Department of MBA

Subject:-BECG

Impact of globalization on Indian business ethics:-

1. Business Ethics
“Business ethics is the study of business situations, activities, and decisions where issues of right
and wrong are addressed.”

It is worth stressing that by ‘right’ and ‘wrong’ we mean morally right and wrong as opposed to,
for example, commercially, strategically, or financially right or wrong. Moreover, by ‘business’
ethics, we do not mean only commercial businesses, but also government organizations, pressure
groups, not-for-profit businesses, charities, and other organizations. For example, questions of how
to manage employees fairly, or what constitutes deception in advertising, are equally as important
for organizations such as CRY, the University of Mumbai, or the Bhartiya Janata Party as they are
for Satyam, P&G, or Infosys. However, given the high profile of ethical issues in relation to
commercial businesses, it is these types of businesses that are predominantly focussed on in
general.

Business ethics and the law

Having defined business ethics in terms of issues of right and wrong, one might quite naturally
question whether this is in any way distinct from the law. Surely, the law is also about issues of
right and wrong? This is true, and there is indeed considerable overlap between ethics and the law.
In fact, the law is essentially an institutionalization or codification of ethics into specific social
rules, regulations, and proscriptions. Nevertheless, the two are not equivalent. Perhaps the best
way of thinking about ethics and the law is in terms of two intersecting domains (see Figure). The
law might be said to be a definition of the minimum acceptable standards of behaviour. However,
many morally contestable issues, whether in business or elsewhere, are not explicitly covered by
the law.

In one sense then, business ethics can be said to begin where the law ends. Business ethics is
primarily concerned with those issues not covered by the law, or where there is no definite
consensus on whether something is right or wrong. Discussion about the ethics of particular
business practices may eventually lead to legislation once some kind of consensus is reached, but
for most of the issues of interest to business ethics, the law typically does not currently provide us
with guidance.

2. GLOBALIZATION
“Globalization is the progressive eroding of the relevance of territorial bases for social, economic
and political activities, processes and relations.”
Globalization is not only a very controversial topic in the public debate; it is also a much contested
term in academic discourse. Apart from the fact that – mirroring the public debate – the camps
seems to be divided into supporters and critics, there is growing concern about whether
globalization is a fact at all. So, for example, some argue that there is nothing like a ‘global’
economy, because roughly 90 per cent of world trade only takes place either within or between the
three economic blocks of the EU, North America, and East Asia, leaving out all other major parts
of the globe (Chortarea and Pelagidis 2004; World Trade Organization 2004). Obviously, we have
to examine the ‘globalization’ buzzword more carefully and to develop a more precise definition
if we want to understand its character and its implication for business ethics.

Scholte (2000) says if we want to get a grasp on the decisive features of globalization, he suggests
we can start by looking at the way social connections traditionally took place. These connections,
be it personal relations to family members or friends, or economic relations such as shopping or
working, took place within a certain territory. People had their family and friends in a certain
village, they had their work and business relations within a certain town or even country. Social
interaction traditionally needed a certain geographical space to take place. However, this link
between social connections and a certain territory has been continuously weakened, with two main
developments in the last few decades being particularly important.

The first development is technological in nature. Modern communication technology, from the
telephone, to radio and television, and now the internet, open up the possibility of connecting and
interacting with people despite the fact that there are large geographical distances between them.
Furthermore, the rapid development of global transportation technologies allows people to easily
connect with other people all over the globe. While Marco Polo had to travel many months to
finally arrive in China, people today can step on a plane and, after a passable meal and a short
sleep, arrive some time later on the other side of the globe. Territorial distances play a less and less
important role today. The people we do business with, or that we make friends with, no longer
necessarily have to be in the same place as we are.

The second development is political in nature. Territorial borders have been the main obstacles to
worldwide connections between people. Only 20 years ago, it was still largely impossible to enter
the countries in the eastern bloc without lengthy visa procedures, and even then, interactions
between people from the two sides were very limited. With the fall of the iron curtain, and
substantial liberalization efforts elsewhere (for instance within the EU), national borders have been
eroded and, in many cases, have even been abolished.

