HDFC chief Parekh urges govt to focus on rooting out graft

Mumbai: Pitching for greater efforts by the government to weed out corruption, industry leader Deepak Parekh today said shell companies are being used for paying bribes and ‘speed money’ remains a challenge for corporates.

HDFC Chairman Deepak Parekh
HDFC Chairman Deepak Parekh

“Speed money facilitates routine transactions and services, except they get delivered faster. So rampant is this practice that many chiefs have called for a legalisation of ‘facilitation payments’. I don’t agree with this. It still remains a bribe,” Parekh, chairman of country’s largest mortgage lender HDFC, said at a CII seminar on risks here.

Sectors like infrastructure, realty, metals & mining, defence, power and utilities are more prone to corruption, he added.

“While the government has firmly declared its intent to improve the ease of doing business, it needs to focus its efforts equally on weeding out corruption,” Parekh said.

Steps like moving towards e-tendering and e-auctions of all natural resources will make it easier to weed out large scale corruption and opined that the proposed digital drive is a step in the right direction, he stated.

“The era of the so-called ‘sealed brown envelopes’ to win contracts may well be of the past,” he said.

Parekh said for corporates, the number one risk remains ‘corruption, bribery and corporate frauds’.

He said CEOs privately acknowledge losses incurred by their firms due to bribery, corruption and fraud, but the acknowledgement is almost always only an oral one.

“Despite regulations mandating reporting of frauds, companies tend to shy away from openly reporting such instances,” he said.

Today bribes that are paid by companies have a totally different avatar as payments are made to look completely genuine or go through a large web of unidentifiable shell companies and movement of such funds is difficult to trace, Parekh said.

“This is high-end sophisticated crime, but it is this type of corruption that has impoverished millions of people around the globe, especially when public resources are used for private gain,” he said.

Talking about speed payments, he said it is a very big challenge for top management.

He said it is the role of the top management to inoculate their organisation from corruption.

“There are still ways to make the system work in the right way – it may require added time and effort, but in the long-run, it is worth it.”

Parekh said there have been endless cases where honest people have been convicted simply because they followed orders of their superiors, or their signatures were on dubious transactions and they became the ‘fall guy’.

These are not instances of impropriety, but instances of a wrong business call, he said, adding, “Fortunately, this government has recognised that bureaucrats need to be assured that they will be immune from such witch-hunting, otherwise they simply will not take any decisions.