Thursday, 28 May 2015

AMENDEMNTS PROPOSED TO PREVENTION OF CORRUPTION ACT


The Prevention of Corruption Act, 1988 (No. 49 of 1988) is an Act of the Parliament of India enacted to combat corruption in government agencies and public sector businesses in India.

Taking a cue from US' Foreign Corrupt Practices Act, 1977, and the UK's Bribery Act, 2010, the government plans to come out with anti-bribery guidelines for companies and their employees while dealing with public servants. The government also proposes to hold commercial organisations responsible in case persons associated with them bribe public servants. These are part of a bigger move to have stricter anti-corruption laws in India - enhanced punishment for bribe givers and bribe takers; speedier completion of trails on corruption cases; extending protection from prosecution to public servants who cease to hold office following retirement, resignation, etc. Also later developments, such as, India ratifying the United Nations Convention Against Corruption “UNCAC”, international practice on treatment of the offence of bribery and corruption, etc. necessitated a review of the existing provisions of the Act, so as to bring it in line with current international practice and also to meet, more effectively, the country's obligations under the UNCAC.

The Prevention of Corruption (Amendment) Bill, 2013 was introduced in the Rajya Sabha for the purpose on 19.08.2013. The Department Related Parliamentary Standing Committee submitted its report on the Bill to the Rajya Sabha on 06.02.2014 but the Bill could not be passed. As the Bill contemplates an important paradigm shift in defining offences relating to bribery, the views of the Law Commission of India were also sought on the proposed amendments. Further amendments are proposed in the Bill as recommended by the Law Commission of India in its 254th Report

The Union Cabinet approved amendments to the Prevention of Corruption Act, 1988, that provide for classifying corruption as a heinous crime and longer prison terms for both bribe-giver and bribe- taker. The proposed amendment act will also ensure speedy trial, limited to two years, for corruption cases.

It is expected that the proposed amendments would fill in perceived gaps in the domestic anti-corruption law and also help in meeting the country's obligations under the United Nations Convention Against Corruption more effectively. The measures approved include penal provisions being enhanced from minimum 6 months to 3 years and from maximum five years to seven years. However, all is not well with the amendment and the biggest challenge has been to the proposed Section 17A which is being opposed by intellectuals across the country lead by Dr. Jayprakash Narayan of Lok Satta. However, before proceeding to the said attempt to dilute the anti graft law let us first understand the other aspect of the said amendment.

1.     7-year prison term brings it to the heinous crime category
The amendments to the Prevention of Corruption Act, 1988, approved by the Union Cabinet include enhancing punishment from the minimum 6 months to 3 years and from the maximum five years to seven years.
The seven-year imprisonment brings corruption to the heinous crime category. The ambit of the existing Act will be enhanced to make commercial entities liable for inducement of public servants. Under the present law, only individuals are liable. The proposed amendment bill also provides for issue of guidelines to commercial organisations to prevent persons associated with them from bribing a public servant.
2.     Non-monetary gratification
Non-monetary gratification will also be covered within the definition of the word gratification in the PCA 1988.
3.     Nature of Proposed Amendments
The Prevention of Corruption (Amendment) Bill, 2013 proposes following changes in aforesaid Acts/Ordinance to widen the description and coverage of offence of bribery in the line with current international practice.

Prevention of Corruption Act, 1988
Prevention of Corruption (Amendment) Bill, 2013
Taking a bribe by a current or prospective public servant

 Section (8)
Accepting or attempting to obtain any reward, other than a salary. This reward must be for doing or intending to do any official act.
 Accepting a reward for official acts that favour or disfavour any person.
 Accepting a reward from another person to exercise personal influence over a public servant.

 Accepting or attempting to obtain a reward for performing a public function in an improper manner.
 Inducing another public servant to perform his public function in an improper manner, in exchange for a reward.
 Public function is defined as one that is: i) of public nature, ii) in the course of employment, iii) to be performed impartially and in good faith.
 Improper performance includes: i) breach of a relevant expectation, ii) failure to perform a function that is a breach of an expectation.
 Relevant expectation is defined as i) a function performed in good faith, or ii) in a position of trust.
Taking a bribe by any person to influence a public servant
Section (9)
Accepting any reward from a person to induce a public servant, illegally, to favour or disfavour someone.
 Accepting a reward to exercise personal influence over a public servant to favour or disfavour someone.
Not provided in the Bill.
Giving a bribe to a public servant
 No specific provision.
 Covered under the provision of abetment.

