New analysis examines corruption in India and likely outcomes of the upcoming Romanian election
Corruption Risk Briefing - India
Maplecroft’s latest Corruption Risk Briefing for India looks at the effectiveness of the legislative framework in tackling corruption, the prevalence of corruption in government and the public and private sectors, and the highest risk sectors of the economy.
Recent corruption scandals have highlighted weaknesses in India’s legal framework in enforcing anti-corruption law, which is both complex and inconsistently applied and this is driving demands for changes in legislation and means there is likely to be increased scrutiny of business deals – particularly from the media. In the most serious cases, companies could also lose their entire investments or contracts won in India.
Corruption in the lower levels of the judiciary could lead to businesses finding it difficult to enforce contracts, particularly when engaged in a dispute with a local partner or competitor who may hold influence or be willing to pay bribes to return a favourable verdict. Courts at the level of state high courts and above are usually free from political influence or corruption, although in recent years there have been incidents of corruption among judges in the Supreme Court. By far, the most significant risk investors face when dealing with all levels of India’s judicial system is the experience of delays in processing cases.
Within the private sector, industries with close links to government are perceived to be among the most corrupt, including real estate, construction, telecommunications, financial services and defence sectors. India’s cumbersome regulatory framework encourages corruption in the private sector as a means of making business processes quicker. Corruption within the tax system poses a considerable risk to businesses, where bribes to tax inspectors to aid tax avoidance are reportedly commonplace.
Election Monitor - Romania
Maplecroft’s pre-election Monitor for Romania offers analysis and forecasts of the upcoming parliamentary election in the country, including the key risks and implications for business.
The centre-left Social Liberal Union (USL) coalition, led by Prime Minister Victor Ponta, is likely to build on its strong performance during local elections earlier in the year to take an outright majority of seats in the parliamentary elections on 9 December 2012. Support for the USL coalition waned following its unsuccessful attempt to dismiss independent president Traian Basescu in July 2012, but has since recovered its popularity and is headed to win the 50% needed for an outright majority in elections for the upper two houses of parliament - the Chamber of Deputies and the Senate. The opposition Liberal Democratic Party (PDL) is unlikely to seriously challenge for power due to the raft of unpopular austerity measures it enforced as part of the outgoing coalition.
If the USL coalition is victorious, tensions between Prime Minister Ponta and President Basescu, are likely to continue. This will frustrate and slow down meaningful policy-making and will do little to help implement the programme of reforms agreed with the IMF, including Romania's latest privatisation drive. Investor concerns over the government's commitment to combat corrupt practices are also likely to persist under the USL rule.
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