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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, an Indian company, has a documented anti-bribery policy, training and a due diligence process for agents. An employee nevertheless promises an undue advantage to a public servant to secure a tender for the company. What is the company's position under Section 9 of the Prevention of Corruption Act, 1988?

The company may defend itself by proving it had adequate procedures, in compliance with the prescribed guidelines, to prevent persons associated with it from bribing. The burden of proof lies on the company, and a bare policy does not give automatic exemption.

  1. AIt has no defence because the employee acted for the company
  2. BIt may defend itself by proving it had adequate procedures in compliance with the prescribed guidelines to prevent associated persons from such conductCorrect
  3. CIt is exempt automatically because it has a written policy
  4. DIt is liable only if the Board approved the payment

Explanation

The proviso to Section 9(1) gives a defence if the organisation proves it had adequate procedures in compliance with prescribed guidelines. The burden is on the company, and merely having a policy does not exempt it automatically. Board approval is not needed for liability.

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