The Prevention of Bribery of Foreign Public Officials and Officials of Public International Organizations Bill, 2015

Amit Singhal analyzes the Prevention of Bribery of Foreign Public Officials and Officials of Public Organizations Bill at a time when India's economy is growing exponentially, the increasing numbers of political scams, and widely prevalent corrupt practices in various sectors, have become a strong deterrent to this growth.

INTRODUCTION

Good governance has been recognised as a crucial aspect of the government’s agenda to avoid discouraging investors and to curb these acts of depravity. In line with this vision, past years have seen several attempts made through a multitude of legislations, to implement good governance in the public as well as private sectors of economic operation.

Such an attempt was first seen in the Indian Penal Code (“IPC”), which punished criminal breach of trust by public servants, who either were entrusted with or held dominion over property.¹ Section 21 of the IPC listed over ten categories of persons who were considered public servants under the act. Eventually, the need for more specialised laws was felt, and the Parliament passed the Prevention of Corruption Act (“PCA”) in 1988. The PCA not only expanded the definition of ‘public servant’ to have wider connotations, but also carved out a separate offence for taking of bribes while acting in an official capacity. Other statutes such as the Benami Transactions (Prohibition) Act, 1988 and the Prevention of Money Laundering Act, 2002 (“PMLA”) also sought to check the growing menace of corruption.

A similarly heightened consciousness towards promoting good governance in several other countries caused the United Nations to draft an international convention that inter alia criminalized the act of giving and receiving bribes.² The United Nations Convention against Corruption, 2005 (“UNCAC”), is a comprehensive convention that has been ratified by 178 countries including India.³ In order to give effect to the UNCAC, the Prevention of Bribery of Foreign Public Officials and Officials of Public International Organizations Bill, 2011 (“2011 Bill”) was introduced in the Parliament. However, due to several reasons, the 2011 Bill could not be passed and it lapsed when the Lok Sabha dissolved in May, 2014.

Meanwhile, a bill to amend the PCA is in the pipeline and several amendments to the PMLA have already been enacted in February, 2015.Although such changes looked promising in the context of a frankly dismal state of affairs, it became imperative to reintroduce the 2011 Bill in the Parliament. Accordingly, the Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill, 2015 (“2015 Bill”), was drafted and sent for review to the 20th Law Commission of India (“Commission”). The resultant Report No. 258⁴ of the Commission proposed fresh amendments and redrafted a comprehensive version thereof (“Proposed Bill”) after a detailed review of existing international practices on bribery and money laundering. The recommendations are still pending for consideration by the Government and yet to become the draft let alone the Act.

This Paper seeks to study the 2011 Bill and the Proposed Bill, and provide some recommendations in light of global practices. Part I briefly studies status quo in India, while Part II gives a comprehensive analysis of the Proposed Bill and the amendments it seeks to bring about. Part III studies best practices of common law countries that have successfully ratified the United Nations Convention against Corruption (“UNCAC”), while Part IV concludes with suggestions for change in India.

PART I: STATUS QUO

‘It’s amazing. The moment you show cash, everyone knows your language.’

Corruption and bribery pose serious threats to the Indian democracy and rule of law, in addition to disrupting economic progress and political functioning. With the increased focus on anti-corruption laws over the last few years, India has shown considerable progress in tackling the issue on the international front. The latest Corruption Perceptions Index by Transparency International ranked India 76 out of 174 countries, placing it above China, Thailand and Sri Lanka⁵; this is a commendable rise from ranks of 85 and 94 in previous years.⁶ However, the number of instances of bribery continues to rise rampantly in public and private sectors.

The existing mechanisms in India to combat corruption can be rooted in the UNCAC, since it laid the foundation for criminalisation of various forms of corruption.

UNCAC

The UNCAC defines a Foreign Public Official (“FPO”) as “any person holding a legislative, executive, administrative or judicial office of a foreign country, whether appointed or elected; and any person exercising a public function for a foreign country, including for a public agency or public enterprise”.⁷ An Official of Public International Organisation (“OPIO”) is an international civil servant or person who is authorized to act on behalf of that organization.⁸ The convention criminalizes both active and passive bribery, i.e. offering bribe as well as accepting it. Moreover, it seeks to establish several acts as criminal offences, such as embezzlement, misappropriation or other diversion by a public official, giving or receiving undue advantage, abuse of power, illicit enrichment, laundering of proceeds of crime, etc. The convention also urges states to take appropriate measures to prevent corruption in both the public and private sectors – it specifically tackles the offences of bribery and embezzlement in the course of economic, financial and commercial activities in the private sector.⁹ Hence, the UNCAC extensively covers various forms of corruption, and also recommends adjudicatory mechanisms to enforce them. This report, however, shall restrict its study to Articles 14-16 of the UNCAC as they aid in understanding the anti-corruption laws in India.

