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'84 pc of Indian businesses pay bribes'

business Updated: Mar 18, 2008 23:51 IST
Suman Layak
Suman Layak
Hindustan Times
Highlight Story

A new report by KPMG on fraud has now confirmed what we all knew. More than 84 per cent of the respondents in a survey have said that businesses in India pay bribes or facilitation payments to get their work done.

Also, more than 60 per cent of the executives who replied said that their companies experienced fraud in the last two years.

This figure has risen significantly from just 39 per cent in its last survey in 2006.

The findings come after Transparency International rated India low on the Corruption Perception Index at 3.5 out of 10 and lowest on the bribe payers index, indicating the high degree of corruption prevailing in the country.

The study says: “Sixty per cent of the respondents did not have adequate knowledge about the anti-corruption laws. This leads us to wonder if ignorance is the reason for organisations to be non-complaint with these laws.”

The study points out that the Indian Prevention of Corruption Act and the American Foreign Corrupt Practices Act 1977 are being applied with increasing severity.

The study has found that most Indian companies are not ready to tackle fraud within the company.

“Over 60 per cent of the respondents stated that their organisations neither have a complete understanding of various risks fraud faced by them nor they have an effective internal control mechanism, to manage such risk,” the study found.

The survey also found that payments and bribery by a supplier is the biggest reason for a fraud in a company. Senior employees were also considered as a significant group that is likely to indulge in fraudulent activities.

Out of the 60 per cent of the employees who found that their company saw a fraud in the last two years, 75 per cent said that they saw 5 instances of fraud, while 14 per cent said that they saw 10 instances of fraud.

The financial sector is now the most vulnerable sector and has overtaken the information technology sector in terms of its vulnerability to fraud.

In the near future intellectual property will be the prime target of fraud and more than 80 per cent of the respondents in the study were unhappy with what their company was doing about protecting intellectual property.