Updating your FCPA ABC Program to keep up with definitions under Indian law

The primary way for an anti-bribery compliance (ABC) program to be effective is to be locally tailored, so that it isn’t alien to the jurisdiction it operates in. Importantly, in countries such as India, the anti-corruption law regime is witnessing frequent changes due to the judicial interpretation of the Prevention of Corruption Act, 1988 (PC Act). One of the most relevant and continuing trends has been to expand the scope of the definition of a “public servant”. It is imperative that the expansion in scope of what is criminalised under the PC Act, is adequately reflected in your India specific ABC program.

To illustrate, consider the definitions of the demand side personnel in the FCPA and the (Indian) PC Act. The PC Act governs acts of bribery involving “public servants”, which can be broadly split into two groups – (i) persons expressly provided for in the statute; and (ii) persons included due to performance of a “public duty”. The first category explicitly lists arbitrators appointed by courts, judges, governing body members of universities, government employees, etc., irrespective of whether formally appointed by the Government. The second category, is a catch-all group who, by virtue of their office, perform “any public duty”. “Public duty” is defined to mean the discharge of duty in which the State, the public or the community at large has an interest. Moreover, despite the existing broadness of the definition of “public servant” under the PC Act, the Supreme Court of India has further expanded this.

The Supreme Court has done this by emphasising the public duty element – as done in CBI v. Ramesh Gelli (2016) and State v. Mansukhbhai Shah (2020). Specifically, in Gelli the court in holding that bank employees of private banks are public servants, rejected the argument that a banker and a customer are in a commercial relationship and there is no public duty involved. In Shah, it held that the governing body member of a deemed university would be a public servant as institutions have “common public duty” of granting (educational) degrees which are ultimately qualifications recognised in society. While these interpretations have statutory support, there is a clear shift towards a purposive interpretation by courts in deciding whether a person is a public servant and thus subject to prosecution under the PC Act.

On the other hand, the FCPA, inter alia, governs payments to any “foreign official” who is “…any officer or employee of a foreign government or any department, agency, or instrumentality thereof,” or anyone acting on behalf thereof. Given that the FCPA has does not define as to what an instrumentality of a “foreign government” is, using the limited precedents such as United States v. Carson, 783 F. Supp. 2d 1108 (2011) and the Department of Justice guidance, it is arguable that the abovementioned expanded scope of a public servant may meet the criteria of “foreign official” under the FCPA.

However, it is a worthwhile exercise to harmonise or even contrast the definitions of “foreign official” under the FCPA and “public servant” under the (Indian) PC Act, and ensure that your ABC program apprehends the purposive approach of these laws. This is especially relevant for US based parent entities applying an FCPA oriented ABC program to Indian subsidiaries and intermediaries, and thus, inadvertently exclude possible nuances of local laws.

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Qualification: LL.B / Advocate
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Location: New Delhi, New Delhi, IN
Member Since: 29 Jan 2021 | Total Posts: 1

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April 2021