Article 14: establishes the offence of money laundering and requires states to regulate and supervise institutions such as banks, non-bank financial institutions and other bodies prone to money laundering.

Article 15: codifies the criminal offences of active and passive bribery by national public officials. Interestingly, the act of promising, offering or giving bribes by any person has been deemed at par with solicitation or acceptance by public officials. The offence has been worded as giving or accepting “undue advantage”, a term which has not been defined in the UNCAC and is consequently left to the open interpretation of states.

Article 16: is the crucial provision that criminalizes bribery by FPOs and OPIOs when committed with intention, either directly or indirectly, in order to induce an official to act or refrain from acting in their official duties. Article 16(1) discusses offering bribery “to obtain or retain business or other undue advantage in relation to the conduct of international business.” On the other hand, Article 16(2) deals with the solicitation or acceptance of undue advantage by an official. In other words, while paragraph 1 of Article 16 recognizes the offence of active bribery by any person, paragraph 2 identifies passive bribery by the official himself.

The three abovementioned articles carve out the general scheme of Indian anti-corruption laws. Although Indian statutes such as PCA and PMLA were enacted before the commencement of the UNCAC, they correspond to the offences iterated by the UNCAC.

PREVENTION OF CORRUPTION ACT

The PCA crossing the parameters of UNCAC has given a broader definition to the terms ‘public servants’ and ’institutions.‘ Sections 7, 8, 9, 11 and 13 of the PCA provide the list of offences that can be committed by a public servant, and only address passive bribery. The PCA punishes accepting, or obtaining, or agreeing to accept, or attempting to obtain gratification other than legal remuneration in money or in kind by a public servant.

In addition to the abovementioned criminal offences, Sections 11 and 13 of the PCA punish the obtaining of anything valuable without consideration from a person concerned in proceedings or business transacted by a public servant, and criminal misconduct by a public servant, respectively. All offences, with the exception of criminal misconduct, are punishable with imprisonment between six months to five years along with fine. Criminal misconduct, however, can result in imprisonment for between one to seven years and fine.

The jurisdiction for taking cognizance and trying matters arising out of the PCA is vested with the Special Judge appointed in accordance with the act.

PREVENTION OF MONEY LAUNDERING ACT

Money laundering refers to the act of indulging in or assisting processes or activities connected with the proceeds of crime and its projection as untainted property.¹⁰ The offence is punishable with imprisonment for three to seven years and fine up to five lakhs. The offences under the PMLA are capable of being tried by a specially appointed adjudicating authority.

The two acts, PCA and PMLA respectively codify the provisions of Articles 15 and 14 of the UNCAC. There are two preliminary issues that can be identified with the existing system. First, Indian laws only penalise the offence of passive bribery while active bribery continues to go unchecked. Second, Article 16 of the UNCAC relating to bribery involving foreign officials is yet to be incorporated in Indian laws. The 2011 Bill was introduced to largely address these issues.

The next part will analyse the provisions of the 2011 Bill and the new changes suggested by the Commission as evident in the Proposed Bill.

PART II: CHANGES PROPOSED BY THE PROPOSED BILL

This section aims to throw light on the provisions of the 2011 Bill and the Proposed Bill, and endeavours to identify the issues they seek to resolve. A brief look at status quoe vinces that the absence of any legislative framework to punish bribery by FPOs and OPIOs is a major loophole that threatens the stability and security of industries and diminishes state resources. Hence, the need for more comprehensive legislation was imminent, and this need manifested itself in the form of the 2011 Bill. Although the 2011 Bill was never passed by the Parliament, it is crucial to analyse its provisions and compare them with the Proposed Bill.

