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Indian Anti-Corruption Environment : New Laws and Other Developments

Global League Anti-Corruption Research Group

Abhishek BhartiIACA

www.iaca.int Slide 2

Artha Shastra (ancient Indian treatise on statecraft, economic policy

and military strategy) 2nd century BC - Administrative corruption and 40

types of embezzlements/ corrupt practices.

East India Company (British Trading Company)1858- Introduced

“No Gifts” policy & Indian Civil Service rules.

Indian Penal Code, 1860- Offences by Public Servants-Sections 161 to

165 provided the legal framework to prosecute corrupt public servants.

At that time the need for a special law to deal with corruption was not

felt. IPC has undergone many amendments since then.

HISTORICAL/LEGAL REFERENCES


Coal Allocation 2 G Spectrum Scam Sardha Ponzi Scheme

THE COMPLIANCE ENVIRONMENT

Tetra Trucks/ Defense deals

VYAPAM Issue/Teachers Recruitment

Common Wealth Games Scandal

Cash for votes scamIPL Spot Fixing/ Cricket

Adarsh Housing scam/Govt. Housing scheme

INDIA*

*Some cases are sub judice – we wont elaborate- Public Knowledge

Interesting Facts :

1.Fastest Major Growing Economy with 7.6% GDP Growth/ annum2.Kroll Global Fraud Report: Highest national incidences of corruption (25%) Highest proportion reporting public procurement corrupt practices (77%)3.Latest World Bank (Ease of ) Doing Business Report : 130/189


S

CORRUPTION PERCEPTIONS INDEX-2016

Source: Transparency International

2016:Denmark & NZ #1, Austria #17, India#79, Somalia#176

Adobe Acrobat Document


1. SAARC2. APEC3. ASEAN4. BRICS

NO Formal / In-formal Anti-Corruption mechanism in place.

THE BANGALORE PRINCIPLES OF JUDICIAL CONDUCT, 2002 (UNODC Initiative) To establish standards for ethical conduct of judges. They are designed to provide guidance to judges and to afford the judiciary a framework for regulating judicial conduct. They are also intended to assist members of the executive and the legislature, and lawyers and the public in general, to better understand and support the judiciary.

REGIONAL COVENANTS


CONSTITUTIONAL/ CHARTER MANDATE

Constitution of India provides for The Fundamental Rights, Directive Principles of State Policy and Fundamental Duties that prescribe the fundamental obligations of the State to its citizens and the duties of the citizens to the State.

The Fundamental Rights are defined as the basic human rights of all citizens.These rights, defined in Part III of the Constitution, apply irrespective of race, place of birth, religion, caste, creed or gender. Judicial Interpretations-A Human Rights-based approach to Anti-Corruption: SDGs/A human rights based approach to anti-corruption means putting the international human rights entitlements and claims of the people (the ‘right-holders’) and the corresponding obligations of the State (the ‘duty-bearer’) in the centre of the anti-corruption debate and efforts at all levels, and integrating international human rights principles including non discrimination and equality, participation and inclusion, accountability, transparency, and the rule of law. Resolution 23/9(The negative impact of corruption on the enjoyment of human rights)


DEMONITIZATIONDISRUPTIVE POLICY INNOVATION- GOVERNMENT

2016 INDIAN BANKNOTE DEMONETISATION

On 8 November 2016, the Government of India announced the demonetization of all ₹500 (US$7.40) and ₹1,000 (US$15) banknotes of the Mahatma Gandhi Series. The government claimed that the action would curtail the shadow economy and crack down on the use of illicit and counterfeit cash to fund illegal activity and terrorism. The sudden nature of the announcement—and the prolonged cash shortages in the weeks that followed—created significant disruption throughout the economy, threatening economic output. The move was heavily criticized as poorly planned and unfair, and was met with protests, litigation, and strikes. However, the move is considered as a bold initiative and a policy innovation which has a potential to change behaviours and introduce transparency in the economy

Source: https://inc42.com/resources/demonetisation-effect-online-shopping-traffic/


ZERO RUPEES CURRENCY NOTE :

A zero rupee note is a banknote imitation issued in India as a means of helping to fight systemic political corruption. The notes are "paid" in protest by angry citizens to government functionaries who solicit bribes in return for services which are supposed to be free. Zero rupees notes, which are made to resemble the regular 50 rupees banknote of India, are the creation of a non-governmental organization known as 5th Pillar which has, since their inception in 2007, distributed over 3 million currency notes.

