Fraud risk higher in India: survey

Tuesday, 22 August 2006, PTIA survey of Ernst & Young says fraud levels in India are considerably higher at 42 pc against global average of 27 pc

New Delhi: As India Inc steps up to expand in the global arena, it faces the risk of stumbling on frauds, the levels of which were far higher compared to global levels, according to international consulting firm Ernst and Young.

A survey by E&Y in emerging markets has revealed that fraud levels in India are considerably higher at 42 per cent than the global levels of 27 per cent.

“The growing focus on cross-border expansion, high levels of growth with internal processes not keeping pace and large number of new employees joining the organisation are making most companies vulnerable to greater fraud risk in recent times,” Ernst and Young national director, risk and business solutions, Sunil Chandiramani said.

The study said as many as 42 per cent of the Indian companies believe that internal collusion, corruption and bribery have skewed up fraud levels in India.

About 14 per cent of companies admitted experiencing ‘significant’ fraud in the last two years.

The survey said the actual number may be higher due to various reasons, including non-disclosure of fraud and non-discovery of significant frauds among others.

As many as 36 per cent of the responding companies considered internal collusion with third parties as the greatest fraud risk, followed by corruption and bribery, considered as a fraud threat by 29 per cent, it said, adding only 14 per cent of the respondents considered financial statement fraud as the greatest fraud risk.

Compared to 59 per cent of respondents globally, 24 per cent of in India viewed corporate security prevention and detection; corporate culture ethics; documented formal processes; legislation or raising employee awareness and training as important for determining success towards fraud prevention and detection, it said.

“Many organisations are still not considering appropriate fraud risks while designing their controls systems and procedures. Though robust internal controls remain the first line of defence against fraud, anti-fraud controls are not always integrated under an anti-fraud programme and monitored for compliance,” Chandiramani said.

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Malaysia to sign labour MoU with India

Wednesday, August 23rd, 2006

New Delhi – India and Malaysia are to sign a memorandum of understanding (MoU) on labour in October following which a Malaysian government agency will recruit blue-collared Indian workers directly, Overseas Indian Affairs Minister Vayalar Ravi said.

Ravi, who visited Malaysia last week, said a delegation led by Malaysian Human Resources Minister Fong Chan Onn will visit India in October and sign the MoU.

‘Once the agreement is made, the Malaysian government will directly recruit the Indian workers and distribute them to their companies, which need such workers,’ Ravi told IANS.

‘This agreement on labour will basically avoid the hassles and troubles created by the recruitment agencies. It would be the responsibility of the Malaysian government to ensure the safety of the workers and good wages for them there,’ he added.

Ravi said the Construction Industry Development Board (CIDB), the Malaysian governmental agency, would recruit the workers – mainly for the construction companies in the country – and distribute them.

‘The officials from the CIDB will visit India to train the workers,’ the minister said, adding that the Indian government would identify the agency that would recruit people from here.

‘The agreement will ensure good wages, good living conditions and better medical facilities for the workers. The government will be responsible for these. That makes a lot of difference,’ Ravi explained.

He admitted that there have been serious complaints against recruitment agencies that they did not ensure good wages and living conditions for workers going abroad.

Indian workers form the third largest foreign work force in Malaysia, with 140,000 of them eking out a living there. Ethnic Indians comprise seven percent of Malaysia’s population of around 24 million.

213 million Indians will be unemployed by 2020

NEW DELHI (IANS) August 16,2006
A national report on the employment situation in India has warned that nearly 30 percent of the country’s 716 million-strong workforce will be without jobs by 2020.

The report prepared by the recruitment agency TeamLease Services said that the shortage of employment in India can trigger many social security problems as the bulk of the unemployed – 85 to 90 per cent – will be in the age group of 15-29.

The study titled India Labour Report presents the shortage of jobs as the flip side to the much-touted young workforce in the country. It said 213 million Indian without jobs would be a huge task for the government to manage.

It said the quality of those employed in the future is not very encouraging as only 88 million will be graduates, while another 76 million will have passed their senior secondary level.

The bulging population and the expanding workforce will require about 15 million new jobs every year, against the 10 million new jobs being projected by the government.

The scarcity of job opportunities in the organised sector is likely to create a major shift towards the unorganised sector, which is already expanding and absorbing additional workforce.

Of India’s 402 million-strong workforce, only about 7 per cent is in the organised sector.

The unorganised sector is absorbing more labour and has improved upon its ’80s pace of 29.62 per cent growth to 30.29 per cent in the ’90s.
The organised sector, which is under the purview of labour laws, remains more rigid than the unorganised sector, which remains outside the reach of most labour laws.

The report estimates the annual financial “damage” to the exchequer due to the unorganised sector’s leakages in terms of tax revenues at 32 per cent of the total manufacturing sector GDP at Rs 162,000 crore (Rs 1620 billion).

“Unfortunately, labour legislation has been hijacked by a small minority of organised labour,” says Manish Sabharwal, chairman, TeamLease Services. The report lays stress on reducing unnecessary state intervention and over-legislation in the field of labour.