Growing Need for Companies to Embrace Anti-Corruption Values as a Strategic CSR Mission

Just as corporations have ventured out proactive positions on other social issues, such as child labour and the environment, it’s time for anti-fraud and anti-corruption to become part of a companies’ CSR mission.


A paper released by Deloitte in India in collaboration with Federation of Indian Chambers of Commerce and Industry (FICCI) Aditya Birla CSR Centre for Excellence emphasised that now, it’s a high priority mandate for businesses to embrace anti-corruption values as a strategic CSR mission by moving beyond risk mitigation towards proactively solving social problems critical to the business.


The paper also delves into actionable steps on the responsibilities of various stakeholders as well as what companies should do to tackle the menace of fraud.


While one has witnessed progress in the reporting of CSR initiatives; the disclosure on lobbying practices and being transparent on sensitive issues is still playing a minor role for many organisations. Companies need to realise that issues arising from fraud and corruption can have an adverse effect on their bottom line thereby directly affecting their ability to compete.


“In this current environment, no organisation can afford to be complacent or believe that fraud will not affect them," says Rohit Mahajan, Senior Director, Deloitte in India. "It is important to stay one step ahead of the ‘fraudster’ and understand the different means of why and how fraud occurs. While the management needs to demonstrate ‘zero tolerance’ to the issues of fraud and corruption, they also need to establish effective risk management practices and a preventive defense to fraud.”


Dr. KK Upadhyay, Head CSR – FICCI Aditya Birla CSR Centre for Excellence, added, “CSR is one of the means to foresee change in the paradigm of creating transparency and ethical business practices.”


Today, organisations are being encouraged by both, their internal and external stakeholders to demonstrate transparency and accountability in their business operations and their impact on society and the environment. Being compliant with these thus, forms the foundation of ethical business practices in any company.


Additionally, having a CSR mission or incorporating corporate governance in a company is incomplete, until there is complete trust on the transparency of the company.


Increased incidents of fraud have also encouraged regulators and law enforcement agencies to establish stringent laws with strict penalties. The impact of laws such as the U.S. Foreign Corrupt Practices Act, 1977 (FCPA) and the UK Bribery Act, 2010 (UKBA) is growing, pushing companies to take steps to improve their compliance. Looking at India itself, the Companies Act 2013, along with some other legislations, like the Prevention of Corruption Act (1988), the Whistleblower Protection Act, Prevention of Bribery of Foreign Public Officials Bill (2011), are all aimed at increasing and improving corporate transparency.


The Companies Act 2013 has raised the bar of how Indian companies need to evaluate themselves. Inclusion of some ground-breaking provisions such as the provisions for shareholders’ class-action suits are all aimed at increasing the levels of transparency as well as enhancing accountability, eventually leading to stricter enforcement.


“Whilst we have taken the right steps, I do not foresee change occurring overnight. Good governance, robust enforcement and greater transparency will create a platform on which we need to work arduously to change the global mindset about doing business in India,” adds Mahajan.


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