Legal Briefing

Anti-corruption: the Indian scenario

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Public Sector | 01 September 2011

Public outcry against corruption is a worldwide phenomenon today. Voices of citizens in India demanding a corruption-free state have also soared to extremely high decibel levels. Recent high-value scams have further contributed to the increased public awareness.

Newspapers and television channels have been full of reports pertaining to scams of alleged misappropriation and misapplication worth billions by officials during the 2010 Commonwealth Games in Delhi; an estimated $40bn in revenues lost from the sale of 2G telecom licenses; and billions misappropriated from food and fuel subsidy schemes for the poor in Uttar Pradesh. Statistically speaking, India was ranked 87th out of 178 countries in Transparency International’s corruption perceptions index in 2010.

EXISTING LEGAL FRAMEWORK

India has a framework in place for combating corruption under certain statutes: the Prevention of Corruption Act (PCA) 1988; the Prevention of Money Laundering Act (PMLA) 2002; the Indian Penal Code 1860; the Benami Transactions (Prohibition) Act 1988; and the Right to Information Act (RTIA) 2005.

Theoretically, the existing legal framework does criminalise corruption in the form of active and passive bribery, extortion, abuse of office and money laundering. PCA 1988 prohibits the receipt of illegal gratification by ‘public servants’ and gratification is not limited to pecuniary gratifications alone. While the PCA 1988’s focus is on the bribe taker, the bribe giver may be caught through the offence of abetment. The RTIA 2005 also aims to tackle corruption by providing transparency in government matters by granting citizens the right to seek information from public authorities. Further, certain regulated companies are also required to maintain records under the PMLA 2002. At local level, state governments have various statutes, rules and policies to tackle specific aspects of corruption.

However, practically, the existing legal framework has not been sufficient in curbing corruption in India. For example, India still does not have any specific legislation to protect whistleblowers; the ambit of foreign public official is also limited and restrictive; and bureaucratic hurdles and the need for regulatory approvals often make compliance with US, UK and local bribery laws particularly challenging. Parity with international standards for criminalisation of bribery (as spelled out in US Foreign Corrupt Practices Act (FCPA) and UK Bribery Act) is needed.

CURRENT SITUATION

Lokpal Bill

2011 has seen widespread public protests and movements, led by social activists, against corruption and for the return of illegal wealth stashed away by politicians and businessmen in foreign banks. Social welfare workers have led movements to compel the Indian government to start taking some proactive measures. This includes notifying a drafting committee for generating the consensus version of the new Lokpal Bill and taking note of, and accepting some, provisions of the Jan Lokpal Bill (Citizen’s Ombudsman Bill). Key provisions include the appointment of independent Lokpal, financial independence of the Lokpal and granting of powers to the Lokpal to receive corruption complaints against politicians and bureaucrats etc. However the tussle between the social activists and the government is continuing as the social activists want wider powers for the Lokpal and the government wants certain exceptions to be carved out.

United Nations Convention against Corruption (UNCAC)

As part of its ongoing efforts to curb corruption, India ratified UNCAC on May 1 2011. UNCAC, adopted by the UN General Assembly in 2003, aimed at providing a solution for any global problem. Since corruption today transcends national and regional boundaries, one of UNCAC’s strongest features is its global nature, with about three-quarters of the world’s countries bound by the terms of the Convention. The instrument is designed to support and assist signatory states in fighting corruption through four key areas:

  1. prevention;
  2. criminalisation and law enforcement;
  3. international co-operation; and
  4. asset recovery.

Since the UNCAC is a legally binding international agreement targeting corruption, its ratification by India is an effective step to prevent and combat corruption in both public and private sectors by punitive and preventive means. The various measures in UNCAC that are relevant to the Indian context include:

  1. setting up of anti-corruption bodies;
  2. developing anti-corruption policies;
  3. public reporting; and
  4. participation of the civil society in combating corruption.

Additionally, the commitment of UNCAC to restoring wrongfully gained or stolen funds from overseas bank accounts back to where they belong is particularly relevant in the context of India. UNCAC provides for the freezing, forfeiting and return of embezzled money. Chapter 2 of UNCAC covers preventive measures obliging signatories to adopt co-ordinated measures to tackle corruption and designate a body or bodies to oversee that this is done.

The Public Interest Disclosure and Protection to Persons making the Disclosures Bill (Whistleblowers Protection Bill) 2010

The Whistleblowers Protection Bill 2010 was introduced to establish the long-awaited mechanism for receiving complaints relating to the disclosure of any allegation of corruption or willful misuse of discretion by any public servant, as well as to inquire into any disclosures and provide adequate safeguards against victimisation of the whistleblower. Demonstrable loss to the government or demonstrable gain to the public servant is the vital test. The Bill is designed to remove the impediment whereby corrupt acts of employees of government or public sector undertakings are not being highlighted or looked into due to lack of adequate protection of the complainants.

Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill (FPO Bill) 2011

Article 16 of UNCAC requires the state to adopt legislative and other necessary measures for establishing ‘the giving or taking of undue advantage to or by a foreign public official, directly or indirectly’ as a criminal offence. Subsequently, the FPO Bill 2011 has been introduced in the Lok Sabha. This bill provides a mechanism to deal with bribery by foreign public officials and officials of public international organisations and thereby furthers ratification of UNCAC. This bill also empowers central government to enter into agreements with other countries (contracting states) to enforce this law and exchanging investigative information.

Among many other provisions, the FPO Bill 2011 criminalises the act of accepting or soliciting bribes, offering or promising to offer bribes to foreign public officials. Penal punishment equivalent to imprisonment ranging from six months to seven years, and a fine is also prescribed. Further, in case evidence required for investigating an offence under the FPO Bill 2011 is available in a contracting state, an application may be made by the Investigation Officer to the Special Judge appointed under PCA 1988.

CONCLUSION

One of the biggest obstacles in India’s story of growth has been corruption. Dealing with this requires not only legislative growth and development reaching global standards, but also an effective enforcement regime coupled with adequate administrative and political will.

India’s ratification of UNCAC is indeed a step in the right direction as it makes India responsible by abiding to international standards of criminalisation of acts of corruption. The next step would be the enactment of the FPO Bill 2011, to punish foreign public officials and officials of public international organisations involved in corrupt international business. Enactment of the Whistleblowers Protection Bill 2010 will also help elimate corruption by providing adequate protection to the whistleblowers. Further, a consensus on a new and stronger Lokpal Bill that incorporates the provisions of the Jan Lokpal Bill will surely provide the impetus that India has been looking for. In conclusion, India is on the right course, and the government, along with its citizens, need to ensure that the momentum is maintained.

The views expressed in this article are those of the author and do not reflect the official policy or position of Amarchand Mangaldas.