India Inc mostly keeps corruption, bribery cases behind closed doors

A study of the business responsibility and sustainability reporting (BRSR) disclosures reveal that bribery or corruption cases are not commonly reported in Indian companies.

According to the BRSR data, sourced from Prime Database, 92% of the top 1,200 listed companies have disclosed having an anti-corruption and anti-bribery policy. However, bribery/corruption cases are not commonly reported.

Public sector undertakings (PSUs), on the other hand, have been found to disclose the maximum number of incidents of a law enforcement agency taking disciplinary action against the company's director, KMP, employee or worker.


"Private corporations and individuals in India are not legally obligated to report bribery or corruption offenses under the Prevention of Corruption Act", said Chirag Naik, associate partner, MZM Legal LLP. "Besides India, unlike countries like the US and UK, offers no incentives to corporations and individuals to self-disclose corruption through reduced penalties. Companies must go through the full rigour of criminal trials which are time-consuming and risky. Companies often prefer to address corruption issues internally, rather than risk public scrutiny or legal entanglements by reporting them."

Since PSU officers have vendor and bidding touchpoints prone to potential misuse of authority, they have greater scrutiny - and, hence, greater disclosures.

"By contrast, PSUs dealing with public funds, large-scale contracts, and tendering processes operate under heightened vigilance through dedicated vigilance departments. Tender processes are often challenged by competitors, contractors, or third parties, resulting in frequent allegations or formal police investigations and FIRs. This results in the creation of publicly accessible records, which automatically encourages higher disclosures," Naik added.

To be sure, countries like the US and UK have mechanisms like deferred prosecution agreements that incentivise corporations and individuals to self-disclose corruption through reduced penalties. India offers no such alternatives.

Some research studies have found that corruption works to 'grease the wheels' in case of weak institutions and complex bureaucratic formalities, while some others have held that bribery 'sands the wheel' of the business giving rise to disincentives, rent seeking behaviour, misallocation of productive resources and greater uncertainty about returns. "Lot of companies will genuinely not have any instances of bribery or corruption cases to report", said Anand Krishnamurthy, co-founder, Envint, a sustainability & ESG services firm.

“But it is difficult to believe that most companies will not have any instances of corruption or bribery. So, there is under-reporting. Stakeholders need to know what exactly is happening and unless there are more nuanced guidelines from Sebi about what and how to report, the under-reporting will continue to happen.”

According to Naik, companies fear reputational damage and prefer to address corruption issues internally rather than risk public scrutiny or legal entanglements. There is also a lack of whistleblower protection mechanism in India that prevents individuals from raising flags against bribery.

Research studies have highlighted the role of technology in mitigating corruption and companies that prioritise governance and anti-corruption compliance are better positioned to succeed in the digital age.