Bridging the UNCAC gap: India’s need for legislation banning the bribery of foreign public officials

Avik Biswas

IndusLaw, Bangalore

avik.biswas@induslaw.com

Rithika Reddy

IndusLaw, Bangalore

rithika.reddy@induslaw.com

Animay Singh

IndusLaw, Bangalore

animay.singh@induslaw.com

Introduction

Among the many benefits ushered in with the advent of globalisation, the world has witnessed greater cooperation and economic interdependence between nations. An unintended consequence of increased economic cooperation was an increase in the prevalence of transnational economic crimes. Owing to the limitations of several countries’ domestic laws in combatting transnational economic crimes and the lack of consensus on the meaning and scope of corruption, the United Nations Convention against Corruption, 2003 (UNCAC) was formulated. It creates clarity by enacting a set of general norms for the identification and punishment of corrupt conduct, including the active and passive bribery of foreign public officials. It came into force on 14 December 2005 and has been signed by 140 countries, including India.

Relevant provisions of UNCAC and India’s progress

The UNCAC provides for an expansive definition of the term ‘foreign public official’. Under Article 2, a foreign public official is defined as ‘any person holding a legislative, executive, administrative or judicial office, whether appointed or elected; and any person exercising a public function for a foreign country, including for a public agency or public enterprise.’ The definition of ‘public official’ is similar, except that it also includes any specific definition of the term under the domestic law of each state party.

While Article 15 of the UNCAC requires state parties to adopt measures to criminalise both the active and passive bribery of a domestic public official, Article 16 imposes a corresponding obligation on state parties to criminalise active and passive bribery of foreign public officials and officials of public international organisations.

India signed the UNCAC on 9 December 2005 and subsequently ratified it on 9 May 2011.^[1] Consequently, India was required to incorporate various provisions of the UNCAC into its domestic law. Various efforts have been made by India’s parliament to promulgate several statutes to bring domestic law in line with the provisions of UNCAC. For example, enacting the Lokpal and Lokayukta’s Act 2013 to meet the obligations imposed by UNCAC requiring every state to ensure the existence of a body specialised in combatting corruption. Similarly, India also enacted the Whistle Blowers Protection Act 2014 to meet its obligations under Article 33 of UNCAC.

With respect to the domestic law, India’s primary legislation which deals with the bribery of public officials is the Prevention of Corruption Act 1988 (POCA). At the time of India’s ratification of UNCAC, the provisions of POCA only dealt with the bribery of domestic public officials.

To date, the POCA has failed to address the issue of complying with Article 16 of UNCAC with regard to the bribery of foreign public officials and officials of public international organisations. Efforts have been made to address the issue through the introduction of various bills in parliament, such as The Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill 2011 (‘2011 Bill’). However, the 2011 Bill lapsed due to the dissolution of the 15th Lok Sabha (the lower house’s bicameral parliament) in 2014. Attempts have since been made to introduce various iterations of the 2011 Bill before the Lok Sabha, as will be discussed later in this article.

The need for a foreign bribery law

There are several compelling reasons behind the need for a law penalising the bribery of foreign public officials in India, apart from the fulfilment UNCAC obligations. Transparency International, a global anti-corruption movement, in its 2020 report titled Exposing Corruption,^[2] revealed that India ranked poorly in enforcement actions against bribery of foreign public officials. This can be directly attributed to the fact that there is no law which criminalises such an act, owing to which India failed to initiate a single case of bribing foreign public officials between 2016 and 2019.

This situation is especially concerning in view of the recent disclosures made by certain India companies under the United States Foreign Corrupt Practices Act, 1977 (FCPA), stating that they were investigating allegations of improper payments to professionals in jurisdictions outside India. Despite there being corporations headquartered in India, there is currently no law under which the Indian government can initiate an investigation into these allegations.

As a prominent global exporter, India cannot afford to fall behind by failing to introduce a law criminalising the bribery of foreign public officials, as there is significant reputational risk. Alignment with international standards would enhance India’s law enforcement and minimise any reputational risk associated with the lack of effective enforcement mechanisms to combat such offences. This would assure potential investors that Indian companies committing the offence of bribing foreign public officials will not hold an unfair advantage over competitors who choose to conduct business in an ethical manner, and that such offenders will be held accountable and prosecuted under domestic law.

Efforts to introduce a foreign bribery law

The 2011 Bill was followed by an attempt to introduce the Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill 2015 (‘2015 Bill’). At the request of the Ministry of Law and Justice, the 20th Law Commission of India offered its views and recommendations on the 2015 Bill, see Report No 258.^[3] However, for various reasons, the 2015 Bill was not introduced before the Lok Sabha.

On 4 February 2022, a private member introduced the Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill 2019 (‘2019 Bill’)^[4] in the Lok Sabha. It is pertinent to note that many of the 20th Law Commission’s criticisms of the 2015 Bill are also applicable to the 2019 Bill. The criticism includes applicability of the legislation, lack of enforcement measures when it comes to passive bribery of foreign public officials, absence of exceptions concerning acts of bribing foreign public officials and most critically, lack of provisions relating to the liability of commercial organisations.

Conclusion

The 2019 Bill has, arguably, failed to take into consideration any of the criticisms or recommendations proposed by the 20th Law Commission in its Report No 258. While the introduction of the 2019 Bill may be seen as an instance of India’s resolve in its commitment to fulfilling its obligations under UNCAC, one cannot help but wonder if the benefits would have been greater if all recommendations in the Report would have been incorporated. Considering the numerous attempts to introduce legislation on this front and India’s low score in the Corruption Perception Index, the legislature would do well to enact specific law in this regard swiftly so as to bring the country in line with other signatories to the UNCAC.