India Inc.’s sentiments see a paradigm shift toward compliance – EY

Mumbai, 26 November, 2014

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EY’s Fraud Investigation & Dispute Services practice spearheaded an initiative to determine India Inc.’s sentiment toward bribery and corruption, and the findings revealed a tide change taking place in the industry. With 95% of the respondents expressing an inherent apprehension in paying bribes, there seems to be an enhanced level of awareness around individual integrity and ethics. This may be a step ahead in the right direction, but 59% still consider bribery to be a necessity to conduct business in India.

This shift in public perception has the potential to improve, as 94% still believe that enforcement of anti-bribery and corruption laws lacks intensity. But the collective stance has an optimistic tone and can be further fuelled by better governance.

Arpinder Singh, Partner and National Leader, Fraud Investigation & Dispute Services emphasised, “The past year has infused a sense of promise into the industry, at not only an organizational level but also at an individual level. Given the intense media scrutiny and regulatory changes, there is a heightened sense of responsibility across the board. This has percolated through the organizational structure and ensured that employees are wary of the repercussions, if they cross a line. This renewed effort augments the prospect of a better and more compliant business culture.”

The initiative focused on several aspects of the industry’s perceptions:

Paying bribes for work or to expedite processes: A pain point for many organizations, handling unethical characters asking for bribes with business at stake can be a challenging task as any delays will result in a direct impact on operations, continuity and revenue. The shift toward transparency and veracity is seemingly in progress, weighed by individual stance and organizational outlook. The findings strongly demonstrate negative sentiments which surround paying a bribe, with 95% stating concerns in such a scenario.

The dichotomy of bribery being essential for business in India: General perception says that bribery is irrefutable in India and 59% of the respondents agreed to it. This reflects a dichotomy between working professionals’ individual attitude as compared to companies’ projected approach of conducting business in India. The apparent gap highlights that a lot still needs to be in raising awareness about business integrity and impact of global regulatory laws.

Tone at the top around anti-bribery and anti-corruption policies: The Companies Act 2013 has a significant impact on the Indian industry and led to increased consciousness from the top management, Independent Directors and Audit Committee. 82% of respondents believe that their company’s top management is able to clearly communicate its commitment toward anti-bribery & corruption.

Gearing up for whistle-blowing: Regulatory changes under the Companies Act 2013 and the amended SEBI corporate governance norms have mandated a whistle-blowing mechanism in certain classes of companies. This has given a much needed impetus to ethics and transparency at the workplace and generated a new sense of confidence in corporate India. A strong majority, 87% have stated their willingness to blow the whistle if they witness some unethical activity. Though this marks a huge leap in the possibility to unearth fraud and corruption risks, it also brings challenges around malicious or frivolous complaints to the table.

Greater enforcement of laws still needed: The letter of the law has been comprehensive in its standpoint to combat bribery and corruption; but a majority (94% of the respondents) still believes that greater enforceability is still required. The Companies Act 2013 has brought in an era of change however its success lies in the actual implementation and not just a tick-in-the-box approach. With more anti-graft bills in the pipeline, India Inc. is still awaiting further reforms to build a principled future.

Respondent profile - The sample comprised more than 200 individuals from a variety of businesses operating in India. Given the pervasiveness of the subject, its outreach spanned across hierarchal levels from grass root to C-level executives.

*Disclaimer: The percentages garnered from this initiative have been rounded off to the closest complete number.

Notes to Editors

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About EY’s Fraud Investigation & Dispute Services practice

Dealing with complex issues of fraud, regulatory compliance and business disputes can detract from efforts to succeed. Better management of fraud risk and compliance exposure is a critical business priority — no matter the industry sector. With our more than 2,500 fraud investigation and dispute professionals around the world, we assemble the right multidisciplinary and culturally aligned team to work with you and your legal advisors. And we work to give you the benefit of our broad sector experience, our deep subject matter knowledge and the latest insights from our work worldwide.

This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.