General challenges of international compliance work - India as an Example

In ti­mes of in­cre­asing glo­ba­liza­tion, in­ter­na­tio­nal com­pli­ance work plays an in­cre­asin­gly im­port­ant role. Since many com­pa­nies to­day have sub­si­dia­ries in many dif­fe­rent coun­tries, it is par­ti­cu­larly im­port­ant to con­sider the cul­tu­ral con­di­ti­ons as well as the or­ga­niza­tion and ma­tu­rity of the cor­po­rate land­scape of the re­spec­tive coun­try when alig­ning the com­pli­ance stra­tegy.

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These dif­fe­rent as­pects show that it is im­pe­ra­tive for a busi­ness to align the in­ter­na­tio­nal sub­si­dia­ries cul­tu­rally and ideo­lo­gi­cally with the pa­rent com­pany.

To achieve this, large com­pa­nies have ge­ne­rally im­ple­men­ted ex­ten­sive, but mostly stan­dar­di­zed, com­pli­ance ma­nage­ment pro­grams in their coun­tries. On the other hand, SMEs of­ten lack this ba­sic de­sign, which can also be ob­ser­ved in Eb­ner Stolz Com­pli­ance Study of 2018.

General cultural differences

Let's take a clo­ser look at In­dia: The coun­try is cha­rac­te­ri­zed by a di­verse and strong cul­ture that is sha­ped not only by its history, but also by to­day's way of life.

In­dia is not only the se­cond most po­pu­lous coun­try in the world, but also an up-and-com­ing in­dus­trial na­tion, which to­day ranks among the top 10 in­vest­ment lo­ca­ti­ons world­wide. Com­pli­ance work in In­dia pres­ents Ger­man com­pa­nies with spe­cial chal­len­ges. Her­ein, we at­tempt to high­light some of the re­gio­nal and cul­tu­ral as­pects to be con­side­red:

CUL­TU­RAL SEN­SI­TI­VITY AND LAN­GUA­GES

In­dia is a cul­tu­rally di­verse coun­try with 22 ma­jor lan­gua­ges spo­ken in 29 sta­tes and 7 union ter­ri­to­ries. While the cul­tu­ral dif­fe­ren­ces are clear to the out­side world, they are also pre­sent wi­thin the coun­try. De­pen­ding on the state and re­gion, cul­tu­ral spe­ci­fi­ci­ties should be ta­ken into ac­count in pre­pa­ra­tion of the ap­proach to com­pli­ance.

LE­GAL AND LAW EN­FORCE­MENT FRAME­WORKS 

It is es­sen­tial to know the lo­cal le­gal frame­work in or­der to un­der­take any com­pli­ance in­tia­tive. In In­dia, for ex­am­ple, the up­dated anti-cor­rup­tion law was pas­sed last year. Un­der the Pre­ven­tion of Cor­rup­tion (Amend­ment) Act of 2018, an­yone who of­fers a bribe can now also be pro­se­cu­ted. Pre­viously, only those who re­cei­ved bri­bes (such as ci­vil ser­vants) were pu­nis­hable un­der this law. Any di­rec­tor / part­ner, of a com­mer­cial or­ga­niza­tion which has been pro­ven of an of­fense un­der the Act shall also be lia­ble to be pro­se­cu­ted un­der the Act.

LACK OF AWAR­NESS OF DI­GI­TAL EVI­DENCE

Most In­dian com­pa­nies lack a ge­ne­ral awa­ren­ess of the im­port­ance of di­gi­tal evi­dence. And since most com­pa­nies lack a de­fi­ned fraud re­sponse plan, the con­se­quen­ces of white-col­lar crime are of­ten chaotic.

When fraud is un­co­vered, com­pa­nies usually try to in­ves­ti­gate and ac­cess the sub­ject's com­pu­ter on their own. Va­luable evi­dence is of­ten tam­pe­red with. This also rai­ses ques­ti­ons about the ad­mis­si­bi­lity of evi­dence in court, since mea­su­res have been ta­ken on the com­pu­ter of the af­fec­ted per­son wi­thout the pre­sence of an ad­ju­di­ca­ted per­son­nel or aut­ho­rity.

