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

Sundaram Infra Ltd's board is reviewing its anti-bribery framework after its consultant, with no employment contract, bribed a municipal official on its behalf. The CFO argues the company is safe because the consultant's contract is described as 'principal-to-principal' and the consultant is not on its payroll. Which view is correct under section 9 of the Prevention of Corruption Act, 1988?

The CFO is wrong. Association turns on whether the person performs services for or on behalf of the company, judged by all relevant circumstances rather than merely the nature of the relationship. A principal-to-principal label or absence from payroll does not remove the consultant's association.

  1. AThe CFO is right, because association depends on the label in the contract
  2. BThe CFO is right, because only employees and subsidiaries are persons associated
  3. CThe CFO is wrong, because association is decided by all relevant circumstances and not merely by the nature of the relationship, and a person performing services for or on behalf of the company is associatedCorrect
  4. DThe CFO is wrong, because any person who has ever dealt with the company is associated

Explanation

A person is associated if he performs services for or on behalf of the organisation. Explanation 2 says this is determined by all relevant circumstances and not merely the nature of the relationship. Thus a contractual label does not protect the company. The last option overstates the test, since mere dealing is not enough.

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