Compromised Corporate Ethic

ImageCorporate ethics in India is flying in the air. Almost all corporate companies have been caught in the corruption net.  The tragedy of globalised times is that even the uncompromising corporate companies have embraced corruption. From Tatas in the 2G scam to Reliance in the KG Basin Price Rigging to Jindals in the Coalgate scam to Sahara in the investor cheating to Satyam in the book cook up case, the list is full. One of the critical reasons for the booming corporate corruption is the mushrooming of middle men and women. The brokers (dalal) have mesmerized the corporate world with their amazing bowling skills. The corporate wickets have been falling one and after the other. Unfortunately none of them are returning to the pavilion. All those who are caught in the corruption cases have been staying on the crease. The umpires have been bought and the audiences are watching helplessly. Why corporate India is becoming more and more like the destroyed IPL? How come the onus of national development in an ethical way is left unattended?

In the last fifteen years (1997-2012) more than 115 companies have been exposed for corporate fraud. Rs.43,815 crores were involved in this corporate fraud. This amount is apart from lakhs of crores involved in the mega scams involving corporate companies, bureaucrats and politicians. According to Thought Arbitrage Research Institute (TARI) the average size of corporate fraud was  Rs.282 crores till 2009. But in the last four years it has gone up to Rs.502 crores which is a whopping 80% rise in the last five years. The manufacturing tops the corporate fraud table with 35% followed by I.T with 21% and banking & financial sector with 16%. More than 115 companies which are listed in the Indian stock exchanges have involved in the corporate frauds from 2010-2012. Tinkering with procurement bills, bribing for special favours and creating fictitious accounts are considered to be the major avenues for corporate fraud.  Nearly 44% of the stock market listed companies have been caught for fraud. This is tip of the iceberg

There is no possibility of recovering corporate ethics? Despite having a Ministry of Corporate Affairs things seem to be going haywire. The Competition Commission of India is slowly started to having some impact. It has started to show its powers to the corporate companies. The regulatory bodies like Telecom Regulatory Authority of India (TRAI), Insurance Regulatory Authority of India (IRAI), Security and Exchange Board of India (SEBI) and Real Estate Regulatory Authority of India (RERAI) are great inventions to control the customer duping in India.

The corrupt corporate culture is not India specific. Even the global giants like Citibank, Enron, Xerox, WorldCom, Daewoo, have been messed up in the scandals. The bubble of mismanagement of corporate companies was blown up by the vigilant media. Even the inter-corporate rivalry exposes the scandals inside the corporate world. The fallout of corporate companies weakened the American economy which affected the world economy in general. The Chinese who are known for disciplined state control are also dancing to the global corruption tunes. From the famous Politburo member of Communist Party of China, Bo Xilai  to the bottom down there is an enlarged corruption in Communist China.  According to the KPMG Inida Fraud Survey Report, 75% of the corporate executives admit that there is fraud in their companies. They also say that there is no way to detect and punish the fraudsters. These frauds are present in different spheres of the corporate sector. The nexus between companies, bureaucrats, politicians and suppliers damage the corporate world devastatingly.

Cell phone companies are experts in duping the customers and tax authorities alike. Evading tax and service charges are common in the cellular circles. Despite heavy fining which runs into hundreds of crores, the cellular companies haven’t learnt any lesson. They continue to invent novel ways to extract money from the subscribers. Apart from cheating customers and the government, the cellular companies knowingly or unknowingly involve in collaborating with foreign companies which may endanger the national security. The 2G scam was not just financial mismanagement and scandal saga but it was also a major national security threat.  Enemies of India are engaged in a global project which promises to destroy the unity of India. The Cellular companies have become party to this project unknowingly.

Insurance sector is another trouble area where there is massive disenchantment of investors. While talking sweetly before investment, investors are made to run from pillar to post after the investment. This is sickening when the investors were put in extreme hardships while reclaiming the insurance money of their deceased family member. Even one insurance company’s advertisement pulls another company’s poor customer dissatisfaction. It portrays the irresponsible behavior of the opponent company’s staff in handling the customer query. This is common in almost all companies.