CHAL­LEN­GES WHILE CON­DUC­TING IN­TER­VIEWS

One of the most cri­ti­cal pha­ses in con­duc­ting in­ves­ti­ga­tion is the in­ter­view phase. In­di­ans are con­side­red highly emo­tio­nal and sen­si­tive peo­ple, even when it co­mes to the pro­fes­sio­nal en­viron­ment. The­re­fore, con­duc­ting in­ter­views, whe­ther ac­cu­satory or other­wise, can be seen as a daun­ting task.

In or­der to con­duct a suc­cess­ful in­ter­view in such an en­viron­ment, an in­ter­viewer must con­sider the fol­lo­wing points:

• Buil­ding a per­so­nal re­la­ti­ons­hip with the in­ter­viewee du­ring the in­ter­view
  In­di­ans are not used to ex­tre­mely for­mal dia­lo­gues and dis­cus­sions. Even in a for­mal en­viron­ment they will app­re­ciate a per­so­nal con­ver­sa­tion more and be­come open for the ex­change of in­for­ma­tion. If a per­sis­tent for­mal ap­proach is cho­sen, the re­spon­dent will cer­tainly be­come very de­fen­sive and will not di­vulge any in­for­ma­tion. It might be hel­pful if the in­ter­viewer first sha­res some per­so­nal ex­pe­ri­en­ces. This al­lows the in­ter­viewer to es­ta­blish a per­so­nal con­tact with the re­spon­dent and con­vince them that they are only pre­sent to help.
• The in­ter­view team must in­volve lo­cal/re­gio­nal ex­perts
  For most peo­ple in In­dia, the pre­sence of a for­eig­ner is al­ways very in­ti­mi­da­ting. This is a na­tu­ral obst­acle to open com­mu­ni­ca­tion. To avoid this and to create a more plea­sant at­mo­sphere, a lo­cal/re­gio­nal re­pre­sen­ta­tive should be part of the in­ter­view team.

Concluding remarks

Com­pli­ance work in In­dia pres­ents Ger­man com­pa­nies with spe­cial chal­len­ges. Howe­ver, if cul­tu­ral dif­fe­ren­ces are ta­ken into ac­count and suf­fi­ci­ent pa­ti­ence is brought along, suc­cess can also be achie­ved here in the long term.

For this and more, Eb­ner Stolz has a de­di­ca­ted In­dian Com­pli­ance desk for all your busi­ness needs in the Indo-Ger­man chan­nel. Whe­ther you need sup­port in In­dia with con­duc­ting risk re­view or in­ves­ti­ga­ti­ons, or to your needs in Ger­many for in­ter­nal au­dits, con­sul­ting, ad­vi­sory and le­gal ser­vices, Eb­ner Stolz is your one stop so­lu­tion.

Ebner Stolz India Desk Services

Outbound - Go India

In­sights into the com­pli­ance and cul­tu­ral con­di­ti­ons in In­dia as well as con­sul­ting on stra­tegy de­ve­lop­ment in In­dia:

• On-site ex­ami­na­tion of the frame­work con­di­ti­ons
• Con­sul­ting for stra­tegy de­ve­lop­ment
• Over­com­ing cul­tu­ral dif­fe­ren­ces

Sup­port in enhan­cing go­ver­nance and com­pli­ance mea­su­res for sub­si­dia­ries in In­dia:

• Com­pli­ance re­views and fo­ren­sic in­ves­ti­ga­ti­ons at sub­si­dia­ries in In­dia
• Due di­li­gence on in­di­vi­du­als / tar­get en­ti­ties / third par­ties
• Co-sour­cing or out­sour­cing of fi­nance func­tions

Inbound - Go Germany

Enhan­cing go­ver­nance and com­pli­ance mea­su­res for sub­si­dia­ries of In­dian com­pa­nies in Ger­many and as­sis­ting in ad­verse si­tua­ti­ons when it mat­ters the most:

PROAC­TIVE SER­VICES

• Risk as­sess­ments for risk iden­ti­fi­ca­tion and ana­ly­sis of com­pli­ance struc­tures
• De­ve­lop­ment and im­ple­men­ta­tion of com­pli­ance ma­nage­ment sys­tems (CMS)
• Trai­ning / sup­por­ting em­ployees re­gar­ding com­pli­ance is­sues in Ger­many and EU

POST-FACTO RE­VIEWS

• Anti-cor­rup­tion / in­ter­nal / com­pli­ance in­ves­ti­ga­ti­ons
• E-dis­co­very and Di­gi­tal Fo­ren­sics