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We believe that the softest pillow is a clear conscience.                 Let us see how!!!                               ...
What is Corruption?                              Spiritual or                                 moral                       ...
Root causes of Corruption  Poor incentive     Desire for an unfair                                            Lack of tran...
Types of Corruption?            • Routinely dominated to sustain economic/social or political system.Systemic    • Regular...
Corruption in India: Causes    Continuation of confused Nehruvian Socialism.   Hypocrisy of current Liberalism.    Weak an...
Confusion in Policies:                     • 5 years planning. Nehruvian                     • Contractual businesses lead...
India is no different: Corruption- Asian way                         7
Corruption in Emerging Markets                        8
India is no different: Corruption- Asian wayCorrupt civil servant misusing office of power. Initiated by both parties: c...
Anti corruption laws in India       • Imprisonment up                                   • To prevent         to three year...
Anti-Corruption Organizations In India                                 Bharat                               Swabhiman     ...
Business System: Software services in India                                    Bidding for clients             Increasing ...
Consequences of corruption in Business: SCAMS 2 G Scam (USD 35.24 billion): The 2G spectrum scam involvedofficials in the...
Thin line between Corruption and Fraud             CORRUPTIONOffering, giving, rec or Computer crimes,                    ...
Corruption in Software Industry– A SNAP SHOT WIPRO Technologies was banned by World Bank for issuing shares through CIO an...
Fraud in Software Industry– A SNAP SHOT  Satyam Computer Services-had regularly  falsified the company’s accounts. — JAN 2...
Set your compass in the direction of fairness • Infosys agreed to pay        • Refrained from providing         • Came out...
Increasing painGain v/s Pain Graph                           Had Infosys taken the other                            stand....
Leadership and Management     Organization and                                                          Leader       Manag...
Leadership and Management• Infosys’ distinctive business practice:    – Refuse any transaction that hinted corruption    –...
Its not all Rosy !        21
The “Mis-Management”• Infosys underwent a major re-organization in recent years and is no longer  the same company run by ...
The Bitter Truth• "Infy is like James Hadley Chase  novels. The cover looks so  interesting...from outside Infy is  also l...
Tip of the iceberg?• H1B visa was misused – People were sent to US  irrespective of their skills• Creatively getting aroun...
India Inc. is no Mr. Clean• Twenty years after liberalization, the  system still favours the insider• Crony Capitalism is ...
The Necessary Evil?Most of these fraudsters work in offsite location away from direct control of mgmtUsually in Sales an...
Fight against corruption : The new Wave A people’s movement started in2010 by Anna Hazare Demand a strong anti-corruptio...
Fight against corruption : India Inc treads cautiously• India Inc. has cautiously supported  the Anna Hazare campaign• Agr...
Legalizing Bribery?• One school of thought says that, to reduce bribery, make it  legal. Really?• First engage the class a...
Ways to Fight Corruption           30
Recommendationso India Inc. has to put pressure on government whilesupporting the civil movement against anti corruption.o...
As said by late Mr. Ramon Magsaysay “I believe that a highand unwavering sense of morality should pervade allspheres of go...
References:http://elaine.ie/2009/07/31/definitions-and-types-of-corruption/http://prem.sabhlokcity.com/2011/06/the-main-ca...
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Corruption in private Sector- Infosys's example

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How Infosys stood against corruption in India and its stand in current times. Also, we analyze the political and corporate business system and how things work in India. Also we analyze the root causes of Corruption.

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  • Add the graph for transparency index and talk about it.
  • Points need to be added at a later stage on the key features of these orgs and who started it and what do they stand for.
