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The optics (and other compelling reasons) for an India foreign bribery law

India’s own foreign bribery law, the Prevention of Bribery of Foreign Public Officials and Officials of Public International Organizations Bill, is stuck in a legislative logjam. It has passed through a parliamentary committee and was the subject of a Law Commission Report. But at present there is no timeline for the passage of the Bill.

The Act itself is an enabling statute for the United Nations Convention Against Corruption 2002. Under the Bill, acceptance or solicitation of bribes or gratification by Foreign Public Officials or Officials of Public International Organizations for undue advantage other than lawful remuneration is a crime punishable with prison sentences between 3 and 7 years and a fine.

Unless there is evidence that adequate procedures were in place to prevent such conduct, companies will be liable for bribery offenses committed by the company itself, a director, or a person associated with the company.

But from India’s point of view the key question to ask is the need for such an Act.

India at $9.8 million of OFDI in 2014 (as opposed to the U.S. at $337 billion, China at $116 billion, and Russia at $56 billion, according to the World Investment Report Factsheet 2015) is only a medium sized capital exporter. And ranked 19 on Transparency International’s Bribe payer’s Index (below Brazil at 14, but above Russia and China at 28 and 29), India is only median “dirty.”

A law that would arguably add compliance costs and be hard to enforce is being met skeptically by many people (the author included).

But such arguments fail to locate foreign bribery in overall geopolitical context. China has traditionally found it tempting to use bribes to foreign public officials in their quest to outcompete deep seated western economic interests — in Africa, Developing Asia, and Latin America, among other regions. China, after all, is competing with the United States for global authority.

India, on the other hand, is a status quo nation and has no such strategic use for a bribe. It has much to lose in the game of competitive bribery, especially since it lacks the deep pockets of the Russians and Chinese.

But foreign bribery legislation will act as a reputational enhancement that can earn Indian corporations prestige and goodwill. It also fits well into the Indian domestic and foreign initiatives to rein in black money and prevent tax evasion, and to aggressively target transfer pricing and money laundering.

Further, leading Indian companies are already deeply embedded in the Western World. Thus they already are heavily exposed to compliance requirements under the FCPA, the UK Anti-Bribery Act and similar legislation in all OECD countries, all of whom have varying extraterritorial applications.

Under such circumstances for India not to have such a law is essentially to erode its judicial sovereignty.

China (in 2015) and Russia (in 2011) have both enacted foreign bribery laws. India cannot afford the optics of not enacting one.

____

Suvrajyoti Gupta is Assistant Professor at O.P. Jindal Global University in Delhi, India, and Assistant Director of the Centre for Alternative Dispute Resolution. His teaching and research interests include dispute resolution, international arbitration and corruption.

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3 Comments

  1. Interesting article

    Is the proposed law intended to address outbound bribery (Indian sourced payments for influencing non Indian officials ?)

    Thanks

  2. An interesting review of India's position, but I want to say this-
    India is no longer a status quo nation, see what India leadership is upto in Iran, Afganistan, Nepal, Sri Lanka, Bangladesh, Bhutan, the Maladives, etc ets and you get a position on India's growing ambitions in its neighborhood arena. India is also a net lender of development assistance, with a plan of $ 25b to dole out in foreign aid and soft loans this year, up from $14b last year. We could say that this is perhaps the beginning of a phase, twenty years behind China's, of a pole position in South Asian leadership. The fact that Indian companies are already building power plants, rail tracks, roads and gap pipelines overseas, more so when aid is tied to Indian vendors, transforms India's position and it needs stringent anti corruption laws and practices in place not just to regulate its internal environment, but also its fast spreading external outreach.India has plans to disperse nuclear and weapons technology and nurses ambitions to be a nuclear supplier in the region.

  3. There are further pressing reasons why India should adopt without further delay the Prevention of Bribery of Foreign Public Officials and Officials of Public International Organizations Bill. Under successive Action Plans of the G20 Anti-Corruption Working Group, India has committed to lead by example in combating bribery, including by active participation in the OECD Working Group on Bribery with a view to exploring possible adherence to the OECD Anti-bribery Convention. In order to ratify the OECD Anti-Bribery Convention, and join its economic peers in combating the supply of bribes in international business, India must first make such bribery a criminal offence.


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