Developments in Indian Anti-Corruption Legislation

The Lokpal Bill

The Lokpal Bill (“Ombudsman Bill”) is designed to create an ombudsman to enforce India's anti-corruption laws. See Lokpal Bill of 2010, www.annahazare.org/pdf/Lokpal%20Bill%20by%20Government%20of%20India.pdf.; “Lokpal bill will fight graft at centre, not states,” Economic Times (Apr. 15, 2011), http://articles.economictimes.%20indiatimes.com/2011-04-15/news/29422050_1_lokpal-bill-lokayukta-justice-n-santosh-hegde. The bill, however, has stirred significant controversy in India. Critics claim that the Lokpal Bill is weak because it merely creates an advisory body as opposed to an independent investigative agency free of government interference. Lokpal Bill at 12. As currently drafted, the Lokpal Bill requires that complaints made against the prime minister, other ministers, and members of parliament be routed to the ombudsman through the presiding officer of
the house to which the member of parliament belongs. Lokpal Bill at 12. It also contains limitations on the ombudsman's jurisdiction over the prime minister. Id. Ultimately, critics' biggest complaint is that the Lokpal Bill creates an entity with mere advisory powers ' the ombudsman can only receive forwarded complaints and recommend action; it cannot initiate or enforce inquiries and it has no police powers.

In response, civil society activists drafted an alternative bill, the Jan Lokpal Bill (“Citizen's Ombudsman Bill”), which would create a central ombudsman with the power to initiate investigations and prosecutions against public officials and private entities, issue search warrants, impose fines and protect whistleblowers. See Jan Lokpal Bill at 8(2)(b), 8(2)(h), 9, www.annahazare.org/pdf/Jan%20lokpal%20bill%20by%20Expert%20(Eng).pdf. The Jan Lokpal Bill also requires all investigations to be completed within one year and trials to be completed within one year after completion of the investigation. Id at 30. Existing anti-corruption agencies in India, including the Central Vigilance Commission and the anti-corruption branch of the Central Bureau of Investigation, would be merged into the ombudsman. Id. at 24, 25. Members of the ombudsman would be appointed by judges, citizens, and constitutional authorities (not politicians), and could not include former or current politicians. Id at 4.

In support of the Jan Lokpal Bill, social activist Anna Hazare began a “fast unto death” on April 5, 2011. Hazare demanded the formation of a joint committee equally composed of ministers and civil society activists to draft a new Lokpal Bill that would more closely resemble the Jan Lokpal Bill. See “Anna Hazare Begins Indefinite Fast on Lokpal Bill,” Business Standard Reporter (Apr. 6, 2011), www.business-standard.com/india/news/anna-hazare-begins-indefinitefastlokpal-bill/431161/. Soon after Hazare began his hunger strike, thousands of protesters joined his cause across India, some participating in candlelight vigils. See “Hunger Strike Over Lokpal Bill as Thousands Protest Corruption,” Reuters (Apr. 6, 2011), http://in.reuters.com/article/2011/04/05/idINIndia-56135720110405. Four days later, on April 9, 2011, the government finally agreed to form a joint committee to draft a new Lokpal Bill and Hazare called off his hunger strike. See “India Wins Again, Anna Hazare to Call Off Fast,” The Times of India (Apr. 9, 2011), http://articles.timesofindia.indiatimes.com/2011-04-09/india/29400310_1_anna-hazarerevolutions-on-other-issues-law-minister.

Committee in Controversy

The committee, however, has been steeped in controversy ' shortly after it was formed, activists accused the civil society of nepotism because it appointed Shanti Bhushan and his son Prashant Bhushan to the committee. See “No Nepotism, Need Experts In Panel for Lokpal Bill: Hazare,” The Economic Times (Apr. 11, 2011), http://economictimes.indiatimes.com/news/politics/nation/no-nepotism-need-experts-in-panel-for-lokpal-bill-hazare/articleshow/7940447.cms. Hazare defended the appointments, saying that the committee needed legal experts, and both Bhushans were lawyers on the first drafting committee. Id. In addition, a CD has surfaced that allegedly contains a recorded telephone conversation between Shanti Bhushan and two other individuals, in which they discuss influencing the presiding judge in two major pending corruption cases. See “Shanti Bhushan CD Doctored: Prashant Bhushan,” The Economic Times (Apr. 17, 2011), http://economictimes.indiatimes.com/news/politics/nation/shanti-bhushan-cd-doctored-prashant-bhushan/articleshow/8008484.cms. Shanti Bhushan has stated that the CD is doctored and the allegations are no more than a smear campaign to derail the civil society's anti-corruption efforts. Id.

Amidst all the controversy, talks broke down between the civil society members and the ministerial members, and the committee disbanded. In addition, several political parties in the Indian Parliament criticized the government for attempting to bypass the parliamentary process and involving the civil society in the drafting of the bill. In early July 2011, the parties met and demanded that the government bring before the next session of Parliament a strong Lokpal Bill for proper debate in a standing committee and then in the full Parliament. On Aug. 16, 2011, however, Hazare began a second indefinite fast, demanding that the government pass the Jan Lokpal bill, as written, by Aug. 30. The real question is whether public support for drafting a new Lokpal Bill in Parliament will continue at the same intensity with which the public supported Hazare during his hunger strike, or whether public support will wane.

