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