By K. Manoggnya Reddy

Published On: August 30, 2021 13:02 IST

Introduction

The abuse of public resources to private gain is corruption. This concept refers to the various phases of our lives, from our childhood to our present day. This word is often used to imply that a person’s actions and decisions are made for their own selfish interests instead of the rights or wrongs of their decisions. It is a serious threat to democracy and is threatening the economy and commerce.

There are some differences between bribery and corruption. Corruption is usually misusing someone’s influence/position for undue advantages, whereas bribery is the act of offering something, usually money, to gain an advantage in exchange for either a position of advantage or illicit advantages.

India has a federal structure with a strong emphasis on local autonomy. The government and its various state-owned enterprises play a vital role in the Indian economy. This includes performing various sovereign functions, such as defence and education, etc. So, conducting business in India often involves engaging in various forms of interactions with the government.

Moreover, many of the laws in India have a wide range of discretion when it comes to government functionaries. A single business entity is often subject to various regulations. These regulations may vary depending on the business’s operation and the level of government oversight. Therefore, several legislations have been enacted in order to fight corruption.

Legislative framework of Bribery in India

• Prevention of Corruption Act, 1988

The Prevention of Corruption Act, 1988, was enacted to criminalize the taking of any advantage of public duty. This Act also provides for a wider meaning of the word “undue advantage”. This term does not include any form of gratification that an individual receives from the government or any organization that he/she works for or to be specific this does not restrict to any specific type of gratification or form of compensation but it includes any other form of compensation that is not permitted by the law or any government organization that he/she serves.

The Public Service refers to individuals who perform their duties for the government or a local authority. It also includes any person who is a judge, an arbitrator, or a public servant. Private banks, for instance, may also perform a public duty. Similarly, being a Member of Parliament is also considered a public servant.

The offences under the Act are broadly divided into six pointers,

• They are applicable to anyone who accepts or makes available any undue advantage in performing the public duty dishonestly.
• Thirdly, influencing a public servant to perform a specific action or act on behalf of oneself by using personal influence.
• Bribing a public servant for business or for an advantage in the conduct of business. This type of bribery is usually carried out by commercial organizations.
• Any public servant obtaining any advantage or undue advantage from another person for any reason whatsoever by him or his superior.
• Any person who “abets” an offence or is an regular offender is guilty of the offence as per the act.
• Any criminal misconduct which includes the diversion of public funds or properties for private gain.

The cases under the Act are investigated by the Central Board of Investigation or the anti-corruption branches of the police. Trial before a special court is also conducted by a special judge appointed by the Central or State government. Before they initiate disciplinary proceedings against public servants, the government has to first sanction them.

In case of bribery, the same applies to both the accused and the private person who gave the bribe. As per the Act, anyone caught giving a bribe of any kind is liable to get imprisoned for up to 10 years.

• Foreign Contribution Regulation Act, 2010 

The Act prohibits the acceptance of foreign contributions or the utilization of foreign hospitality for any detrimental purpose. The Act allows the use of hospitality and contribution from the central government without prior permission. The Act refers to individuals such as judges or who are either government servants or members of a political party and are controlled by the government. Further, the term Foreign Contribution has a wider connotation.

It pertains to any transaction that is made by or on behalf of a foreign entity made in the form of either currency or securities or etc. Similarly, A foreign source is a term that refers to the government of a foreign country or an international agency. The Foreign Contribution (Regulation) Act, 1989, only prohibits the acceptance of foreign contributions and also prohibits the receiving of foreign hospitality by foreigners while visiting a foreign country.

On violation of these regulations, there could be punishment in the form of imprisoned for up to five years.

• Others

Various legislations are also made to check corruption in the country. These include the Central Vigilance Commission Act, 2013, the Right to Information Act, 2011, and the Whistle-Blowers Protection Act, 2011.

There are various rules and regulations that restrict the public official from receiving undue advantage through gifts, trade, business or other pecuniary benefits. Under Indian Penal Code 1860, it is an offence for a public servant to engage in any occupation or business. Under the provisions of the Indian Penal Code, a public servant could be prosecuted for commercial activities.

These regulations and laws aim to prevent corruption within the country.

