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

Kaveri Textiles Ltd, a company incorporated in India, is accused of an offence because its clearing agent, who performs services on its behalf, promised cash to a customs officer to speed up the release of its consignment. Kaveri's board had earlier adopted an anti-bribery policy, trained staff and prescribed due diligence for agents under the government guidelines. Which statement best reflects the position under the Prevention of Corruption Act, 1988?

Kaveri may defend itself by proving it had adequate procedures in line with the prescribed guidelines. Section 9 punishes a commercial organisation for bribery by an associated person, but the proviso gives a defence of adequate preventive procedures, and the agent's capacity does not matter.

  1. AKaveri is automatically liable because the agent is not its employee
  2. BKaveri cannot be liable because only individuals can commit bribery offences
  3. CKaveri may defend itself by proving that it had adequate procedures in line with the prescribed guidelinesCorrect
  4. DKaveri is liable only if its board members personally knew of the promise

Explanation

Section 9 makes a commercial organisation punishable with fine where a person associated with it gives or promises undue advantage to a public servant to obtain or retain business or an advantage. The proviso gives a defence if the organisation proves it had adequate procedures in compliance with the prescribed guidelines. Option A is wrong because the capacity of the associated person, employee or agent, does not matter, and it is not automatic liability given the defence.

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