The year 2012 has seen India at the centre of
much speculation regarding the growth opportunities it presents and the
corruption risks associated with realising the same opportunity. The
speculation in the private sector is complemented by with the masses conveying
their strong displeasure with the corrupt state of affairs in the country. The
2012 Corruption Perception Index published by Transparency International ranked
India 94th out of 176 countries. The Economic Times in September
2011 had a put a figure of US $ 462 Billion as the loss that India has suffered
post its Independence in 1947, to tax evasion, crime and corruption. Post the
publication of this report, the country has already been witness to various
other corruption scandals, including a scandal involving the allocation of coal
blocks which is estimated to be at US $ 33 Billion and a scandal in the State
of Karnataka dealing with Wakf land estimated at US $ 36 Billion in addition to
others – further contributing to this astronomical figure.
This notwithstanding, the public pressure and
the proactive role played by the Indian media is bringing to the fore front a
no corruption sentiment, forcing the law makers, the judiciary and the
enforcement agencies to pick up the ante. India has also signed and ratified
the United Nations Convention against Transnational Organised Crime and also
the U.N. Convention against Corruption.
Thus, the tide is definitely turning. Through the course of this article
we seek to map out the latest trends in the anti corruption framework in India
from both a legislative and enforcement perspective.
Legislative update: The legislative framework dealing with anti corruption definitely
requires a major revamp in order to strengthen the substantive offences.
India’s principal money laundering legislation Prevention of Money Laundering
Act 2002 was amended with the passing of the Prevention of Money Laundering
(Amendment) Bill, 2011 in December 2012. This amendment introduced the concept
of ‘corresponding law’ which would seek to link the provisions of the Indian
law with foreign law and also removed the maximum penalty amount of Rupees Five
Hundred Thousand as earlier prescribed, in addition to other reforms – bringing
India’s money laundering laws closer to its western counterparts.
The Indian Parliament is currently sitting
over several legislations that will strengthen the anti corruption framework
considerably. These are:
· Prevention
of Bribery of Foreign Public Officials and Officials of Public International
Organizations Bill, 2011: This bill seeks to criminalize the offence of bribing foreign
public officials and officials of public international organisations. The
punishment for the offences is imprisonment from six months to seven years and
a fine. This bill further empowers the Government of India to enter into
agreements with other countries to enforce the same and also provides for the
amendment of existing extradition treaties to cover the mentioned offences.
- Public Interest Disclosure and Protection to Persons Making the Disclosure Bill, 2010: This Bill is commonly referred to as the Whistle Blowers Bill and endeavours to create a mechanism whereby complaints on any allegations of corruption or wilful misuse of power against a public servant can be registered, while protecting the identity of the person making such disclosure or the whistleblower. The Bill penalises the disclosure of the identity of the whistle blower and also penalises false complaints which were knowingly made.
- The Prevention of Corruption (Amendment) Bill, 2008: This Bill will amend India’s principal anti corruption legislation the Prevention of Corruption Act, 1988 by including provisions for the forfeiture of property acquired by public servants through corrupt means, modification of the fine for the offence of not satisfactorily accounting for pecuniary resources disproportionate to known sources of income and extending the provision for protection of public servants against vexatious complaints to post their ceasing to remain public servants.
- Lokpal & Jan Lokpal Bills: These Bills seek the formal establishment of an Ombudsman to be the principal anti corruption watchdog and judge. The Jan Lokpal Bill is accompanied by a citizens charter as well.
- Private sector corruption: The Indian Prime Minister – Dr Manmohan Singh, at a recent conference with various enforcement agencies spoke about amending the Indian Penal Code to cater to offences of private sector corruption in order to better tackle the supply side of corruption. The drafts of the proposed Bill are being circulated with the various States and Enforcement Agencies.