Legislative framework for Bribery in US, UK, and Canada

• US

The Foreign Corrupt Practices Act is a US law that prohibits individuals and entities from making payments to foreign officials to obtain or retain business. It applies to anyone who has a connection to the US and engages in corrupt practices abroad. The Foreign Corrupt Practices Act applies to any act that a US business, foreign corporation, or individual commits in the US in order to further a foreign corrupt practice. The act applies to any individual or entity engaged in corrupt activities in the US. Those who are physically present or not in the US may be prosecuted under the act.

The Foreign Corrupt Practices Act is widely enforced in the US. Both the Department of Justice and the Securities and Exchange Act of 1933 (SEC) enforce it. The concept of the act was to introduce corporate liability for all the parties involved in the corruption offences, regardless of how they committed their foreign counterparts. In cases of violations of the act, there are various penalties involved. These include large financial penalties and prison time.

The analysis of the law confirms that bribery is not a basic requirement of businesses in most countries but that does not mean that it doesn’t exist. Many countries have taken important steps in addressing bribery, but much more is needed to be done in order to prevent it.

Many companies have started adopting anti-bribery and corruption solutions (ABAC) to improve their operations. Due to the increasing number of third-party contracts, businesses are not having complete control over the third party. This is a risk factor that they are not able to control. Many companies that operate internationally have adopted third-party contracts even though they are with high levels of corruption, to protect themselves from potential fines and reputational damage.

• UK

The Bribery Act 2010, which was enacted by the British Parliament, is a law that aims to prevent bribery acts in the UK. The Bribery Act is a law that criminalizes the bribery of foreign officials and public officials. It also covers the failure of a commercial institution to prevent bribery. The penalties for a crime under the Act are severe, with up to 10 years in prison and an unlimited fine. Officers and directors are also liable to disqualification even if they are actively or passively involved.

This law gives authorities the ability to prosecute those who have links to the UK regardless of where the crime occurred. To get caught, all that’s required is that the company is carrying out business or part of its business in the UK. The UK government has indicated that it will consider a company’s presence in the country when it applies for this condition.

It is important that companies take a close look at their legal and operational framework to ensure that their operations are carried out in a manner that is risk-free. This new law applies to companies that have multiple branches and subsidiaries in the UK. This law could affect the operations of companies that have sales representatives, agents, and bank accounts in the UK.

• Canada

There are two main sources of anti-bribery regulation in Canada:

The Foreign Public Officials Act and the Criminal Code. The Canadian Financial Protection and Accountability Act of 2013 (CFPOA) became more lenient in its enforcement against individuals and businesses that engage in corrupt activities. The Canadian Financial Protection and Accountability Act applies to everyone who engages in corrupt practices with a foreign public official.

The term “foreign public official” is also used to refer to persons who act for a foreign state or perform public duties for a foreign state not necessarily includes political officials or candidates.

Section 3 of the Foreign Corrupt Practices Act makes it an offence to bribe a foreign official. It can also induce the official to act or influence the foreign state’s decisions. It is an offence if the bribe is not paid or the action is not carried out. Both accepting and offering a bribe are considered offences. Accounting offences are usually referred to as books and records offences are dealt under Section 4.

This section relates to the bribery of a foreign official. Generally, this offense involves forging accounting records to conceal or facilitate the official’s bribery. The courts of Canada have jurisdiction over offences that are under the Canadian Financial Protection and Accountability Act if they occur within the territory of Canada. Generally, if an offence occurs, then the courts have jurisdiction over the accused regardless of whether it actually occurs.

Under the Canadian Financial Protection and Accountability Act, businesses can make “facilitation” payments to foreign public officials under Section 3(3) of the Act. A facilitation payment is made to a foreign public official to accelerate or guarantee their routine actions. The Bill 2013 eliminated the exception of facilitation payments being made in Canada. Accordingly, these payments will become an offence once the new provision is proclaimed into force.

The Code also contains specific offences that deal with corruption and bribery in Canada. These include fraud, bribery, and secret commissions. These include schemes involving public officials, judges, MPs, and police officers.

Aside from the Canadian Financial Protection and Accountability Act, anti-corruption programs are also applicable to interactions with First Nations officials and governments in Canada. This includes the implementation of new regulations and the Code of Conduct for Public Officials. There is also a conscious need to be aware of the various interactions between Canadian Aboriginal governments and foreign and domestic officials. 

