Key Amendment To India's Anti-Corruption Legislation

Has Significant Implications for Multinationals Doing Business in India

The new PCA Section 8 establishes a separate offense for giving or offering an “undue advantage” to another person with the intention of inducing or rewarding a public servant to improperly perform a public function

In late July 2018, India’s parliament passed an amendment to the Prevention of Corruption Act 1988 (the “PCA”), India’s principal legislation for combating bribery and corruption involving public officials. The Prevention of Corruption (Amendment) Act, 2018 (the “Amendment”) introduces changes that have considerable significance for multinational corporations (“MNCs”) doing business in India. In this summary, the Amendment’s key provisions and impact on MNCs are discussed:

Targeting Bribe-Payers

Prior to the Amendment, the primary anti-bribery provisions of the PCA in Sections 7 and 11 dealt with the acceptance of bribes by public servants. Section 12 of the unamended PCA allowed for the prosecution of bribe-payers indirectly though the law’s abetting provisions. However, Indian prosecutors used the abetting provisions sparingly against private individuals and entities.

The Amendment indicates a potential shift. The new PCA Section 8 establishes a separate offense for giving or offering an “undue advantage” to another person with the intention of inducing or rewarding a public servant1 to improperly perform a public function. Whether the public servant accepts the offer is of no consequence. The form of gratification is likewise immaterial; the law prohibits any gratification other than legal remuneration. If convicted under the Section 8, bribe-payers face potential fines and/or imprisonment of up to seven years.