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CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Business Ethics, Code of Conduct and Anti-Bribery

Arjun Engineering Ltd's code of conduct says only employees are covered by its anti-bribery policy. A subsidiary's staff, working on behalf of Arjun, bribe a public servant to win a tender for Arjun. Which view aligns with Section 9 of the Prevention of Corruption Act, 1988?

The subsidiary is an associated person, because a person performing services for or on behalf of the organisation is associated regardless of whether it is an employee, agent or subsidiary. The code should therefore extend to subsidiaries, agents and other intermediaries, not just employees.

  1. AThe subsidiary is an associated person because the capacity, whether employee, agent or subsidiary, does not matter if it performs services for or on behalf of the organisationCorrect
  2. BThe subsidiary is outside the section because it is a separate legal entity
  3. COnly direct employees can be associated persons
  4. DAssociation exists only if the bribe was promised in writing

Explanation

A person is associated if it performs services for or on behalf of the organisation. Explanation 1 says capacity is immaterial, whether employee, agent or subsidiary. So the code's employee-only scope is too narrow and leaves a gap.

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