Anti-Bribery & Corruption (ABC) Training

The Prevention of Corruption Act, 1988 was substantially rewritten by the Prevention of Corruption (Amendment) Act, 2018. Section 7 now punishes a public servant who obtains, accepts or attempts to obtain an "undue advantage" intending to perform a public duty improperly or dishonestly, or as a reward for doing so. Asking for or taking the advantage is itself the offence, even if the duty is then performed properly.

Section 7A applies to anyone who takes an undue advantage as a reward for using corrupt means or personal influence over a public servant. This catches "fixers" and intermediaries.

Under section 2(d), "undue advantage" means any gratification other than legal remuneration, and gratification is not limited to money. Gifts, hospitality, jobs for relatives and favours can all qualify.

Since 2018, section 8 makes it an offence for any person to give or promise an undue advantage to another person intending to induce a public servant to perform a public duty improperly, or to reward them for doing so. It does not matter whether the advantage is given directly or through a third party.

There is a narrow exception for a person who is compelled to give the advantage, but only if they report the matter to a law enforcement authority or investigating agency within seven days of giving it. Where a commercial organisation commits the offence under section 8, it is punishable with fine.

Section 9 makes a commercial organisation punishable with fine if any person associated with it gives or promises an undue advantage to a public servant intending to obtain or retain business, or an advantage in the conduct of business, for the organisation. "Commercial organisation" covers companies and partnerships or associations of persons formed in India, and foreign bodies that carry on business in India.

A person is "associated with" the organisation if they perform services for or on its behalf, whatever the capacity: employee, agent or subsidiary. An employee is presumed to be associated unless the contrary is proved. This is why distributors, customs agents, liaison consultants and joint venture partners matter as much as staff.

The organisation's only statutory defence is to prove that it had in place adequate procedures, in compliance with guidelines to be prescribed, to prevent associated persons from such conduct. Section 9(5) requires the Central Government to prescribe these guidelines, and section 29A allows them to be made by rules. At the time of writing we could not find any notified guidelines, so organisations must design procedures without an official checklist. Training records help show the procedures operated in practice.

Where a section 9 offence is proved to have been committed with the consent or connivance of a director, manager, secretary or other officer, that individual is guilty of the offence and faces imprisonment of three to seven years and a fine. Section 12 separately punishes abetment of any offence under the Act.

Indian companies with UK or US links, such as listed securities, subsidiaries or business conducted in those jurisdictions, may also fall under the UK Bribery Act 2010 or the US Foreign Corrupt Practices Act. Their scope and tests differ from the Indian Act, so take advice on whether they apply to you. This guide covers Indian law only.