Are you one of those who believe you cannot do government work in India without paying bribes? Do you think "yeh sab toh chalta hai" as long as your work gets done on your schedule? Do you believe the ends justify the means? If you do, it's time for a reality check. Undisputedly, people still pay bribes in India to get government work done. However, the "chalta hai" attitude can no longer pass muster, especially for companies, businesses and firms.

Indian investigators have tightened the noose around serious perpetrators of corporate corruption who are increasingly emerging from the woodwork. Stories of permits issued in a hurry, consent to operate granted without due diligence, and building maps sanctioned without site visits are a dime a dozen. However, more and more companies are now finding themselves on the wrong side of the law with the stricter enforcement of the Indian Prevention of Corruption Act, 1988 (PCA) and the US Foreign Corrupt Practices Act 1977 (FCPA).

Rainmaker's Training module on anti-corruption and anti-bribery laws called "WorkBAC" narrates the story of one such company, Trix India, the Indian subsidiary of a US-based MNC. The module starts with a scene where the CBI is raiding the office of Trix India, confiscating materials for further investigation. A few minutes later, we see the COO of the company getting arrested. The module depicts how the lives of all those involved in corruption from the company's side & their family members get affected. It also shows how the reputation & fortunes of the MNC take a massive hit in the investigation's aftermath. Let's discuss how corruption affects each actor involved.

Getting your hands dirty and paying for it

Imagine a situation where your foreign boss calls you from the HQ and assigns you some work to be completed within a short deadline. Your boss compliments you handsomely, saying there is no better person for this job than you. He even dangles the carrot of a promotion in front of you if the job gets done satisfactorily. Would you not do everything you can to finish the work within the desired deadline, come rain or shine?

That's what Deepak Chauhan, the COO of Trix India, does. The Global COO asks Deepak to set up a unit in Valsuri within 10 months, and even though Deepak knows the task to be nigh impossible, he takes it up. He meets dead end after dead end as he first tries his luck with different government officials and soon realises that he would need to do something "more" to get the job done. The "more" that Deepak is thinking of is hiring a contractor with a dubious reputation, Talpade, and it’s clear from the first meeting itself that Talpade intends to pay bribes to get all the necessary approvals.

Why would someone take an enormous risk?

You would think that a man in Deepak Chauhan's position – COO of the Indian subsidiary of an MNC – would know that indulging in acts of bribery and corruption is a crime. Then why would he take such an enormous risk? There are a few probable answers — maybe he thought that in a highly bureaucratic country like India, this was the only way to get work done. Or perhaps he felt that since he was deriving no personal gain from the bribes, he wasn't doing anything wrong. Maybe he thought he was benefiting the company and the hundreds of people who worked there. He may even have been swept up by patriotic fervour, thinking that a unit in Valsuri would give jobs to local people and bring in FDI to the country.

But does it matter how Deepak Chauhan justified his actions to himself or his subordinates? Whatever his intent, engaging a third-party intermediary like Talpade to pay bribes to get permissions, amounts to giving an undue advantage to a public servant to obtain or retain business. This action is "bribery" as per PCA and FCPA, and it is for the offence of bribery that Deepak Chauhan became one of the first employees of Trix India to be arrested.

While Deepak is behind bars, his wife struggles to cope with the expenses of running the household while trying to hire the best legal help for her husband. Even his friends stop supporting him financially while the trial drags on. Out on bail, Deepak realises he cannot find another job or even open a bank account, making it difficult to set up an excellent legal defence. Eventually, you see him heading behind bars to serve out a conviction of 7 years for the offences of bribery and corruption. A promising career, a growing family, and a bright future came crashing down because "sab nahi chalta hai"!

Wearing blinkers is not all right

The first part of the module is about those company employees who knew that corruption was taking place and, at some level, were involved in it. However, the latter concerns those unaware of the corruption or who knew about it but turned a blind eye to it. For example, the CEO of Trix had called Deepak Chauhan from New York and given him the orders to complete the Valsuri unit within a short deadline. The module shows that an internal investigation instituted by the Board of Directors of Trix, found that the Global CEO failed to discharge his duties even though he was not complicit in the bribery. The Board slashed his salary by almost one-third as punishment for failing to put in place adequate safeguards and processes, to prevent corruption and bribery.

Then there are those employees who didn't question suspicious transactions even when confronted. These would include employees of the finance department who prepared the invoices with incidental charges and the higher-ups who allowed payments for such expenses to be released. As a practice, companies institute these checks and balances in their governance structure to prevent the sort of situation at hand here. However, with Trix India, none of the employees authorised to undertake checks and balances did what they were supposed to. Instead, they looked the other way while excesses took place. The module shows that these kinds of incidents can severely hurt the reputation of an organization. Additionally, those employees who were aware and still didn’t raise an alarm, suffered too - their professional prospects within the company and outside of it got seriously impacted.

The company is the biggest loser 

When it is discovered that a company is indulging in bribery and corrupt practices, it can have many repercussions. One can be the authorities imposing massive penalties on the company and black-listing it from future government work. Enforcement actions against the company can even put it entirely out of business. Another likely outcome is that clients with strict anti-corruption policies may not be willing to work with companies that have previously indulged in bribery and corruption. Public listed companies risk plummeting stock prices after corruption allegations and subsequent convictions. Some of the other natural consequences are being unable to attract and keep quality talent, spending vast amounts of time and money on legal counsel and forensic audits, and getting derailed from its future growth path.

The critical question is, should you care about the pitfalls of corruption and bribery if you do not partake in them? 

Yes, you should because even if someone in your company – your senior, colleague or subordinate – takes part in bribery or corruption, your professional life gets affected. Your company's loss of reputation, clients, and work involves your prospects. The expenditure on legal counsel, audits and protection from enforcement actions may leave your company severely financially constrained. This constraint would affect your salary, bonus and growth in the company.

Suppose you are a part of the senior management, and it is found that your subordinates took part in corruption? It will likely reflect poorly on you and may result in economic strictures. Your clean image may get tarnished by association so much that you may find it challenging to find employment in other companies. In short, there are many reasons to refrain from indulging in bribery and corruption and to report it if you see something suspicious happening around you.

Rainmaker's WorkBAC e-module is a comprehensive and interactive solution for training you and other employees of your organisation on

• • the provisions of the PCA and the FCPA,
  • the consequences of violating the provisions of the PCA and the FCPA,
  • some of the common bribery pitfalls and red flags and how to avoid them, and
  • how to implement an effective compliance program to prevent any future acts of corruption.

=============

Author: Pallavi Mohan Editor: Sumali Nagarajan

DISCLAIMER - No information contained in this website may be reproduced, transmitted, or copied (other than for the purposes of fair dealing, as defined in the Copyright Act, 1957) without the express written permission of Rainmaker Online Training Solutions Pvt. Ltd.