India has seen significant progress over the past few years with regulatory reforms and increased enforcement. Recent legislation include the Insolvency and Bankruptcy Code which seeks to resolve insolvencies in a strict time-bound manner, the Data (Privacy and Protection) Bill to bring strong data protection laws in India and the Fugitive Economic Offenders Act to curb economic offenders from evading prosecution in India. The amendments to the Prevention of Corruption Act (POCA), 1988 can be viewed as a significant effort to strengthen the anti-corruption landscape, and covers culmination of action taken in the past (such as demonetization, crackdown on shell companies and errant government officials and investigations around benami properties, black money and money laundering).
Strengthening the POCA has brought Indian anti-corruption legislation in line with the United Nations Convention against Corruption, and closer to being at par with global laws. While countries such as India and other emerging markets continue to face increased bribery and corruption risks, strong reforms and enforcement can help in bringing a positive perception around the risk levels to a large extent.
Some of the key amendments passed in the POCA include:
With the amendments made to the POCA, organizations need to safeguard themselves against corrupt practices as both individuals and corporates can now be held liable for bribery. Further, for Indian organizations not covered by global anti-corruption legislations so far, these amendments will bring them under the purview of the Act.
What can organizations do to mitigate bribery and corruption?
Establishing an effective anti-bribery and anti-corruption framework requires organizations to undertake compliance procedures that commensurate with their operations. A multitude of factors need to be considered when assessing risks that an organization may be faced with such as nature of business, industry, government touchpoints, geographical locations and involvement of third parties.
The amendments to POCA requires organizations to implement procedures in line with prescribed guidelines to deter irregularities pertaining to corruption. While the guidelines are yet to be specified, it is expected that the principles will be in line with global requirements. Thus, organisations must proactively take action to mitigate risks. This may include:
- Development of documented policies and procedures on anti-bribery and anti-corruption
- Demonstration of zero-tolerance toward bribery by senior management
- Conducting regular training and awareness campaigns
- Conducting periodic audits in a timely manner
- Including third parties in the compliance framework
- Using analytics in compliance frameworks
- Obtaining certifications such as ISO 37001: Anti-Bribery Management Systems
An encouraging headway
While corruption continues to remain an area of concern for a developing country such as India, actions such as the amendments to the POCA can help reinforcing the government’s commitment to crackdown on bribery and corruption.