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Can Comprehensive Background Check Assure the Honesty of Seniors?

The average size of frauds since 2009 is Rs 502 crores, an increase of almost 80% from the average of the past 15 years which was Rs 381 crores,” said the latest study report by Thought Arbitrage Research Institute (TARI), in partnership with UN Global Compact India.

Corporate frauds in India have increased in the last 15 years in terms of both size and scale of the fraud. More than 50% of frauds are related to defrauding lenders and to siphoning of funds by the promoters or top management. The significant increase is due to a number of high profile and large frauds detected in the period of 2009-12. A significant motivator for the promoters and management to commit fraud is to bring about personal enrichment at the cost of all other stakeholders.

How do you think can the urge of top executives to use fraudulent means for personal gains be tackled?

Can greater annual compensation or top management background check do the trick? Off late, companies are paying more to CEOs’ and top management executives than they used to. According to the research conducted by an executive compensation analysis firm, Equilar Inc., the median 2012 pay package for top management executives came in at $15.1 million, a rise of 16% from 2011. Can honesty of corporate heads be assured by any other measure, if not by higher compensation?