Anti Corruption Investigation Tips for Compliance with FCPA in India

 Way back in October 2009, Indian media highlighted FCPA violation by US-based firm. This initiated action and investigation into more such cases in India against wrongdoers that included inquiries against errant Public servants, companies and their respective representatives.    

The inquiry was guided by the anti-bribery provisions of the Prevention of Corruption Act, 1988, violation of the Accurate accounting requirements under the Companies Act, falsification of accounts under the Indian Penal Code and related proceedings under the Income Tax Act and the other applicable statutes.   

It is necessary for the US companies operating in India to recognize the risk of violation of FCPA provisions in India. The companies should understand what they can and cannot do in their dealing with government officials, how effective due diligence initiatives must be devised while considering the acquisition of business/entity. Also, there is a need to codify a gift, travel and entertainment policy amongst other compliance with FCPA. 

These companies Have To:-

• Understand the scope and the applicability of the FCPA To the enterprise

• Ensure compliance with FCPA in addition to other laws applicable to companies in India, including the POC Act.

• Create and consistently bolster their compliance with FCPA policies and initiatives with the motive to insulate them from FCPA scrutiny and to otherwise adhere to established norms of good governance.

India’s Score Low in the Transparency International Corruption Perceptions Index

Scoring relatively low rank in the Transparency International Corruption Perceptions Index, India is heading towards earning a reputation for the corrupt nation. There are many challenges faced in doing business in India; however, these can be managed by understanding the bribery and corruption risk present and likely to arise. Implementing appropriate procedures and policies can manage anti-corruption risk.

Listed Below Are Some Instances That Exist In India To Encourage Corruption At Different Levels:-

• Here are regulatory hurdles, including the necessity of obtaining permits, licenses and other regulatory approvals to start a business. Additionally, there are various application and registration fees. Presence of these low-level transaction provides an opportunity for bribery where in the payments are made in cash or gifts

• Payments are other benefits to custom officials to bypass inspections or overlooked incorrect or incomplete paperwork

• Paying a local tax regulator to overlook errors or inconsistencies in filings

• A third-party asked the company to provide it with unreasonably large discounts, excessive commissions, reimbursement or contingency fees

• Providing per-diems pocket money for foreign officials to use during a visit

Tips for Managing Anti-Corruption Programs/Investment in India

1) Prepare for Law Enforcement Action during the investigation. Also, there is a necessity to have a contingency plan laid down in advance.

2) Evaluate privilege issues as there should be no attorney-client privilege for in-house lawyers under Indian law.

3) Careful examination of third-party intermediary expenditures as in most of the cases, improper payments are made through agents, consultants or other intermediaries.

4) Watch for key red flag terms while reviewing documents or Indian subsidiary books and records.

5) Stay focused on the real issue during the investigation.

6) Protect reporters identity is an extra step.

7) Consider local counsel within India as they should be involved to assess records and communicate effectively with the involved employees.

Hope the article help with a little insight into anti-corruption policies and programs formulations in compliance with FCPA.