Bribery and corruption in emerging markets, including India still exists: Study

Over half of the executives -- 52 per cent -- surveyed in emerging markets said that "bribery and corruption continue to be rampant in business", while 40 per cent of the respondents in India believed so, according to the EY Emerging markets - Integrity in the spotlight 2018 report.

The perceived level of bribery and corruption in emerging markets, including India, has continued to be double that of developed markets, a new global study on fraud, bribery and corruption trends claimed Thursday.

Over half of the executives -- 52 per cent -- surveyed in emerging markets said that "bribery and corruption continue to be rampant in business", while 40 per cent of the respondents in India believed so, according to the EY Emerging markets - Integrity in the spotlight 2018 report.

"In India, 40 per cent of the executives surveyed believed that bribery and corrupt practices occur widely in business. 12 per cent said their companies have experienced a significant fraud over the last two years, while 20 per cent justified cash payments to help a business survive," the report said.

The study noted that there have been concerted efforts in India to enhance corporate governance and transparency through regulatory reform such as the Prevention of Corruption (Amendment) Act 2018 (penalises bribe givers as well as commercial organisations, including foreign companies), Companies Act 2017 and Insolvency and Bankruptcy Code (Amendment) Bill 2017, as well as increased penalties for non-compliance.

"However, fraud and corruption are still a major obstacle to growth. In the media, the more frequent reporting of larger cases of corruption pose a greater reputational risk for companies doing business in the region," it said.

The study, undertaken by EY Forensic & Integrity Services, surveyed 1,450 executives from 33 emerging market countries and territories, including India, China, Japan, South Africa, Brazil, Nigeria, the UAE, as part of the global study.

"Even though many emerging markets have implemented new laws, increased enforcement and organisations operating there have adopted anti-fraud frameworks, the overall sentiment is still sombre.

"More than 42 per cent of emerging markets respondents believe that fraud and corruption pose one of the greatest threats to businesses. This is significantly higher than the 29 per cent of respondents in developed markets," the report said.

The report claimed that a number of organisations feel some form of incentive is necessary to guarantee a company's survival.

"Sixteen per cent of respondents from emerging markets acknowledged it is common practice to use bribery to win contracts as compared to 5 per cent in developed markets," it said.

The report also found that some business executives still believe that it is "acceptable to give cash payments in exchange for commercial advantage", and added that 19 per cent of emerging markets respondents felt this could be justified compared with just 6 per cent in developed markets.

"Overall, China ranked 6th and India stood at 12th among 33 emerging markets where offering cash payments could be justified," it said.

Emerging markets are the powerful force in spurring business growth but the underlying risk of fraud, bribery and corruption persists, Arpinder Singh, Partner and Head – India and Emerging Markets, Forensic & Integrity Services, EY, said in a statement.

Global organisations operating in these markets have significant scope for expansion but need to take a proactive approach to address the root causes of unethical behaviour by building a culture of integrity, he added.

"This includes strengthening anti-corruption efforts by using advances in forensic data analytics to both detect and prevent wrongdoing and increase the effectiveness of their compliance systems," he added.

Argentina, Brazil, Bulgaria, Chile, China, Colombia, Cyprus, Czech Republic, Hong Kong SAR, Hungary, India, Indonesia, Israel, Jordan, Kenya, Korea, Lithuania, Malaysia, Mexico, Nigeria, Peru, Philippines, Poland, Romania, Russia, Saudi Arabia, Singapore, Slovakia, South Africa, Taiwan, Turkey, the UAE and Ukraine are the countries classified as emerging markets in the survey.

(With inputs from agencies.)