These two developments mainly account for the massive proliferation and spread territorial
connections. These connections may not always necessarily have a global spread in the literal
sense of worldwide spread. The new thing though about these connections is that they no longer
need a geographical territory to take place and they are not restricted by territorial distances and
borders any more.

Relevance of globalization for business ethics:-

Globalization as defined in terms of the deterritorialization of economic activities is particularly
relevant for business ethics, and this is evident in three main areas – culture, law, and
accountability.
1. CULTURAL ISSUES
As business becomes less fixed territorially, so corporations increasingly engage in overseas
markets, suddenly finding themselves confronted with new and diverse, sometimes even
contradicting ethical demands. Moral values, which were taken for granted in the home market,
may get questioned as soon as corporations enter foreign markets.

For example, attitudes to racial and gender diversity in Europe may differ significantly to those
in Middle Eastern countries. Similarly, Chinese people might regard it as more unethical to sack
employees in times of economic downturns than would be typical in Europe. Again, whilst
Europeans tend to regard child labour as strictly unethical, some Asian countries might have a
more moderate approach. Consider the case of Playboy, the US adult magazine, which had to
suspend its Indonesian edition and vacate the company premises in 2006 in the wake of violent
protests by Islamic demonstrators – even though the Indonesian edition was a toned down version
that did not show nudity. The reason why there is a potential for such problems is that whilst
globalization results in the deterritorialization of some processes and activities, in many cases there
is still a close connection between the local culture, including moral values, and a certain
geographical region.

For example, Europeans largely disapprove of capital punishment, whilst many Americans
appear to regard it as morally acceptable. Women can freely sunbathe topless on most European
beaches, yet in some states of America they can get fined for doing so – and in Pakistan would be
expected to cover up much more. This is one of the contradictions of globalization: on the one
hand globalization makes regional difference less important since it brings regions together and
encourages a more uniform ‘global culture’. On the other hand, in eroding the divisions of
geographical distances, globalization reveals economic, political, and cultural differences and
confronts people with them.

It has been said that countries exhibit very different views on the makeup of business ethics. These
differences are regarded as based largely in cultural diversity. For example, Japan is considered to
have an entirely different set of guidelines than the United States because the cultures of these two
countries come from entirely different origins. However, if business ethics are based only in
culture then businesses’ global interactions should instigate much more conflict than currently
exists. The basic cultures of Japan and the United States have very little common ground, therefore
their views on business ethics would come from entirely opposite directions. Compromising a
culture’s moral values can be considered extremely difficult; it is much more likely that those same
values would try to be imposed upon the other party. With each culture imposing its values on the
other, the result would be adamant conflict. However, the rapid growth of global business paints
this picture of conflict as false. Businesses can only expand quickly in global markets by being
empathic to the needs, perspectives, and accepted procedures of their foreign counterparts and
partners. Therefore, business ethics is not entirely based on the culture from which it is derived. It
is based more on a basic human moral understanding that transcends international boundaries. Up
to present, ethics have evolved through isolated pockets due to the limited scope of global
communications. Today’s close communication and cooperation of companies worldwide will
have an evening out effect. Business ethics will eventually drive toward one general definition.
What exactly constitutes that definition is yet to be determined. The certainty is that the definition
will be fluid in nature and change as new principles are accepted and implemented. To know where
we are headed we must understand how ethical business practices evolved. Although business
ethics is a relatively new study the concept has been around since commerce began. For instance,
a blacksmith earned his reputation by treating his employees well and his customers fairly. As his
reputation grew so did the size of his business. While this is a simplistic example it is meant to
show that the concept of fair business practices has existed and contributed to the success of
enterprises long before business ethics became an established study. Prior to today’s multiple
innovations in worldwide communications, business morals in each separate geographical area
evolved on their own. Without much influence from the outside world, ethical behaviour was
influenced by what was important to the society. What was significant to the society created
expectations of fair business practices that have carried through the years? What do societies
consider important?

Culture and ethics are interrelated and intertwined in such a way that it makes it difficult to know
which factor guiding / motivating the behaviour is arising from a given situation. Is it the cultural
vision of his/her ethics or is it the ethical vision of his/her culture that guides someone to do or not
do certain things. Trompenaar’s survey questioning people’s reaction to a given situation shows
that cultures with more emphasis on human relationships and loyalty (particularists) scored lower
than those that emphasized obeying rules (Universalists).

