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

Orbit Logistics Ltd, an Indian company, has a detailed anti-bribery policy approved by its board, but it has no training, no due diligence on intermediaries and no monitoring. A sales employee promises cash to an official to retain a contract. Orbit's counsel claims the board-approved policy automatically establishes the defence. Which statement is correct under the Prevention of Corruption Act, 1988?

The defence needs proof of adequate procedures complying with the prescribed guidelines, so a policy that is never implemented may fail. Explanation 3 merely presumes that an employee is an associated person; it does not take away the defence, and the employee need not have been prosecuted or acquitted.

  1. AThe defence is available as soon as any written policy exists
  2. BThe defence requires proof that adequate procedures were in place in compliance with the prescribed guidelines, so a policy without implementation may not sufficeCorrect
  3. CThe defence is unavailable for employees because Explanation 3 presumes association and removes the defence
  4. DThe defence applies only if the employee is also acquitted

Explanation

The proviso to section 9(1) requires proof of adequate procedures in compliance with prescribed guidelines, which implies working controls, not just a paper policy. Explanation 3 only presumes an employee is an associated person; it does not remove the defence. Section 9(2) says liability does not depend on prosecution of the individual, so the employee's acquittal is not required.

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