All of us working professionals have been witness to some corrupt practices at our respective workplaces. Our entire socio - economic structure has been a victim of this scourge. While countries across the world have woken up to the reality of Corruption at the workplace, in form of introducing new legislations in an effort to curb it, the US has taken a stellar lead with the Foreign Corrupt Practices Act. It is about time all us law-abiding citizens take some concrete measures (big or small), in an effort to wipe out the tyranny of corruption from the face of this earth. While it is a daunting task, we should not be overwhelmed by it. We must at least make an effort, individually and collectively, to minimize the impact of the scourge of Corruption at the workplace. Therefore, the purpose of this report is to create greater awareness among all the Business Stakeholders about how corruption/fraud/use of company resources for personal gains, soils the sanctity of the workplace, the reason it takes place and what are some of the remedial measures that organizations should adopt to curb the same. This report is formed from general research and also by incorporating views of various individuals in responsible positions, which was congregated by SuperCFO by carrying out a survey on the said subject. SuperCFO is greatly thankful to all the participants of the survey who contributed their personal experiences on how & where this happens and also have shared their views & suggestions as regards how to minimize corrupt practices and how to deal with personnel who deliberately siphon off office wherewithal for personal gains.

2. Author Note
All of you must have been witness to some or the other corrupt instances at your
workplace. Our entire socio - economic structure has been a victim of this scourge.
While regulations are being introduced by several countries to curb corruption, with the
US taking the lead with FCPA, it is about time all us law-abiding citizens take some
concrete measure (big or small), in an effort to wipe out the tyranny of corruption from
the face of this earth. And though it is nearly impossible to eradicate corruption
entirely, we must take necessary steps, in our individual and collective capacities, to
minimize the same at least at our workplace.
The purpose of this report is to create awareness among the Business Stakeholders about
how corruption/fraud/use of company resources for personal gains happens at
workplace, why it happens and what should one to curb the same. This report is formed
from general research and also by incorporating views of various individuals in
responsible positions, which was congregated by SuperCFO by carrying out a survey on
the said subject.
SuperCFO is greatly thankful to all the participants of the survey who contributed their
personal experiences on how & where this happens and also have shared their views &
suggestions as regards how to minimize corrupt practices and how to deal with
personnel who deliberately siphon off office wherewithal for personal gains.
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3. Reflections by Thought Leaders
“Whoever is careless with the truth in
small matters cannot be trusted with
important matters”
― Albert Einstein
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4. About Corruption
 Corruption can occur on many different scales. There is corruption that occurs
as small favors between a small number of people (petty corruption), while there
is corruption that affects government on a large scale (grand corruption), and
corruption that is so prevalent that it is part of the everyday structure of society
(systemic corruption).
 Corruption occurs through myriad methods. The use of both positive and
negative inducements to encourage the misuse of power is well known. In
addition, favoring of friends, relatives and cronies in a way that is not directly
beneficial to the corrupt individual is a form of corruption.
 Corruption at workplace occurs when responsible executives of a Company
misuse their position for personal gain, for example, by accepting bribes or by
charging personal expenditure as official expenses.
 Multiple methods of corruption are used like Bribery, Fraud, Embezzlement of
funds, Kickbacks, Blackmail, Forgery, Illegal Transactions, Cheating, etc.
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5. Few Examples Of How This Happens (1/2)
 Taking commission payments from suppliers to grant contracts.
 Vendors and Suppliers often resort to giving nice gifts, free vacation, etc. to win
contracts.
 Business managers sometimes enter into arrangements with suppliers to inflate
price to the company, while the supplier and the manager would share the spoils
of the overinflated pricing on the side.
 Inflated stationery bills, bogus vehicle hiring bills, claiming personal fuel
reimbursement as official expenses, etc. are quite common
 Employees at retail stores steal products (classified formally as shrinkage), give
lower discount to customers & pocket the difference, wear company products for
attending parties & then put them back on the shelves next day; and sometimes
even buy cheap fake products locally to sell those through company branded
stores.
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6. Few Examples Of How This Happens (2/2)
 Create dummy employee/vendor accounts and transfer salaries/fees to the
same, at regular intervals.
 Buy products for deals, and pocket free gifts /add-ons.
 Undertake avoidable Business Travel for personal reasons / Fly on an expensive
ticket, to receive free companion ticket or to add on frequent flier miles.
 Office Affairs – Undertake avoidable travel and business lunches.
 Deposit client receipts in personal account and treat the client account as bad
debt, write-off or provide discounts, issue credit notes.
 Siphon off company gadgets/devices for personal and family use.
 Theft through collusion by several employees and outside parties.
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7. Reflections by Thought Leaders
“If you once forfeit the confidence of your
fellow citizens, you can never regain their
respect and esteem. It is true that you may
fool all of the people some of the time; you
can even fool some of the people all of the
time; but you can't fool all of the people
all of the time. -Speech at Clinton, Illinois,
September 8, 1854.”
― Abraham Lincoln
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8. Who Is Most Vulnerable ?
 According to a recent survey we conducted on the subject, we were told that
employees from Sales & Marketing department were most vulnerable to
bribery/corruption followed by Procurement.
 Also 53% of the survey respondents said that those employees who have been with the
company for a while and had acquired trust were the most vulnerable of the lot.
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9. Why Does This Happen ? (1/2)
 Poor financial condition of employee.
