Law Firm in India

Corruption at Workplace in India

There is no ‘black’ and ‘white’ in corruption cases and they must be adjudicated separately. However, it would be helpful if workplaces define ‘acceptable gifts’ along with the value threshold.

Corruption and bribery are widespread in India and are the root cause for many inefficiencies in the country. A report in 2020 shared how India had a corruption rate of nearly 40% - the worst in Asia, and one of the worst globally.

Corruption leads to dissatisfaction, distrust and misuse of power. India has a variety of laws that can hold people accountable for corruption. However, implementation is weak and the act has become symbolic with our very system.
 

Are corruption & bribery the same?


Though often used interchangeably, corruption and bribery have different meanings. Bribery is only a form of corruption, as corruption is a much larger umbrella. Bribery involves dishonest persuasion of someone to act in your favour by offering or receiving something in value; an ulterior motive in exchange for a gift or money, for example. Whereas, corruption also includes acts such as fraud, embezzlement, collusion, nepotism, etc. It is an abuse of power by those in authority. Thus, bribery is a smaller subset of corruption; every act of bribery is an act of corruption but not vice-versa. 

Bribery is only a form of corruption 
Examples of a bribe: Gift, promotion, free tickets to an event, contributions. 
Examples of corruption: blackmail, extortion, refusal to work without a bribe. 
 

Laws governing corruption & bribery in India


There are various laws that cover corruption and bribery in India. These are as follows:

The Indian Penal Code (IPC), 1860

  • Defines ‘public servant’ as government employees, officers in the armed forces, police, judges, officers of a Court of Justice, and any local authority established by a central or state statute.
  • The Code, under Section 169, prohibits buying or bidding for property by a public servant and gives imprisonment for the same for two years or fine or both. Any purchased property that later comes to light is confiscated.
  • Section 409 deals with criminal breach of trust by a public servant with maximum punishment of life imprisonment.
  • Section 171B pertains to the act of bribery and defines the act in three separate sub-provisions.


The Prevention of Corruption Act (POCA), 1988

  • Extends the definition of “public servants” to include office bearers of cooperative societies receiving financial aid from government, employees of universities, public service commissions and banks.
  • Any gratification, other than legal remuneration, in respect of an official act or for influencing public servants is punishable with a maximum of five years. Influencing the public and exercising personal influence on a public servant also attracts this Act.
  • No public servant must accept a valuable without duly paying for it adequately if such valuable is received from a person with whom there is involvement in a business transaction in his official capacity. Imprisonment for such an act may attract imprisonment for up to five years.


The Prevention of Money Laundering Act (PMLA), 2002

  • The PMLA prohibits the act of money laundering, more specifically. Funds or valuables received via corruption and/or bribery are often laundered to provide them with a façade of legitimacy. Hence, the PMLA investigates any process connected with ‘proceeds of crime’. This means any property or valuables received by a person through illegitimate means.
  • However, a person can be charged with money laundering only if he/she has committed any offence as that mentioned under the Schedule of the Act.
  • Imprisonment for money laundering can go up to rigorous imprisonment for seven years and INR 5 lakhs as fine.
  • List of scheduled offences include provisions from 6 statutes: IPC, NDPS, Arms Act, Wildlife Protection Act, Immoral Traffic (Prevention) Act, and POCA.


Foreign Contribution Regulation Act (FCRA), 2010

  • The Act prohibits acceptance of foreign contributions from foreign sources by persons in the government, judges, legislators, political parties, etc. without the express permission of the government.
  • ‘Foreign source’ is defined widely and includes foreign companies, other foreign entities, a foreign trust or foundation, or a foreign citizen.
  • Non-governmental organisations who receive funding from abroad must be registered under the Act to be legally secure. Government employees are also prohibited from accepting foreign ‘hospitality’ abroad without express permission of the central government.


Regulation of Public Servants

  • Persons in the central government services are governed by the Civil Services (Conduct) Rules 1964 and the All India Services (Conduct) Rules 1968.
  • Together, they are known as ‘Service Rules’ and restrict gifts in various forms that exceed specified thresholds – an exclusive feature of these rules.
  • No other statute provides de minimis thresholds.
 

