BUSINESS

ETHICS

ETHICAL ISSUES IN CORRUPTION

The term corruption is vague and is not easily defined. Corruption can take on
different meanings depending on whether the acts occur in the public or private sector
(Eiras, 2003). Corruption can be thought of as embezzlement, fraud, bribery, treason, or
acts that constitute a conflict of interest (Everett, Neu, Rahaman, 2006). The unclear
term can involve different types of corruption including political corruption, grand
corruption, productive corruption, and petty corruption, among others (Everett et al.,
2006). Other authors who seek to define the term have included just under sixty
different actions that constitute corruption in the manner we think of today (Everett et al.,
2006). For purposes of this paper, corruption will be any act deemed illegal due to the
belief that it creates an unfair advantage for one party over the other. For example,
fraud or embezzlement can be considered corrupt because it places the fraudulent party
at a personal advantage over the non-fraudulent party.

CAUSES OF CORRUPTION
Low Pay scales/ Wages

Low Job opportunities

Lack of Strict and fast punishments

Lack of Unity in public

Lack of transparency in affairs and deals:

Option of many political parties

Lack of accountability:
Greediness of people
Restrictions in law

Bribery, corruption and facilitation payments were the most commonly reported
issues recorded by the Institute of Business Ethics' media monitoring during 2013. They
accounted for 13% of all the stories on business ethics. The sectors most frequently
mentioned were extractives (70%), defence and security (63%), pharmaceuticals (47%)
and broadcast/media (33%).
Businesses still have some way to go to embed anti-bribery and corruption mechanisms
effectively into their culture. This gap between saying and doing is also reflected in
external studies. A survey by Control Risks and the Economist Intelligence Unit found
that 25% of companies felt there was at least a "somewhat likely chance" their company
would be required to investigate a suspected violation of anti-bribery laws involving an
employee in the next two years.

The cost of corruption

The effects of corruption on society are well documented. Politically it represents an
obstacle to democracy and the rule of law; economically it depletes a country's wealth,
often diverting it to corrupt officials' pockets and, at its core, it puts an imbalance in the
way that business is done, enabling those who practise corruption to win.
The language of bribery also deceives, implying that what is being offered or expected
is of no consequence. But corruption is not a victimless crime; it leads to decisions
being made for the wrong reasons. Contracts are awarded because of kickbacks and
not whether they are the best value for the community. Corruption costs people
freedom, health and human rights and, in the worst cases, their lives. It may also cost
companies, as the UK Anti-Bribery Act takes force, making an organisation culpable if it
fails to have "adequate procedures" in place to stop bribery and corruption.

The challenge for companies

Most companies offer employees some guidance on anti-bribery and corruption.
However, the global nature of today's business means that organisations can have
difficulties when trying to embed policies around the globe..

Employers need to provide relevant support to staff to help them recognise, understand
and respond to the ethical challenges they may face.
Creating a culture that influences employees' actions, decision making and behaviour
can be a challenging and lengthy process, requiring sensitivity, patience and resources.
Corruption can be so ingrained into a company's culture as to be considered "the way
business is done".
This can be the case especially for companies who use agents, or who operate in
countries where enforcement of anti-corruption regulation is poor and facilitation
payments are seen as the norm. Getting staff to see that a backhander is actually a
form of corruption takes time and requires regular communication and training.

Some Examples of Corruption

Indian Coal Allocation Scam 2012
Cost :1.86L Crore
This scam is in regards to Indian Governments allocation of nations coal deposit to
PSUs and private companies. The scam happened under Manmohan Singh
government and came out in 2012
The basic premise of this scam was that wrongful allocation of Coal deposits by
Government without resorting to competitive bidding, which would have made huge
amounts to the Government (to tune of 1.86 Lakh crore). However, the coal deposits
were allocated arbitrarily

2G Spectrum Scam 2008

Cost : 1.76 L Crore
We have had a number of scams in India; but none bigger than the scam involving the
process of allocating unified access service licenses

At the heart of this Rs.1.76-lakh crore worth of scam is the former Telecom minister A
Raja who according to the CAG, has evaded norms at every level as he carried out
the dubious 2G license awards in 2008 at a throw-away price which were pegged at
2001 prices.
The cases are still going on against many people including A. Raja, M. K. Kanimozhi
and many telecommunication companies as well.

