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PwC’s Global Economic Crime Survey 2024 – India outlook
Addressing risks smartly to survive and thrive
In today’s interconnected world, opportunities often come riding on risks. The free flow of capital, goods and services across international borders, in addition to creating opportunities, throws up its share of challenges. In these times, a persistent and pervasive challenge that businesses have to routinely deal with is economic crime. As companies enter new markets, there is a greater risk of bribery and corruption. Geopolitical conflicts in Europe and West Asia have disrupted supply chains and intensified the risks of sanctions and export controls. Procurement fraud is another matter of serious concern. Furthermore, there is widespread global concern over forced labour and environmental, social and governance (ESG) responsibilities. Long supply chains and the use of third parties also call for increased vigilance. Mitigating risks, and doing so intelligently, is imperative for sustainable businesses. With this objective in mind, PwC conducted its annual Global Economic Crime Survey 2024 with 2,446 respondents, including CEOs and managing directors as well as investigation, risk and compliance heads. The spectrum of questions posed to the top business leaders was meant to assess the threat of economic crime and gauge how companies were dealing with it. In India, company heads across 91 organisations were asked questions on the most disruptive economic crimes impacting their respective sectors and ways of mitigating risks of fraud and non-compliance.
Key themes
- Rise in economic crimes in India
- Safeguarding against economic crimes
- Preventing economic crimes
- Procurement fraud – India’s primary concern
- Raising the bar on corporate compliance to counter corruption and bribery
- The risk of forced labour behind multi-tiered and opaque supply chains
- Looking beyond borders to navigate risks associated with export controls and sanctions
Key findings
Rise in economic crimes in India
India respondents stressed that economic fraud was rampant in the country. Their perception of this threat to their businesses was higher than that of their global counterparts. About 59% executives in India said their company had faced some form of financial or economic fraud in the past 24 months, as against 41% executives in global companies.
This percentage has increased as compared to the results of our previous survey in 2022, where 52% of Indian organisations had stated that they experienced fraud or economic crime within the last 24 months.1 Has your organisation experienced any fraud, corruption or other economic/financial crime in the last 24 months? While companies have introduced some intelligent measures to safeguard against economic crime, there is still considerable ground to cover.
Has your organisation experienced and fraud, corruption or other economic/financial crime in the last 24 months?
Preventing economic crimes
Procurement fraud – India’s primary concern
Procurement fraud, or illegal manipulation of the procurement process for financial gain, is one of the oldest forms of economic crime, impacting large and small businesses alike. This year, 5 out of 10 respondents believe that it is a major concern in India.
In PwC’s 2022 Global Economic Crime and Fraud Survey, procurement fraud ranked fifth (26%) among economic crimes faced by companies in India. In the 2024 survey, about 50% of senior executives in India cited it as the biggest problem businesses faced, with 39% describing it as the most disruptive economic crime. In contrast, only 29% of global companies that had faced economic fraud in the past 24 months flagged procurement fraud as a major concern.
Procurement fraud is clearly a growing problem, with respondents referring to it as the most serious and disruptive economic crime businesses face in India. Usually difficult to detect, procurement fraud can crop up at any stage of business – from the time of bidding to the point of delivery of goods and services – and assume different forms:
- inflated or fake invoices
- buyer-supplier collusion – when a conflict of interest is not declared, such as a link between an employee from the buyer organisation and the vendor
- changing specifications of goods and services, which may not be in the best interest of an organisation and may favour a particular bidder in return for a kickback
What types of fraud, corruption or other economic crime has your organisation experienced in your country within the last 24 months?
Procurement fraud cuts across industries and processes, being one of the most disruptive economic crimes. The integrity of the procurement process is of paramount importance, as a company’s reputation rests on it.
Examining the role of third parties to mitigate procurement fraud risks
Businesses must assess the role of third parties – such as vendors, suppliers, distributors or customers, and companies acting on their behalf. PwC’s survey highlights the confidence of business heads in India in this regard: 52% respondents said they were confident their company had a complete and accurate understanding of the third parties involved, while 26% said they were very confident. Moreover, 56% respondents in India said their third-party management programme included risk-scoring of third parties.
