Report No. 254
A. Section 9 of the 2013 Bill
4.2.1. Section 9 creating an offence relating to bribing of a public servant by a commercial organisation is taken from section 7 of the UK Act, which deals with the failure of a commercial organisation to prevent bribery. In the UK context, it would be punishable for a private person to bribe another private person or a public servant in the context of commercial organisations intending to obtain or retain business. In the proposed 2013 amendment, the only bribery that is made punishable is when it pertains to a public servant for the purposes of section 9(1)(a) and (b). Hence, section 9 is a distinct offence from section 8.
4.2.2. The proviso to section 9 of the 2013 Bill provides for a defence for the commercial organisation to prove that it had in place adequate procedures designed to prevent "any person associated with it" from undertaking the stipulated criminalised conduct. This bears reference to section 7(2) of the UK Bribery Act, read with sections 7(4) and 9 thereof, with the underlying premise that the "individual failings of particular members of staff do not necessarily illustrate systematic failures in the way that it [company] sought to prevent the commission of bribery."12
12. UK Law Commission, supra note 2, at ¶ 6.108
4.2.3. Section 9 of the UK Act, however, creates a mandatory obligation on the Secretary of State to publish "guidance about procedures that relevant commercial organisations can put in place to prevent persons associated with them from bribing as mentioned in section 7(1)". The section further envisages a regular revision to the guidance. The UK authorities have put in place a detailed "guidance" for such procedures,13 to provide clarity and certainty. As the UK Law Commission noted:
13. Ministry of Justice, Bribery Act of 2010: Guidance, (2011),
<http://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf>
the adequacy of a system can be made to depend on the size (and, we might add, the resources) of the company in question. In a small company with five employees, it might be perfectly adequate for the managing director simply to remind the employees (and others) periodically of their obligations.14
14. UK Law Commission, supra note 2, at ¶ 6.109
4.2.4. The Guidance published by the UK government lists six principles, in addition to case studies, to help determine the adequacy of procedures:
(a) The principle of proportionate procedures- A commercial organisation's procedures to prevent bribery by persons associated with it are proportionate to the bribery risks it faces and to the nature, scale and complexity of the commercial organisation's activities. They are also clear, practical, accessible, effectively implemented and enforced.
(b) Top-level commitment: The top-level management of a commercial organisation (be it a board of directors, the owners or any other equivalent body or person) are committed to preventing bribery by persons associated with it. They foster a culture within the organisation in which bribery is never acceptable.
(c) Risk assessment: The commercial organisation assesses the nature and extent of its exposure to potential external and internal risks of bribery on its behalf by persons associated with it. The assessment is periodic, informed and documented.
(d) Due diligence: The commercial organisation applies due diligence procedures, taking a proportionate and risk based approach, in respect of persons who perform or will perform services for or on behalf of the organisation, in order to mitigate identified bribery risks.
(e) Communications (including training): The commercial organisation seeks to ensure that its bribery prevention policies and procedures are embedded and understood throughout the organisation through internal and external communication, including training, that is proportionate to the risks it faces.
(f) Monitoring and review: The commercial organisation monitors and reviews procedures designed to prevent bribery by persons associated with it and makes improvements where necessary.15
15. Guidance, supra note 13, at 20-32
4.2.5. However, the proposed amendment to section 9 of the 2013 Bill does not require any such guidance and places no obligation on the government in this regard. This is especially important given that the proviso places the burden of proof on the commercial organisation.
This provision will lead to an immediate and significant impact on the conduct of business by corporations, especially in light of the fact that they will not have any clarity on what is expected of them and will not even know if the procedures and processes they adopt are in compliance or in possible breach. This might also impede the efficient functioning of small businesses, which will not be able to determine the "adequate standard" themselves.
4.2.6. Moreover, even the Foreign Corrupt Practices Act (hereinafter "FCPA"), 1977 in the United States mandates the US Attorney General to issue guidelines. While the UK Bribery Act mandates consultation of the Secretary of State with the Scottish Ministers, the FCPA Act requires the Attorney General to consult all the interested persons through public notice and comments procedures before publishing the guidelines.
In both countries thus, there are extensive guidelines on procedures, which commercial organisations may use on a voluntary basis to conform their conduct to the law and relevant government policy on enforcement.
4.2.7. In the Commission's recommendation, section 9 should be brought into force only when the guidelines under the proposed section 9(5) are prescribed and published by the Central Government.
4.2.8. Recommendation: Section 9 should be amended to provide for a section, along the lines of section 9 of the UK Bribery Act, introducing a statutory obligation on the government to publish guidance as to the procedures that commercial organisations can take to put in place "adequate systems".
In Section 9, a further sub-clause (5) can be added to the following effect:
(5) The Central Government shall prescribe and publish guidelines about the adequate procedures, which can be put in place by commercial organisations to prevent persons associated with them from bribing any person, being or expecting to be, a public servant.
Provided that such guidelines shall be prescribed and published by the Central Government after following a consultation process in which the views of all the interested stakeholders are obtained through public notice.
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