COMPARISON OF PROVISIONS

The 2011 Bill introduced the offences of accepting and giving gratification, while also punishing any abetment of, or attempt to commit the same. The key provisions of the 2011 Bill, as compared with corresponding parts of the Proposed Bill, are as follows:

1. Extent and Application

1. Clause 1(2)(c) of 2011 Bill extends the jurisdiction of the law to “persons on an aircraft or ship registered outside India but for the time being in or over India”, which is extremely broad in its application, and inconsistent with the principles of sovereignty envisaged by Article 4 (‘Protection of Sovereignty’) of the UNCAC. In light of this, clause 1(2) has been redrafted in the Proposed Bill to clarify the circumstances in which the conduct constituting an offence under this Act may fall under the jurisdiction of Indian law.

   Now, the Proposed Bill suggests that the Act shall applies when the conduct occur wholly or partly in India or wholly or partly on board an aircraft or ship registered in India at the time of the commission of the offence; and also when the conduct constituting the offence under the Act occurs wholly outside India, and the offence is committed by a person who is an Indian citizen; or a person who is a permanent resident of India; or a person that is a body corporate incorporated by or under the laws of India. The Proposed Bill further defines ‘permanent residence’ which was not defined in the 2011 Bill. The absence of the definition in the 2011 Bill makes the term open for number of interpretations and has its implications in case of applicability of the Act as an individual can be a permanent residence in any number of cases. Therefore, the Proposed Bill limits the definition of ‘permanent residence’ by assigning the meaning to it given under the Income Tax Act, 1961.

2. Interpretation

1. Clause 2(1)(e) of 2011 Bill defines ‘Foreign Country’ as to include all levels and sub-divisions of Government, from national to local. It seems that the 2011 Bill proceeds to define a foreign country only on the basis of government, without having any reference whatsoever to territory. In other words, actually the definition doesn’t define Foreign Country at all because it uses word ‘include’ and not ‘means’.

   Therefore, Clause 2(1)(d) of the Proposed Bill seeks to define ‘Foreign Country’ more comprehensively, as it now ‘means’ any country other than India, including any political subdivision, government and any agency or political division.

2. Clause 2(1)(c) of 2011 Bill has been amended in the Clause 2(1)(e) of the Proposed Bill by dividing into two sub-clauses and followed by two Explanations. Now, Clause 2(1)(c) defines Foreign Public Official (“FPO”) means a person who holds a legislative, executive, administrative or judicial position of a foreign country; or a person who performs public duties or public functions for a foreign country. FPO in 2011 Bill also includes any person exercising a public function for public agency or public enterprise. The Proposed Bill instead of using terms ‘public agency’ and ‘public enterprise’ which are vague and not defined proposes to restrict itself to persons employed by a board, commission, corporation or other body or authority who performs public duties or public functions for a foreign country. Further, the term “official or agent of a public international organisation” used in Clause 2(1)(c) of the 2011 Bill has been proposed to be deleted in the Proposed Bill as the term is defined separately in clause 2(1)(g). Moreover, the terms “public duty” and “public function” are defined in the Proposed Bill via Explanation (A) & (B) respectively.

3. No change has been proposed to the Clause 2(1)(d) of 2011 Bill which defines an Official of a Public International Organisation (“OPIO”) as an international civil servant or any person authorised by a public international organisation to act on its behalf.

4. The definition of 'undue influence' under clause 2(1)(h) of the 2011 Bill has been simplified in the Proposed Bill as any gratification, benefit or advantage, property or interest in such property, reward, fee, valuable security or gift or any other valuable thing other than legal remuneration. It can be pecuniary or non-pecuniary, tangible or intangible. Further, an explanation has been added to clarify the concept of “legal remuneration” consistent with the meaning assigned to it under the Prevention of Corruption Act, 1988. The Clauses 2(1)(h)(i) & 2(1)(h)(ii) of the 2011 Bill attempt to incorporate the offence itself into the definition, which is inappropriate. Therefore, clauses 2(1)(j)(i) and (ii) sought to be deleted in the proposed Bill.

5. 2011 Bill contains no provision as to the definition of the term Public International Organisation (“PIO”), whereas Proposed Bill defines it under Clause 2(1)(f) as an organisation where countries, or their governments, or other international organisations or a mixture of them are members. The significance of this definition becomes more important when Clause 2(1)(d) of the Proposed Bill defines ‘Official of PIO’ but doesn’t define what PIO is.

