28 Nov，2009

PUNE: The four BRIC countries have more in common than just fast-growing economies. The rate of growth of auditing firms’ forensic practice, which refers to cases of fraud, corruption and bribery, is also the highest among these countries. According to one report, $20-40 billion was paid as bribes to officials last year. 

“The rate of growth of the forensic practice for us in India, China, Russia and Brazil is similar. These markets are growing at 40-50% annually. It is much lower, at 15-20%, for the more mature economies,” said Arpinder Singh, executive director (advisory), KPMG. 

“With global enforcement, there will be more international cases involving Indian companies,” Pamela J Parizek, partner (advisory services), KPMG LLP, who is based in Washington DC, told reporters on the sidelines of a seminar on ‘Occupational fraud: the enemy within’. 

Among the sectors in India most prone to theft and fraud are the IT and ITeS sectors, where data theft is a primary issue. This theft could be the company’s own data or that of its clients, fraud over transactions where identity theft happens and the theft of intellectual property created at R&D centres here. Fudging CVs is another issue hard to handle since some of these companies have a large workforce. 

“The IT and ITeS sectors have a huge pressure on margins. Since they bill on cost and time, their US clients have concerns over a lack of transparency. As law enforcement goes global, there is every chance that regulators from other countries could follow up cases with Indian subsidiaries or contractors,” Mr Singh said. He added that the automotive sector is also prone to fraud since there is a huge market in spurious automotive components. 

“No one talks of auto component fakes, but it is a huge issue for the automotive industry. Then, automobile manufacturers may have issues with the channel, the dealer over selling. Pharma is a big sector where in the US at least, companies have to declare how much they have spent on promoting a drug,” Mr Singh said.