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Indian companies are LESS corrupt than the Chinese: Survey

October 17, 2013 11:37 IST

Indian companies are LESS corrupt than the Chinese: Survey

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Stephen Brown

While Indian firms performed the best in fighting corruption, Transparency International has slammed Chinese companies for their opaque business practices.

The anti-corruption watchdog Transparency International has admonished Chinese companies for their opaque business practices while praising Indian firms' relatively high standards, in a survey of emerging market multinationals released on Thursday.

China got the lowest rating of the BRICS economies (Brazil, Russia, India, China and South Africa), whose companies made up three quarters of the total sample in the survey of 100 of the fastest-growing multinationals in 16 emerging economies.

Marked on how transparently they present measures to combat corruption, how they report on their organisations and how they disclose data like revenue, expenditure and taxes, three quarters of the companies scored less than five out of 10.

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Image: An Indian child waves the national flag.
Photographs: Arko Datta/Reuters

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"As emerging market companies expand their influence they should seize the opportunity to play a bigger role stopping corruption internationally," said Huguette Labelle, head of the Berlin-based independent pressure group.

Widespread shortcomings included the failure of about 60 percent of all the companies surveyed to disclose information about their political contributions.

"Results show that companies from China lag behind in every dimension with an overall score of 20 percent," Transparency said in the report. "Considering their growing influence in markets around the world, this poor performance is of concern."

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Photographs: Reuters

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Eight of the 10 worst-performing companies were Chinese, such as state-owned Chery Automobile Co Ltd, which along with Mexico's privately-owned consumer goods group Mabe scored zero points.

Wang Wei, a spokesman for Chery, said that he had never heard of Transparency International and was never contacted by the organisation.

"Chery is not publicly traded, so naturally it is not as transparent as those listed companies," Wang said, noting that the automaker does publish quarterly and annual results to its bond investors.

Mabe did not immediately respond to requests for comment.

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Image: Visitors view China's Chery M14 car in Shanghai.
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"In contrast, Indian firms perform best in the BRICS with a result of 54 percent and several occupy the top positions in the overall index," said Transparency, attributing this to laws in India about how multinationals must report on subsidiaries.

Top of the class overall came India's Tata Communications Ltd, which also topped the anti-corruption programmes category with 92 percent, followed by three more Tata companies.

A Tata Communications representative was not immediately able to comment.

Transparency International said public disclosure of anti-bribery measures "confirms a company's commitment to ethical conduct" and made it easier for the public to monitor them.

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Photographs: Krishnendu Halder/Reuters

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Emirates Airline, which is state-owned, came first in the category for organisational transparency, followed by Johnson Electric Holdings Ltd of China and Malaysian state energy company Petronas.

Emirates, Johnson Electric and Petronas were not immediately available to comment.

This category marked firms on their disclosure of data like majority and minority holdings, percentages owned by the parent company and the country of incorporation and operation - all of which is often made "deliberately opaque for the purpose of hiding the proceeds of corruption", Transparency said.

Eleven companies scored zero in this category, nine of them incorporated in China.

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Image: Emirates Airlines
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In the third category measuring standards of country-by-country reporting of revenues, capital expenditure, income before tax, income tax and community contributions, the Chilean retailing group Falabella scored highest with 50 percent.

Sandro Solari, Falabella's chief executive officer, said transparency was "a central element in building trust" and it would continue strengthening its ability to deliver information.

"Key financial data give citizens the possibility to understand the activities of a particular company in their country and to monitor the appropriateness of their payments to governments," said Transparency.

In a sub-index ranking just the BRICS nations, which the watchdog said account for 20 percent of global economic output and 15 percent of world trade, the companies from first-placed India were followed by South Africa, Russia, Brazil, then China.

(Additional reporting by Niluksi Koswanage in Kuala Lumpur, Antonio De La Jara in Santiago, Alice Woodhouse in Hong Kong, Devidutta Tripathy in New Delhi, Norihiko Shirouzu in Beijing, and Simon Gardner in Mexico) 


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