For over three years now , fight against corruption , black money generation and payment of graft for government contracts has been the biggest debate that the country has seen. Time and again, the issue becomes a political debate but only to embarrass each other . Nothing concrete and measurable has been noticed as far as fight against corruption is concerned. India continues to be ranked 79th in the Corruption Perception Index of Transparency International from amongst the 176 countries surveyed . India however still offers hope of reduction in corruption as its perception index is showing a positive trend with its scores rising from 36 to 40 on a scale of 100 in the last five years, with 100 being an ideally honest nation. Denmark and New Zealand are the only 2 countries which cross the 90 mark being considered as the most transparent governments.
In India However a disturbing trend that has been seen emerging is the recent discovery of several Foreign Corrupt Practices Act (FCPA)violations in India . In the year 2016 , 9 US corporations were held guilty and fined for violations by their associates , subsidiaries in India. This figure was 4 in 2015 . The cases reported to the SEC involve several global giants like aircraft manufacturer Embraer , Beverages company AB InBev and aircraft engines manufacturer Rolls Royce relating to their operations in India.
After years of investigation, disclosures, and press reports, the Embraer FCPA case finally came to a close. Embraer settled its case by paying $205 million in fines with the Justice Department and the SEC. It was found that while Embraer used third-party agents to funnel bribes to government officials in the Dominican Republic, Saudi Arabia and Mozambique. Interestingly, in India, while the settlement did not include facts relating to an actual bribery payment. Check online casino. Instead, the statement of facts outlined how Embraer hid roughly $6 million in payments to an agent, pursuant to a contract that was hidden in a safe deposit box in a Swiss bank. It may be noted that Embraer sold the Indian government three aircraft for $208 million.
The US Justice Department and the SEC found internal control and books and records violations for retaining an agent in India under suspicious circumstances. While Embraer earned more than $83 million profits by paying the bribes, Embraer has now paid $107 million to the US Justice Department as part of a three-year deferred prosecution agreement (DPA) and agreed to a corporate monitor.
While the principal objective of the FCPA is to prohibit United States companies and their employees, officers, directors and agents from paying or promising to pay bribes to foreign officials, political parties, candidates or their conduits to obtain or retain business. US based law firm KMB Legal has raised concerns on the worrying trend of rising FCPA violations on Indian soil. Hundreds of U.S.-based companies do business in India, directly or indirectly, and Katz, Marshall & Banks has indicated that it intends to work with whistleblowers in India to identify corruption and bring it to the light of U.S. authorities.
Similarly, in September 2016, the SEC announced that global beverage company Anheuser-Busch InBev had agreed to pay $6 million to settle charges that it violated the FCPA in connection with its business activities in India. The SEC described InBev using “third-party sales promoters to make improper payments to government officials in India to increase the sales and production of Anheuser-Busch InBev products in that country.”
While the two cases bring to light how Indian subsidiaries of several Global firms have been found violating norms , KMB legal has raised concerns on how majority of the violations of these giants go undetected. Whistleblowers in the United States of America have played a crucial role in supporting the Government in its fight against corruption . By reporting such corruption to the SEC, not only help to stop criminal activity and unfair influence by such companies, but stand to receive millions of dollars in rewards for the information provided.
Dinesh Thakur , the man who as a whistleblower in the famous Ranbaxy case is also proposing to set up patient advocacy groups to take up cases of violations of norms and rules by international and national pharma drug companies. It may be recalled that Dinesh Thakur had been rewarded US$ 48.6 Mn approximately Rs 266 crores for his expose of violations by Ranbaxy .
The team of KMB legal experts feel what what gets reported and detected is the tip of the iceberg and many such violations can be brought to light by better understanding of the Dodd-Frank Act. The U.S. Securities and Exchange Commission (SEC) is required to reward whistleblowers who voluntarily provide the U.S. government with original information regarding violations of the FCPA between 10 to 30 percent of any monetary recovery of over $1 million that the SEC obtains from an offending party through enforcement actions that come as a result of the whistleblowers’ information. The reward program applies to bribery of government officials in India and other countries by companies that are traded on U.S. exchanges, even if the companies are headquartered outside the U.S.