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.

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. 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
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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.
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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.
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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.
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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.
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7. India is no different: Corruption- Asian way
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8. Corruption in Emerging Markets
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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.
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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
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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
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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
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13. Consequences of corruption in Business: SCAMS
 2 G Scam (USD 35.24 billion): The 2G spectrum scam involved
officials in the government of India illegally undercharging mobile
telephony companies for frequency allocation licenses, which they would
use to create 2G subscriptions for cell phones.
 COMMONWEALTH GAMES SCAM (USD 4.1 billion): Corrupt practices in
procurement of materials, land acquisition, contracts for organizing CWG
in 2010.
 SATYAM FRAUD SCANDAL: High involvement of CEO R. Raju in falsifying
financial accounts of SATYAM. This also raised huge concerns over PWC’s
auditing and reporting capabilities.
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14. Thin line between Corruption and Fraud
CORRUPTION
Offering, giving, rec or Computer crimes,
Knowingly or
Action, omission Bribery, extortion
Obtain financial
Directly or
recklessly Influencing actions
benefits or avoiding
eiving or soliciting Credit card, hacking,
misrepresentation Indirectly
misleading a party of other parties
obligation
anything of value and embezzlement.
financial
misrepresentation
FRAUD
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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 probe
against Oracle and HP Co. against allegations
that both the firms paid illegal payments to
state owned and private companies in Russia
whereas IBM a few months ago paid
settlements to authorities for paying bribes.—
Apr 2011
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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
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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.
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18. Increasing pain
Gain 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
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19. Leadership and Management
Organization and
Leader
Management
Significant 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.
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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
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21. Its not all Rosy !
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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 employees
This 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
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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
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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 way
we do business and we can’t control what they do in India.”
- Infosys HR manager
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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
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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 if
the news leaks to public domain
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27. Fight against corruption : The new Wave
 A people’s movement started in
2010 by Anna Hazare
 Demand a strong anti-corruption
law
 Enforce Govt. of India to enact
the Jan Lokpal Bill
Provide protection to those who
are victimized for raising their voice
against corruption
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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
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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
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30. Ways to Fight Corruption
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31. Recommendations
o India Inc. has to put pressure on government while
supporting the civil movement against anti corruption.
o Incorporate stricter corporate governance structure and
penalize employees/managers breaching these policies.
o Walk the Talk.
o Motivate workforce to involve themselves in Anti Corruption
movements.
o Encourage fair practices in doing business with clients.
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32. As said by late Mr. Ramon Magsaysay “I believe that a high
and unwavering sense of morality should pervade all
spheres of governmental activity. ”
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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.aspx
http://www.transparencyindia.org/
http://www.ey.com/IN/en/Services/Assurance/Fraud-Investigation---
Dispute-Services
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