ZERO RUPEES NOTE

DISRUPTIVE INNOVATION-CIVIL SOCIETY/ CITIZENS GROUPS

Source: http://5thpillar.org/images/Website_Images/zrn/hindi_front.jpg


IPaidABribe.com:

A website initiative by citizen group Janagraha, to tackle corruption by harnessing the collective energy of citizens. Citizens can report on the nature, number, pattern, types, location, frequency and values of actual corrupt acts on the website. The reports, perhaps for the first time, provide a snapshot of bribes being paid (or taken), across Indian cities. IPaidABribe uses them to argue for improving governance systems and procedures, tightening law enforcement and regulation. It is an reduce the scope for corruption while obtaining services from the government.

Source: http://www.ipaidabribe.com/

IPaidABribe

DISRUPTIVE INNOVATION-CIVIL SOCIETY/ CITIZENS GROUPS

http://www.ipaidabribe.com/

http://www.ipaidabribe.com/


India Against Corruption (IAC) Movement:

A non-violent movement started in 2011with the aim of eradication of corruption in the government through introduction of the Jan Lokpal Bill or Ombudsman law. Another aim, was the repatriation of black money from offshore tax havens and foreign banks.

This Movement was successful and as a result Lokpal Act 2013 was enacted. Main Features of this Ombudsman Act are:

• Establishment of the institution of Lokpal or Ombudsman to inquire into allegations of corruption against public functionaries

• Movement wanted Prime Minister and Judges to be covered but the final Act excluded Prime Minister and Judiciary

• All the government employees are liable to declare their assets and liabilities• Ombudsman is required to conduct a preliminary inquiry within 30 days. If

there is no prima facie case, the matter is closed. • If the case is established, the investigation has to be completed within six

months

India Against Corruption (IAC) MovementDISRUPTIVE INNOVATION-CIVIL SOCIETY/ CITIZENS GROUPS


• Representation of People’s Act, 1951• Prevention of Money Laundering Act, 2002• Prevention of Corruption Act, 1988 , Amendment Bill 2013• Central Vigilance Act , 2003• Right To Information Act , 2005• Lokayukta Act, 2013 (Ombudsman Act)• Companies Act , 2013• Whistleblowers Protection Act, 2014• The Black Money (Undisclosed Foreign Income and Assets) and

Imposition of Tax Act , 2015• The Benami Transactions (Prohibition) Amendment Act 2016

PROMINENT ANTI-CORRUPTION LAWS IN FORCE


• The Judicial Standards and Accountability Bill, 2010• The Citizen's Charter and Grievance Redressal Bill 2011• The Prevention of Bribery of Foreign Public Officials and Officials of

Public International Organizations Bill, 2011 ( Indian Version of FCPA)• The Public Procurement Bill, 2012

ANTI-CORRUPTION BILLS IN PIPELINE


These 3 legislations involved maximum Public agitation, parliament scrutiny and Judicial intervention- Is Judicial intervention a sign of Judicial Activism ?

1. Right to Information Act, 2005(RTI): Any citizen of India can request information from a "public authority” which is required to reply within 30 days. The Act also requires every public authority to computerize their records. RTI aims at bringing in transparency and eradicate corruption by civil society’s direct involvement.

2. Representation of People’s Act, 1951- Representation of the People (Amendment and Validation) Act, 2013- Supreme Court’s Intervention -Direct and immediate disqualification of elected and nominated members of Parliament and state assemblies.

3. The Lokayukta Act or Ombudsman Act- Already covered

ANTI-CORRUPTION LEGISLATIONS


4. Prevention of Corruption Act, 1988 , Amendment Bill 2013:

• Amendment has increased the scope -not only act of receiving but act of giving bribe is also punishable.

• There are diverging views on whether bribe giving under all circumstances must be penalized. Some have argued that a coerced bribe giver must be distinguished from a collusive bribe giver.

• Commercial organizations can be held liable for giving bribe, earlier there was no provision covering private sector.

• It is necessary to obtain prior approval from the central or state government in order to prosecute a public servant.



5. The Prevention of Money Laundering Act, 2002:

• Law imposes obligation on banking companies, financial institutions and intermediaries to verify identity of clients, maintain records and furnish information.

• The law introduces the concept of corresponding law to link the provisions of Indian law with the laws of foreign countries.

• The law expands the definition of offence under money laundering to include activities like concealment, acquisition, possession and use of proceeds of crime.

• The law seeks to establish Special Courts for trial in Money Laundering cases.

• The law allows confiscation and seizure of the property obtained from the laundered money.