The situation: you’re riding in a car driven by a close friend, who’s driving at least 35 mph in a 20
mph zone. He hits someone. No witnesses. His lawyer says if you testify under oath that your
friend was driving at 20 miles per hour, it might save him from serious consequences.

What right has your friend to expect you to protect him?

Lying was more prominent in cultures stressing human relationships, whereas it was less prevalent
in cultures stressing rules. Telling the truth is an ethical value that appears in this context. One
could say, people in cultures emphasizing human relationships would most likely lie to protect the
relationship; whereas, people in cultures putting a greater value on rules would lie less in order to
abide by the rule. Adler differentiates between cultures that are universally oriented (all rules apply
to everyone) and particularly oriented ‘the nature of the relationship determines how someone will
act in a particular situation’. When it comes to the actual experience of the individual in question
it is not certain if that person is motivated by cultural influences and/or ethical implications of
his/her act and/or decision. Paul Ricoeur suggests three positions in ethical development: 1) the
self 2) relations with others, 3) institutional. Through this process of moral integration, the self
eventually becomes autonomous (auto self- nomous – norms which becomes understood as self-
regulatory) in its experiences and interactions with others and institutions. The self internalises the
cultural norms and values through socialization (being in the world with others).

2. LEGAL ISSUES
A second aspect is closely linked to what we said previously about the relation of ethics and law.
The more economic transactions lose their connection to a certain regional territory, the more they
escape the control of the respective national governments. The power of a government has
traditionally been confined to a certain territory, for example: French laws are only binding on
French territory, UK laws on UK territory, and so on. As soon as a company leaves its home
territory and moves part of its production chain to, for example, a third world country, the legal
framework becomes very different. Consequently, managers can no longer simply rely on the legal
framework when deciding on the right or wrong of certain business practices. If, as we said earlier,
business ethics largely begins where the law ends, then deterritorialization increases the demand
for business ethics because deterritorialized economic activities are beyond the control of national
(territorial) governments. For example, global financial markets are beyond the control of any
national government, and the constant struggle of governments against issues such as child
pornography on the internet shows the enormous difficulties in enforcing national laws in
deterritorialized spaces.

A behavior may be perceived as ethical to one person or group but might not be perceived as
ethical by another. Further complicating this dichotomy of behavior, laws may have been
legislated, effectively stating the government’s position, and presumably the majority opinion, on
the behavior. As a result, in today’s diverse business environment, one must consider that law and
ethics are not necessarily the same thing. Though law often embodies ethical principles, law and
ethics are far from co-extensive. The law does not prohibit many acts that would be widely
condemned as unethical. And the contrary is true as well. The law also prohibits acts that some
groups would perceive as ethical. For example lying or betraying the confidence of a friend is not
illegal, but most people would consider it unethical. Yet, speeding is illegal, but many people do
not have an ethical conflict with exceeding the speed limit. Law is more than simply codifying
ethical norms. Establishing a set of ethical guidelines for detecting, resolving, and forestalling
ethical breaches often prevents a company from getting into subsequent legal conflicts. Having
demonstrated a more positive approach to the problem may also ensure that punishment for legal
violations will be less severe.

Some activities and beliefs may be legal, but not perceived as ethical. Marriott Corporation
maintains very comprehensive ethics standards to which their employees must abide. Their
Corporate Dress Code is an example. Several years ago, the orientation program at Marriott
Corporate Headquarters included a presentation on what was and was not considered acceptable
appearance in the company. Some requirements included:

Women could not wear skirts any shorter than 4 inches above the knee.

Women could show no bare leg. Either long pants or hose were required at all times.

Women’s shoulders could not be exposed.

Men’s hair could not reach their collar, except for religious reasons.

Men could not wear earrings.

Although these rules were part of company policy, there is nothing illegal about any one of these
items. However, in the Marriott Corporate culture, each was considered unethical.

