An anti-corruption policy can only be effective when it strikes a balance between pre-emptive statutes and brutally repressive edicts. In this context, in almost all of Europe, bribery is considered a double-edged act of corruption that exposes both the giver and the taker to criminal liability.

Europe combats corruption effectively, not only by putting in place strong preventive measures but also by instituting an efficient, ruthless system of criminal prosecution. Across EU nations, there are “special prosecutor's offices” that deal primarily with cases of bribery and related offences. There is exacting investigation and quick prosecution of acts of corruption.

This has had a significant deterrent effect in countries across the EU. And it is achieved, in part, through close teamwork between all concerned, including the police investigators and prosecutors.

Strict Action

For instance, criminal law in Germany allows for significant fines and imprisonment of up to ten years in corruption cases.

Public prosecutors exploit fully the punishments available to them and courts are willing to ‘presume' corruption. For example, the mere fact that a company executive kept slush funds is deemed to be a breach of trust against the company — no actual act of bribery need exist.

Bribing foreign public officials is already a punishable offence under the EU Anti-Bribery Law and under the international law on combating bribery.

Both active and passive bribery of foreign politicians, bureaucrats and judges are liable to be punished, even if they are not EU members.

Therefore, under EU laws, criminal prosecution does not stop at national and EU frontiers. The criminal provisions for bribery of employees apply also, to activities in foreign competition.

In bribery investigations within Europe, great effort is made to induce informants to come forward and report corrupt behaviour. In Germany, the federal States, the city administration as well as public and private companies have successfully implemented two kinds of information strategies: the so-called “virtual letterbox” and the “ombudsman system” — a ‘hush-hush' advocate system. Together, these systems allow the whistleblower to protect one's identity, if the person so wishes, and communicate incognito.

The difference is that the “virtual letterbox” works exclusively via the Internet, while the “ombudsman system” involves direct personal contact and counselling between the whistleblower and the confidential advocate.

Prevention

For European corporates, the threat of blacklisting or banning corrupt firms has been the most effective deterrent in the anti-corruption armoury. In most European procurement contracts, one general prevention tool employed is the “four-eyes” principle, where a second person must sign off on all business decisions, legal contracts and even legally binding letters.

Another provision with identical legal consequence is the issue of conflict of interest. It makes clear the need to report, pre-authorise, or even prohibit any form of extra or derived activity or, employment.

Integrity Clause

As for European public procurement contracts, a general condition used by every contracting unit is an ‘integrity clause' that is applied to all procurement awards. That clause gives the government contracting office a contractual right to impose penalties, and enforce contract cancellation and debarment whenever an act of bribery, fraud or misappropriation is detected. The integrity clause is used in the course of negotiations as an incentive for the private sector to do its part to fight corruption.

One model anti-graft legislation within Europe is the UK Bribery Act. Deliberately intended to bring to an end to the UK's pitiable reputation in tackling corruption, this legislation is today publicly lauded as the international benchmark for anti-corruption legislation.

This seems a good law to draw points for the Lokpal Bill. There are four offences under the Act — the two general offences of paying and receiving bribes, the bribery of foreign officials and the failure of commercial organisations to prevent bribery.

Each offence carries a potential 10-year jail sentence and unlimited fines for directors and chief financial officers — given that they, at the end of the day, hold the keys to the purse.

Corporate compliance

In many European states, corporate compliance is becoming an important part of translucent and deeply accountable corporate management. Inflexible, tough compliance is evident by the strict observation of laws and regulations.

The recent bribery scandals in India must raise both public and business awareness of the importance of corporate compliance. National industry associations such as CII and FICCI need to include compliance, values and good business ethics in their action agenda.

Prima facie , the draft Jan Lokpal Bill concentrates on administrative corruption — focusing on the activities of individuals who, in their positions as public officials — as policymakers or as administrators — control various activities or, decisions.

Ripple effect

In the wake of massive privatisation in India, the concepts proposed in the Lokpal Bill must include corrupt conduct in the private sector – outside as well as within its interface with the public service.

This is bound to have a ripple effect, as is evidenced in Europe where stringent anti-graft laws are riveting European business to meet shareholder expectations and, serve the national good, without compromising on good value management systems and business ethics.

(The author is former Europe Director, CII. >blfeedback@thehindu.co.in ).

Related Topics
comment COMMENT NOW