Is procurement fraud a widespread concern amongest businesses?
Does your organisation's third-party risk management programme include risk-scoring of it's third parties?
Using data analytics for fraud detection
Indian companies have increasingly been using data analytics to identify procurement fraud, waste or abuse. In the survey, 52% of respondents said they analysed their transactions before a deal was closed, while 46% said it was done after the deal. However, only 37% of the respondents said they utilised data analytics to monitor payments in real time, with the ability to block outgoing payments. Advanced transaction monitoring solutions that use sophisticated algorithms and machine learning technology to detect suspicious activities and patterns in procurement transactions can identify potential fraud. Combined with graph analytics, such solutions could help understand and analyse the complex relationships among entities such as suppliers, employers and third parties. Data analytics can also be leveraged to highlight anomalies such as an abnormal rise in invoice volumes, discrepancies between purchase orders and deliveries, multiple payments to vendors without any corresponding services rendered, unusually low or high bid prices, and a sudden rise in consumer complaints
What steps, if any, is your organisation taking to mitigate the risk of procurement fraud?
Our survey found that a majority of the companies identified and prevented procurement fraud by:
- strengthening processes
- revising vendor selection processes
- adopting robust conflict of interest policies
- training procurement personnel. Indian respondents used data analytics to identify unusual bid patterns.
Raising the bar on corporate compliance to counter corruption and bribery
The strengthening of anti-corruption laws and their robust implementation has been encouraging news for corporate houses. In India, nearly 63% of business leaders stated the laws were now more robust in the country. Although strict law enforcement may be a strong deterrent, our survey findings indicate that is not quite adequate to mitigate risks. About 33% of all economic crimes are related to corruption and bribery, while 26% of the respondents in India found it to be one of the top three disruptive economic crimes in the past 24 months in their respective industries.
About 20% of company heads in India believed corrupt practices – i.e. those associated with corrupt or improper payments to government officials and/or commercial customers – had increased in the past 12 months, while 34% said corruption had decreased.
How are government efforts to enforce anti-corruption laws changing?
In your opinion, were risks associated with corrupt or improper payments to government officials and/or commercial customers in the last 12 months?
Developing a framework to risk-score third parties to mitigate risks associated with corruption and bribery
To tackle corruption, companies need to first recognise the core problem and then address it. The surveyed executives said they were aware of corruption and were seeking to mitigate it. Risk-scoring, third-party management and investigations are essential if companies have to fight corruption in their ecosystem. However, a majority of those surveyed either did not risk-score each of their third parties or did not have corruption as one of the factors in risk scoring. In India, some (13%) did not even have a third-party risk management programme. Only one-third (33%) of the respondents had a risk-scoring programme, with corruption risk as a factor in the scoring process.
According to the survey, in India, while most companies were concerned about the threats posed by corruption and bribery, 34% of companies did not even conduct anti-corruption/anti-bribery audits of third-party vendors. Furthermore, 24% said they had not done so in the past two years and 10% said they had never conducted such an audit. About 35% said such an audit had been conducted in the past two years. The situation was not very different globally – only 18% of respondents said such audits had been conducted in the last two years. However, nearly half of the organisations surveyed in India (49%) mentioned that they had reviewed their investigation process in the past 12 months, while 27% had done so a year/two years ago.
About the survey
PwC’s Global Economic Crime Survey 2024 analysed the responses of 2,446 heads of organisations across the world, of which 91 were from India, on the most disruptive economic crimes affecting their sector and ways of mitigating risks of fraud and non-compliance. More than 50% of the respondents held top positions and comprised board members, CEOs, managing directors and presidents. Respondents in India represented 91 organisations spanning a wide spectrum of industries including consumer products and retail, industrial and manufacturing, automotive, technology and healthcare.
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Puneet Garkhel
Partner and Leader, Forensic Services, PwC India
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