3. Offences

1. Clause 3 of the 2011 Bill, enacted in pursuance of Article 16(2) of UNCAC, makes bribe-taking by a foreign public official or official of a public international organisation punishable. Whereas, Clause 3 of the Proposed Bill seeks to remove the act of attempting to obtain undue advantage.

2. Active bribery or the act of intentionally offering or promising to offer, giving or promising to give, directly or indirectly, any undue advantage to an FPO or OPIO is also punishable under Clause 4 of the 2011 Bill.

   No change made to the provision but a new provision has been introduced in the Proposed Bill as Clause 7 by listing statutory defences that can be claimed. According to Clause 7 of the Proposed Bill, a person is not guilty if it was:

   1. a reasonable and bona fide expenditure for (a) promotion, demonstration, or explanation of products or services, or (b) execution or performance of a contract.

   2. permitted under the laws of the foreign country or public international organization.

   3. made to expedite or secure the performance of any duty or function of a routine nature such as issuing licences, processing official documents, provision of services normally offered, etc.

3. While abetment and attempt to commit any of the abovementioned acts are also offences, in the case of attempt, it is expressly stated under Clause 5 of the 2011 Bill that there should be an act towards the commission of such offence.

   This above clause has been split into two provisions for abetment and attempt under the Proposed Bill. Clauses 5 and 6 prescribe different punishments for abetment and attempt respectively.

4. Liability of commercial organisations and of any director, manager, secretary or other officer with whose consent or connivance the offence was committed has been introduced in the Proposed Bill under Clause 8.

4. Punishment

1. 2011 Bill, Clauses 3, 4 & 5: The punishment prescribed for all offences under the 2011 Bill is imprisonment for a minimum term of six months extendable to seven years, in addition to fine.

   Proposed Bill, Clauses 3, 4, 5, 6 & 8: The minimum extent has been increased to three years while the maximum extent remains seven years. Attempt to commit an offence is punishable with imprisonment for a minimum term of one year but extendable to seven years.

5. Agreements with Foreign Countries

1. Clause 6 of the 2011 Bill provides that the Central Government is permitted to enter into any other country for enforcing the provisions of this Bill and for exchange of information. With respect to other states with which India has entered into conventions or treaties with, and with whom certain reciprocal arrangements have been made, the Central Government may notify conditions, exceptions and qualifications to such arrangements.

   On the other hand, Proposed Bill seeks to delete the clause on notifications regarding other contracting States.

6. Extradition

1. Offences under Clause 7 of the 2011 Bill are made extraditable offences and provided for in extradition treaties made by India.

   This provision was deleted in the Proposed Bill since the Commission found that such a unilateral amendment of treaties would violate Article 39 of the Vienna Convention on the Law of Treaties.

The Commission has also mutatis mutandis replaced the term “contracting States” or other states with which India has arrangements through a Convention or treaty, with “concerned States”. Overall, the Proposed Bill has amended the 2015 Bill to remove redundant provisions and to make its provisions more compliant with international law. However, certain issues continue to plague the Proposed Bill.

In light of these various aspects discussed above, it now remains to be seen whether the provisions of the Proposed Bill are in consonance with the best practices globally. The next section will analyse the measures adopted by various States who have ratified the UNCAC and compare them with the Indian position.

PART III: BEST INTERNATIONAL PRACTICES

It is observed that most commercial contracts between Indian and foreign parties choose the legislations of UK and USA as their standard anti-corruption laws. In addition to these laws of UK and USA, the practices of states in the Asia-Pacific also have to be analysed as the socio-economic and political context for their enactment is comparable to that in India.

UNITED KINGDOM

• Extra Territorial Application: The Bribery Act, 2010 in UK (“UK Act”) applies to offences committed within the territory of the UK as well as outside it, if the offender has a close connection with the UK. Such persons include inter alia British citizens, overseas citizens, residents and body corporate incorporated under the laws of UK. The UK Act also extends to situations where a part of the act or omission constituting the offence takes place in the UK. In case of FPOs and OPIOs, the UK Act clarifies that it applies only if the performance of the function or activity by the official is subject to the laws of UK.

• Categorization: The UK Act criminalizes both active and passive bribery that aims to induce or reward improper performance of a function/activity by any person. The relevant functions or activities are categorized into (a) functions of a public nature, (b) business activities, (c) in the course of a person's employment, and (d) by or on behalf of a body of persons. The definition of an FPO is identical to that in India.

