Thursday, April 16, 2009

Indian business: Corruption Inc.

When it comes to bribery, Indian businessmen are almost on par with their counterparts in China and Russia, according to a report released by Transparency International (TI), a Berlin-based global corruption watchdog.

TI released the Bribe Payers Index (BPI) for the year 2008 at a function in London today. It ranks 22 developed and developing countries on the tendency of their firms to bribe abroad. It is based on the Bribe Payers Survey (BPS) conducted among 2,742 business executives of 26 countries, between August 5 and October 29 this year.

Countries are ranked on a scale of zero to 10. The higher the score, the lower is the possibility of the companies engaging in bribery. These 22 countries together account for approximately 75% of global exports.

While Belgium and Canada top the list with a score of 8.8, Russia is at the bottom with 5.9 points. India, with a score of 6.8 ranks 19th; there are two countries below India – Mexico (6.6) and China (6.5). It may be noted that the previous index released in 2006 had placed India at the bottom out of a list of 30 countries.

"The BPI provides evidence that a number of companies from major exporting countries still use bribery to win business abroad, despite awareness of its damaging impact on corporate reputations and ordinary communities," said Transparency International Chair, Huguette Labelle in a statement.

The BPS revealed sector-wise analysis to the incidence of bribe worldwide. Companies engaged in the business of public works contracts and construction; real estate and property development; oil and gas; heavy manufacturing and mining were seen to indulge in bribery most frequently. In other words, these companies were identified as most likely to use illegal means to influence the state.

On the other hand, information technology, fisheries and banking and finance were identified as “cleanest.”
While most of the world’s wealthiest countries already subscribe to a ban on foreign bribery, under the OECD (Organization for Economic Co-operation and Development) Anti-Bribery Convention, there is little awareness of the convention among the senior business executives interviewed in the Bribe Payers Survey.

The timing of the report could not have been more appropriate; December 9 is International Anti-Corruption Day. India has been consistently ranked as one of the highly corrupt countries in the world. Mr. P.N. Veda Narayanan, a retired Vigilance Commissioner, Tamil Nadu government, said, “Those who are in contact with public, like policemen, income-tax officials, etc. are the most corrupt. But we can’t always blame them. What is a policeman’s get as salary, for guarding me, you and our families throughout the year? Pittance. It’s natural that he looks for other sources, to make ends meet.”

A member of a chamber of commerce said, on condition of anonymity, “I know of a minister who demanded a ransom from a person for the top post of a port trust. But such cases are hard to prove, for want of clinching evidence.”
The Corruption Perception Index released by TI earlier this year ranked India at 85th position among 122 countries. In fact, India has slipped from its 72nd position last year.

In a related development, Pricewaterhouse Coopers (PwC) announced in a press release the establishment of “Anti-Corruption Center of Excellence.”

The release quoted PwC’s global CEO Samuel A. DiaPizza Jr. as saying the center would “provide clients unparalleled access to our deep expertise in addressing the corruption challenges of today and tomorrow.”

TI’s India chapter (TII) and Centre for Media Studies (CMS) released a report titled TII-CMS India Corruption Study, 2007 in June this year. The report was based on a survey of 22,728 below the poverty line (BPL) households and covered 11 kinds of basic services availed by them like police, medical services, land records/registration, housing, water supply, NREGS, school education, among others. Some of the major observations were:

· These households were forced to pay about Rs. 883 crores as bribe to avail the services
· Police perceived as the most corrupt; with the bribe amount paid estimated at Rs. 214 crores
· Land records and registration services came a close second, the bribe amount being Rs. 122 crores
· Medical services accounted for an estimated Rs. 87 crores
· Extrapolating the data, the report said that nearly a million households could not avail of medical
services, because they either refused to pay bribes or could not afford to pay

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