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Reuters/Damir Sagolj
Bribery, corruption and fraud is rampant in India Inc.
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Educated, 30-something male employees are the most likely to defraud companies in India

Doing business in India isn’t easy. While the Narendra Modi government is trying hard to push up India’s position in the World Bank rankings in ease of doing business, the country’s corporates continue to deal with bribery, fraud, and corruption.

One in four organisations in India, a recent survey by consultancy firm PwC showed, is affected by economic crimes. The survey involved 6,337 respondents from 115 countries.

Most of these crimes are committed by employees. The profile of a typical fraudster in an Indian company, PwC described, is “a highly educated or educated male between 31-40 years at a junior to middle level in the organisation.”

The most common type of crime witnessed over the last 24 months in India was asset misappropriation, the survey said. This typically happens (pdf) when someones misuses a firm’s assets by deceit, and often involves stealing cash.

The procurement processes at Indian companies also suffer from high levels of fraud, with manipulations in vendor selection and kickbacks.

“Our investigation on some of the biggest cases in this area has revealed increasing instances of personal profiteering with increasing spends by companies. However, perpetrators have become much smarter, thus making detection a huge challenge,” Darshan Patel, partner, forensic services, PwC India, said in the survey report.

“In today’s environment, one is less likely to send an obvious email or SMS trail related to unethical activity in people’s inboxes, but more likely to send larger kickbacks routed through a complex network of entities held in the ‘beneficial interests’ of internal perpetrators,” Patel said.

Financial loss

The financial impact of such crimes can be massive. According to the survey, 16% of the respondents in India said that their company bled more than $1 million over the last two years as a result of these frauds. Moreover, 75% of Indian respondents estimated financial losses due to economic crime at up to $1 million. A little over 10% of the respondents said they were unsure about the quantum of loss.

“The true cost of economic crime to the Indian economy is difficult to estimate, especially considering that actual financial loss is often only a small component of the fallout from a serious incident. The reputation cost of such crimes is often much higher,” Dinesh Anand, partner and leader, forensic services, PwC India, said in a statement explaining the survey results.

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