6. Whistleblowers Protection Act, 2014:

• Whistleblower can be any person, including a public servant or NGO• The Act seeks to protect whistle blowers, i.e. persons making a public

interest disclosure on act of corruption, misuse of power, or criminal offense by a public servant. Does not cover corporate whistleblowers.

• No incentives for whistleblowers described. Victimization not defined.

• Every complaint has to include the identity of the complainant. Anonymous complaints not allowed.

• The CVC not to disclose the identity of the complainant. The Act penalizes any person who has disclosed the identity of the complainant.

• The Act prescribes penalties for knowingly making false complaints.



7. The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act , 2015

• The law penalizes the concealment of foreign income, and provides for criminal liability for attempting to evade tax in relation to foreign income

• The law provides for One - time compliance opportunity to persons who have any undisclosed foreign assets (for all previous assessment years)

• A flat rate of 30 per cent tax would apply to undisclosed foreign income or assets of the previous assessment year



8. The Benami Transactions (Prohibition) Amendment Act , 2016:

• The law defines a Benami transaction as a transaction where a property is held by or transferred to a person, but has been provided for or paid by another person.

• The law defines and adds other transactions which qualify as benami, such as property transactions where: (i) the transaction is made in a fictitious name, (ii) the owner is not aware of denies knowledge of the ownership of the property, or (iii) the person providing the consideration for the property is not traceable.

• The law also specifies the penalty for providing false information to be rigorous imprisonment of six months up to five years, and a fine which may extend to 10% of the fair market value of such property



A. The Prevention of Bribery of Foreign Public Officials and Officials of Public International Organizations Bill, 2011

India had signed the United Nations Convention against Corruption on December 9, 2005. The Bill is necessary for the ratification of the Convention. It provides a mechanism to deal with bribery among foreign public officials (FPO) and officials of public international organizations (OPIO)

The proposed law criminalizes the following acts :

• Acceptance or solicitation of bribes by FPO and OPIO for acts or omissions in their official capacity;

• Offering or promising to offer a bribe to any FPO and OPIO for obtaining or retaining business;

• Abetment or attempting either of the above acts

ANTI CORRUPTION LEGISLATIONS IN PIPELINE


B. The Public Procurement Bill, 2012:

The proposed law seeks to :

• Penalize both the acceptance of a bribe by a public servant as well as the offering of a bribe or undue influencing of the procurement process by the bidder with imprisonment and a fine.

• Regulate and ensure transparency in procurement by the central government and its entities. It exempts procurements for disaster management, for security or strategic purposes.

• Open Competitive Bidding as the preferred procurement method; an entity must provide reasons for using any other method.

• Set up Procurement Redressal Committees. An aggrieved bidder may approach the concerned Committee for redressal.

• Publish all government procurement-related information on a Central Public Procurement Portal.

ANTI CORRUPTION LEGISLATIONS IN PIPELINE


INDIA: FCPA ENFORCEMENT ACTIONS

SEC CHARGES LIQUOR GIANT DIAGEO– July 27, 2011 – SEC found that Diageo plc paid more than $ 2.7 million through its subsidiaries to obtain lucrative sales and tax benefits, these illicit payments were made to hundreds of government officials in India from 2003- mid 2009. Diageo agreed to pay $ 16 million to settle SEC’s charges

York International – York was charged with violating the FCPA by, among other things, paying kickbacks of ~$132,000 through a third party to the Indian Navy for contracts. York entered into a deferred prosecution agreement with DOJ and agreed to cooperate with DOJ’s Oil for Food investigations and pay a $10 million fine

Textron Inc. – Textron’s subsidiaries paid illegal kickbacks to various customers, including ~$51,870 to a non-government customer in India, to obtain contracts to sell its industrial equipment. Textron entered into a non prosecution

agreement with DOJ and agreed to pay a $1.15 million fine


• The three main authorities involved in inquiring, investigating and prosecuting corruption

cases are the Central Vigilance Commission (CVC), the Central Bureau of Investigation (CBI) and the state Anti-Corruption Bureau (ACB).

• Cases related to money laundering by public servants are investigated and prosecuted by the Directorate of Enforcement and the Financial Intelligence Unit, which are under the Ministry of Finance.

•The CBI and state ACBs investigate cases related to corruption under the Prevention of Corruption Act, 1988 and the Indian Penal Code, 1860. The CBI’s jurisdiction is the central government and Union Territories while the state ACBs investigates cases within the states. States can refer cases to the CBI.

• The CVC is a statutory body that supervises corruption cases in government departments. The CBI is under its supervision.

INVESTIGATION and PROSECUTION PROCEDURE( public officials)


IT ONLY TAKES ONE …

www.iaca.int

Thank you for your attention!

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