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

Meridian Components Pvt Ltd, incorporated in India, is prosecuted because its freight agent paid money to a customs officer to clear a consignment faster for Meridian. Meridian wants to rely on the proviso to Section 9 of the Prevention of Corruption Act, 1988. What must Meridian prove?

Meridian must prove that it had adequate procedures, in compliance with the guidelines prescribed by the Central Government, to prevent persons associated with it from bribing public servants. Ignorance of management or the agent's non-employee status is not the statutory defence.

  1. AThat its senior management had no knowledge of the payment
  2. BThat it had in place adequate procedures, in compliance with the prescribed guidelines, to prevent persons associated with it from such conductCorrect
  3. CThat the agent was not its employee
  4. DThat the customs officer did not ultimately grant any favour

Explanation

The proviso to Section 9(1) makes it a defence for the commercial organisation to prove that it had adequate procedures in compliance with prescribed guidelines to prevent associated persons from bribing. Lack of management knowledge is not the statutory defence. The agent's status does not matter because capacity is irrelevant under Explanation 1.

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