Corruption and compliance: preventive legislations and policies in international business projects

• Author: Harsh Pathak
• Position: Advocate Supreme Court of India, New Delhi, India
• Pages: 136-151

Corruption and compliance: preventive legislations and policies

in international business projects

PhD Harsh PATHAK

1

Abstract

This article seeks to provide a n insight on the inter national phenomenon of

corruptio n, dealing with its existence, a nd whether compliance is higher with Anti-

Corruption laws or with corruption itself, re sulting in anti-corr uption laws being much less

effective than the legislator s intend ed it to be and the reasons for increa sing demand

worldwide for new governa nce standar ds and h igher compliance contr ols and other

effective anti-corruption laws and policies in light of rapid increase in cor ruption every

year. This a rticle further deals with the diagnosis and measures to deal with th e cause of

corruptio n – the shor t-comings in anti-corruption law – the reasons why corpor ations ar e

willing to face continuing legal risks and adverse publicity but still indulge in corrupt

practices and the extent of negative impact the prevailing levels of corruption ultimately

have on international business and trade. Strict compliance controls are being introduced

with increa sing enforcement of anti-cor ruption la ws interna tionally and nations have also

started to focus on individua l and corpora te liability in cases of violation of a nti-corruption

laws, for both government and private or ganisations. In this context of far -reaching

developments, whether European a nd South-east Asian Countries like India and

Interna tional Business Organisa tions ca n act in ig norance or buck up a nd accept this

trend, slowly and steadily moving towards a less corr upt nation and International business

projects – if not towar ds a tota lly corruption free one, keeping in mind the growth of

internatio nal trade and Commerce and its sustaina bility.

Keywords: Corrup tion, Corr uption-Causes, Consequences and Measures ,

Corrupt practices Inter national Business, Inter national Business Pr ojects, Anti-Corr uption

Laws, Internationa l Legislation, India n Laws.

JEL Classification: K14, K22, K33

Introduction

“..Just as fish moving under water cannot possibly be found out

either as dr inking or not drinking water, so government servants employed in the

government work cannot be found out (while) taking money (for themselves).”

'Kautilya' / Chanakya in Arthashastra (Economics) ,

Chapter IX. 370 -283 BCE

“.. It’s Interesting that these themes of crime and political

corruption are always relevant.” Martin Scorsese

In light of the ever increasing international trade and business, one major

concern is corruption growing alongside it. In a race to be at a leading position,

1 Harsh Pathak - Advocate Supreme Court of India, New Delhi, India, info@harshpathak.com

Juridical Tribune Volume 3, Issue 2, December 2013

137

ethics and morals take a backseat and the hunger for power and money lead to

invention of newer ways almost everyday to pay and receive bribes so as to put the

person bribing in a position better than those not doing so, whether such a person is

more capable or not is a question paid no attention to. As corporations and business

entities grow larger, sometimes with a monetary turnover many times that of small

countries, the threat of corruption in the business world, within the organization, in

dealings with other organisations and in dealings with the government is a looming

and growing threat. So is it that capability has little relevance as a qualifying factor

in today’s time and the race is only monetarily driven, the winner predetermined,

on basis of the highest payer? It would certainly seem so.

Definition and meaning of corruption

Corruption has been defined as

2:

Per Oxford Dictionary: “Dishonest or fraudulent conduct by those in

power, typically involving bribery.

Per Black’s Law Dictionary (2nd Edition): Illegality; a vicious and

fraudulent intention to evade the prohibitions of the law. The act of an official or

fiduciary person who unlawfully and wrongfully uses his station or character to

procure some benefit for himself or for another person, contrary to duty and the

rights of others.

As per Dictiona ry.com: The word corrupt (Middle English, from

Latin corruptus, past participle of corrumpere, to abuse or destroy: com, intensive

pref. and rumpere, to break) when used as an adjective literally means "perverted,

made inferior, affected, tainted, decayed".3

Earlier corruption was believed to be prevalent only in public offices,

giving corruption the meaning of use of public office for private gain4 but such a

narrow meaning does not hold in today’s time where corruption is prevalent in

public offices, private offices and commercial spheres of business and one does not

need any analysis or study in support of such contentions. One of the most popular

of the definitions of corruption, namely, ‘Corruption is the abuse of power by a

public official for private gain’ is too limited to be able to include the levels and

spheres corruption and corrupt persons have invaded. Therefore, corruption maybe

political, personal/private or commercial.

The basic difference is in the office, power and position, which are abused,

and aim of abuses. Politica l corruption may include bribery, use of governmental

offices for private enrichment and substitution by particularistic for universalistic

2 U. S. v. Johnson (C. C.) 20 Fed. 082; State v. Ragsdale. 59 Mo. App. 003; Wight v. Rindskopf, 43

Wis. 351; Worsham v. Murchison, 00 Ga. 719; U. S. v. Edwards (C. C.) 43 Fed. 07.

3 Retrived on 14.10.2013

4 As defined in Maria Dakolias and Kim Thachuk, The P roblem of Eradicating Corruption from the

Judiciar y: Attacking Corruption in the Judiciary: A Cr itical P rocess In Judicial Reform, 18 Wis.

Int'l L.J. 353, 355 (2000).