Conclusion

If both the new Lokpal Bill and the Prevention of Bribery Act are passed and enforced vigorously, India will enter a new era in anti-corruption enforcement that could bring about a dramatic change in local business practices. Such local law reform and international cooperation could greatly augment current efforts by the United States, when enforcing the FCPA, and soon to be joined by the United Kingdom, whose Bribery Act came into force on July 1, 2011, to prosecute corrupt behavior involving Indian officials. See, e.g., U.S. v. Pride Int'l, Inc., No. 4:10-cr-766, Deferred Prosecution Agreement (S. D. Tex. 2010); DOJ Press Rel. “Oil Services Companies and a Freight Forwarding Company Agree to Resolve Foreign Bribery Investigations and to Pay More Than $156 Million in Criminal Penalties” (Nov. 4, 2010), www.justice.gov/opa/pr/2010/November/10-crm-1251.html (Pride International, Inc. settled with the DOJ and SEC for a combined $52 million in fines and disgorgement for, in part, allegedly using a subsidiary to pay bribes to the Customs, Excise, and Gold Appellate Tribunal in India to obtain a favorable ruling worth approximately $10 million).

Paul R. Berger is a partner and Aaron M. Tidman is an associate in the Washington, DC, office of Debevoise & Plimpton LLP. Steven S. Michaels is a counsel in the firm's New York office. They are members of the Litigation Department and White Collar Litigation Practice Group.

Last month, we discussed the history of strong anti-corruption legislation in India, as well as the lack of enforcement efforts, which has opened the door for several recent high-profile corruption scandals. In an attempt to strengthen India's anti-corruption regime, the Indian parliament has introduced for debate two new pieces of legislation: 1) The Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill, 2011 (the Prevention of Bribery Act or the Act); and 2) the Lokpal Bill.

The Prevention of Bribery Act

This Act, introduced on March 25, 2011, prohibits bribes to or received by foreign public officials, defined as “any person holding a legislative, executive, administrative or judicial office of a foreign country, whether appointed or elected,” and “any person exercising a public function for a foreign country.” See The Prevention of Bribery of Foreign Public Officials and Officials of Public International Organisations Bill at ch. 1, ' 2(c) (2011), www.prsindia.org/uploads/media/Bribery/Prevention%20of%20Bribery,%2026%20of%202011.pdf. The Act, if passed, also holds liable those who abet the commission of an offense. Convictions for primary violators and abettors are punishable by up to seven years in prison and a fine. Id at ch. 2, ' 5. In addition, the Act allows India to enter into agreements with other countries to enforce the provisions of the Act and exchange information, as well as extradite accused persons. Id. at ch. 2, ' 5-6. If passed, the Act would authorize the Indian government to ratify the U.N. Convention Against Corruption, which India signed on Dec. 9, 2005, but has not yet ratified. Id at 2. The Act has been praised both domestically and internationally; it is currently awaiting a vote in the Lok Sabha, the Indian parliament's lower house.

The Lokpal Bill

The Lokpal Bill (“Ombudsman Bill”) is designed to create an ombudsman to enforce India's anti-corruption laws. See Lokpal Bill of 2010, www.annahazare.org/pdf/Lokpal%20Bill%20by%20Government%20of%20India.pdf.; “Lokpal bill will fight graft at centre, not states,” Economic Times (Apr. 15, 2011), http://articles.economictimes.%20indiatimes.com/2011-04-15/news/29422050_1_lokpal-bill-lokayukta-justice-n-santosh-hegde. The bill, however, has stirred significant controversy in India. Critics claim that the Lokpal Bill is weak because it merely creates an advisory body as opposed to an independent investigative agency free of government interference. Lokpal Bill at 12. As currently drafted, the Lokpal Bill requires that complaints made against the prime minister, other ministers, and members of parliament be routed to the ombudsman through the presiding officer of
the house to which the member of parliament belongs. Lokpal Bill at 12. It also contains limitations on the ombudsman's jurisdiction over the prime minister. Id. Ultimately, critics' biggest complaint is that the Lokpal Bill creates an entity with mere advisory powers ' the ombudsman can only receive forwarded complaints and recommend action; it cannot initiate or enforce inquiries and it has no police powers.