Another example is the manufacturing practices of Nike, one of the largest manufacturers of
athletics sportswear in the world. Nike produces the majority of its goods in South East Asia.
Despite the profits of the Nike organization, its foreign workers are paid substandard wages and
work long hours in appalling conditions. In 1996, the entry-level wage at one of these factories
was $2.20 a day. Labour groups estimate that a liveable wage in Indonesia is about $4.25 a day.
Compare this with the pay of one of Nike’s celebrity promoters, Michael Jordan, who gets $20
million a year to promote Nike sneakers. Jordan’s compensation alone is more than the annual
income of 20,000 workers who make Nike shoes.

Major Reasons behind Unethical Practices

It is considered as the time to identify the causes why employees are tangled in such unethical
conduct so their performance as well of the organization can be improved.

Poor Leadership

It is a common practice in offices where there conflict or clash arises between a boss and an
employee. Sometimes, the leaders prefer one employee over another, or one employee takes the
credit of the whole task and becomes a star in front of the boss. Due to this, an environment of
negativity evolves in the workplace.

In this manner, employees lose interest in the job and do not respect management and feel
discriminated against. Employees feel unsatisfied with the office environment. An involvement
in assignments drops, and he starts wasting time.

Poor Management

At the managerial level, it has been seen that if the manager is not sincere and working
professionally, then his subordinates also start acting in the same manner.

Marking wrong attendance, appearing late at the office, killing time by using the internet, taking
long breaks, misbehaving with the subordinates and misusing his authority are some of the
examples

Discrimination (any specifically Gender)

According to labor law, no employee should be discriminated based on age, race, gender, and all
employees should be treated on a fair and just basis. But to some extent, in the office
environment, these laws are fulfilled and implemented. Inside office stories show some kinds of
poorly managed code. Some employees are harassed, and some face discrimination based on
gender.

If two employees are given the same task and producing the same performance but on the basis
of gender inequality, one employee will be promoted promptly, due to which the decision results
in unethical acts in the form of poor performance or spreading negativity at the organizational
level especially among newcomers.
Poorly Managed Policies

If the policies regarding ethics have already been designed and mentioned in the office manual
but still not generating productive results, so the chances are higher, they are not appropriately
addressed. Employees can’t be blamed on this perspective. The concerned department has not
shown its responsibility; thus, managed and implemented the policies poorly.

Hesitant to Report

If one or two employees are not working with responsibly and wasting the organizational
resources, then to the HR department, this situation must be reported promptly. But this does not
happen most of the time. Why?

The reason is simple that employees hesitate to complain because they have to work in the office
for the long term can’t take the risk of rivalry that can affect their career.

Primarily this happens with a newbie or has spent less time in the organization. They also
hesitate that their complaint or report will be ignored as another person is in the office for quite
long and has a good reputation, so he will not have listened.

Wrong Practices

It’s been also observed that to gain small financial benefits for any reason, many employees
collect bribe from clients to have their task done or to disclose organizational secrets. In the long
term, this can affect the company’s reputation as well as affect their career.

Habitual to Steal

Many employees have a natural habit of stealing the company’s stationery for their personal
usages like pens, folders, papers, and other sorts of stuff. They often grab these items for their
family or have a habit of storing them at home.

Liar by Nature

This is a widespread practice among unethical behaviors studied and is also observed among
managers. To escape from any misconduct on their end, they take the name of any of their
subordinates.

Development of Indian capital markets:-

1. Growth in Financial Intermediation:

The Indian capital market has grown due to innovation of the mechanism of indirect financing.
This innovation has enhanced the efficiency of flow of funds from ultimate savers to ultimate users
through newly established financial intermediaries like UTI, LIC and GIC. The LIC has been
mobilising the savings of households to build a ‘life fund’.

It has been deploying a part of ‘life fund’ to purchase the shares and debentures of the companies.
Until 1991 UTI was amongst the top ten shareholders in one out of every three companies listed
in the Stock Exchange in which it had a shareholding. Likewise, UTI has been mobilising savings
of households through the sale of ‘units’ to invest in securities of ‘blue-chip’ companies.

In short, financial intermediaries like LIC, UTI and GIC have activated the growth process of
Indian capital market. It is evident from the rising intermediation ratio. The intermediation ratio is
a ratio of the volume of financial instruments issued by the financial institutions, i.e., secondary
securities to the volume of primary securities issued by non-financial corporate firms rose from
0.27 during 1951-56 to 0.37 during 1979-80 to 1981-82.

