Disclosure and Reporting, India Inc Scores : Minimising Corruption And Crony Capitalism

A recent report by well-regarded corruption watchdog Transparency International was met with some disbelief in certain circles; after all, it clearly contradicts the prevalent view about the burgeoning nature of corruption in India. However, it is important to see that the two things are not necessarily contradictory. Just as the right to information led to greater knowledge of misbehaviour by the state, a clearer reporting regime allows better investigation of what companies are up to… If viewed rationally, the report should, thus, somewhat defuse the panic around “unique levels” of corruption in India, revealing that the country and its private sector have relatively robust processes in place, allowing for the eventual revelation of corrupt practices. The report evaluated transparency on several fronts – for example, in terms of clarity in related holdings by companies. The more opaque holding structures are, the easier it is to hide the proceeds of corruption… 


minimising-corruption-and-cIt is clear that there is a positive correlation between reform, globalised operations, and transparency of a company. For some time now, the loudest voices shaping public opinion in India have indicated that the country has a particular problem with corruption at the interface of the state and the private sector, and that a lack of reform has allowed India Inc to conceal many acts of wrongdoing. While this may or may not be true, some perspective to these claims was provided by a report by the well-regarded corruption watchdog Transparency International that was released recently evaluating 100 emerging market multinationals, especially from the BRICS countries – Brazil, Russia, China and South Africa besides India.
The report’s executive summary said: “No company achieved a perfect score but companies from India are clearly ahead of the pack.” It appears that in terms of disclosure and reporting, the building blocks of accountability, India is a standout performer in the emerging world. China was the worst performer overall, by far – unsurprising, given its byzantine network of state and private ownership, and its completely opaque and controlled financial sector. Nine out of the 11 worst-rated companies were Chinese.
The report was met with some disbelief in certain circles; after all, it clearly contradicts the prevalent view about the burgeoning nature of corruption in India. However, it is important to see that the two things are not necessarily contradictory. Just as the right to information led to greater knowledge of misbehaviour by the state, a clearer reporting regime allows better investigation of what companies are up to.
If viewed rationally, the report should, thus, somewhat defuse the panic around “unique levels” of corruption in India, revealing that the country and its private sector have relatively robust processes in place, allowing for the eventual revelation of corrupt practices. The report evaluated transparency on several fronts – for example, in terms of clarity in related holdings by companies. The more opaque holding structures are, the easier it is to hide the proceeds of corruption.
Other ingredients in the index were the presence of anti-corruption programmes within the company in question and the transparency of its reporting on activities in other countries – necessary to correctly assess its tax burden. It is clear that there is a positive correlation between reform, globalised operations, and transparency of a company. Still, it is a matter of concern that the absolute level of disclosures is still poor – three-fourths are ranked below five, and 60 per cent do not disclose political contributions.
Fixing that is an important step forward in minimising the impact of corruption and the incidence of crony capitalism. While Indian companies and regulations clearly appear to have done well in comparison with their global peers, much remains to be done. Declarations of political contributions, and explicit reporting of country-by-country results – not just some information about the finances of subsidiaries elsewhere – would be a major step forward for India Inc. As Indian companies spread their wings and begin to compete with developed country giants, they should set their standards for transparency even higher.
– BS:Fighting corruption? India Inc shows the way


The Most Corrupt Countries In The World

More than one person in two thinks corruption has worsened in the last two years and they have seen no improvement in their countries over in that period. Read how India and other countries fared…

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Every day, all over the world, ordinary people bear the cost of corruption. For example, in Zimbabwe, women giving birth in a local hospital have been charged $5 every time they scream as a penalty for raising false alarm, according to Transparency International. Transparency International surveyed over 114,000 in 107 countries to check the prevalence of corruption in each of these nations and the results were startling. More than one person in two thinks corruption has worsened in the last two years and they have seen no improvement in their countries over in that period. Although this report doesn’t rank countries on their levels of corruption, if it used the answer to the bribe question to sort nations, India’s standing would have worsened. In 2013, only 13 out of 107 countries reported the same or higher rates of bribe-paying than India in this year’s report, putting it in 94th place based on this indicator alone. In the 2011 report, India ranked 82 out of 100 countries, based on this indicator.

