Prevention of Corruption (Amendment) Act to bring relief for corporate heads

NEW DELHI: In a big relief to India Inc, the Modi Government will be moving amendments to the Prevention of Corruption (Amendment) Act, 2013 brought by the UPA, to ensure corporate bosses are not in the dock unless they have expressly connived in or consented to a corrupt act of their juniors.
The original bill brought in 2013 to amend the 1988 Prevention of Corruption Act extended the liability of the commercial organisation to every person “in charge of and responsible” to the organisation for the conduct of its business through a deeming provision.

Further, any officer of the organization was to be deemed guilty if the act of corruption was “attributable to his neglect” and the burden of proving otherwise lay with him, as per the 2013 Bill. The sentence for the offence meant a jail term of three-seven years, raising fears among corporates of misuse of the law and consequent harassment.

New amendments to be moved by NDA has changed this key provision – now, if a offence of corruption is committed by a corporate, the director, manager, secretary or other officer will only be liable if the offence “is proved to have been committed with consent or connivance” of such an officer. The burden of proving such consent or connivance will also now lie with the prosecuting agency, unlike the 2013 provisions which deemed one guilty. The Prevention to Corruption (Amendment) Act, 2015 was listed for introduction in Rajya Sabha on Monday but could not be introduced due to repeated adjournments. Minister of State (Personnel) Jitendra Singh had told ET on April 29 that his government will try to bring this bill in the current session.

In making these changes, the NDA government has heeded the advice of the Law Commission of India which gave a report in February red-flagging the 2013 provision.

The Commission report explained that under Section 10 of the original version of the proposed law, had said that if an employee (P) of a company (C), sitting in Bangalore bribes a local official (R) to get its clearance on time, the top brass of the company will be in the dock. “Section 10 will operate to deem every single person in charge of, and responsible to, C – thus, every Director on the Board of Directors, who may be sitting in Delhi more than 2000 kms away – guilty, and the burden on proof will shift on each of these Directors to prove they had no knowledge or had exercised due diligence. The situation could be even worse if for instance, P had the high level clearance of one of the sitting Directors to bribe R, because of which every other Director will now be faced with the difficult task of discharging their high burden of proof,” the Law Commission report had pointed out, prompting the changes .

The commercial organization will remain punishable with a fine if any person associated with it offers or promises to give any advantage to a public servant intending to obtain or retain business for such a commercial organization and to obtain or retain an advantage in the conduct of such business.

However, a new clause added by the NDA is that the Centre, in consultation with the concerned stakeholders, will prescribe guidelines with a view to enhancing compliance with provisions about adequate procedures to be put in place by the commercial organizations to prevent persons associated with them from bribing any public servant. These guidelines are being issued on the pattern of the UK Bribery Act after the Law Commission’s report.