India Inc braces for stricter bribery laws

• Posted by Sindhuri G August 29, 2012 - Filed in Business - 2,064 views

  MUMBAI: India Inc is gearing up to face more stringent and specific anti-bribery laws with the government planning to amend the Indian Penal Code (IPC) to cover bribes given domestically by the private sector. Once this comes into force, the employee concerned and also the company's management could face imprisonment of up to seven years.
  
  It is likely that the proposed IPC amendment would be broad based and, in addition to bribes given to public officials, will also cover bribes within the private sector (such as company A, a supplier, bribing an official in company B to bag huge orders).
  
  "Currently, an employee of a private company could be held liable under the Prevention of Corruption Act for bribing a public official. In turn, the company's management could also be held liable, based on evidence available about their role. It will be easier to take action against private players if the IPC is amended and provisions are made clearer," said Vivek Kathpalia, partner, Nishith Desai Associates, international legal counsellors.
  
  According to a recent PricewaterhouseCoopers (PwC) Global CEO survey, 92% of the CEOs surveyed in India were "extremely concerned" or "somewhat concerned" about bribery and corruption and considered it to be a major threat to business growth. Till recently, most Indian companies did not have specific antibribery policies and got by with just a clause in their code of conduct or a brief mention in their ethics policy.
  
  The scene is changing. "We have been engaged to assist Indian businesses set up a robust compliance framework which entails drafting compliance policies, having discussions with the business heads, assistance in regular monitoring of transactions and hand holding the company in transitioning the compliance function to a compliance officer," said Vidya Rajaro, leader (forensic services), PwC India.
  
  The issue gains importance in the wake of media reports alleging the involvement of Cadbury India officials in bribing certain government officials to get excise exemptions on its Baddi facility. The matter is now under investigation. "A compliant and ethical corporate culture , which includes adhering to laws and regulations in the countries in which we operate, is integral to our success. To that end, we are fully cooperating with the authorities on this enquiry," said a Cadbury India spokesperson.
  
  "One thing we must appreciate is that bribery and corruption in a business entity depends on the 'tone at the top' . An overwhelming majority of Indian business is promoter managed; hence, the concept of employees indulging in bribery and corruption without the management coming to know about it is not a valid premise in India," said Anil Roy, partner, Advisory services , Grant Thornton India LLP.
  
  MindTree, for one, is very clear on such matters. "We ask our operating people to persist and prevail than take shortcuts . Whenever they get stuck, however small the matter may be, like a fire clearance for a building or resolution of a petty issue with the electricity board, our top management walks shoulder to shoulder with operating people to get things cleared, including personally attending meetings with government servants, at any level. The message is simple : persist and we will work alongside you, we will not hold it against you if a project gets into delays or we lose money; do what is right and not what is convenient. Over time, people know what is not on in this company and the social memory becomes many times more effective than just a bunch of policies," said Subroto Bagchi, chairman, MindTree.
  
  Many Indian companies such as the Tata Group or Infosys Technologies spell out their internal code of conduct publicly by posting it on their website . Aditya Birla Group employees are clear on the group's position both domestically and internationally, said group HR head, Santrupt Misra.
  
  Roy of Grant Thornton sees more Indian corporates incorporating an anti-bribery framework in their processes. From the initial stage of setting down clear anti-bribery policies, to employee trainings, periodical risk assessments, due diligence of business partners, proper monitoring and reporting processes and a process for investigation and taking action should any lapses occur, India Inc is gearing up for a more transparent tomorrow.
  
  CLEAN BUSINESS
  
  aChanges in the IPC likely to tackle corruption within the private sector aA recent PwC report found that 92% of the CEOs surveyed in India were worried about bribery and corruption, and considered it to be a major threat to business growth aIndian companies are looking to clearly incorporate anti-bribery policies in their framework