Rank 10: India

  1.  Percentage saying corruption very serious: 47 per cent
  2.  Percentage saying corruption has increased in past two years: 40 per cent
  3.  Most corrupt institution: Political parties (86 per cent voted)
  4.  Second most corrupt institution: Police (75 per cent voted)
  5.  GPP per capita: $1,489

In India, most people bribe to police followed by registry and permits and for land services.
Despite rampant corruption, 36 per cent of the people think that ordinary people can make a difference in the fight against corruption.

Rank 9: Zambia

  1.  Percentage saying corruption very serious: 77 per cent
  2.  Percentage claiming public officials corrupt: 65 per cent
  3.  Percentage claiming police corrupt: 92 per cent
  4.  GDP per capita: $ 1,489

Residents of Zambia said that most of their institution are highly corrupt including military, education systems and judiciary.
In fact, even companies find it difficult administrative procedures in the company cumbersome and full of corruption.

Rank 8: Nigeria

  1.  Percentage saying corruption very serious: 78 per cent
  2.  Percentage claiming public officials corrupt: 69 per cent
  3.  Percentage claiming police corrupt: 92 per cent
  4.  GDP per capita: $2,720

Nigerians pay most bribes to police. Almost 81 per cent said that they have bribed police in the last two years.
Corruption in other areas such as education, registry, and permit services and judiciary is much less compared to police.

 Rank 7: Russia

  1.  Percentage saying corruption very serious: 79 per cent
  2.  Percentage claiming public officials corrupt: 92 per cent
  3.  Percentage claiming police corrupt: 89 per cent
  4.  GDP per capita: $17,709

The Russian think tank Indem estimates that bribes accounted for 20 per cent of Russia’s GDP.
The overall amount of bribes in the Russian economy during the last decade skyrocketed from $33 billion to more than $400 billion per year in Putin’s government, according to Georgy Satarov, former aide to Boris Yeltsin, states Wikipedia.

Rank 6: Paraguay

  1.  Percentage saying corruption very serious: 79 per cent
  2.  Percentage claiming public officials corrupt: 58 per cent
  3.  Percentage claiming police corrupt: 82 per cent
  4.  GDP per capita: $6,136

It is due to corruption that economic development in Paraguay has taken a hit. Though the government has taken measures to control corruption in the country, they have not been effective.
Residents feel that political parties, parliament and legislature, and police are most corrupt institutions.

Rank 5: Mexico

  1.  Percentage saying corruption very serious: 79 per cent
  2.  Percentage claiming public officials corrupt: 87 per cent
  3.  Percentage claiming police corrupt: 90 per cent
  4.  GDP per capita: $15,312

Over 91 per cent of Mexicans feel that political parties are the most corrupt institutions compared to all others.
In fact, in 2012, The New York Times accused Walmart of bribing local government officials in Mexico, in order to expedite the process of awarding construction permits to build new supermarkets.
Most people have paid bribe to police and law officials in the past two years.

Rank 4: Zimbabwe

  1.  Percentage saying corruption very serious: 81 per cent
  2.  Percentage claiming public officials corrupt: 70 per cent
  3.  Percentage claiming police corrupt: 86 per cent
  4.  GDP per capita: $559

According to the residents of the country, corruption has increased dramatically in the country in the past two years.
Most corrupt institution is police department followed by political parties. This is one among the few countries where people feel that corruption in media is high, too.

Rank 3: Venezuela

  1.  Percentage saying corruption very serious: 83 per cent
  2.  Percentage claiming public officials corrupt: 79 per cent
  3.  Percentage claiming police corrupt: 83 per cent
  4.  GDP per capita: $13,616

Rank 2: Mongolia

  1.  Percentage saying corruption very serious: 86 per cent
  2.  Percentage claiming public officials corrupt: 77 per cent
  3.  Percentage claiming police corrupt: 66 per cent
  4.  2012 GDP per capita: $5,372

Mongolia is one of the few countries where health services, judiciary, and public officials are more corrupt than police and politicians.
The highest bribes hence are paid for services such as medial, judicial and education.

Rank 1: Liberia

  1.  Percentage saying corruption very serious: 86 per cent
  2.  Percentage claiming public officials corrupt: 67 per cent
  3.  Percentage claiming police corrupt: 94 per cent
  4.  GDP per capita: $673

Liberians say that the legislatures and police are highly corrupt in the country. Liberia is among the few countries where bribery is rampant in education system.
Consequently, people pay more bribes for services such as education, police and judicial.
It’s also among the nations who population strongly feel that ordinary people can make a difference in the fight against corruption.

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