Business Ethics

Business Ethics

Prevention of Corruption Act, 1988

The Prevention of Corruption Act, 1988 (henceforth referred to as PCA) came into
force on 9th September, 1988. it incorporated the Prevention of Corruption Act,
1947, the Criminal Law Amendment Act, 1952, and sec. 161 to 165-A of the
Indian Penal Code with modifications, enlarged the scope of the definition of the
expression 'Public Servant' and amended the Criminal Law Amendment
Ordinanc,k1944. The PCA, 1988l, thereby widened the coverage, strengthened the
provisions and made them more effective.

Scope & Objectives of

Prevention of Corruption Act, 1988

"If we cannot make India corruption-free, then the vision of making the nation
develop by 2020 would remain as a dream." - Dr. A.P.J.Abdul Kalam
Corruption is considered to be one of the greatest impediments on the way towards
progress for developing country like India. The economic, social and cultural
structure of our country is very strong; however, due to the menace called-
Corruption, it has been adversely affected and has become defenseless against the
forces of anti-social elements.

According to Shri N.Vittal, Former Chief Vigilance Commissioner, the first stage
in the dynamics of the rule of law is the framing of effective rules and laws, which
are equipped to hinder the ever-rising escalation of the corruption graph. It is in
this context that the Prevention of Corruption Act, 1988 becomes highly
significant.

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Corruption is a termite that is eating up the pith of our society it not only hampers
the individual's growth but also the collective growth of our Country. Hence, it
stands highly imperative to control and then stop this growing menace and in this
case the Prevention of Corruption Act,1988 comes to our aid. In fact, the Act has
been beautifully drafted, however, a huge power has been vested in the hands of
the Central and State Government in form of appointment of Special Judges,
providing sanctions etc. Hence the Act would become oblivious if the matter in
question is related to Central or State Governments.
The PCA despite of this lacunae is a very powerful Act which needs proper
implementation in order to curb corruption from grass root-level.

Definition
The Prevention of Corruption Act, 1988 (No. 49 of 1988) is an Act of the
Parliament of India enacted to combat corruption in government agencies
and public sector businesses in India.
This law defines who a public servant is and punishes public servants
involved in corruption or bribery. It also punishes anyone who helps him or
her commit the crime corruption or bribery.

It extends to the whole of India except the State of Jammu and Kashmir and it
applies also to all citizens of India outside India.

The following are the salient aspects of the new definition:

a) Under cl (c) of Sec.2 of the PC, the emphasis is on public duty and not on the
Authority remunerating.

b) The definition is enlarged so as to include the office-bearers of the registered co-

operative societies receiving any financial aid from the Government, or from a
Government corporation or company, the employees of universities, public service
commissions and banks etc.

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Statistical Data of India regarding

corruption

India is the 79 least corrupt nation out of 175 countries, according to the 2016
Corruption Perceptions Index reported by Transparency International. Corruption
Rank in India averaged 75.32 from 1995 until 2016, reaching an all time high of
95 in 2011 and a record low of 35 in 1995.

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Index trends in major states by respective anti-corruption effort[12]

State 1990–95 1996-00 2001–05 2006–10

Bihar 0.41 0.30 0.43 0.88

Gujarat 0.48 0.57 0.64 0.69

Andhra Pradesh 0.53 0.73 0.55 0.61

Punjab 0.32 0.46 0.46 0.60

Jammu & Kashmir 0.13 0.32 0.17 0.40

Haryana 0.33 0.60 0.31 0.37

Himachal Pradesh 0.26 0.14 0.23 0.35

Tamil Nadu 0.19 0.20 0.24 0.29

Madhya Pradesh 0.23 0.22 0.31 0.29

Karnataka 0.24 0.19 0.20 0.29

Rajasthan 0.27 0.23 0.26 0.27

Kerala 0.16 0.20 0.22 0.27

Maharashtra 0.45 0.29 0.27 0.26

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Index trends in major states by respective anti-corruption effort[12]

State 1990–95 1996-00 2001–05 2006–10

Uttar Pradesh 0.11 0.11 0.16 0.21

Odisha 0.22 0.16 0.15 0.19

Assam 0.21 0.02 0.14 0.17

0.01
West Bengal 0.11 0.08 0.03

What do the statistics tell us?

1) Two States with the highest number of registered cases also had poor rates of conviction.
Maharashtra had the highest number of cases registered (4,566) with a conviction rate of 27%.
Recovery or seizure of property from the accused was a measly Rs. 9.1 crore. Rajasthan had the
second highest number of registered cases at 3,770 with a conviction rate of 1/3rd. Recoveries
stood at a mere Rs. 9.7 crores.

2) Some members of the infamous BIMAROU group seem to have done better than others in
combatting corruption. Bihar with 617 cases registered had the highest conviction rate at 78%.
Property worth Rs. 14.5 crores had been recovered or seized from the accused. Between 2005 and
2007 the conviction rate was 100%. The conviction rate fell to 60% in 2009 but property worth Rs.
7.8 crores was recovered during the same year- the highest during the decade.