• Statutory Defences: The only defence available under the UK Act is that the person’s conduct was necessary for the proper functioning of an intelligence service or the armed forces, when engaged on active service.

• Private Sector: The provision punishing commercial organisations for bribery under the UK Act is similar to the one in the Proposed Bill in India.. Sections 7 & 8 of the UK Act and Clause 8 of the Proposed Bill deals with it.

• Penalty: The penalty under the UK Act is imprisonment up to a maximum term of ten years and/or fine.

UNITED STATES

• Extra Territorial Application: The Federal Corrupt Practices Act (“FCPA”) extends to domestic concerns i.e. citizens, nationals, residents, or businesses organised under the laws of US, and foreign public officials. However, its application is limited to the territory of the USA, and due to such jurisdictional issues, the FCPA only punishes active bribery.

• Categorization: A foreign official under the FCPA is defined as any officer or employee of a foreign government or any department, agency, or instrumentality, or of a public international organization, or any person acting in an official capacity on its behalf. Due to certain unresolved jurisdictional issues, the FCPA has only criminalized the act of giving bribes.

• Statutory Defences: Under the FCPA, a statutory defence is provided for bribery to expedite or to secure the performance of a routine governmental action. The Proposed Bill in India seems to have borrowed this defence and the definition of routine governmental action from the FCPA. Moreover, payments or gifts that are either lawful under the written laws of the foreign official’s country, or were made as a reasonable bona fide expenditure, are also exempted from punishment.

• Private Sector: The FCPA punishes the domestic concern and any officer, director, employee, or agent of a domestic concern, or stockholder who is a natural person acting on behalf of such domestic concern. The punishment, however, varies depending upon whether the conduct was wilful.

• Penalty: Under the FCPA, the penalty for natural persons is limited to only a fine not exceeding $2,000,000. If such person is the director, officer, agent, stockholder of a domestic concern, he can be fined not more than $100,000 and/or imprisoned for not more than 5 years.

JAPAN

• Extra Territorial Application: The Unfair Competition Prevention Act, 1993 (“UCPA”) and the Penal Code apply to offences committed within the territory of Japan and to Japanese nationals abroad.

• Categorization: In Japan, the UCPA defines an FPO as a person who engages in (a) public services for a foreign, state, or local government, (b) services for a statutory body carrying out specific affairs in the public interest, and (c) the affairs of an enterprises owner or controlled by the government. It establishes the offence of giving, offering or promising to give any money or other benefits to a foreign public officer in order to obtain illicit gains in business with regard to international commercial transactions. Passive bribery is not an offence under the UCPA.

• Statutory Defences: The UCPA does not permit facilitation payments and has also criminalized ‘small facilitation payments’ made to public officials as it supports good administrative plans to solve corruption.¹¹ However, it has also been clarified that if Japanese companies offer congratulatory small gifts, business entertainment, and travel expenses just for the sake of building relationships and encouraging a better understanding of their products, such behaviour may not amount to bribery. It is strictly provided that payment of bribes would not be permitted even if persons would be forced or extorted to pay bribes in order to avoid being treated unreasonably and discriminately by the foreign public officials.

• Private Sector: In Japan, companies engaging in international business transactions are required to establish a compliance program that can lead to the appropriate prevention of the act of bribing foreign public officials.

• Penalty: In Japan, any person convicted of bribing an FPO may be punished by imprisonment for a period of not more than five years, or a fine of not more than five million yen, or both, according to Article 21 of the UCPA.

MALAYSIA

• Extra Territorial Application: The Malaysian Anti-Corruption Commission Act (“MACCA”) applies outside Malaysia if the offence is committed by a Malaysian citizen or a permanent resident.

• Categorization: The MACCA has a similar definition to the FPO as in the Indian Proposed Bill. It also punishes the offences of active and passive bribery when committed in relation to the official duties of the FPO. The MACCA is similar to the UK Act in its application to the private sector as any person, and not only public officials, can be convicted for the receiving or accepting gratification.

• Statutory Defences: The laws in Malaysia do not provide for any statutory defences. Hence, no express recognition of exemptions to gifts, hospitality, facilitation payments or adequate compliance mechanism of companies can be found in Malaysia.

• Penalty: Upon conviction, the offences under MACCA are punishable with a term of imprisonment not exceeding twenty years and a fine of not less than five times the sum or value of the gratification which is the subject matter of the offence, if it can be valued, or RM 10,000.00, whichever is higher.