2. Growth in Underwriting of Securities:

The New Issue Market as a segment of capital market can be activated through institutional
arrangements for the underwriting of new issues of securities. During the pre-independence period,
the volume of securities underwritten was quite minimal due to lack of an adequate institutional
arrangement for the provision of underwriting. Stock brokers and banks used to perform this
function.

In recent years, the volume and amount of securities underwritten have tremendously increased
owing to increasing participation of specialized financial institutions like LIC and UTI and the
developed banks like 1FC1,1CICI and IDBI in underwriting activities. It is evident from the fact
that the amount of securities underwritten was only 55 per cent in 1960-61, whereas at present it
is about 99 per cent.

Growth in Response to the Offer of Public Issues of Shares and Bonds:

Traditionally investors in India being risk-investors had been reluctant to invest in shares of public
limited companies. Hence, industrial securities as a form of investment were not popular in India
before 1951. However, since 1991 public response to corporate securities has been improving. But
equity-cult has yet to be developed in rural areas.

It is important to point out that the public response to new issues of shares and bonds depends upon
number of factors such as rates of return on industrial securities relative to rates of return on non-
marketable financial assets and real assets, government’s monetary policy and fiscal policy and
above all legal protection to investors in recent years.

All the above mentioned factors have contributed to the growth of public response to new issue of
corporate securities. In short, growing response to public issues has strengthened the Indian capital
market. It is evident from the fact that the number of shareholders rose from 60 lakh in 1985 to
160 lakh in 1994.

4. Growth of Merchant Banking:

The role of merchant banking in India’s capital market can be traced back to 1969 when Grind
lays Bank established a special cell called the ‘Merchant Banking’. Since then all the commercial
banks have set up the ‘Merchant Banking Division’ to play an important role in the capital market.

The merchant banking division of commercial banks advises the companies about economic
viability, financial viability and technical feasibility of the project. They conduct the initial ‘spade
work’ to find out the investment climate to advise the company whether the public issue floated
would be fully subscribed or under-subscribed.

The merchant banks in India act as the underwriter as well as the manager of new issues of
securities. The Securities and Exchange Board of India (SEBI) regulates all merchant banks as far
as their operations relating to issue activity are concerned. To sum up, the emergence of merchant
banking has strengthened the institutional base of Indian capital market.

5. Growth of Credit Rating Agencies:

Of late, credit rating agencies have emerged in the financial sectors. This is an important
development for the growth of Indian capital market. Investment Information and Credit Rating
Agency of India (ICRA) rates bonds, debentures, preference shares, CDs (Corporate Debentures)
and CPs (Commercial Papers).

As Credit Rating Information Services of India Ltd. (CRISIL) is a pioneer in credit rating, it rates
debt instruments of banks, financial institutions and corporate firms. The credit assessment of
companies issuing securities helps in the growth of New Issue Market segment of the capital
market.

6. Growth of Mutual Funds:

Mutual funds companies are investment trust companies. Mutual funds schemes are designed to
mobilise funds from individuals and institutional investors, who in exchange get units which Can
be redeemed after a certain lock-in period, at their Net Asset Value (NAV). The mutual fund
schemes provide tax benefits and buy back facility.

The Unit Trust of India (UTI) can be regarded as pioneer in the setting up of mutual funds in India.
Of late, commercial banks have also launched in India mutual funds schemes. Can-stock scheme
of the Canara bank and LIC’s scheme, such as Dhanashree, Dhanaraksha and Dhanariddhi are
mutual funds schemes.

Since mutual funds schemes help to mobilise small savings of the relatively smaller savers to invest
in industrial securities, so these schemes contribute to the growth of capital market. The total assets
of mutual funds companies increased from Rs. 66,272 crore in 1993-94 to Rs. 99,248 crore in 2005
and to Rs. 4,13,365 crore in 2008. The investment of mutual funds in the secondary market
influences the share prices in the stock exchange.

7. Stock Exchange Regulation Act:

The growth of capital market would not have been possible had the Government of India not
legislated suitable laws to protect the investors and regulate the Stock Exchanges. Under this Act,
only recognized stock exchanges are allowed to function. This Act has empowered the
Government of India to enquire into the affairs of a Stock Exchange and regulate it’s working.

