Legislation just approved in both Ireland and India create a powerful incentive for businesses to establish anticorruption compliance programs. Both give firms a defense to criminal charges if one of their employees or agents is caught paying a bribe. Section 18 of the Irish Criminal Justice (Corruption Offences) Act 2018 provides that a “body corporate” can avoid liability if it can prove that “it took all reasonable steps and exercised all due diligence to avoid the commission of the offence.” Under section 9 of India’s Prevention of Corruption (Amendment) Bill 2018, a “commercial organization” escapes liability if it proves it “had in place adequate procedures in compliance of such guidelines as may be prescribed [by the Attorney General] to prevent persons associated with it from undertaking such conduct.”
The compliance provisions differ, as the quoted language shows, in two respects. India imposes liability on any “commercial organization,” which includes not only corporations but partnerships and business associations “of any kind,” whereas the Irish law is limited to corporations alone. Second, while the Irish Minister for Justice and Equality has the discretion to issue guidance on what constitutes “all reasonable steps” and “all due diligence” to prevent employee bribery, the Indian Central Government must, “in consultation with the concerned stakeholders . . . prescribe such guidelines as may be considered necessary which can be put in place for compliance by [commercial] organizations.”
The Indian requirement follows a report of the Indian Law Commission on an earlier version of the bill. Noting the “immediate and significant impact” the bill would have on corporations, particularly smaller ones, and that both the U.K. Bribery Act and the U.S. Foreign Corrupt Practices Act require law enforcement authorities to issue compliance guidance, the Commission recommended that the liability provision cum compliance defense be effective only once the Central Government published guidance on what was expected of companies wanting to assert a compliance defense. An earlier post noted the burgeoning literature on compliance programs by governments, international organizations, and commentators alike evidences a broad consensus on what constitutes an effective compliance program. Hence in practice the requirement shouldn’t lead to any real difference between what will be required under Indian law and what other nations with a compliance law already require.
The Nations with Anticorruption Compliance Laws table shows Ireland and India are now the fourteenth and fifteenth nations to enact legislation creating a defense to a criminal charge for businesses that have a compliance program. (Readers are asked to submit a comment if I missed any country.) With the six countries plus Quebec that require certain firms to have a compliance program, and with the United States, which both tempers corporate liability for firms with an “effective” compliance program and requires those winning public contracts of any appreciable size or duration to have one, the number of jurisdictions with some type of compliance program law now stands at 23.
What are the other 163 parties to UNCAC waiting for? Why aren’t they enlisting their private sector in the fight against corruption? Do they really think they can win the fight on their own?
Thanks for the update. This makes the U.S. even more of an outlier in terms of OECD Convention countries. For additional reading, see the below post and article.
Glad it was useful. Ironically, in a meeting with private sector representatives in Sri Lanka, many opposed a compliance defense on grounds companies could easily fake them. Would be interesting to know if readers have any guidance, or seen any examples, of a fake compliance program being exposed.