Bribery and corruption in emerging markets shows no improvement : EY

• 52% of respondents in emerging markets stated that bribery and corruption happens widely in business

• 19% said that cash payments can be justified to help businesses survive

• 16% stated that it is a common practice to use bribery to win contracts

The perceived level of bribery and corruption in emerging markets, including India has continued to be double that of developed markets since 2012 according to the EY Emerging markets – Integrity in the spotlight 2018 report. Over half of the executives (52%) surveyed in emerging markets said that bribery and corruption continues to be rampant in business.

Even though many emerging markets have implemented new laws, increased enforcement and organizations operating there have adopted anti-fraud frameworks, the overall sentiment is still sombre. More than 42% of emerging markets respondents believe that fraud and corruption pose one of the greatest threats to businesses. This is significantly higher than the 29% of respondents in developed markets.

Arpinder Singh, Partner and Head – India and Emerging Markets, Forensic & Integrity Services, EY said, “Emerging markets are a powerful force in spurring business growth but the underlying risk of fraud, bribery and corruption persists. Global organizations operating in these markets have significant scope for expansion but need to take a proactive approach to addressing the root causes of unethical behaviour by building a culture of integrity. This includes strengthening anti-corruption efforts by using advances in forensic data analytics to both detect and prevent wrongdoing and increase the effectiveness of their compliance systems”

The report by EY Forensic & Integrity Services surveyed 1,450 executives from 33 emerging market countries and territories as part of a global study on fraud, bribery and corruption trends. Other key findings include :

  • Bribery necessary to win contracts – The report revealed that a number of organizations feel some form of incentive is necessary to guarantee a company’s survival. Sixteen percent of respondents from emerging markets acknowledged “it is common practice to use bribery to win contracts” as compared to 5% in developed markets.
  • Offering cash payments, gifts and entertainment still acceptable – The report found that some business executives still believe that it is acceptable to give cash payments in exchange for commercial advantage. Nineteen percent of emerging markets respondents felt this could be justified compared with just 6% in developed markets. Overall, China ranked 6th and India stood at 12th among 33 emerging markets where offering cash payments could be justified.
  • Mismatch between intention and behaviour – While the majority of respondents in emerging markets understand the importance of demonstrating integrity (97%), adoption of unethical practices is still justified. This shows a contradiction between employee intention and actual behaviour.
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