Comparison of the Laws

The Bribery Act of the UK was enacted in 2010. It prohibits bribery in exchange for certain activities or services. The Act defines bribery as any act of financial or other advantage that is offered in exchange for an improper act or activity.

The term “relevant function” refers to any activity that is performed on behalf of a body of persons or a public institution. Performing an improper act is defined under Section 4 of the Act, as any activity that is expected from a person in a position of trust.

The Section 5 under the Act sets the standard for a person who is a reasonable person in the United Kingdom. If the breach has occurred in the U.K., or in a foreign jurisdiction, then the local custom or practice would be disregarded.

The Act also makes it a crime to bribe a foreign public official. This includes officials of a foreign public institution or government agency. The Act also punishes commercial organizations if they fail to prevent bribery by their employees. There are various laws in the US that are aimed at fighting corruption. The main legislation that pertains to this is the Foreign Corrupt Practices Act.

The Anti-Corruption Act aims to fight public corruption and fraud at international markets. It is applicable to individuals who are involved in the activities of public corruption.

1) This list refers to the domestic and foreign entities that issue securities to the SEC. It also includes the domestic concerns of US citizens and legal residents of foreign countries.

While the US, UK, and India have robust anti-corruption laws, there are some differences in their statutes. This article will talk about these differences and how they can be utilized to fight against graft.

The various anti-corruption legislations have different requirements for their intent. For instance, the concept of “gratification” is different from the concept of “performance”. The provisions of the Prevention of Corruption Act, for instance, require that the recipient of a bribe be incentivized for not performing an official act.

The motive for a conviction under the Foreign Corrupt Practices Act is presumed upon the proof of bribery or acceptance of gratification. Likewise, under the Bribery Act of the UK, the accused is required to show that he or she has knowledge of the activities that he or she has committed. The concept of knowledge under the act is usually defined as conscious disregard or wilful blindness. For instance, the UK’s Bribery Act requires the defendant to show proof of his or her knowledge of the law.

2) Failure to maintain accurate records and books can be regarded as an offence under the Foreign Corrupt Practices Act . Generally, failure to file reports with the SEC and keep accurate books and records is an offence. However, The failure to keep records is not an offence under the Prevention of Crime Act (PCA). Similarly, failure to have adequate procedures in place under the Bribery Act of UK could be regarded as an offence.

3) On the other hand, if a company has a defence of robust corporate compliance, then it can be exempt from the provisions of the bribery act.

However, Having failed to prevent or detect any violation of the Foreign Corrupt Practices Act or the Prevention of Crime Act would not exempt the person from liability under these laws.

4) The presence of local law in foreign countries is not an exception to the requirements of the UK and US Bribery Acts. Foreign officials would be exempt if the local laws provide for the taking of gratification.

5) The provisions of the Prevention of Crime Act vary depending on the seriousness of the offense. For instance, if the crime is considered a serious offense, the maximum punishment is 7 years in jail.

But, For a variety of reasons, including but not limited to corrupt or dishonest conduct, such as according to Prevention of Crime Act, a person may face up to ten years in prison. In most cases, this sentence can be increased to ten years in prison for habitual offenders.

The UK Bribery Act carries maximum fines of up to ten years. Individuals and corporations can also be subject to unlimited fines. The fine for a corporation under the Foreign Corrupt Practices Act ranges from 2 to 2 million dollars. For individuals, it can be up to 2 hundred thousand dollars. The fine for a violation is five-year imprisonment.

Conclusion

Corruption is a threat to global economic growth and human security. It can also cause social services to be compromised. There are regulations and guidelines in place to prevent corruption. The laws in the UK and the US provide a robust framework to fight corruption. Provisions related to commercial and private bribery have yet to gain prominence in Indian laws. The provisions of the laws in these countries would help in developing a robust framework to prevent and reduce corruption.

References

• What Are The Anti-Corruption Laws in USA and UK – iPleaders
• Anti-corruption laws around the world
• The Anti-Bribery and Anti-Corruption Review: India
• A Comparative Analysis of the Perception Differences between Competition Law and Anti-corruption Law