Corporate fraud rose dramatically in last few years: survey

New Delhi: Instances of corporate fraud like corruption, money laundering and bribery in India have risen substantially in the last few years, a survey has found.   The survey by Grant Thornton and Assocham also observed   that the lurking risk of frauds has been dissuading global companies from investing in India. Specific types of frauds including corruption and   bribery, siphoning-off funds, information theft, theft of   physical assets and internal financial fraud have increased   dramatically in India, the survey pointed out. The survey also found that companies in the real estate & infrastructure sectors are the most vulnerable to fraud.  

Any action undertaken to conceal fact, deceive, injure   the interests of the company or its stakeholders, or to gain   undue advantage also constitutes fraud.  "Global companies are increasingly realising that corruption is the biggest threat to do business in India. As a   result, they are investing in building up controls and   processes that address the direct and indirect risks of corruption and bribery in India". "This means that Indian corporates that intend to do   business with such global companies would have to invest significantly in ramping up their anti-corruption controls or else stand a chance to lose doing business with global   companies," said Vidya Rajarao, Partner, Grant Thornton India.  

The survey revealed that corruption, money laundering   and/or bribery is the most common type of fraud that Indian corporates need to watch out for.   Establishing robust internal controls, appointing  compliance personnel and quick response to warning signals by corporates in India were some of the measured advocated by the survey to mitigate and prevent fraud. Over 60 per cent of the survey respondents cited damage to their organisations' brand and market reputation as the   biggest impact of fraudulent activities, while 41 per cent agreed that exposure of corporates to fraud-related threats have increased substantially since the past several years. 

"Over the years, a number of specific frauds have become  more common within the corporate world. Bribery, corruption, money laundering, tax evasion, window dressing, financial reporting fraud, are of mounting concern for Indian   corporates," the survey said.  The survey also found that instances of accounting fraud   involving 'cooking of books' or 'fudging of accounts' by registering fake sales have become increasingly significant over the last few years, along with cyber-crimes. 

 "The growing menace of cyber-crimes involving data theft   and identity theft pose a serious threat not only to individuals and companies across sectors, but also dents the reputation of the information Technology (IT) and IT-enabled   services industry," it noted.