Corporate companies still feel CSR spending a burden and commit serious fraud

The philanthropic facet of corporate companies may not be as real as it seems.

Rather than relying on information constructed explicitly for eye washing the authorities, media, and the public, the reports on CSR activities is an eye opener for how socially ethic these companies are. The CSR mandate was passed for developing an ethical attitude in billion dollar companies. Technically, this law is passed for business firms having a net worth of Rs.5bn ($83mn) or more, turnover of Rs.10bn ($160mn) or more, or net profit of Rs.50mn ($839,000) or more. These companies have to use minimum 2% of their profit for societal purposes. It has been observed that few companies taking up CSR activities use fraudulent methods to execute their social tasks. In small examples, economize their expenses on executing these campaigns, corporations make employees carry out volunteering activities. Also, use weekly off provide to employees to do CSR activities so that they could save their working hours. Not just that, the company also indirectly makes every employees chip in some amount of money for acts of kindness. This rick then further reduces the expense company has to incur. Would not it be justified if an employee is already giving his money to some orphanage or NGO directly? Corporations use media to promote their pseudo social responsible face. Many incidents have also revealed the so-called responsible NGO’s involvement in anti-development projects. Behind the veil of uplifting rural communities, some NGOs have been caught instigating anti-national propaganda among remote areas and uneducated people. According to NgoBox, an entity specially designated to research CSR spend in India. LG Electronics, IBM, Pernod Ricard India Pvt Ltd, Serum Institute of India Pvt Ltd, Cognizant Technology Solutions India Pvt Ltd are among the companies who have spent too less than their designated amount and budget for CSR. Similarly, many such businesses mentioned in the source have been found incurring lesser budget.

In an exclusive talk with Philanthropy Age, the former chairman of the Tata Group and current chairman of the Tata trusts, Ratan Tata, had criticised the clause in the Companies Act Bill claiming that this could pave the way for more fraudulent activities. He stated “We have a phenomenon which is meant to be good but is going to be somewhat chaotic,” he said, arguing that India does not yet have the infrastructure or oversight capability to introduce such a scheme successfully. You will have a registered NGO, you will have the money, the money goes to the NGO, and it may be three or four years before the whole thing explodes in a series of fraudulent operations, money being given to people that don’t exist or causes that are a subterfuge for something else.”

Recently, around 196 companies also came under the Radar of Serious Fraud Investigation Office (SFIO).

Related : 100 companies get government notice on CSR spend

During 2009, Ramalinga Raju, promoter of Satyam Computer Services, India’s third-largest IT company service, perpetrated what was known as the biggest scam in corporate history. His Byrraju Foundation carried out so many social activities like setting up a call center for villagers without a college degree, brought telemedicine, started an ambulance service which reaches an emergency situation within 30 mins with all paramedical equipment. The company was also awarded for its social activities. But all this was done under the fraudulent bracket of CSR. He confessed to having fiddled accounts and brushed significant amounts down the carpet in the name of CSR.

The ongoing campaign “Rally for Rivers” is being spearheaded by ISHA Foundation led by spiritual guru Sadhguru across India. It is basically for saving rivers and maintaining the forest cover surrounding it. The country is in need of awareness on such social issues. This campaign could have been taken up by the billion dollar Reliance Foundation. They have every means to promote, fund and influence this campaign’s goals. Instead, the company is invested in buying sports teams and funding the wealthiest sports and sports team in India.

2-3 years back during the data boom period, Idea had introduced a new scheme as part of its CSR campaign. It had circulated an advertisement stating that the company would provide 20 MB for every missed call. It also said in their campaign that the data could be further transferred for the use of a rural school use it for education. Technically speaking, would this data be enough to run a school in 1 GB for an entire month? And why involve any user involvement in this strategy. The campaign and advertising cost alone would have exceeded the whole CSR cost. This was merely an eyewash.

The whole tragic incident of Gorakhpur which claimed the life of several children, no billion dollar company batted an eye towards how the eradication programme for Japanese encephalitis virus which is causing the deaths of several children.

Manforce India also came under the radar of Wrongful CSR strategy when it campaigned its brand and product using a controversial ad featuring Sunny Leone across Gujarat during Navratri season. The announcement produced strong reactions from many sides which then brought it down.

When you look at the whole spectrum of Social Activities conducted by huge companies, something feels off somewhere. Why is it being advertised so much? Why are corporations acting only because of the Companies Act regulation? Why did some billion dollar companies avoid investing before any statute or law? Why even after bringing up this rule there are insufficient steps taken by firms to uplift the margin societies? Why users and employees involvement is used?