Corruption, frauds keeping away foreign cos from India
Posted on January 24, 2017 from Mumbai ι Report #95826
Mumbai: Corruption, frauds and security- related risks are dissuading nearly a fifth of global firms from entering the country despite a promising market opportunity, says a survey.
"Nearly a fifth of our respondents are dissuaded from investing in the country due to frauds and security concerns," advisory firm Kroll MD Reshmi Khurana said today.
As many as 545 senior executives, 11 per cent of them domestic firms, participated in the global survey.
She said corruption is also another major risk which "is growing", and explained that laws like the FCPA (Foreign Corrupt Practices Act) in the US deter potential investors.
"India is an attractive destination for foreigners given that it is the fastest growing large economy. On the other hand, as the survey shows, investors are deterred due to fraud, corruption and security concerns," she said.
The survey, however, said there was a drop in the number of participants reporting instances of frauds happening in the country to 68 per cent of those polled, as against 80 per cent in the year-ago period.
When asked for reasons why India is suffering on the perception front whereas frauds seem to be going down, she said many respondents prefer not to reveal frauds that happened in the past and also pointed out that senior-level executives--who indulge the most in fraudulent behaviour as per its analysis--are the ones who participate in the survey.
The report said the country tops the Brics grouping of emerging countries in at least five fraud categories, including conflict of interest at management levels, corruption and bribery, money laundering, internal financial frauds and market collusion.
On corruption, another of Krolls managing directors, Tarun Bhatia, pointed out that land acquisition is a key concern for the industry which he said is increasingly depending on the government to get the land needed for projects rather than acquiring by its own.
When asked about noteban, Khurana said it has exposed both vulnerabilities in the system by helping expose newer frauds, and also given opportunity to new frauds because of larger adoption of technology and an increase in transactions.
Pitching in for greater digitisation, she said there is a need for sclaing up the safety infrastructure. The country also needs better protection for whistleblowers, Bhatia said, adding a larger number of people will come forward to report frauds this way.
It also needs better internal audits which are looked at as beyond compliance-related works, he added. The report cited cyber security as an emerging concern which will require greater attention in future with 73 per cent of those surveyed experiencing a cyber incident in 2016.