The world’s largest democracy is on its way to becoming a great economic power. Rapid growth has funded extensive new public infrastructure and attracted a tide of foreign investment. Both have created opportunities for corruption, as witnessed by recent sandals in the telecom industry, 2010 Commonwealth Games, as well as in real estate and banking.
”These episodes have brought the question of integrity to the fore,” observes Rohit Mahajan, Partner and co-Head for Forensic Services in KPMG’s Indian firm.
Bribery has come to be considered as an acceptable behaviour, with the belief that companies which pay bribes are more likely to obtain business. There is an anger which is working its way up from the grass roots, via NGOs and the media, into board-rooms, politics and officialdom. The perceived danger sectors are believed to be those where government and political intervention is considered higher.
There is also growing resentment of widespread petty corruption, often overlapping with facilitation payments, which are lawful and ubiquitous. ”People pay because it is expected of them”, says Mahajan. “India’s anti-corruption framework is incomplete.
The law is aimed at public officials, looking only to the demand side, the bribe taker but not the bribe giver.”
There is an active Federal Prevention of Corruption Agency and a clutch of bodies performing investigative functions at state and municipal level, but none are empowered to launch prosecutions.
Mahajan affirms that ”the Federal government is taking a number of encouraging steps. India has signed up to the G20 deal on prevention of private sector corruption. The Right to Information Act 2005 has ushered in some much needed powers to access personal and business records. The 2006 e-Government initiative has introduced clearly documented procurement processes and, by putting things online, has dramatically reduced the need for face-to-face meetings where corruption so often takes place.“
Indian companies are now major overseas investors themselves and are starting to align themselves with international best practice, including the UK Bribery Act and the FCPA. The Forbes Global 2000 praised 47 Indian companies for taking a stand against corruption during 2009.
Mahajan bears witness that ”more and more senior executives are setting their faces against paying bribes”. The giant Tata Group has made headlines with a zero-tolerance policy and clear public position that it would rather lose business than play dirty. The Group insists vendors subscribe to its code of conduct and audits them to see that proper procedures are followed. Tata is also tough on political donations by devising a ‘values matrix’ to provide transparency on why money is given and to ensure that donations go only to parties sharing corporate values.
There is recognition that effective anti-bribery and corruption policies spring ultimately from changing assumptions amongst the population at large rather than just within organisations.
Mahajan reports that ”one household name firm is running television advertisements urging people to report offences. The Central Bureau of Investigation (equivalent to the US FBI) is running a campaign telling people to report bribes.
”We are fortunate in having a number of active, well-supported public interest groups. One in South India has printed ‘zero rupee’ notes which it urges be given to officials soliciting improper payments. Big companies are now collaborating with NGOs, spurred on by a mass media eager to expose malfeasance. It is this growing popular commitment to reform that lends real heft to political and corporate action”.