AMCHAM ANTI CORRUPTION COMMITEE

							        AMCHAM
ANTI CORRUPTION COMMITEE


   Anand Dayal, Chairman
    New Delhi, 18 November 2009




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            MEETING AGENDA
•   INTRODUCTION OF COMMITTEE MEMBERS
•   ANTI CORRUPTION LANDSCAPE IN INDIA
•   COMMITTEE GOALS
    −   SHORT TERM
    −   LONG TERM
•   PLAN OF ACTION
•   LOGISTICS FOR CONDUCTING MEETING



                                         2
         ANTI CORRUPTION
        LANDSCAPE IN INDIA
•   Nature and causes of corruption in India
•   Areas of risk for US companies
•   FCPA proceedings involving bribery in India
•   Trends in India
•   Anti-corruption laws
•   Investigation agencies dealing with corruption
•   Efforts to curb corruption
•   Dealing with extortionist government officials

                                                3
    NATURE OF CORRUPTION
          IN INDIA
•   Encountered by public in day to day
    dealings
•   Reported demands:
    −   50% (under $ 100)
    −   84% (under $ 5000)

•   General Mindset: bribe giver is victim
•   Motivation: avoid harm or disadvantage,
    rather than for gaining an advantage

                                              4
    CAUSES OF CORRUPTION IN
             INDIA
     As identified by Santhanam Committee
•   Administrative delays
•   Excessive burden of regulatory functions on
    government
•   Government officials vested with personal
    discretion
•   Complex procedures in matters of importance
    to citizens

                                                  5
                CAUSES contd…
         As identified by Scholarly Literature
•   Political patronage. Corruption in the political
    leadership
•   Administrative labyrinth. Cumbersome and
    dilatory administrative procedures
•   Lack of punishment. Corruption cases handled in
    a casual and clumsy manner
•   Social environment. Corruption accepted in the
    social psyche and behavior
                                                       6
       AREAS OF RISK FOR U S
           COMPANIES
•   Culture of acceptance of corruption
•   Excessive discretion in exercise of
    governmental authority
•   Pervasiveness of public sector in commerce
•   Compliance challenges due to legal and
    regulatory ambiguity and inconsistencies
•   Cash oriented economy


                                                 7
FCPA PROCEEDINGS IN INDIA
•   Ten cases involving bribery in India
    −   4 by DOJ Fraud Section
    −   6 by the SEC
•   Many involve conduct of an Indian
    subsidiary
•   Highest monetary penalty, $ 10 million
•   Disgorgement of profits and interest
•   Imprisonment (5 yrs) sought in one case

                                              8
             TRENDS IN INDIA
•   Transparency in government
•   Increased public awareness of rights
•   Emphasis on legal and regulatory compliance
•   Movement away from business model relying
    on undue influence
•   Increased use of technology in dealing with
    government (e-governance)
•   Contract focus vs. relationship focus in business
•   Implementation of global best practices

                                                  9
        ANTI CORRUPTION LAWS
•   Prevention of Corruption Act, 1988
    −   Prohibits the taking of a bribe or other gratification
        by a “public servant”
    −   “public servant” expansively defined
    −   Central Vigilance Commission (CVC) charged with
        inquiring into and investigating offenses
    −   Prosecution requires prior government approval
    −   Imprisonment and monetary fines

•   State Lokayukta Acts and Rules

                                                                 10
    INVESTIGATION AGENCIES
•   Central Vigilance Commission (CVC)
•   Central Vigilance Officer (CVO) at
    undertaking level
•   Central Bureau of Investigation (CBI)
•   Enforcement Directorate




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         INITIATIVES TO CURB
             CORRUPTION
•   Right to Information Act, 2005
•   Government Whistleblower Resolution
•   National e-Governance Plan, May 2006
•   Transparency Efforts in Public Procurement
    −   Integrity pact between government department
        and each bidder
    −   E-procurement, listed as initiatives under
        National e–Governance Plan
    −   CVC guidelines Preventive Vigilance in Public
        Procurement
    −   Defence Procurement Policy

                                                        12
            DEALING WITH
        EXTORTIONIST DEMAND
•   Positive Deviance Approach
    −   Have the courage to say NO and stand by it
    −   Written policy not to engage in bribery
    −   Strict compliance with legal and regulatory
        requirements
    −   Make representation to higher authorities
    −   Encourage and implement E-governance
    −   Reward ethical behavior within government



                                                      13
     GOALS TO ACHIEVE

Help US companies manage
legal compliance challenges

           Create a level playing field vis-
               à-vis local (domestic)
             companies & other foreign
                       MNC’s


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   THANK YOU

   ANAND S. DAYAL
KOURA & CO, ADVOCATES



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