  • Transcript of "Corruption in private Sector- Infosys's example"

    1. 1. We believe that the softest pillow is a clear conscience. Let us see how!!! Learning team 2B Akash Tyagi | Akshay Kalley | Anya Felix | Pooja Sharma | Vinay Potti
    2. 2. What is Corruption? Spiritual or moral impurity. CORRUPTION is viewed Dishonest or differently by Deviation fraudulent different people. Broadly, it is an unfair from ideals. conduct act to ensure personal gains. Making Unfair Misuse of someone Power/Autho deprive of his Corrupt rity rights. Unethical 2
    3. 3. Root causes of Corruption Poor incentive Desire for an unfair Lack of transparency structures advantage. Problems with the Lack of Punitive law: lawlessness or Dysfunctional measures overregulated Systems governments. 3
    4. 4. Types of Corruption? • Routinely dominated to sustain economic/social or political system.Systemic • Regularly prevalent with no alternatives. • Irregular and individual based.Sporadic • No threat to control mechanisms or economy. • Unfair transactions between Political and private parties (High level corruption.)Political • Abuse of law and regulations leads to misallocation of resources. • Synonymous to political corruption. Grand • High level corruption in policy formulation. • Everyday corruption affecting common man. • Prevalent in implementation end of politics like small scale, bureacratic Petty decisions. 4
    5. 5. Corruption in India: Causes Continuation of confused Nehruvian Socialism. Hypocrisy of current Liberalism. Weak and ineffective local governments. Lose control on state government from Centre. Vote bank politics. Low income levels of government officials. High involvement of politicians in administrative proceedings. Inclination towards convenience. Lack of knowledge related to laws and rights. 5
    6. 6. Confusion in Policies: • 5 years planning. Nehruvian • Contractual businesses leads to favoritism and bribery. • Mixed economy led uneducated politicians control on economic policies. socialism • Scattered administrative institutions resulting in slow decision making and pending approvals. • Bureaucratic callousness “Neta- Babu raj” • Prevalence of Crony capitalism. • Favoritism based on special ties, ethnicity, race or License religion. • Slow decision making . • Almost zero transparency. Raj • Rise of Bribery for acquiring licenses. • Influence of politics in business. • Tax evasion. 6
    7. 7. India is no different: Corruption- Asian way 7
    8. 8. Corruption in Emerging Markets 8
    9. 9. India is no different: Corruption- Asian wayCorrupt civil servant misusing office of power. Initiated by both parties: clients as well as officials. Distrust in the revenue granting agencies of government. Developing stage of most economies. Low wages for public sector employees. Too much power vested in bureaucrats. Dysfunctional contract bidding process. Weak judiciary and law system. Less chances of political changes. Highly layered administrative structure. Too much competition and lack of corporate governance. 9
    10. 10. Anti corruption laws in India • Imprisonment up • To prevent to three years unnamed and/or Fine. transactions and Property will be black money. seized and with no monetary return. Prevention The Benami of Transactions The Right to Corruption (Prohibition) Information Act Act, 1988 Act, 1988 (2005): Furnish details or face The Prevention actions. Penal of Money Indian Code, 1860 Laundering • Imprisonment Act, 2002 from 3-10 years • Section 169 and and a fine of 5 409. lakhs with a Imprisonment percentage of the and/or Fine seized property t 10
    11. 11. Anti-Corruption Organizations In India Bharat Swabhiman Trust ASTRA- Association for Social JAN LOKPAL 5th Pillar Transparency , Rights and (2012) : Citizen’s Organizations Actions ombudsmen Jaago Re! India Against One Billion Corruption Votes 11
    12. 12. Business System: Software services in India Bidding for clients Increasing rapport, Acquiring Deals with Bidding Acquiring clients, growth and profits, governmentplanning and estimation administrative performing audits. with Deals wars, governm owned contracts like OEMs and ent contracts infrastructure water, license and like electricity and providers. tenders, Audit spectrum, visa land supply. ory services. s, etc. Providing services Setting up infrastructure 12
    13. 13. Consequences of corruption in Business: SCAMS 2 G Scam (USD 35.24 billion): The 2G spectrum scam involvedofficials in the government of India illegally undercharging mobiletelephony companies for frequency allocation licenses, which they woulduse to create 2G subscriptions for cell phones. COMMONWEALTH GAMES SCAM (USD 4.1 billion): Corrupt practices inprocurement of materials, land acquisition, contracts for organizing CWGin 2010. SATYAM FRAUD SCANDAL: High involvement of CEO R. Raju in falsifyingfinancial accounts of SATYAM. This also raised huge concerns over PWC’sauditing and reporting capabilities. 13
    14. 14. Thin line between Corruption and Fraud CORRUPTIONOffering, giving, rec or Computer crimes, Knowingly or Action, omission Bribery, extortion Obtain financial Directly or recklessly Influencing actions benefits or avoidingeiving or soliciting Credit card, hacking, misrepresentation Indirectly misleading a party of other parties obligation anything of value and embezzlement. financial misrepresentation FRAUD 14
    15. 15. Corruption in Software Industry– A SNAP SHOT WIPRO Technologies was banned by World Bank for issuing shares through CIO and senior staff to members of the family and friends of World Bank employees.— Jan 2009.SEC and Justice department opened a probeagainst Oracle and HP Co. against allegationsthat both the firms paid illegal payments tostate owned and private companies in Russiawhereas IBM a few months ago paidsettlements to authorities for paying bribes.—Apr 2011 15
    16. 16. Fraud in Software Industry– A SNAP SHOT Satyam Computer Services-had regularly falsified the company’s accounts. — JAN 2009 Fraud raised questions regarding regulatory oversight in India and also took outsourcing industry by storm. HCL Technologies was accused of destroying data on behalf of News International by U.K Parliament’s Home affair committee. — JUL 2007 16