In response, civil society activists drafted an alternative bill, the Jan Lokpal Bill (“Citizen's Ombudsman Bill”), which would create a central ombudsman with the power to initiate investigations and prosecutions against public officials and private entities, issue search warrants, impose fines and protect whistleblowers. See Jan Lokpal Bill at 8(2)(b), 8(2)(h), 9, www.annahazare.org/pdf/Jan%20lokpal%20bill%20by%20Expert%20(Eng).pdf. The Jan Lokpal Bill also requires all investigations to be completed within one year and trials to be completed within one year after completion of the investigation. Id at 30. Existing anti-corruption agencies in India, including the Central Vigilance Commission and the anti-corruption branch of the Central Bureau of Investigation, would be merged into the ombudsman. Id. at 24, 25. Members of the ombudsman would be appointed by judges, citizens, and constitutional authorities (not politicians), and could not include former or current politicians. Id at 4.

In support of the Jan Lokpal Bill, social activist Anna Hazare began a “fast unto death” on April 5, 2011. Hazare demanded the formation of a joint committee equally composed of ministers and civil society activists to draft a new Lokpal Bill that would more closely resemble the Jan Lokpal Bill. See “Anna Hazare Begins Indefinite Fast on Lokpal Bill,” Business Standard Reporter (Apr. 6, 2011), www.business-standard.com/india/news/anna-hazare-begins-indefinitefastlokpal-bill/431161/. Soon after Hazare began his hunger strike, thousands of protesters joined his cause across India, some participating in candlelight vigils. See “Hunger Strike Over Lokpal Bill as Thousands Protest Corruption,” Reuters (Apr. 6, 2011), http://in.reuters.com/article/2011/04/05/idINIndia-56135720110405. Four days later, on April 9, 2011, the government finally agreed to form a joint committee to draft a new Lokpal Bill and Hazare called off his hunger strike. See “India Wins Again, Anna Hazare to Call Off Fast,” The Times of India (Apr. 9, 2011), http://articles.timesofindia.indiatimes.com/2011-04-09/india/29400310_1_anna-hazarerevolutions-on-other-issues-law-minister.

Committee in Controversy

The committee, however, has been steeped in controversy ' shortly after it was formed, activists accused the civil society of nepotism because it appointed Shanti Bhushan and his son Prashant Bhushan to the committee. See “No Nepotism, Need Experts In Panel for Lokpal Bill: Hazare,” The Economic Times (Apr. 11, 2011), http://economictimes.indiatimes.com/news/politics/nation/no-nepotism-need-experts-in-panel-for-lokpal-bill-hazare/articleshow/7940447.cms. Hazare defended the appointments, saying that the committee needed legal experts, and both Bhushans were lawyers on the first drafting committee. Id. In addition, a CD has surfaced that allegedly contains a recorded telephone conversation between Shanti Bhushan and two other individuals, in which they discuss influencing the presiding judge in two major pending corruption cases. See “Shanti Bhushan CD Doctored: Prashant Bhushan,” The Economic Times (Apr. 17, 2011), http://economictimes.indiatimes.com/news/politics/nation/shanti-bhushan-cd-doctored-prashant-bhushan/articleshow/8008484.cms. Shanti Bhushan has stated that the CD is doctored and the allegations are no more than a smear campaign to derail the civil society's anti-corruption efforts. Id.

Amidst all the controversy, talks broke down between the civil society members and the ministerial members, and the committee disbanded. In addition, several political parties in the Indian Parliament criticized the government for attempting to bypass the parliamentary process and involving the civil society in the drafting of the bill. In early July 2011, the parties met and demanded that the government bring before the next session of Parliament a strong Lokpal Bill for proper debate in a standing committee and then in the full Parliament. On Aug. 16, 2011, however, Hazare began a second indefinite fast, demanding that the government pass the Jan Lokpal bill, as written, by Aug. 30. The real question is whether public support for drafting a new Lokpal Bill in Parliament will continue at the same intensity with which the public supported Hazare during his hunger strike, or whether public support will wane.

Conclusion

If both the new Lokpal Bill and the Prevention of Bribery Act are passed and enforced vigorously, India will enter a new era in anti-corruption enforcement that could bring about a dramatic change in local business practices. Such local law reform and international cooperation could greatly augment current efforts by the United States, when enforcing the FCPA, and soon to be joined by the United Kingdom, whose Bribery Act came into force on July 1, 2011, to prosecute corrupt behavior involving Indian officials. See, e.g., U.S. v. Pride Int'l, Inc., No. 4:10-cr-766, Deferred Prosecution Agreement (S. D. Tex. 2010); DOJ Press Rel. “Oil Services Companies and a Freight Forwarding Company Agree to Resolve Foreign Bribery Investigations and to Pay More Than $156 Million in Criminal Penalties” (Nov. 4, 2010), www.justice.gov/opa/pr/2010/November/10-crm-1251.html (Pride International, Inc. settled with the DOJ and SEC for a combined $52 million in fines and disgorgement for, in part, allegedly using a subsidiary to pay bribes to the Customs, Excise, and Gold Appellate Tribunal in India to obtain a favorable ruling worth approximately $10 million).

Paul R. Berger is a partner and Aaron M. Tidman is an associate in the Washington, DC, office of Debevoise & Plimpton LLP. Steven S. Michaels is a counsel in the firm's New York office. They are members of the Litigation Department and White Collar Litigation Practice Group.