Mumbai : Over a third of respondents in India feel that offering cash payments to win or retain business is justified, says a survey by E&Y.
"India has robust policies but the issue is compliance. In the current challenging market condition, the incentives for unethical conduct can be strong when personal remuneration is at stake and pressure to deliver growth is being felt directly.
"At the same time, a focus on growth and cutting costs can weaken systems and teams put in place to prevent and detect these actions," E&Y India Leader for fraud investigation and dispute services Arpinder Singh said.
According to Ernst & Young's global fraud survey, despite the existence of compliance programmes and awareness about them, a significant and influential group still regards unethical business practices as acceptable.
"They are willing to make cash payments or offer personal gifts or entertainment to win or retain business. In India, over a third of respondents feel that offering cash payments to win or retain business can be justified," E&Y India Leader for fraud investigation and dispute services Arpinder Singh said.
Nearly 43 percent of Indian respondents witnessed downward pressure in terms of reduction in remuneration and removal of bonus.
The survey revealed that the risks of misreporting are compounded by an unethical business environment. In India 69 percent believe that bribery and corruption are widespread in the country, it said.
Although companies are aware that unethical practices are rampant in the country, many respondents appear to be in denial about how close bribery and corruption are to home. They see it happening widely in the country, but when asked about its occurrence in their sector, they hold a different view, the report said.
"Only 44 percent of respondents believe that bribery is a common practice to win contracts in their sector. The results seem to say that 'everyone else is doing it, but not me or my business'," he said.
While majority of respondents are aware that their company has an anti-bribery or anti-corruption (ABAC) policy, the survey shows many organisations have a significant perception gap between senior management and employees when it comes to the relevance and effectiveness of such policies.
Nearly 60 percent of directors and senior managers believe that their companies would support people who reported cases of suspected fraud, bribery or corruption, whereas only 34 percent of other employees agree.
"India is a dynamic market and while companies are focussed on cost, compliance has to become imperitive. Businesses will always manage these risks differently. One size does not fit all, even in a single business, let alone across sectors and geographies. Businesses face significant threats and must be aware and take action to navigate these risks," Singh added.
First Published: Tuesday, May 07, 2013, 21:39