The Indian economy is one of the fastest growing economies in the world. But the benefits of this growth are not evenly distributed. As per the recent Global Wealth Report, 2016, top 1 per cent of our population has more than 58 per cent of the total wealth of the country. Large-scale corruption is the main cause of this uneven growth.
Curbing corruption and eliminating black money
- Curbing corruption and eliminating black money is one of the important mandates of the present government. The Prime Minister has gone full throttle to fight this menace, starting from setting up of a Special Investigation Team (SIT), Foreign Assets Declaration Scheme, renegotiation of bilateral treaties on Double Taxation Avoidance Agreement (DTAA) with Mauritius, Cyprus and Singapore, Income Disclosure Scheme (IDS) 1 & 2, Benami Transactions (Prohibition) Amendment Act (2016), demonetisation, deregistration of Shell Companies and Goods and Services Tax (GST).
- India has various anti-corruption legislations; we also have a number of anti-corruption institutions. But the main legislation, Prevention of Corruption Act, 1988, does not contain any provision directly dealing with the offence of giving bribe.
- Likewise, in Companies Act, 2013, the offence of corruption or bribery is not specified. It is only a matter of time that India will have a specific legislation (Act) to deal with bribery in the private sector.
- However, global anti-corruption trends recommended under OECD guidelines, G20 initiatives, UNCAC conventions, contain specific recommendations to check bribery and corruption in the private sector.
- International legislations such as the Foreign Corrupt Practices Act, 1977 (FCPA) of US and the United Kingdom Bribery Act, 2010 mandate corporate and other business entities to formulate and adopt anti-bribery policies in accordance with its requirements and provide protection to senior management if they have an anti-bribery policy in place.
Corruption – a severe impediment to economic growth
- Corruption is severe impediment to economic growth, it threatens the integrity of markets, undermines fair competition, distorts resource allocation, destroys public trust and undermines the rule of law.
- The fact that the private sector in general is the victim of corruption rather than a beneficiary is largely ignored. Therefore, it is in the interest of the development process to engage the private sector in creating a clean business environment.
- The private sector has taken strong initiatives with respect to corporate governance practices. However, in a survey of the corporate sector by the Institute of Company Secretaries of India (ICSI) it was observed that due to the absence of clear-cut guidelines, the private sector lacks a well-formulated policy to check corruption and bribery emanating in their organisations.
The ‘Corporate Anti-Bribery Code’
The ‘Corporate Anti-Bribery Code’ of the ICSI hits at the very core of corruption that is, tackling the supply side of bribery. This code is an important institutional initiative in curbing corruption in India.
- The Code has nine clauses, including model policies on gift, hospitality and expenses, purchase procurement policy and guidelines for whistle-blower mechanism. It also deals with penalties for non-compliance.
- The code will help the private sector establish anti-bribery systems. Generally, the process of voluntary adaptation and preparation before a law is enacted and enforced is good for the country and the stakeholders.