Over the years, Germany and India have emerged as strong trade partners due to mutual co-operation over foreign policy matters, investments, and common values on democracy and free trade. Cross border collaboration has deepened over time and in May 2017, Germany and India signed 18 MoUs in key areas such as defence manufacturing, trade, intelligence and clean energy. Germany has grown to be India’s biggest economic partner in Europe and the sixth largest globally, with bilateral trade in 2016-17 amounting to $18.3 billion. Additionally, post Brexit, Indian investors are looking at Germany becoming a gateway to the EU.
Bribery and corruption laws in India and Germany
As growth opportunities for India and Germany are booming, businesses operating in these markets are still exposed to fraud, bribery and corruption risks. Corporate misconduct continues to aggravate; individuals adopt unethical practices and pay bribes for survival. However, regulatory authorities have been introducing various laws and amending existing ones to strengthen governance and compliance.
Globally, cross border co-ordination and information sharing has matured over time in an effort to deter fraud, bribery and corruption. A look at EY’s Global Fraud Survey 2018 showcases that both India and Germany have seen rising risks but there is still a dichotomy in the results. For instance, respondents in both regions have divergent views when identifying external risk factors that continue to pose a threat to businesses. A technologically-led nation such as Germany considers cyber-attacks as the key risk to businesses. On the other hand, Indian respondents consider a changing macro-economic environment as the primary threat.
EY’s Global Fraud Survey 2018 also highlights that despite recognizing the importance of integrity, fraud and corruption continue to prevail, leading to significant business insufficiencies. This is due to ambiguity in the owner or custodian responsible for driving integrity and ethics within employees. Respondents from Germany focused more on individual responsibility, Indian respondents put onus on the human resource department in organizations.
Historically, EU and in particular the GSA (Germany, Switzerland, Austria) has had very strict data protection and privacy policies as well as enforcement. As part of the 27 country EU directive signed in 1995, Germany also has stringent rules on the usage of personal data. Our survey also covered rising data privacy concerns that are impacting global corporations. Respondents from Germany stated high awareness on the recent General Data Protection Regulation. On the other hand, respondents from India still had low awareness about the regulation and its repercussions on businesses.
Thus, Indian organizations with operations in Germany, and German companies with India operations need to strengthen their compliance programs keeping applicable bribery and corruption laws into account, formulate robust anti-fraud controls that permeate through all employee levels across regions, instil a sense of integrity within employees and adopt emerging technologies to enhance growth.