Siemens' solution to India's biggest problem

Fri, 20 Apr Pre-Open

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Have a look at the government machinery or the functioning of the Indian corporate world. You will find that our country is reeling under a wave of corruption scandals. In the recent past, our country witnessed a spate of big scams such as 2G scam, commonwealth game scam, several land scams, defense scam and mining scam. And the list is definitely not going to end here. The interesting part is that most of the time, it happened on the back of collusion between the government bodies and the corporate world.

There are many factors such as lack of deterrence, lengthy judicial process and lack of social stigma which are giving rise to such a situation. However, it's not like the Indian corporations have not done anything to curb the corrupt practices. Take the example of Tata Group companies. They have got their own 'code of conduct'. They try to inculcate the values in employees from the very beginning. And no doubt, it helps to some extent. But definitely, this is not sufficient.

There is something which is still missing - a robust system against corruption with proper checks and balances. And this is what Indian companies need to learn and implement. And guess who is being the bellwether in this process. One of the most reputed face of the Indian corporate arena, the Tata Group itself.

They are talking lessons from Siemens AG, the German multinational conglomerate company headquartered in Munich. Till recently, Siemens applied all sorts of illegal means to do business around the world. Contrary to Tata's culture, bribery and corruption was the business culture of the company. And then, the company had to pay a high price for its wrongdoings. The US and German authorities slapped a fine of US$ 1.6 bn on the company. And thereafter, the company started taking steps to eradicate corruption from its system.

However, it did not go the Tata way. It did not rely merely on signing the code of conducts. Rather the company instilled a robust anti-corruption system in place in all its worldwide businesses. The employees were given extensive compliance training. The top management was encouraged to follow the clean functioning by way of adding a compliance component to the bonuses. The aim was to plug the existing systemic loopholes within the functioning of Siemens AG and its subsidiaries. The point is Siemens went beyond just imparting values and tried to create a corruption-proof structure. And the testimony of its success is that the whole episode became a case study to learn how to control corruption. And like the Tata, other Indian companies may also show interest to learn from this. And why only Indian incorporations! The Indian government too can take a lesson or two if it is really serious on the corruption issue. Now, everyone understands that just taking oaths at the start of the tenure hardly makes any sense to the people sitting in the top government offices.

Steps taken by Tata to go beyond mere values and to build a robust system to counter corruption is definitely a welcome move. We hope that someday, other Indian companies as well as the Indian government would also consider the same.