 Salary levels not compatible with work pressures and personal lifestyle.
 Existence of conflict of interest in business relations, and it goes unreported.
 Unequal enforcement of rules – Rules should be applied universally across the
organization. Unequal enforcement of rules creates a sense of unfairness among
employees.
 Lax in Company’s internal controls – At organizations, where company’s internal
controls are weak, even the employees at the lower most level are able to execute
fraud with little understanding of the system.
 Poor HR Management: People management is very important in all companies. If
working atmosphere is hostile, employees are tempted to do something wrong, not
just for personal benefit, but to teach a lesson to the company management.
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10. Why Does This Happen ? (2/2)
 Poor execution of rules, regulations and procedures – Good written and strong
procedures are not enough. Ongoing supervision of execution and effectiveness of
these procedures is equally pertinent.
 Greed. There is no end to greed once it starts and gets fuelled if not caught with
petty theft.
 Commissions/kick-backs paid by companies involved in Government dealings
often creates the climate for 'internal corruption' as also the 'cash culture' in many
organizations which is also one of the main causes for breeding 'internal
corruption‘.
 Sometimes mere urge to steal to beat the system.
….many more…… and as someone rightly said, it is difficult to understand a
human mind!
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11. What Should One Do To Curb The Same
Implement Strong Policies and Procedures (P&P)
 Have well thought policies and control systems makes it difficult for someone to
commit a crime.
 Many companies have benefitted by having a comprehensive Authorization
Matrix. Another important area is controlling procurements.
 In a recent survey that we conducted, 76% respondents confirmed having
implemented various policies & procedures (for e.g. An Authorization Matrix, a
Procurement Policy, etc.) to keep a check on any leakage/misuse of the authority.
 It is not a one time exercise, but a process, where one has to constantly evaluate
effectiveness, identify gaps and make necessary amendments to Control
Procedures.
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12. Reflections by Thought Leaders
“Honesty is the first chapter in
the book of wisdom.”
― Thomas Jefferson
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13. Entrepreneur Quotes
 “Chances of corruption are least in organizations driven by processes and systems.
However, corruption at higher levels is a serious issue considering these are the ones with
power to bypass systems. In my opinion no one must be above the system and policies of the
company”
 “It has been reasonably effective. The monitoring controls have been lacking, dependent
on specific management culture.”
 “They are effective. They reduce the chance of misuse of authority.”
 “Policies and procedures can work well but are inadequate where collusion is involved. A
more robust and direct approach is required as well as strong relationships with employees,
customers and suppliers.”
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14. What Else Can Help You Curb The Same
 Surprise Checks / Audits.
 Background Verification.
 Strict Action/Penalties for the Wrong Doers.
 Rotating Jobs / Responsibilities.
 Whistle Blower Policy, Incentivizing Informers.
 Regular Counseling and Good HR practices.
 Mystery Audit. (as a Shopper / Client / Vendor)
 Taking sign-offs/confirmations from employees and vendor/client
that no bribe, in any form, has been received/paid.
Keeping a tab on office grapevine.
Good Independent Directors.
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15. Warning Signals
If you are alert, you can quickly spot warning signals of a potential or an
ongoing fraud/corruption. Following are few such examples:
 If an employee never takes a day off.
 Extravagant spending, beyond one’s earning capacity.
 Sudden change in working habits – e.g. working late after office
hours, even without a lot of workload.
 If an employee prefers working independently without any
supervision, and gets agitated when proposed one.
 Rising shrinkages, increase in procurement costs, increase on Credit
Notes.
 Employee is seen excessively socializing with a vendor or defends a
particular vendor aggressively even for significant shortcomings.
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16. Reflections by Thought Leaders
“I will not let anyone walk
through my mind with their dirty
feet.”
― Mahatma Gandhi
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17. Top 15 Phrases Used By Fraudsters
According to research conducted by Ernst & Young (E&Y) with FBI, following
terms are frequently used by employees in emails, when discussing fraud:
With good use of technology, a Company could set-up a mechanism to search
emails and other communications for these keywords.
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18. How can we help You
It is very important for a Company to have good Policies,
Processes and Controls. But most important of all is to
have a very good Finance, Legal and Compliance team to
support various initiatives. Should you ever need a good
resource in this domain, whether full-time, part-time, or on
an interim basis, write to us at info@SuperCFO.com.
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19. Disclaimer
Information contained herein is of a general nature and is not intended to address the
circumstances of any particular individual or entity. This document has been prepared in
good faith, on the basis of information available at the date of publication without any
independent verification. SuperCFO does not guarantee or warrant the accuracy,
reliability, completeness of the information in this report nor its usefulness in achieving
any purpose. No one should act on such information without appropriate professional
advice after a thorough examination of the particular situation and also acknowledge that
any reliance upon any such opinion, advice, statement or information shall be at your sole
risk. Readers are responsible for assessing the relevance and accuracy of the content of
this report. SuperCFO will not be liable for any loss, damage, cost or expense incurred or
arising by reason of any person using or relying on information in this report.
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20. Thank You
SuperCFO Services Pvt. Ltd.
104, Marathon Max, Mulund - Goregaon Link Road,
Mulund (West), Mumbai: 400 080, India.
Phone: + 91 22 259 26052 / 57
Email: info@SuperCFO.com
Website: www. SuperCFO.com
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