Emerging trends and devlopments: The
galvanised anti corruption sentiment has seen its manifestation in the actions
of the judiciary and enforcement agencies. We track some of these trends and
developments below:
The
Government of India has given its assent for the establishment of 71 special
courts exclusively for the trial of cases by the country’s premiere
investigative agency the Central Bureau of Investigation (CBI) which fall under
the ambit of the Prevention of Corruption Act. The Supreme Court of India taking
active cognizance of the matter on the 30th of January 2013 passed
an order asking the Government to establish 22 such courts within 2 months.
The
Serious Frauds Investigative Office was established in the year 2003, but with
the advent of the passing of the Companies Bill 2011, we will soon see the
Serious Frauds Investigation Office being given more teeth, including the
reported power to investigate companies for violations in India even if they
aren’t registered in India, along with a host of other powers. This is coupled
with the Economic Offences Wing’s that are being set up in almost all States in
the country.
The
Investigation trend into acts of bribery, corruption and fraud – is further
complemented by the heightened media interest in such cases, which in turn
pressurises the agencies and courts involved. The Higher Judiciary in India has
been seen making strong recommendations in this regard as was evident when the
Supreme Court of India in a landmark case[1]
held that delaying the sanction to prosecute public servants as is provided for
under the Prevention of Corruption Act by the Government would amount to a
violation of the due process of law. The Higher Courts have been taking a major
interest in trials that are being conducted in the lower courts, to prevent
abuse or manipulation by any sort, and the 2G case trial was the best example
of the same.
Executive action is also seeing visible signs
of being conscientious about allegations of corruption. In March 2012, six
defence companies out of which there were four foreign companies were
blacklisted by the Ministry of Defence for a period of 10 years, on grounds of
allegations of bribery in the procurement of contracts. A similar blacklisting
order was passed by the Ministry of Agriculture against Dow Agro Sciences India
a subsidiary of Dow Chemicals, U.S.A. The keyword here is a mere allegation of
bribery and not cases where such allegations were proved. A blacklisting
proceeding is relatively less cumbersome on the Ministry as they are only
required to conform to the Principles of Natural Justice and serves as an
effective remedy in their hands, while causing obvious business loss and tremendous
loss of goodwill and bad publicity to the blacklisted company. In light of
repeated cases involving bribery and corruption, various Government agencies
and departments are also proactively making the legal framework stronger in
their favour by entering into ‘Pre-Contract Integrity Pacts’ and requiring
express representations through documentation that the companies will not bribe
either themselves or through agents to obtain government contracts / tenders/
mandates.
We also find growing scrutiny into all
sectors having major license regulations. The transactions in such cases are
coming under the scanner, and this is an extremely important trend to note.
Bharti Wal-mart, Wal-marts Indian subsidiary has recently been reported to have
allegations of bribery in obtaining over 50 licenses that were necessary for
doing business in India. With the disclosure of investigation made by Bharti
Wal-mart, the Indian investigative agencies have also swung into action. This
was also visible while Augusta Westland the helicopter manufacturer is facing a
probe by Italian prosecutors, the Indian Ministry of Defence had asked for
information in this regard through diplomatic channels to evaluate prosecution
in India. A similar trend has been noted when investigations were faced by
Kraft Foods in the U.S.A under the Foreign Corrupt Practices Act for
allegations of bribery by their Indian subsidiary, the Indian agencies took
cognizance of the same to investigate the matter in India as well.
All in all there is a positive trend which is
visible, but still miles to go before India can actually rest. Until and unless
enforcement action and successful prosecution actions pick up, the rest will be
window dressing. However, the step in the right direction has definitely been taken.
[1] Subramaniam Swamy v. Dr. Manmohan Singh, Civil Appeal
NO. 1193 OF 2012 (Arising out of SLP(C)
No. 27535 of 2010)
Authors: Sherbir Panag and Zulfiquar Memon
Published by: Criminal Law Section News, International Bar Association Legal Practice Division Newsletter, Volume 6 Number 1
