Tuesday, May 7, 2013
OFFERING CASH TO BIZ IS OK
Over a third of respondents in
India feel that offering cash payments to win or retain business is
justified, says a survey by E&Y. "India has robust policies but the
issue is compliance. In the current challenging market condition, the
incentives for unethical conduct can be strong when personal
remuneration is at stake and pressure to deliver growth is being felt
directly. "At the same time, a focus on growth and cutting costs can
weaken systems and teams put in place to prevent and detect these
actions," E&Y India Leader for fraud investigation and dispute
services Arpinder Singh said. According to Ernst & Young's global
fraud survey, despite the existence of compliance programmes and
awareness about them, a significant and influential group still regards
unethical business practices as acceptable. "They are willing to make
cash payments or offer personal gifts or entertainment to win or retain
business. In India, over a third of respondents feel that offering cash
payments to win or retain business can be justified," E&Y India
Leader for fraud investigation and dispute services Arpinder Singh said.
Nearly 43 per cent of Indian respondents witnessed downward pressure
in terms of reduction in remuneration and removal of bonus. The survey
revealed that the risks of misreporting are compounded by an unethical
business environment. In India 69 per cent believe that bribery and
corruption are widespread in the country, it said. Although companies
are aware that unethical practices are rampant in the country, many
respondents appear to be in denial about how close bribery and
corruption are to home. They see it happening widely in the country, but
when asked about its occurrence in their sector, they hold a different
view, the report said. "Only 44 per cent of respondents believe that
bribery is a common practice to win contracts in their sector. The
results seem to say that 'everyone else is doing it, but not me or my
business'," he said. While majority of respondents are aware that their
company has an anti-bribery or anti-corruption (ABAC) policy, the
survey shows many organisations have a significant perception gap
between senior management and employees when it comes to the relevance
and effectiveness of such policies. Nearly 60 per cent of directors and
senior managers believe that their companies would support people who
reported cases of suspected fraud, bribery or corruption, whereas only
34 per cent of other employees agree. "India is a dynamic market and
while companies are focussed on cost, compliance has to become
imperitive. Businesses will always manage these risks differently. One
size does not fit all, even in a single business, let alone across
sectors and geographies. Businesses face significant threats and must be
aware and take action to navigate these risks," Singh added.
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