Verdict Corner: Towards a corruption-free India?

The amendments to the Prevention of Corruption Act, if accepted, may have far-reaching implications on understanding corruption in public life and efforts to counter it

An effort to bring the anti-corruption laws in India in parity with global best practices and the judicial pronouncements by the UPA government seems plagued with “hurried drafting and mechanical lifting” of certain provisions of the foreign law.

Though a much-needed endeavour in light of India’s ratification of the United Nations Convention Against Corruption (UNCAC) in May 2011, the 2013 Bill—which is an amendment to the Prevention of Corruption Act 1988; Delhi Special Police Establishment Act 1946; and Criminal Law (Amendment) Ordinance 1944—has come under severe criticism by the Law Commission, which feels that the approach “to transplant certain provisions from the UK Bribery Act, while well intended, is misconceived and will serve to create further confusion and ambiguity.”

With the aim to bring in clarity with regard to payment of bribery to public servants, Law Commission chairman AP Shah, in his report submitted to law minister Sadananda Gowda, has proposed some significant amendments in the Prevention of Corruption (Amendment) Act.

The suggestions were made after carrying out a detailed study of the UNCAC and other relevant statutes and case laws of India and the UK.

As of now, the Prevention of Corruption Act only covers public servants and does not bring in its fold companies and private individuals. It is for the first time that the government is proposing amending the Act to hold “a commercial organisation liable for failure to prevent persons associated with it from bribing a public servant.” It also laid down necessary norms for commercial organisations to set their house in order to tackle any form of corruption perpetrated by their employees or associates in the course of business to further the interests of the organisations.

The 54-page report describes as “overbroad” the provision which ascribes criminal liability “to every person who is in charge of and responsible to the organisation for the conduct of its business” if the offence is proved to have been committed with the consent or connivance of the company, since it exposes the entire top brass to a jail term of 3-7 years.

Suggesting a better solution, the law panel has asked the legislature to drop the phrase ‘undue financial or other advantage’ from the entire Bill and substitute it with ‘undue advantage’ throughout. “The clause ‘financial or other advantage’ (as proposed in the 2013 Bill) does not seem to cover sexual favours in return for the public servant’s acts or omissions. Thus, the proposed amendment is actually narrowing the scope of corruption, instead of the stated intent of expanding it,” the panel added.

The rationale given by Justice Shah is that the ‘undue advantage’ would cover any gratification whatsoever, other than legal remuneration, and that the word ‘gratification’ is not limited to pecuniary gratifications or to gratifications estimable in money. The Law Commission report says that only that official must be held liable whose consent or connivance is proved, without any harassment caused to other officials of the company. The report also criticises a provision which says that a company would have to pay a fine if it is unable to prevent acts of corruption.

While the proposed Section 8 targets commercial organisations for indulging in bribery of a public servant to obtain an undue advantage in business, the proposed Section 9 talks about the vicarious liability of the commercial organisations in failing to exercise due diligence to prevent persons associated with it from bribing a public servant.

Unlike the UK’s Bribery Act, the proposed amendment to Section 9 does not envisage the publication of any sort of guidance or any obligation on the government, and it places the entire burden of proof on commercial organisation to prove their innocence. The Commission has recommended that a new clause should be inserted making it mandatory for the government to publish guidelines for “adequate procedures” after due consultation with the public.

“This provision will lead to an immediate and significant impact on the conduct of business by corporations, especially in light of the fact that they will not have any clarity on what is expected of them and will not even know if the procedures and processes they adopt are in compliance or in possible breach,” Shah said.

Even separate procedures for attachment and forfeiture introduced in the 2013 Bill in cases of corruption by public servants are bound to create confusion. Thus, Shah has recommended replacement of the proposed sections 18A-18N with a single provision to ensure compliance with the UNCAC.

Though the Law Commission has managed to correct the inordinate errors, what remains to be seen is whether Parliament will check its faults by accepting the suggestions. If accepted, the Bill may have far-reaching implications on understanding corruption in public life and efforts to counter it. The amendment Bill is likely to be brought before Parliament in this Budget session.

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