THAILAND

• Private Sector: In Thailand, the bribery is not recognized as an offence within the private sector.

• Categorisation: The Act Concerning Offences Relating to the Submission of Bids to State Agencies punishes persons and bidders who engage in active or passive bribery for some benefit in submission of bids with state agencies.

OTHER STATES

• Countries such as Canada, Korea, Australia, New Zealand, Switzerland and Belgium recognize small payments to facilitate routine governmental functions. However, the predominant practice in Asian countries like Hong Kong, Singapore, and Taiwan is to criminalize all forms of gratification given to public officials regardless of the amount.

ANALYSIS

1. Thailand: Sections 4, 5 & 8 of the Act Concerning Offences Relating to the Submission of Bids to State Agencies B.E. 2542 (1999) deal with the persons and bidders who engage in active or passive bribery for some benefit in submission of bids with state agencies by specifically penalising bribery in bids conducted by state agencies. The insertion of this provision after Clause 8 as Clause 9 ‘Liability of Persons dealing in submission of bids’[thereafter the clauses could be renumbered accordingly] in the proposed bill will help in tackling the bribery offences in cases of bid conducted by the state.

2. Australia: Sections 70.3 & 70.4 of the Australian Criminal Code provides that facilitation payments made to expedite or to secure the performance of a routine governmental action by a foreign official, political party or party official are exempt from penalization. Clause 7 of the proposed bill impliedly provides for this defense, but however, the important point to note is that the proposed bill failed to provide for circumstances under which a certain transaction will be considered as a facilitation transaction. In this regard, the Australian Anti-Bribery law provides that for a transaction to be a facilitation payment and not bribery, the benefit received must be ‘of a minor value’ and must be offered ‘for the sole or dominant purpose of expediting or securing performance of a routine government action of a minor nature’. The proceedings of the transaction are also required to be recorded. Such provision can be added in Clause 7 of the Proposed Bill and the provision as to the circumstances under which a certain transaction will be considered as a facilitation transaction can be added by way of insertion of Explanation 2 to Clause 7 in the Proposed Bill and numbering Explanation as Explanation 1. As such insertion will fetter the misuse of defences provided under the proposed bill.

3. Austria: The Austrian Penal Code provides for the jurisdiction to prosecute when extradition is denied due to nationality but also covers situations of the denial of extradition for reasons unrelated to the nature of the offenses. This provision should not be included in the Proposed Bill as this would be too harsh and can affect the relation of India with Other Countries.

4. Canada: Under section 3 of the Corruption of Foreign Public Officials Act (“CFPOA”) it is also possible to prosecute an individual for conspiracy which is not covered in the proposed bill. Moreover, the manipulation, falsification, or destruction of “books and records” to conceal or facilitate bribery also constitutes an offense under the CFPOA (section 4). These aspects can very well be included in Clause 3 of the proposed Bill as ‘an intention in common to commit bribery, and counselling others to commit bribery”.

5. Malaysia: All gifts received by national public officers must be reported in accordance with section 25(1) and (3) of Malaysian Anti-Corruption Commission Act (“MACCA”). In the instance a gift is received and not reported, it is deemed to have been received corruptly. The incorporation of this kind of provision after Clause 15 as Clause 16 ‘Duty to Report Bribery Transactions’ [thereafter the clauses could be renumbered accordingly] in the proposed Bill will strengthen the Anti-Bribery legislation in India.

Moreover, Section 161 of the Penal Code outlaws the taking of gratification, other than legal remuneration, not only in respect of an official act by a public servant but also is also applicable to “someone expecting to be a public servant”.

Also, the legislature has also provided a compelling presumption under section 50 of MACCA in order to ease the prosecution of cases involving the aforementioned offenses. The presumption comes into operation only when the essential ingredients of the offense have been established by the prosecution. Under this presumption, once it has been shown that gratification has been received by a national or foreign public official or an official of a public international organization, it shall be presumed that it was corruptly received unless the contrary is proved.