Laws in the Private Sector

  • In India, there are no explicit anti-corruption or bribery laws for the private sector. However, statutes like the PMLA or the all-encompassing IPC for criminal acts will apply to individuals.
  • Private sector is largely governed by the Companies Act and the internal codes of conduct and regulation as framed by the organisation itself.
  • The Companies Act has stringent provisions pertaining to fraud. Acts of bribery, or any concealment of the same, can be considered to be fraud on behalf of the company.
  • Private organisations are obligated to make such disclosures in their audits and auditors are similarly obliged to forward their report of suspicion of fraud, corruption, bribery, etc. to the relevant central government authorities.
 

Questions to consider while determining the validity of a ‘Gift’


While the public sector and government employees are heavily scrutinized when in receipt of gifts, the private sector does not have any explicit law or provision covering the same. The Companies Act or the Securities & Exchange Board of India (SEBI) do not have rules concerned with offering or receiving gifts and require oragnisations to have adequate internal policies to govern the same.

Therefore, in the adjudication of whether a particular offer or acceptance is a ‘gift’, the following points must be scrutinized:

  • What is the motive?
  • Whether the gift was given with an intent to obtain a business favour?
  • Whether the gift was an attempt to influence the other person?
  • Whether the gift was generally given out to a wider group or only a selected few or a single person?
  • What is the nature and value of the gift? Is it in line with company policy? Is it exorbitantly high?
  • Would a normal person perceive it as a gift without ulterior motives?
  • Under Section 11 of PCA, even quid pro quo is not necessary; whether the gift is provided to a public official with whom the person involved is or is likely to be involved in a business transaction?

Under the PCA, offences by those other than ‘public servants’ are:

  • Accepting gratification to influence a public servant,
  • Accepting gratification for exercising personal influence with a public servant,
  • Abetment – in terms of ‘offering’ the gift under Section 12.
The above two circumstances are in violation of the Act, even for the private sector.
 

What may be construed as legal?

  • A gift must be truly made as a token of ‘goodwill’, without any strings attached.
  • No blanket ban on receiving gifts for public servants under the Central Civil Services Rules 1964. However, the pecuniary threshold must be adhered to.
  • Gifts, meals, hospitality, etc. can be accepted within the permissible threshold. However, the intention behind such generosity must be clean and devoid of any mens rea (criminal intention).
  • The gift, if made in the private sector, must be in line with the organisation’s policies. Your support for the management must end if they breach the organisation’s policies or provide differential treatment.
  • The context of each case matters a lot.
 
Scenario: It is believed by legal experts that, for example, an employee accepting a dinner invitation from an influential client is permissible. However, if the same employee accepts a foreign holiday abroad, the law will look at it with suspicion. There is no ‘black’ and ‘white’ in such cases and they must be adjudicated upon separately. 
 


How do you file a case for corruption?


If a citizen wishes to report an instance of corruption, there are various avenues available. A complaint for corruption can be made through:
  • The Central Vigilance Commission (CVC)
  • The Central Bureau of Investigation (CBI)
  • Lokpal


Filing a complaint through the CVC


The following steps need to be followed to report corruption against a Central Government employee via the CVC route:

  • No anonymous complaints can be made through the CVC route.
  • Complaints can be lodged by writing a letter to the CVC or through the official website-portal https://portal.cvc.gov.in/
  • Click on ‘Lodge a Complaint.’
  • Select ‘Complaint Category.’
  • Track your complaint through ‘Know your Complaint Status.’

If you send a letter, it should contain the following:

  • Addressed to the Commission directly.
  • Name & personal details.
  • Postal address of the sender.
  • Contact details.
  • Information on the matter.
  • Any evidence supporting the claim.
  • Complaints sent on any email ID of officers of the commission will not be entertained.
  • Signature of the complainant.


Filing a complaint through the CBI


If you wish to file a complaint through the CBI, the following steps must be followed:

  • Every state has a CBI office.
  • Visit the CBI official website-portal at https://cbi.gov.in/
  • Click on ‘Join us on Fighting Corruption.’
  • Select the nearest branch for informing about corruption.
  • Report to the contact information.


