The anti-corruption laws in India have undergone a significant shift in the recent times with a hard stance been taken by the incumbent Government. Several legislations have been implemented like Lokpal and Lokayukta Act, 2013 to investigate and prosecute cases of corruption against public officials. In addition to it, significant amendments have been made to the existing legislations like (i) Prevention of Corruption Act, 1988 (PCA), which is the primary anti-corruption legislation in India and criminalizes corruption amongst public servants; and (ii) Foreign Contribution Regulation Act 1976 (FCRA) which regulates foreign contribution/aid received by Indian entities. The act is framed to ensure that the funding or aid does not in any way impact political or any other situation in India.
By ratifying international conventions, the Government has shown a great level of commitment to fight against corruption and a keenness to join hands with the counterparts from other jurisdiction to tackle issues of corruption. In this fight they are aided by the close observation of Indian courts like the Supreme Court which takes an active and strong stance against corruption and recognizes the principle of corporate criminal liability in India.
Currently, India has been ranked at the 80th position among 180 countries and territories in the Corruption Perception Index (CPI) prepared by Transparency International. The CPI, released at the WEF 2020 here, ranks 180 countries and territories by their perceived levels of public sector corruption, according to experts and businesspeople.
The issue of corruption can be classified into two categories i.e., public corruption which can be defined as “the promise, offering, giving, to a public official, directly or indirectly, of an undue advantage, for the official himself or herself or another person or entity, in order that the official act or refrain from acting in the exercise of his or her official duties) and private corruption can be defined as “when an undue advantage is promised, offered to or conferred on a private-sector individual, as opposed to a public official, it is considered an act of private corruption”.
The regulatory framework of India is analyzed keeping in mind the abovesaid issues of corruption and the mechanism set forth to tackle the same.
Regulatory legal framework includes:
For regulating the conduct of the public officers and to tackle issue of public bribery, the following legislations are in place the Lokpal (independent ombudsman) to investigate and prosecute public servants including ministers for corruption, Prevention of Corruption Act, 1988 (PCA), Centre Civil Services (Conduct) Rules 1964, All India Services (Conduct) Rules 1968, Central Vigilance Commissions, 2003, Lokpal and Lokayuktas Act, 2013.
In 2018 the PCA, 1988 was further strengthened and amendments were made to the same. The amendment makes “bribery giving” to public officers a specific offence. Earlier only the act of “receiving or accepting bribery” by public officers was punishable. It vests more obligations upon corporate entities to tighten their compliance processes and to actively prevent its employees from engaging in any acts of corruption or fraud. The powers of the investigative agencies have also been broadened to investigate and prosecute a company along with its director, managers and other officers who participated in the acts of corruption or fraud by way of consent or connivance.
For regulation of instances of private corruption amongst companies (both Domestic and Foreign)-Companies Act, 2013 with strong focus on corporate governance and prevention of fraud, Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations 2015.
For regulating corruption amongst individuals those with undisclosed income and tax evaders have been targeted– Black Money (Undisclosed Foreign Income and Assets), Imposition of Tax Act, 2015, Fugitive Economic Offenders Act, 2018.
For regulation of foreign contributions- Foreign Contribution Regulation Act 1976 (FCRA). The act was amended in 2020 with the objective of enhancing transparency and accountability in the receipt of foreign contributions. This amendment was brought in the light of cancellation of licenses of non-governmental organization for their noncompliance in maintaining accounts and filing of returns for the foreign contributions received by them.
In addition to all the above the Indian Penal Code, 1860 sets out provisions which covers bribery and fraud matters, including offences relating to criminal breach of trust and cheating.
Anti-corruption laws for multinationals
It’s a mandatory requirement for the Indian subsidiaries of a foreign company to comply with the anti-corruption laws as prevalent in the location of the parent company and to actively adopt the anti-corruption policies and framework of the parent company.
A strict compliance with the US and UK anti-corruption or anti-bribery laws is also required by the Indian subsidiaries, and they shall be liable for any sanctions in case of a violation. For instance, the Foreign Corrupt Practices ACT (FCPA) 1977 expressly prohibits payment of bribes to foreign officials in favor of obtaining or retaining business from abroad. FCPA violations can result in significant number of sanctions.
Overview of Cross Border Issues and Corporate Liability of Companies
India has ratified the United Nations Conventions against Corruptions (UNAC) and United Nations Conventions against Transnational Crimes and its three conventions. Corresponding changes have been introduced in the PCA in 2018 to align India with its international obligations. Both PCA and FCRA recognize the principle of corporate criminal liability of commercial organizations. The PCA and the existing legislative framework with its recent reforms for now are considered adequate for tackling the issue of corruption in India. However, a strong compliance with the said regulatory framework is recommended to combat this evil of “corruption”.
Group Anti-Corruption Policy (Capgemini)