Offering or promising a reward to a person for making a public official perform his public duty improperly.
 Offering a reward to a public official, knowing that such acceptance would qualify as performing his public duty improperly.
Giving a bribe by a commercial organisation to a public servant
No specific provision.
 Covered under the provision of abetment.

Offering a reward in return of obtaining or retaining any advantage in business.
 The person acting for the organisation and the head of the organisation are also made liable.
 The organisation and its head will not be held liable if  it is proven that the organisation took adequate precautions, and the head had no knowledge of the act.
Abetment
 A public servant abetting an offence related to influencing another public servant is covered.
 Any person abetting offences related to i) taking a bribe and ii) obtaining a valuable thing from a person engaged with in a business transaction is covered.

Covers abetment by any person for all offences under the Act.

Criminal Misconduct by a public servant

 Habitually taking a bribe or a valuable thing for free.
 Fraudulent misappropriation of property in his control.
 Obtaining a valuable thing or reward by illegal means.
 Abuse of position to obtain a valuable thing or monetary reward.
 Obtaining valuable thing or monetary reward without public interest.
 Possession of monetary resources or property disproportionate to known sources of income.


 Fraudulent misappropriation of property entrusted to a public servant.
 Intentional enrichment by illicit means and being in possession of property or resources disproportionate to known sources of income.

Habitual Offender
Habitually taking a reward to either influence a public servant or abet in the taking of a bribe.
The committing of any offence under the Act by a person who has previously been convicted.
Attachment and forfeiture of property
Not provided by the Act.
If an authorised investigating police officer believes that a public official has committed an offence, he may approach Special Judge for attachment of the property.
Prior sanction for prosecution
The prior sanction from the appropriate authority is required for prosecution of public officials.
Extends the requirement of prior sanction to former public officials, if the act was committed in their official capacity.
Protection to bribe giver from prosecution
Any statement made by a bribe giver, in a corruption trial of a public servant, would not subject him to prosecution for the offence of abetment.
Not provided by the Bill.
Penalties*:
 Habitual offender
 Criminal Misconduct
 Others (taking a bribe, abetment)


 Imprisonment of five years-10 years and a fine.

 Imprisonment of four years-10 years and a fine.

 Imprisonment of three years-seven years and a fine.


 Imprisonment of three years-10 years and a fine.

 Remains unchanged in the Bill.

 Imprisonment of three years-seven years and a fine.


