India lacks mechanism to tackle foreign bribery, probed zero such cases from 2016 to 2019: Report

India lacks a mechanism to crack down on bribery of foreign officials by its exporters and did not investigate a single such case between 2016 and 2019, anti-corruption watchdog Transparency International has noted in a report.

According to the anti-corruption watchdog, "The biggest global exporters with the worst track records are China, Japan, the Netherlands, South Korea, Hong Kong, Canada, India, and Mexico."

The Berlin-based NGO on Tuesday, in its study entitled 'Exporting Corruption 2020: Assessing Enforcement of the OECD Anti-Bribery Convention', found that only four of 47 countries — the US, UK, Switzerland, and Israel, making up 16.5 percent of global exports — were actively enforcing legislation against foreign bribery in 2019.

That’s down from seven countries, making up 27 percent of exports, which were conducting active enforcement in 2018. The report indicated a significant drop in the investigation into bribery, money laundering scandals across the world since 2018.

China, the world’s largest exporter and not a signatory to the convention, was found to conduct “little or no enforcement,” in a category that also includes India, and convention members Japan and Korea.

"Bribery of foreign public officials has huge costs and consequences for countries across the globe," the report warned. "And with those consequences becoming more severe due to the COVID-19 pandemic and with so many cases of foreign bribery occurring in health care, one cannot afford to lose additional lives to corruption."

The 1997 Organisation for Economic Cooperation and Development convention prohibits bribes to win contracts and licenses, or to dodge taxes and local laws.

Credit: transparency.org

The report highlighted the fact that despite India being under the UN Convention Against Corruption since 2011, it has yet to meet Article 16 obligations to define and criminalise foreign bribery.

Hence the legal framework in the country has suffered from other shortcomings which affect India's capacity to prevent and prosecute foreign bribery.

The report finds that despite India accounting for 2.1 percent of global exports, the country has not conducted a single investigation into cases of foreign bribery in the past three years.

"Despite the several scandals that India has experienced, bribery continues to be used by companies from major exporting countries to win business in the markets," the study noted.

The report stated that while the Companies Act 2013 places a greater focus on transparency, accountability and corporate governance than the previous 1956 Act, it is not clear if bribing a foreign public official would be considered an illegal purpose under the law.

It also points out inadequacies in the legal framework as one of the reasons for not much action against corruption in India.

“Even after several anti-corruption developments i.e. appointment of the first Lokpal (Ombudsman), Amendments to the Prevention of Corruption Act, The Companies (Amendment) Act, 2017, The Whistle-blowers Protection Act 2014 and many more, India has failed to implement active enforcement. India still has a long way to go in meeting their obligations," the report stated.

The report also added that while the listed companies which accept deposits in excess of Rs 50 crore are required to establish a vigilance mechanism to report about unethical behaviour or corruption, in reality, these provisions are minimal and ineffective.

"There are multiple agencies in India involved in the investigation of cases related to corruption and fraud, and coordination among agencies is seen as the biggest challenge in the timely prosecution of offenders. High-profile investigations are delayed due to political interference. The Indian investigating agencies are short-staffed and many lack the skills to investigate white-collar crime and other economic offences," the report stated.

As foreign bribery is not yet criminalised in India, the adequacy of the enforcement system in relation to this specific offence cannot be assessed, the watchdog said. However, certain shortcomings in the enforcement system evident from the current enforcement of domestic corruption would also be a concern for foreign bribery enforcement, it added.

The report also highlighted that the Indian government does not publish any statistics on foreign bribery enforcement, nor does it provide such statistics on request.

Cases of alleged foreign bribery in India

In 2019, India ranked second after Brazil in terms of the number of investigations concerning alleged bribery of domestic officials by foreign firms, as per the 10th Annual Global Enforcement Report of TRACE International.

As per a 2018 report by Transparency International, India, among 16 countries targeted by alleged bribery, has seen several cases of alleged bribery or attempts to bribe Indian government officials by foreign firms including France-based Airbus.

The four-year case involved the investigation of accusations that Airbus, between 2004 and 2016, used intermediaries to bribe public officials in numerous countries to buy its planes and satellites.

“In 2017, the Ontario Court of Appeal upheld the 2013 conviction of a Canadian man for conspiring to bribe Indian public officials, including a minister, in a failed bid to win a major contract for Cryptometrics Canada ( a firm) to supply security-screening equipment to Air India,” the report said, giving details of Canada which according to it has “limited enforcement”.

The 2018 edition of the report also cited cases of alleged bribery by foreign firms including in a deal of 12 helicopters by Italy-based firm AgustaWestland, where it had again asked India to criminalise foreign bribery and introduce effective legislation to protect whistleblowers in the private sector.

“Too many governments choose to turn a blind eye when their companies use bribery to win business in foreign markets,” Transparency International head Delia Ferreira Rubio told The Associated Press. “G-20 countries and other major economies have a responsibility to enforce the rules.”

“Our research shows that many countries are barely investigating foreign bribery,” Gillian Dell, the lead author of the Transparency report told AP. “Unfortunately, it’s all too common for businesses in wealthy countries to export corruption to poorer countries, undermining institutions and development.”

Recommendations by report

Amongst the recommendations made is that the India should become a party to the OECD Anti-Bribery Convention, pass legislation criminalising foreign bribery, extend the coverage of whistleblower protections to the private sector and enforce against foreign bribery to the extent possible under existing legislation.

The G20 has repeatedly encouraged its member countries, including India, to ratify the OECD Anti-Bribery Convention, which establishes legally binding standards to criminalise bribery of foreign public officials in international business transactions and provides for a host of related measures that make this effective.

The OECD Anti-Bribery Convention was adopted in 1997 to address the supply side of international corruption. There are now 44 parties to the convention, 36 of them members of the OECD (Organisation for Economic Cooperation and Development).

“It is a matter of concern that India failed to initiate or conclude a single case of foreign bribery from 2016 to 2019. It needs to reject every form of corruption and ameliorate on several parameters which this report has reflected,” Brij Bhushan Singh, an anti-corruption activist told The Week.

The watchdog also recommended ending secrecy in ownership of companies, which makes investigating foreign bribery difficult, and exploring increased liability of parent companies for the actions of their foreign subsidiaries.

With inputs from agencies