The Government of India established the Securities and Exchange Board of India (SEBI) on April
12, 1988 through an extra ordinary notification in the Gazette of India. In April 1992, SEBI was
granted statutory recognition by passing an Act. Since 1991, SEBI has been evolving and
implementing various measures and practices to infuse greater transparency in the capital market
in the interest of investing public and orderly development of the securities market.

8. Liberalisation Measures:
Foreign Institutional Investors (FII) have been allowed access to Indian capital market. Investment
norms for NRIs have been liberalized, so that NRIs and Overseas Corporate Bodies can buy shares
and debentures, without prior permission of RBI. This was expected to internationalize Indian
capital market.

To sum up, the Indian capital market has registered an impressive growth since 1951. However, it
is only since the mid-1980s that new institutions, new financial instruments and new regularity
measures have led to speedy growth of the capital market. The liberalisation measures under New
Economic Policy (NEP) gave a further boost to the growth of Indian capital market.
Business ethics of Indian Managers

1. ‘Buying business’ by way of bribes as gifts and personal favor are a major concern for
managers. Personal problems also caused anxiety, but mostly due to a conflict of the head
and heart when emotions came in the way of responsible decision-making.
2. Before executing an action, managers generally analyze the ethical implication of decision
making.
3. Managers emphasis the importance of company policy primarily in influencing ethical
action. A man’s personal code of conduct is considered secondary.
4. The influence of supervisors, through whom the company policy is most often transmitted,
was considered important in influencing ethical action.
5. Dishonest methods used by competitors and the unethical climate in the industry were often
cited as deterrents to the honest transaction of business.
6. Corruption and greed of government officials, red-tapism, nepotism, and suffocating
regulations were considered obstacles to ethical business behavior.
7. The attitudes and reactions of the older business managers to situations demonstrated a
greater ethical awareness than those of younger ones.
8. The size of the company, by and large, had no discernible influence on ethical decision
making by managers.
9. Managers were dissatisfied with the idea that profits should be the only guidelines for a
businessman in decision-making.
10. Formal education and training to managers did not seem to have stimulated the desire to
act honestly.
11. The ethical attitudes of the managers who belong to a religion which was more organized
were no better than those in whose religion there is no much scope for guidance.
12. Certain areas (construction, engineering, research and development, banking, investment
and insurance) seemed more prone to encouraging unethical practices than others.
13. A majority of the managers welcomed the idea of a code of conduct and felt it would help
to improve the ethical climate in the country.
14. Managers felt that the management of each company (i.e., self-regulation) would be the
authority best suited to enforce the code.

Major Indian scams:-

1 – 2G SPECTRUM SCAM
What can be said that hasn’t been said before, this is THE mother of all scams. The Supreme
Court recently said the spectrum scam has put ‘all other scams to shame’. The incident saw
former telecom minister A Raja being forced to resign after the CAG indicted him in the 2G
spectrum scam that resulted in a loss of about 176,000 core to the national exchequer. The
scandal revolves around the alleged irregularities in allotting wireless radio spectrum and
licences by the telecom ministry to private operators — some of whom were ineligible. Licences
were given and spectrum allocation was done at an extremely low price (2001 prices in the year
2008) leading to a gargantuan loss to the national coffers.

2 – COMMONWEALTH GAMES SCAM

Yes, of course, how could the scamsters miss the much publicized and anticipated Common
Wealth Games hosted by India in 2010. Even before the long awaited sporting bonanza could see
the light of the day, the grand event was soaked in the allegations of corruption. Estimated to be
involving money worth close to 35,000 crore, the scam included discrepancies like payment to
non-existent parties, will-ful delays in execution of contracts, over-inflated price and bungling in
purchase of equipment through tendering – and misappropriation of funds. The accused, former
chairman of the CommonwealthGames Organising Committee, Suresh Kalmadi, was charged
and jailed later by CBI in april 2011

3 - TELGI SCAM
Abdul Karim Telgi, the name is still etched boldly in the memory of the whole of India. The con
artist, who shook the entire nation with his mastered art of forgery in printing duplicate stamp
papers. The scam spanned across 12 states and estimated to the amount of 20,000 crore plus.
With support from numerous Government Departments this scam one of the first few which
brought to light the shameful corrupt practices of the politicians and the beaurocrats alike.