In order to deal with the pan Indian customers in a real time basis, customer care centers were opened by all corporate companies. Unfortunately these call centers have become trouble enhancement centers. Those who call up these call centers have to undergo indefinite wait to get some vague answer. The long automatic directions increase the blood pressure of the caller. Why not give the “talk to call centre representative” as the first option? Those who know the automatic number options will do it on their own. Why to increase the caller’s agony? A revolution in the customer care is needed from the Indian corporate companies. Without which they will head towards fall.

From mega corporate companies to tiny business entities ‘milk the customer’ campaign is spearheaded systematically. The hard earned money of poor people are duped through fancy advertisements and marketing. Defrauding lenders 17%, defrauding the government 13%, defrauding the investors 13%, Evading taxes 12%, others 45% account for the corporate fraud in India. KPMG report says that the corporate companies instead of taking against the perpetrators of fraud are soft towards them. Either they are removed from the company or the fraud is completely white washed. Unethical practices on the part of corporate India dents the foundation of India.

Government agencies which are supposed to watch over these fraudsters ironically collaborate with them. When it reaches unmanageable proportion, the fraudsters are arrested and released in no time. Why there is no proactive approach in saving the customers and investors? What the consumer forums are doing? Why the consumer courts are watching these public duping so helplessly? An alert watch dog is a must to contain the injustices meted out to the customers and investors. Media advertisements by the Ministry of Consumer Affairs are a step in the right direction. Its frequency must be increased. There is no point in creating employment and wealth by the government. It must also protect its hard delivered duty.


List of Recent Mega Corporate Frauds in India



Name of the company

Persons involved

Method of scam







Bhushan & 7 other companies

S .Jagathrakshakan

Ex.union minister

Subodh Kant Sahay Ex.Union Minister

Naveen Jindal M.P

Vijay Darda

Nitin Gadkari M.P (Ex.BJP President)

& other politicians, corporate honchos, bureaucrats

Undue allocation of coal blocks to private companies

Rs.185591.34 crores

Files missing

CBI dogging the case

Accused not arrested



Karnataka Wakf Board Land Scam

Officials, real estate sharks, private companies

Illegal construction of buildings &  encroachment of Wakf Board properties

Rs.20000.00 crores

No action



UP National Rural Health Mission Scam (NHRM)

Collaborative loot of Public funds by private companies and officials

Non purchase of medicines and medical equipments despite showing bills

Rs.10000.00 crores

2 Chief Medical officers, 1 deputy medical officer and a project officer found dead



Hassan Ali Khan

Hassan Ali Khan

Tax evasion

Rs.39120 crores

Arrested and let out in bail



2G Spectrum Scam

20 Telecom companies



Nira Radia, 20 telecom companies, top bureaucrats


Fictitious telecom companies


Rs.1.76 lakh crores

Arrested and let out in bail



Corporate fraud cannot be eliminated intoto. Reducing the corporate fraud from the current 75% to 15% will be a herculean task. In order to reduce the corporate fraud, the companies need to constitute internal vigilance committee with people of impeccable integrity.  This internal vigilance committee should meet regularly and discuss the ethics of the company behind the screens. Face to face meeting with the staff can motivate them to avoid frauds. A unanimous decision of the India Inc not to patronize corruption at any level can boost up the confidence level of honest staff. Vigilant public, active media and finally strong internal audits can control the corporate corruption.


Bhatia S.K (2004) – Business Ethics and Corporate Governance, Deep & Deep Publications, New Delhi

Conenen, Tracy L (2013) – Essentials of Corporate Fraud, Wiley & Sons, New Jersey.

Fernando, A.C (2009) – Business Ethics: An Indian Perspective, Pearson, New Delhi

Gupta, Ananda Das (2008) – Corporate Citizenship: Perspectives in the new century, Cambridge Scholars Publishing House, Cambridge

Wells, Joseph T  (2006) –  Corporate Fraud Handbook. Prevention and Detection, John Wiley & Sons, New Jersey

Pedneault, Stephen (2010) – Anatomy of Fraud Investigation, John Wiley & Sons, New Jersey

KPMG India Fraud Survey Report (2010) – KPMG India.

TARI Report (2013) – Understanding the demand and supply equations of corruption and fraud:  An insight into the corruption and fraud by the private sector in India. Thought Arbitage Research Institute, New Delhi.



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