Corporate Corruption

Letter “C” seems to be riding high these days in India. Confrontation of Corruption by the Common Class of a Classical Character in line with Constitutional Charter! The waves are running high and the results have been unprecedented. As a matter of fact, it is the word "corruption" from which no part of the vast society is untouched in direct or indirect way. Hence, there was this whole euphoria and at times overly energetic responses from all the parties involved in past two weeks.

No doubt, the initiatives are being taken in the right direction (may be a little late). However, it remains to be concluded whether these initiatives will suffice in eradicating the letter “C” Completely. It is a humongous task to even think of all possible forms of corruption – leave alone its eradication. One of such form of corruption is the malpractices exercised by the corporate houses or even medium size entrepreneurial businesses in order to maximize the wealth.

It is not 'only' the politicians who are responsible for the wide-spread corruption. Businessmen see it in their every right to bribe the person of authority to ask for a favour. Big companies find it appropriate to manipulate financial records to mislead an investor's decisions. Investors do not leave any stone unturned to solicit insider information to engage in stock trading. Employees do their bit in colluding with external or internal parties to skim off company’s assets and monies. Are these not a form of corruption? Absolutely. Yes.

This is a form of a corruption which seems directly proportional to the number of transactions that take place within the business community. Ironically though, it is not the risk related to the volume of transactions that occupies the center stage in audit committee meetings. In fact, the risk that is most relevant is the risk of business continuity, risk of investor disinterest, risk of unproductive cash on the balance sheet or risk of underachieved business targets. And this is where the focus comes in the way of dealing in most ethical manner. Enough corruption still exists at various levels in the entire business cycle which relates to these risks. In theory, this constitutes a part of enterprise risk management (ERM).

Yet, we witness corporate scandals of big or small form not so infrequently. I wonder can ERM be most effective when the intent itself is questionable. Can any professional body design a way to curb those malicious intents? Probably no. The pre-requisite then is to conduct the business with utmost integrity and arm’s length way. Alas but true, the fight against corruption has a long way to go! There is a need to institutionalize anti-corrupt practices in daily affairs – in mind, body and soul.