4 – SATYAM SCAM
Satyam scam is the biggest fraud in the Indian corporate industry till date, amounting to 14,000
crore. The disgraced former chairman, Ramalinga Raju is accused of fudging the books of
accounts for several years and inflating revenues and profit figures of Satyam. His efforts to fill
the “fictitious assets with real ones” through Maytas acquisition failed, after which he decided to
confess the crime. India’s fourth largest IT company lost a staggering Rs 10,000 crore (Rs 100
billion) in market capitalisation as investors reacted sharply and dumped shares, pushing down
the scrip by 78 per cent to Rs 39.95 on the Bombay Stock Exchange in a single day.

5 – IPL SCAM
Never before has a scam been enjoyed and celebrated by such a massive proportion of Indian
people. A lot of the IPL activity has been alleged to be unethical, unlawful and sometimes
illegal. Politicians and others are said to be laundering black money via Mauritius and other tax
havens which hide investors’ identities through shell companies and false names. There are
suggestions that matches and bids for team franchises have been fixed, and that there have been
bribes, tax evasion, illegal betting, and breaches of foreign investment rules. At the centre of the
growth, and the controversy, was Lalit Modi, creator and chairman of the IPL and former vice
president of the highly politicised Board of Control for Cricket in India (BCCI).

6 – BOFORS SCAM
The Bofors scandal is known as the hallmark of Indian corruption. In the 1980s,the then PM
Rajiv Gandhi and several others including a powerful NRI family named the Hindujas, were
accused of receiving kickbacks from Bofors AB for winning a bid to supply India’s 155 mm
field howitzer. The Swedish State Radio had broadcast a startling report about an undercover
operation carried out by Bofors, Sweden’s biggest arms manufacturer, whereby $16 million were
allegedly paid to members of PM Rajiv Gandhi’s Congress.

7 - HARSHAD MEHTA SCAM

Popularly known as the Big Bull, Harshad Mehta took advantages of the loopholes in the
banking system and triggered a rise in the Bombay Stock Exchange in the year 1992 by trading
in shares at a premium across many segments. He and his associates diverted funds to the tune of
about Rs 5,000 crore (Rs 50 billion) from the banks to stockbrokers between April 1991 to May
1992. He was later charged with 72 criminal offences.

8 – COBBLER SCAM
In1995 another Scam of magnanimous proportions was exposed. Sohin Daya of Dawood Shoes,
Rafique Tejani of Metro Shoes, and Kishore Signapurkar of Milano Shoes were arrested in this
multi-crore shoes scam on the charges of availing loans of crores of rupees on behalf of fictitious
leather co-operative societies and taking advantage of these through various schemes. Officials
of various state banks were also charge sheeted.

9 – FODDER SCAM
More commonly known as the “Chara Ghotala”, this scam was worth a whooping 900 core and
involved the infamous and forever popular Bihar politician Lalu Prasad Yadav. The scam
involved fabrication of “vast herds of fictitious livestock” for which fodder, medicine and animal
husbandry equipment was supposedly procured.

10 - HAWALA SCANDAL
Yet another widely publicized bribery scandal which came out in 1996. It involved payments to
the tune of $18 milion received by Country’s leading politicians through hawala brokers. The list
of accused included the then leader of the opposition Lal Krishna Advani. The masses were left
shocked as all the major political players were being accused of having accepted bribes and also
alleged connections about payments being channelled to Hizbul Mujahideen militants in
Kashmir.

CONCLUSION
So this concludes the list of TOP 10 biggest Indian scams of all times. According to the
compilation, the total amount of money involved in various scams over the last 12 years alone,
since 1992, is estimated to be over Rs 80 lakh crore (Rs 80 trillion) or $1.80 trillion!
To many people abroad, India is seen sentimentally as Mahatma Gandhi’s country of khadi cloth,
good ethics, and care for the poor. To some it is an economic miracle and a future super power,
while to others it is an unkind cruel place of caste, ethnic and rich-poor divisions and violence.
Above all however, and not far below the surface, India is a maze of unethical, unlawful and
illegal swindles that link most politicians, many bureaucrats, and a large number of businessmen
and others.