6. Switzerland: Article 7(1) of the Swiss Criminal Code provides that under exceptional circumstances, criminal jurisdiction can also be established in relation to crimes committed abroad where the alleged offender and the victim are both foreign nationals. These circumstances may relate to crimes that are condemned by the international community or cases where due to the application of the principle of non-refoulement, the extradition request cannot be operationalized. Such kind of provision can be added in the proposed bill by inserting Clause 14 ‘Other offences committed Abroad’ after Clause 13 [thereafter the clauses could be renumbered accordingly] as it would help in cases where the extradition request is denied by the countries and the offence has its effect to the international community at large.

PART IV: LOOPHOLES AND RECOMMENDATIONS

Firstly, the Proposed Bill has created the principal offences of merely ‘agreeing to accept’ or ‘promising to offer/give’ undue advantage in addition to attempt to commit such offence. It remains unclear as to when an act would transcend mere preparation and become an attempt, and whether it would classify as an attempt (deserving lesser penalty) or a principal offence.

Secondly, the list of comprehensive defences enumerated by the commission, which includes facilitation payments, is similar to that in Australia and the United States. This defence of advantage to FPOs for expediting routine governmental functions implies that providing an incentive to speed up the process and ensure that officials perform their routine non-discretionary duty is not illegal. However, this weakens the strict anti-corruption stance that the Proposed Bill seeks to take. In most Asian countries, individuals and companies suffer due to bureaucratic red-tapism and rampant corruption among government officials, as a result of which this defence has not been popular amongst most other Asian nations. Hence, this provision of the Proposed Bill may need reconsideration and in the alternative that the legislature decides to adopt the defence, they should also provide further guidelines mandating the officials to report such advantages received.

Thirdly, the Proposed Bill provides that in case of offences committed by any officer in a commercial organisation, the fact that such organization had in place adequate procedures designed to prevent persons associated with it from undertaking such conduct will be a defence for it to avoid liability. However, the practice in countries like Japan that has expressly made it compulsory to formulate a stringent internal mechanism has been found to be more effective. Moreover, members of companies that are either owned or controlled by the state have been deemed to be public officials under the UCPA. Adopting a similar practice will enforce a better check on commercial organisations that engage in international transactions.

Fourthly, all the bills drafted in India so far have failed to address bribery in the private sector. This is particularly relevant in cases of bids conducted by the state. In many cases in Japan, retired public officials, who were appointed as bidders, were found guilty of accepting gratification. Bid rigging is also a major issue in Thailand, which has sought to deal with this threat by specifically penalising bribery in bids conducted by state agencies.

Lastly, Article 35 of the UNCAC provides a legal right to obtain compensation for persons or entities who have suffered damages due to corruption. The UNCAC recommends this right to be incorporated by States in their domestic laws. However, the Proposed Bill does not provide for compensation as a remedy. The provision regarding compensation can be added in Clause 3 of the proposed bill itself by inserting ‘and compensation for damages’ after words ‘liable to fine’.

CONCLUSION

An analysis of best practices of states makes it evident that the Commission has considered and incorporated provisions which have worked in other countries, in the Proposed Bill. Provisions regarding extra-territorial application, passive bribery and penalty are in consonance with the UNCAC as well as best global practices. However, some issues continue to remain unresolved and unaddressed.

While the recommendations mentioned in Part IV of this Analysis are matters to be considered while passing the domestic legislation, the international community faces complications in extra-territorial application of anti-corruption laws and asset recovery. Both concerns were discussed extensively in the latest Conference of State Parties to the UNCAC in 2015 ¹² where states were requested to adopt Article 53 of the UNCAC, which recommends mechanism to allow direct recovery of assets by one state from another. It is commendable to note that the 2011 Bill and the Proposed Bill not only provide for such efficient methods of asset recovery and management but also recognise the importance of mutual agreement between states over assets and immunities of public officials. However, these pending issues will only be resolved by increased compliance with the UNCAC by other states, in the absence of which the Convention will remain toothless.

Moreover, it’s been more than 2(two) years since Law Commission has submitted its report and until now the recommendations are still pending for the purpose of consideration in the draft bill, it’ll be interesting to see the light of the day when the draft bill will become an Act. In any case, the enactment will go about as a reputational improvement that can win Indian companies & corporations’ goodwill and eminence. It additionally fits well into the Indian local and foreign activities to get control over black money and forestall tax avoidance, and to forcefully target exchange valuing and illegal tax avoidance. Also, it’d be interesting to see the next step of the Government at the time when India for the first time moved into the top 100 in the World Bank’s Ease of Doing Business global rankings.