The Bill, once enacted, will govern the ethical behaviour of Indian companies in their foreign operations. It defines "bribery" much more broadly than similar laws applying to their foreign competitors, potentially causing both legal and business harm to Indian industry in the process. The United States' Foreign Corrupt Practices Act (FCPA) excludes "facilitation" payments (also known as "speed" payments or "customary" payments) made to foreign public officials from a definition of punishable bribery. The FCPA allows for two affirmative defences in addition: (i) an exemption for payments which are lawful under foreign law, such as "compulsory" payments made under an importing country's offset requirements or mandatory CSR requirements; and (ii) another exemption for "reasonable and bonafide" expenses directly related to the promotion or demonstration of products or services related to the execution or performance of a contract. It is easy to see that all these three types of business transactions can easily mask bribes.
Similarly, while Britain's Anti Bribery Act (ABA) does not exempt customary payments, the executive guidance issued recently discourages British prosecutors from pursuing foreign bribery charges in respect of facilitation and compulsory payments. Given that most foreign contracts are high-value, where the contract-deciding and decision-expediting roles vest within the same set of officials, the exception and affirmative defence clauses under the FCPA and the ABA, in effect, allow foreign entities to disguise contract decision-influencing payments (which are prohibited under the FCPA/ ABA) as exempt payments, resulting in "business as usual".
On the other hand, India's Bill has a more comprehensive definition of bribery and contains no exceptions at all. This makes it a more morally correct formulation - suitable for an ideal, perfect world. However, it may have adverse business implications for Indian companies operating in foreign markets: a large class of payments by their foreign competitors to foreign officials would be exempt from bribery charges under their domestic laws, while an Indian company would be liable to criminal prosecution for similar payments under India's own foreign bribery law.
Another interesting feature of the Bill is that it grants automatic access in India for legal processes originating from foreign governments and foreign courts in other UNCAC (UN Convention Against Corruption) countries. More specifically, section 7 of the Bill declares that all offences under the Bill shall be deemed to have been included as extraditable offences and (shall be deemed to have been) provided for in all the extradition treaties made by India with convention (UNCAC) countries. As a result, Indian courts would be compelled to treat requests from all UNCAC-covered foreign courts and governments as automatically extraditable, without the Indian legal system obtaining any equivalent guarantee for processes issued by its own courts.
This could be a cause for concern when examined in light of observations from India's higher courts that a warrant issued by a foreign court cannot be executed in India without a formal request from the foreign government concerned for extradition of the accused under an existing extradition treaty or agreement in terms of the Extradition Act, 1962.
The proposed formulation could also enable (relatively) much easier extradition of public officials and business managers from India, placing them at the doorstep (and associated whims and fancies) of foreign courts and foreign legal systems.
The way forward for resolving these tricky issues, while still moving forward on combating foreign corruption by India as obligated under the UNCAC, appears to be relatively simple, particularly since the UNCAC itself gives participating countries an option to choose either the convention or their own domestic extradition law as the legal basis for extradition.
Suggested reforms could include the following: (i) India's Bill can be reworded to allow the same exceptions to its own industry in their foreign operations, as are available to their foreign competitors under their domestic legal frameworks such as the FCPA and executive guidance under the ABA; and (ii) the benefit of automatic extradition, in a limited form, can be restricted to "contracting states" as defined in the Bill, after ensuring alignment with aspects such as "dual criminality" and with provisions of the Extradition Act. That would limit extradition to a narrowly defined range of offences and to those countries that bilaterally negotiate with India equivalent access for India's legal processes - rather than unilaterally extending extradition benefits for a wide range of offences to all UNCAC countries.
Without these changes, Indian industry could well face an adverse level-playing field vis-à-vis their foreign competitors in global markets merely because of stricter definitions under India's own bill as compared to laws applicable to their foreign competitors. Similarly, unless reworded, the FB Bill may well end up creating serious imbalances favouring the execution of foreign warrants and foreign legal processes in India.
The writer is a civil servant. These views are his own