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India among worst in corporate fraud, shows survey

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Washington: India has one of the highest percentages of companies where corporate fraud, corruption and bribery were detected, according to a new survey of large local and multinational companies across the world.

Conducted by the Economist Intelligence Unit and commissioned by New York-based risk consultancy firm Kroll Inc., the survey asked around 770 senior executives if they had discovered any fraud in their companies in 2014.

Around three-quarters of the executives surveyed said that they encountered corruption, bribery and stealing of proprietary information among other things.

The problem is even worse in emerging countries like India, where 80 percent of the respondents said they had come across fraud in their firm.

India was more prone to some types of fraud than any other country. For instance, the survey found that Indian respondents were most likely to report encountering corruption and bribery, regulatory breaches, money laundering and theft of intellectual property.

Globally, 11 percent of all executives surveyed said, they discovered cases of in-house corruption and bribery while 25 percent of respondents from India said that they came across such types of fraud in the past year, according to the report.

In comparison, only around 18 percent of Chinese executives and 20 percent of Russians said they encountered corruption and bribery.

One reason that India’s numbers appear higher than some of its emerging market peers might be because more and more Indian companies have in recent years started reporting and confronting corrupt practices, the Wall Street Journal said.

Even so, fraud in India remains a growing problem, both for Indian companies and investors, the Journal said, citing Reshmi Khurana, head of South Asia for Kroll.

Part of the problem is that accounting standards and financial regulations are not strictly implemented.

Auditing of firm balance sheets, for instance, is supposed to be independent but is sometimes carried out by auditors who are too close to the company’s management.

In addition, the standards for corporate governance within Indian companies are broadly low, according to Khurana as cited by the Journal.

Besides bribery to government officials, one key issue for companies in India is executives taking bribes to give a big order to a vendor, or to hire someone, Khurana was quoted as saying.

According to the fraud report, India’s record on the lack of compliance with regulations is also the worst among the countries surveyed.

A fifth of respondents from India said they had found instances of regulatory or compliance breach, compared to a global average of 12 percent.

India, though, appears slightly better compared to the global average on a handful of matrices, including the theft of physical assets.

While 22 percent of respondents globally reported such theft, only 17.5 percent of respondents from India said they had come across it.

(IANS)

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Big reforms made India fastest growing major economies globally: Garg

It also has enormous implications for emerging markets and developing countries

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The RBI building in Mumbai. Photo credit: AFP/Sajjad Hussain

The major reforms undertaken by the Indian government for raising economic growth and maintaining macroeconomic stability have made the country one of the fastest growing major economies in the world, said Subhash Chandra Garg, Secretary, Department of Economic Affairs (DEA).

Garg was addressing the Special Event hosted by US-India Strategic Partnership Forum on ‘Indian Economy: Prospect and Challenges’ in Washington D.C on Friday.

Indian economy needs big reform.

He said the launch of the Goods and Services Tax (GST) represented an “historic economic and political achievement, unprecedented in Indian tax and economic reforms, which has rekindled optimism on structural reforms.” He further emphasized that India carried-out such major reforms when the global economy was slow.

“With the cyclical recovery in global growth amid supportive monetary conditions and the transient impact of the major structural reforms over, India will continue to perform robustly,” Garg said.

During his meetings, Garg highlighted that the digital age technologies have profound implications for policies concerning every aspects of the economy. It also has enormous implications for emerging markets and developing countries.

Also Read: Biggest Bank Frauds Which Shook The Indian Economy

He expressed that the response to such a transformation will have to shift from ‘catch up’ growth to adoption/adaption of digital technologies for development and growth.

Garg also informed that India has started adopting policies and programmes for transforming systems of delivery of services using digital technologies and connecting every Indian with digital technologies and access through Aadhaar and other such means.

Indian economy should be on rise. www.mapsofindia.com

While citing the example of expanding mobile data access, he mentioned that India is now the largest consumer of mobile data in the world with 11 gigabytes mobile data consumption per month. He informed that India is investing in digital technologies, encouraging private sector to adapt these technologies and also addressing the taxation related issues by introducing equalisation levy.

Garg is currently on an official tour to Washington D.C. to attend the Spring Meetings of the International Monetary Fund and the World Bank and other associated meetings. He is accompanied by Urjit Patel, Governor, Reserve Bank of India and other senior officials. IANS

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