    17. 17. Set your compass in the direction of fairness • Infosys agreed to pay • Refrained from providing • Came out with disclosures 135% duty on hardware kickbacks officials for favors regarding their rather than sufficing to or to win business from misadventures in stock custom official and clients. market in order to be appealed later only to win transparent to their the case. • Avoided personal gratification shareholders. to a government official • Refused to follow the by revising their previous • Did not service practice of splitting the offer on a piece of land by government projects to invoice into two- Software 40%. avoid corruption. and manual for software to avoid duty. 17
    18. 18. Increasing painGain v/s Pain Graph Had Infosys taken the other stand. They would have found themselves here High gain High gain High pain Increasing gain Low pain Since they took stance against Low gain Low gain corruption Infy Low pain High pain found itself here Increasing pain 18
    19. 19. Leadership and Management Organization and Leader ManagementSignificant role Sound Actions are Neutrality and in character values are Walks the Talk infectious objectivity building inculcated Plays a crucial role in eradication of social evils such as corruption The action outside becomes Dilemma of the doer voluntary, spontaneous and self motivated. 19
    20. 20. Leadership and Management• Infosys’ distinctive business practice: – Refuse any transaction that hinted corruption – “say no to bribes”• Foundations of Infosys’ corporate governance: – Transparency – “when in doubt, disclose” – Fairness• Benefits in putting values first – Respect  less approached by corrupt officials – Values became almost second nature to the organization – Good clean reputation  “vaccine against corruption” – Long term gains  enjoy lower transaction costs in many dealings with stakeholders 20
    21. 21. Its not all Rosy ! 21
    22. 22. The “Mis-Management”• Infosys underwent a major re-organization in recent years and is no longer the same company run by Narayana Murthy• Infosys top management wage bill crosses $10 million mark registering a 52% increase over the previous year• This is in a time when they declared a freeze in hike for its 1.5 million common employeesThis is true for most corporate. Austerity and cost cutting for others and big bonuses for management. There should be a limit to the salary ratio between the highest and lowest paid employees. Management salaries bonuses should not be increased if employees salaries are not increased. And if company profits are going down. management salaries/bonuses should be reduced by the percentage of profit fall– Company employee 22
    23. 23. The Bitter Truth• "Infy is like James Hadley Chase novels. The cover looks so interesting...from outside Infy is also like...only people who are working there know the problems that we face."– Chaz• "Infosys have money to pay dividend, to recruit new employees, for infrastructure etc...then why not for employees increment."– Santosh 23
    24. 24. Tip of the iceberg?• H1B visa was misused – People were sent to US irrespective of their skills• Creatively getting around H1B limitations• There was no monitoring of the B1 system, a visa which was only for Business meetings and not for Full time work Jay Palmer• Infosys intentionally violated US visa and tax laws Whistleblower Infosys Visa Fraud case for the purpose of increasing revenues• This was totally about profit and not hiring Americans for jobs in the U.S. due to higher salary requirements“It has been a long known problem and we can’t do anything, it’s just the waywe do business and we can’t control what they do in India.”- Infosys HR manager 24
    25. 25. India Inc. is no Mr. Clean• Twenty years after liberalization, the system still favours the insider• Crony Capitalism is highly prevalent• Success depends on close relationship between Business people and Govt. officials• Resources and privileges are distributed according to the whim of those in power 25
    26. 26. The Necessary Evil?Most of these fraudsters work in offsite location away from direct control of mgmtUsually in Sales and Procurement departments, more interaction with external partiesCompanies are reluctant to take action against fraud, fearing damage to reputation ifthe news leaks to public domain 26
    27. 27. Fight against corruption : The new Wave A people’s movement started in2010 by Anna Hazare Demand a strong anti-corruptionlaw Enforce Govt. of India to enactthe Jan Lokpal BillProvide protection to those whoare victimized for raising their voiceagainst corruption 27
    28. 28. Fight against corruption : India Inc treads cautiously• India Inc. has cautiously supported the Anna Hazare campaign• Agree that it is good for development and growth of the country• Some companies allowed their employees to join the movement even during office hours Infosys, Wipro and TCS employees together in a rally “When somebody is fasting and standing up for In our latest fight against corruption, we have a cause of cleansing the system and removing to exercise self restrain, adhere to value system corruption, every single individual will support and be prepared to lose contracts because we it. I am not speaking on behalf of L&T, but I am believe in honest and decent business. saying this because I know he is right” - Narayana Murthy, Founder, Infosys - A M Naik, MD, L&T 28
    29. 29. Legalizing Bribery?• One school of thought says that, to reduce bribery, make it legal. Really?• First engage the class and then show NRN video• http://www.youtube.com/watch?v=q7MURRMBzxk 29
    30. 30. Ways to Fight Corruption 30
    31. 31. Recommendationso India Inc. has to put pressure on government whilesupporting the civil movement against anti corruption.o Incorporate stricter corporate governance structure andpenalize employees/managers breaching these policies.o Walk the Talk.o Motivate workforce to involve themselves in Anti Corruptionmovements.o Encourage fair practices in doing business with clients. 31
    32. 32. As said by late Mr. Ramon Magsaysay “I believe that a highand unwavering sense of morality should pervade allspheres of governmental activity. ” 32
    33. 33. References:http://elaine.ie/2009/07/31/definitions-and-types-of-corruption/http://prem.sabhlokcity.com/2011/06/the-main-causes-of-corruption-in-india/http://www.techinsurgent.com/post/2012/04/12/Slumdog-Sweatshop-Infosys-Exposed-by-CBS.aspxhttp://www.transparencyindia.org/http://www.ey.com/IN/en/Services/Assurance/Fraud-Investigation---Dispute-Services 33
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