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Report No. 254

B. Section 10 of the 2013 Bill

4.3.1. Section 10 extends the liability of the commercial organisation to every person in charge of and responsible to the organisation for the conduct of its business through a deeming provision. Given that the section begins with "when a commercial organisation has been guilty", it is clear that section 10 only pertains to section 9, and is not connected to section 8 - it again provides differing standards of how to treat corporate bribery within the same enactment.

4.3.2. The effect of section 10 is that if an employee (P) of a company (C), sitting in Bangalore bribes a local official (R) to get its clearance on time, then the combined effect of the 2013 Bill is that P will be liable under section 8; R under section 7; and C under section 9, unless it can prove it has in place adequate procedures designed to prevent such conduct.

However, section 10 will operate to deem every single person in charge of, and responsible to, C - thus, every Director on the Board of Directors, who may be sitting in Delhi more than 2000 kms away - guilty, and the burden on proof will shift on each of these Directors to prove they had no knowledge or had exercised due diligence. The situation could be even worse if for instance, P had the high level clearance of one of the sitting Directors to bribe R, because of which every other Director will now be faced with the difficult task of discharging their high burden of proof.

4.3.3. As is evident thus, section 10(1) of the 2013 Bill is over-broad and unlike the provisions in the UNCAC or the UK Bribery Act. However, even section 10(2), with its elements of negligence, is overtly broad and not along the lines of section 14(2) of the UK Bribery Act. To provide for consistency and coherence between sections 9 and 10 of the 2013 Bill and to remove the over-broad elements of negligence, section 10 should be redrafted.

4.3.4. Recommendation: Section 10 of the Bill should be amended, with sub-section (1) being deleted and sub-section (2) being modified. The revised Section 10 will read as follows:

"10. Where an offence under section 9 is committed by a commercial organisation, and such offence is proved to have been committed with the consent or connivance of any director, manager, secretary or other officer of the commercial organisation, such director, manager, secretary or other officer shall be guilty of the offence and shall be liable to be proceeded against and punishable with imprisonment which shall not be less than three years but which may extend to seven years and shall also be liable to fine."

4.4. Keeping in mind all the changes proposed in this Chapter, and other consequential amendments that follow from the Commission's recommendations, the comprehensively drafted sections 9 and 10 will now read as follows:



The Prevention of Corruption (Amendment) Bill, 2013 Back




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