An effort to bring the anti-corruption laws in India in parity with global best practices and the judicial pronouncements seems plagued with “hurried drafting and mechanical lifting” of certain provisions of the foreign law.
Though a much-needed endeavour in light of India’s ratification of the United Nations Convention Against Corruption (UNCAC) in May 2011, the 2013 Bill—which is an amendment to the Prevention of Corruption Act 1988; Delhi Special Police Establishment Act 1946; and Criminal Law (Amendment) Ordinance 1944—has come under severe criticism by the Law Commission, which feels that the approach “to transplant certain provisions from the UK Bribery Act, while well intended, is misconceived and will serve to create further confusion and ambiguity.”
With the aim to bring in clarity with regard to payment of bribery to public servants, Law Commission chairman AP Shah, in his report submitted to law minister Sadananda Gowda, has proposed some significant amendments in the Prevention of Corruption (Amendment) Act.
The suggestions were made after carrying out a detailed study of the UNCAC and other relevant statutes and case laws of India and the UK.
As of now, the Prevention of Corruption Act only covers public servants and does not bring in its fold companies and private individuals. It is for the first time that the government is proposing amending the Act to hold “a commercial organisation liable for failure to prevent persons associated with it from bribing a public servant.” It also laid down necessary norms for commercial organisations to set their house in order to tackle any form of corruption perpetrated by their employees or associates in the course of business to further the interests of the organisations.
The 54-page report describes as “overbroad” the provision which ascribes criminal liability “to every person who is in charge of and responsible to the organisation for the conduct of its business” if the offence is proved to have been committed with the consent or connivance of the company, since it exposes the entire top brass to a jail term of 3-7 years.
Suggesting a better solution, the law panel has asked the legislature to drop the phrase ‘undue financial or other advantage’ from the entire Bill and substitute it with ‘undue advantage’ throughout. “The clause ‘financial or other advantage’ (as proposed in the 2013 Bill) does not seem to cover sexual favours in return for the public servant’s acts or omissions. Thus, the proposed amendment is actually narrowing the scope of corruption, instead of the stated intent of expanding it,” the panel added.
The rationale given by Justice Shah is that the ‘undue advantage’ would cover any gratification whatsoever, other than legal remuneration, and that the word ‘gratification’ is not limited to pecuniary gratifications or to gratifications estimable in money. The Law Commission report says that only that official must be held liable whose consent or connivance is proved, without any harassment caused to other officials of the company. The report also criticises a provision which says that a company would have to pay a fine if it is unable to prevent acts of corruption.
While the proposed Section 8 targets commercial organisations for indulging in bribery of a public servant to obtain an undue advantage in business, the proposed Section 9 talks about the vicarious liability of the commercial organisations in failing to exercise due diligence to prevent persons associated with it from bribing a public servant.
Unlike the UK’s Bribery Act, the proposed amendment to Section 9 does not envisage the publication of any sort of guidance or any obligation on the government, and it places the entire burden of proof on commercial organisation to prove their innocence. The Commission has recommended that a new clause should be inserted making it mandatory for the government to publish guidelines for “adequate procedures” after due consultation with the public.
“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,” Shah said.
Even separate procedures for attachment and forfeiture introduced in the 2013 Bill in cases of corruption by public servants are bound to create confusion. Thus, Shah has recommended replacement of the proposed sections 18A-18N with a single provision to ensure compliance with the UNCAC.
Though the Law Commission has managed to correct the inordinate errors, what remains to be seen is whether Parliament will check its faults by accepting the suggestions. If accepted, the Bill may have far-reaching implications on understanding corruption in public life and efforts to counter it. The amendment Bill is likely to be brought before Parliament in this Budget session.
There must be a senior officer in an investigating agency to decide whether or not a decision was taken in good faith. It should not be left to a junior official to decide on a particular case.
"One should not judge a civil servant on the basis of whether a decision is right or wrong, but on the basis of the documents or the information available to him as he took that decision
"It is a welcome a step. But it has to be seen that these provisions, after they become part of law, are implemented in letter and spirit," said former Central Vigilance Commissioner (CVC), PJ Thomas. Legal experts also said they feel that the proposed changes will help in checking corruption in the country.

GIVING BRIBE IS ALSO AN OFFENCE: There is also a need to distinguish between collusive corruption and extortionist corruption where the first is when both/all the parties involved indulge in corruption to do something which is not legal. On the other hand extortionist bribery is something which is out of compulsion and thus a person is forced to give some money to get his legal dues done. Thus both kind of corruption can not be dealt with the same yardstick and it requires different understanding and protection. 

Amendments Proposed in Section 17
  • In 2003, Section 6A was incorporated in the Delhi Special Police Establishment Act, 1946 (DSPE Act, 1946) dealing with CBI. This section mandated prior approval of government before CBI took up investigation of cases of corruption under Prevention of Corruption Act, 1988 (PC Act, 1988) relating to officers of the rank of Joint Secretary and above.
In 2014, in the case of Dr. Subramanian Swami vs Director, CBI and others (writ petition (civil) number 21 of 2004 of Centre for Public Interest Litigation vs Union of India) the Supreme Court struck down Section 6A as unconstitutional and violative of rule of law.
 
  • PC Act, 1988 gives full freedom to investigative agencies to conduct enquiry into allegations against any public servant. No prior permission was envisaged in law for investigation. However, Section 19(1) of the PC Act, 1988 as well as Section 197 of CrPC envisage prior sanction of prosecution of a public servant.
     
  • Now the Union government is introducing an official amendment in the pending legislation The Prevention of Corruption (Amendment) Bill, 2013 (PC Amendment Bill, 2013). Under the proposed Section 8B of the Amendment Bill, a new Section 17A is sought to be inserted in the Principal Act as follows:

