Question

Provide an overview of the FCPA and the risks presented in India as well as advice to implementing a comprehensive compliance program to reduce the risk of violating this law

Answer 1

OVERVIEW OF FCPA:-

FCPA stands for Foreign Corrupt Practices Act. The act deals with prohibition of payment of bribes to any officials to do any thing favourable to them or unfavourable to others and also to cover or window dress the corrupted financial or accounting transactions in an organization. The act applies importantly to two persons namely 1) Issuers and 2) Domestic companies

Issuers are the other nations companies whose securities were registered in U.S where as Domestic company is the US registered company with Nationality and citizenship of U.S.

FACP prohibits payment of any cosh or non cash item of any value to any government officer to get his work as his favour i.e infulencing that officer to do favour in his business.

Penalty for this type of voilations are both imprisonment or fine. Imprisonment may extend to 20 years. And penality for individuals up to $100,000 and for corporations 20 million dollars, which may extend to 25 million $s.

RRISKS PRESENTED IN INDIA :-

The risk of corruption in India is some what high because of political interference in business by bureaucrats is more. And to do business in India it requires lot of registrations and compliance procedures, upon complying with those rules only one can register in India to carry on business.

Different types of registrations and permissions required under Indian laws are as follows:-

1) Licence from Customs departments

2) Clearence from Central Government

3) Registration from local sales tax ( GST registration)

4) Registration and clearence from specified ministry relating to the business

5) Clearence from pollution controll board.

6) Permission from local municipalities

7) No objection from Government authories.

Thess are some of the licences and registrations which are required to carry on business in India.

And at every point there is a human intervention. A clearence certificate or no objection cerificate or any type of licence will be granted only by respected government offficial.

Any person can infulence those officials by briebing them to get the work in favourable to them.

Bribes may be in cash and non cash ways.i.e by giving cash, providing luxurious meal or accomidation, providing them foreign travel trips, valuble items presentation in some occassion to those officials etc..

SOME OF THE WAYS IN IMPLEMENTING A COMPREHENSIVE COMPLIANCE PROGRAMME TO REDUCE THE RISK OF VOILATIONS OF THE FCPA LAW,

is, firstly human intervention should be decreases in some areas of registration where there is no need of scrutiny in application and stringent rules for verification.

Using artificial intelligence and latest advanced technology to process the compliance procedures.

By setting stringent rules and advanced standards in process of registration or issuing certificates or permissions or whatever it may be.

Now in India lot of departments are computerized and connected over network with different departments and it become very simple to obtain cerificate of registration through online.

For eg:- GST registration certificate. Just by applying in online we will get Registration Certificate through online with less human intervention.