Wakf Board Land Scam 2012

Cost : 1.5-2L Crore
In March of 2012, Anwar Maniapddy, the chairman of Karnataka State Minorities
Commission submitted a sensational report which alleged 27,000 acres of land, which
was controlled by Karnataka Wakf Board had been allocated illegally or
misappropriated. The value of land which was misappropriated was in tune of 1.5 to 2
lakh crore rupees.
report alleged that nearly 50 percent of the land owned by Wakf board was
misappropriated by Politicians and Board members in conjunction with real estate mafia
at fraction of actual land cost.

Commonwealth Games Scam 2010

Cost : 70,000 Crore
It is estimated that out of Rs. 70000 crore spent on the Games, only half the said
amount was spent on Indian sportspersons
The Central Vigilance Commission, involved in probing the alleged corruption in various
Commonwealth Games-related projects, has found discrepancies in tenders like
payment to non-existent parties, will-ful delays in execution of contracts, over-inflated
price and bungling in purchase of equipment through tendering and misappropriation
of funds.

Telgi Scam 2002

Cost : 20,000 Crore
As they say, every scam must have something unique in make money out of it in an
unscrupulous manner- and Telgi scam had all the suspense and drama that the scandal
needed to thrive and be busted.
Abdul Karim Telgi had mastered the art of forgery in printing duplicate stamp papers
and sold them to banks and other institutions. The tentacles of the fake stamp and
stamp paper case had penetrated 12 states and was estimated at a whooping Rs.
20000 crore plus
The Telgi clearly had a lot of support from government departments that were
responsible for the production and sale of high security stamps.

Satyam Scam 2009

Cost : 14,000 Crore
The scam at Satyam Computer Services is something that will shatter the peace and
tranquility of Indian investors and shareholder community beyond repair. Satyam is the
biggest fraud in the corporate history to the tune of Rs. 14000 crore.
The companys disgraced former chairman Ramalinga Raju kept everyone in the dark
for a decade by fudging the books of accounts for several years and inflating revenues
and profit figures of Satyam.
Finally, the company was taken over by the Tech Mahindra which has done wonderfully
well to revive the brand Satyam.

Bofors Scam 1980s & 90s

Cost : 100 to 200 Crore

The Bofors scandal is known as the hallmark of Indian corruption. The Bofors scam was
a major corruption scandal in India in the 1980s;
The Swedish State Radio had broadcast a startling report about an undercover
operation carried out by Bofors, Swedens biggest arms manufacturer, whereby $16
million were allegedly paid to members of PM Rajiv Gandhis Congress.
Most of all, the Bofors scam had a strong emotional appeal because it was a scam
related to the defense services and Indias security interests

The Fodder Scam 1990s

Cost : 1,000 Crore
If you havent heard of Bihars fodder scam of 1996, you might still be able to
recognize it by the name of Chara Ghotala, as it is popularly known in the
vernacular language
In this corruption scandal worth Rs.900 crore, an unholy nexus was traced
involved in fabrication of vast herds of fictitious livestock for which fodder,
medicine and animal husbandry equipment was supposedly procured.

The Hawala Scandal 1990-91

Cost : 100 Crore
The Hawala case to the tune of $18 million bribery scandal, which came in the
open in 1996, involved payments allegedly received by countrys leading
politicians through hawala brokers.From the list of those accused also included
Lal Krishna Advani who was then the Leader of Opposition.Thus, for the first time
in Indian politics, it gave a feeling of open loot all around the public, involving all
the major political players being accused of having accepted bribes and also
alleged connections about payments being channeled to Hizbul Mujahedeen
militants in Kashmir.