“17A (1) No police officer shall conduct any investigation into any offence alleged to have been committed by a public servant under this Act, where the alleged offence is relatable to any recommendation made or decision taken by such public servant in the discharge of his official functions or duties, without the previous approval-
(a) of the Lokpal, in the case of a public servant who is employed, or as the case may be, was at the time of commission of the alleged offence employed in connection with the affairs of the Union, and is a person referred to in clauses (a) to (h) of sub-section (1) of section 14 of the Lokpal and Lokayuktas Act, 2013;
(b) of the Lokayukta of the State or such authority established by law in that State under whose jurisdiction the public servant falls, in the case of a person who is employed, or as the case may be, was at the time of commission of the alleged offence employed in connection with the affairs of a State,
Conveyed by an order issued by the Lokpal in accordance with the provisions contained in Chapter VII of the Lokpal and Lokayuktas Act, 2013 or the Lokayukta of the State or such authority referred to in clause (b) for processing of investigation against the public servant:
Provided that no such approval shall be necessary for cases involving arrest of a person on the spot on the charge of accepting or attempting to accept any undue advantage for himself or for any other person.
(2) Any information received or any complaint which is made to a police officer or any agency (including the Delhi Special Police Establishment) in respect of an alleged offence relatable to any recommendation made or decision taken by a public servant in discharge of his official functions or duties shall, first, be referred by such police officer or agency-
(i) in respect of a public servant referred to in clause (a) of sub-section (1), to the Lokpal;
(ii) in respect of a public servant referred to in clause (b) of sub-section (1), to the Lokayukta of the State or such authority referred to in that clause.
(3) Any information or complaint referred by a police officer or the agency under the subsection (2), shall be deemed to be a complaint made to-
(a) the Lokpal under clause(e) of sub-section (1) of section (2) of the Lokpal and Lokayuktas, Act, 2013 and all the provisions of the said Act shall apply accordingly to such complaint;
(b )the Lokayukta of a State or such authority established by law in a State, as the case may be, and all the provisions of the law under which the Lokayukta or such authority has been established shall apply accordingly to such complaint”.
Implications of the proposed Section 17A:
  1. This covers all recommendations and decisions of all public servants in the discharge of their official functions or duties. That means, except in cases of successful trap, every allegation of corruption must first be forwarded to Lokpal/Lokayukta for prior approval of investigation. The police, who have the duty to investigate any and every crime, including murder, rape, misappropriation, are prevented from investigating corruption on their own.
     
  2. Given the way Lokpal/Lokayukta institutions are structured, we can have every confidence that each case will be decided on merits. But there are about 60 lakh public servants of Union government (including public undertakings and departments), and in many major states there are over 10 lakh public servants. Overall, there are about 200 lakh or 2 crore public servants in India. If the CBI and State Anti-Corruption Bureau (ACB) have to forward each case to Lokpal/Lokayukta before even commencing investigation, the whole anti-corruption institutional framework will be jammed and paralysed.

  1. The proposed Section17A does not even allow a summary, instant decision by Lokpal/Lokayukta. The amendment specifies that the Lokpal/Lokayukta must give prior approval conveyed by an order issued in accordance with the provisions contained in Chapter 7 of the Lokpal and Lokayuktas Act, 2013. Chapter 7 of the Lokpal and Lokayuktas Act, 2013 envisages an elaborate procedure even for preliminary enquiry. In case of Lokpal, it may again involve CVC, CBI or Lokpal’s own investigative wing. Also, even at preliminary stage, the public servant must be given an opportunity of being heard. The preliminary enquiry may take 90 days or longer. Only after such an elaborate procedure can Lokpal/Lokayukta accord approval for investigation.

  1. This provision ultimately creates enormous hurdles to the investigation of any corruption offence even in the preliminary stage. What is needed is speedy sanction of prosecution under Section 19(1) of the PC Act, 1988 and Section 197 of CrPC, and to ensure that such sanction power vests in an independent, impartial authority like Lokpal/Lokayukta. Instead, even powers of investigation are taken away from CBI and ACBs by the new Section 17A.

  1. The net result will be tremendous weakening of investigative agencies, and dilution of Lokpal and Lokayuktas. The Lokpal/Lokayuktas are intended to be high ombudsmen to hold senior civil servants and highly placed public servants to account. By bringing every case of corruption before them even at the allegation stage prior to investigation, the Lokpal/Lokayuktas lose all relevance as high ombudsmen, and will become ineffective, overburdened, dysfunctional, slow-moving bureaucracies, defeating the very purpose of Lokpal legislation.

This provision may not hold its ground in the court of law with supreme court of india very likely to declare it as unconstitutional. In fact it is illogical in extending the discredited single directive to all classes of government employees, retrogressive as it weakens investigative agencies, burdensome on the institutions of Lokpal/Lokayuktas, and ultimately counter-productive in combating corruption.

THUS 2 Major concern of the amendment is Section 17A and non distinction of compulsive corruption with collusive corruption. The PCA, even after the amendment, is expected to suffer from a few pragmatic difficulties. As mentioned above, not only prosecution but also investigation requires prior sanction, which is seldom forthcoming and plagued with procedural barriers and red-tapism. This may result in abysmally low prosecution rates as in the past. 


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