Filing a complaint through Lokpal

  • Visit the official website portal at https://www.lokpal.gov.in/
  • Click on ‘Complaint Corner.’
  • Click on ‘Lodge a Complaint.’
  • Select ‘Lodge a Complaint Online.’
  • Different forms for ‘Part-wise’ entry of the complaint: Part A for individual complaint; Part B for complaint on behalf of body, board, authority, society, corporation, person of trusts etc.; Part C is for entry of details of allegation with necessary proof; Part D is an affidavit with notarized documents.


What to do in case of a false complaint of corruption?


In case of a complaint of corruption, it will be treated as a criminal case. The following steps can come to your aid if you are of the opinion that the complaint is false/malicious.

  • Applying for anticipatory bail under Section 438 of the Criminal Procedure Code (CrPC) because of apprehension of arrest. This remedy can only be invoked before the arrest of the accused.
  • If a First Information Report or FIR has been filed against the accused, a ‘quashing of FIR’ can be sought by invoking Section 482 of the CrPC. The power vested by the High Court is invoked to give effect to any order or prevent abuse of process of any Court.
  • The Writ Jurisdiction of a High Court can be invoked by filing a petition under Article 226 of the Constitution of India to the concerned High Court for any grave miscarriage of justice.
  • If innocence is proved, the wrongly accused can further file for defamation under Section 499 read with 500 of the IPC and seek damages from the court.
  • The wrongly accused can also seek compensation for accusation without reasonable cause under Section 250(1) of the CrPC.
  • Can seek punishment for the complainant under Section 182 and 211 of the IPC.
 

Conclusion: What can constitute a Workplace Anti-Corruption Policy?


A typical gift policy may cover the following points:

Acceptable nature of gifts

  • A typical gift policy must clearly define where corruption begins, where is the line.
  • The main objective of any policy is to define the appropriate rules and criteria for gifts.
  • The intention and motive of the giver is of paramount importance in determining whether the gift is acceptable or not.
  • Any possible ulterior motive must be examined closely.
 
 Gifts that may be troublesome are as follows:
  • Cash or means of payment similar to cash like bank transfers.
  • Securities such as stocks and bonds.
  • Gold, precious stones and other precious metals.
  • Vouchers and gift cards.
  • No-interest or low-interest loans.
  • Holiday packages to lavish destinations.


Value threshold of the gift

  • There is a general acceptance in the corporate sector that higher the value of the gift or benefit, greater is the suspicion of corruption.
  • There are no clear answers as to where the line is drawn as that depends on the context and policy of the organisation.
  • Ideally, value depends on the purchasing power, status of the gift giver/receiver. For example, gifting a Swiss watch in Switzerland may be normal. However, the same in India may indicate corruption.
  • Deciding monetary equivalent for gifts from abroad is also difficult. However, this can be tackled by setting a limit from foreign countries.
 

Occasion/Reason for the gift

  • Legitimate occasions for a gift can be present. For example, a birthday, an anniversary or other office events, such as a Christmas or New Year celebration.
  • However, if no apparent reason or occasion exists, the employee must have an explanation for the gift that satisfies the office authorities.
  • If the giver and recipient are colluding under the garb of gifts, it is an indication of corruption and malpractice.
 

Documentation in case of disclosure of gift

  • The internal policy of the organisation must have laid down procedure for the documentation required to disclose a gift.
  • Such documentation can cover the nature of the gift, the value, the relation of the giver to the organisation and the occasion or reason for the gift.
  • Disclosure of any company logo, in case present on the gift, must also be made.
 

Gift register for monitoring

  • In order to monitor the inflow of gifts and benefits, a gift register in the organisation is a must. This can be a digital register as well as software can help in compliance with permissible values and annual limits within the organizational policy.
  • The register can store vital information such as what was given, when and on what occasion. Answers to such questions can provide quick solutions in case a decision has to be taken and also reduces liability risks.
  • It should be monitored by an ethics officer or other responsible person, as assigned by the organisation.
 

Nature of penalty or punishment

  • Apart from being separately prosecuted, the organizational policy must state the nature of penalty or punishment in case of breach of policy.
  • Punishments could be in terms of suspensions, fines or both.
  • Employees could also be demoted with salary cuts.
  • Penalties and punishments would depend on the gravity of the breach of policy.

 

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