3) Madhya Pradesh also had a higher conviction rate at 50% (1,257 cases registered) and recoveries
worth Rs. 36.2 crores.

4) Orissa with 2,957 cases registered during the same period had a 1/3rd conviction rate but logged
in the highest recovery rate amongst States at Rs. 63 crores.

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5) Karnataka with 2,422 cases registered had the lowest conviction rate at 14% but had recovered
or seized close to Rs. 20 crores worth of property from the accused.

6) Sikkim with 155 registered cases had the second highest conviction rate at 68%. Kerala with
1,572 registered cases had the third highest conviction rate at 65%. No recoveries have been
recorded for this period in Kerala.

7) Andhra Pradesh (2,686 registered cases) Tamil Nadu (1,719 registered cases) and Assam (95)
also had high conviction rates at 58%, 55% and 54% respectively. In Andhra Pradesh recoveries
had been made to the tune of Rs. 13.6 crores. In Tamil Nadu this figure stood at Rs. 6.9 crores. No
recoveries were reported from Assam.

8) Gujarat tomtomed as one of the best governed of States in India had 1,880 registered cases but
with a conviction rate of less than 1/3rd (31%). Seizure or recovery of property was at a low of Rs.
2.4 crores in 10 years. Jammu and Kashmir kept close company with Gujarat with a near-similar
conviction rate (30%). However it logged higher recoveries at Rs. 9.5 crores. Even Maoist-affected
Chhattisgarh (267 cases, 48% conviction rate and Rs. 3.4 crores worth of recoveries) seems to have
done better than Gujarat in tackling corruption.

9) Manipur, Meghalaya, Mizoram and Tripura had a 0% conviction rate despite registering a handful
of cases. Goa also had a 0% conviction rate despite registering 32 cases during the decade.

10) West Bengal had only 9 cases registered during the decade. No cases were registered at all in
2008-09. Even though the State has not withered away from the Left-combine ruled West Bengal

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Offences and Penalties

The following are the offences under the PCA along with their
punishments:- Taking gratification other than legal remuneration in respect
of an official act, and if the public servant is found guilty shall be punishable
with imprisonment which shall be not less than 6 months but which may
extend to 5 years and shall also be liable to fine.

 Taking gratification in order to influence public servant, by corrupt or illegal

means, shall be punishable with imprisonment for a term which shall be not
less than three year but which may extend to seven years and shall also be
liable to fine.

 Taking gratification, for exercise of personal influence with public servant

shall be punishable with imprisonment for a term which shall be not less
than six months but which may extend to five years and shall also be liable
to fine.

 Abetment by public servant of offences defined in Section 8 or 9, shall be

punishable with imprisonment for a term which shall be not les than six
months but which may extend to five years and shall also be liable to fine.

 Public servant obtaining valuable thing without consideration from person

concerned in proceeding or business transacted by such public servant, shall
be punishable with imprisonment for a term which shall be not less than six
months but which may extend to five years and shall also be liable to fine.

 Punishment for abetment of offences defined in Section 7 or 11 shall be

punishable with imprisonment for a term which shall be not less than six
months but which may extend to five years and shall also be liable to fine.

 Any public servant, who commits criminal misconduct shall be punishable

with imprisonment for a term which shall be not less than one year but
which may extend to 7 years and shall also be liable to fine.

 Habitual committing of offence under Section 8, 9 and 12 shall be

punishable with imprisonment for a term which shall be not less than two
years but which may extend to 7 years and shall also be liable to fine.

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Case Law
Investigation shall be done by a police officer not below the rank of:

 In case of Delhi, of an Inspector of Police.

 In metropolitan areas, of an Assistant Commissioner of Police.
 Elsewhere, of a Deputy Superintendent of Police or an officer of equivalent
rank shall investigate any offence punishable under this Act without the order
of a Metropolitan Magistrate or a magistrate of first class, or make any arrest
therefore without a warrant.
If a police officer not below the rank of an Inspector of Police is authorized by the
State Government in this behalf by general or special order, he may investigate
such offence without the order of a Metropolitan Magistrate or Magistrate of First
class or make arrest therefor without a warrant.
Provided further that an offence referred to sec 13.1.e shall not be investigated
without the order of a police officer not below the rank of a Superintendent of
Police. An such investigation without the order of a SP of above rank will be
dismissed see Umesh Kumar Choubey vs State of Madhya Pradesh

Prominent cases
2G Spectrum Scam
Main article: 2G spectrum scam

Telecom spectrum which is a scarce natural resource of national importance was

allotted by UPA government at throwaway prices to companies through corrupt
and illegal means. A special CBI is conducting the trial under this act.[5][6]
Ketan Desai
The CBI recently arrested the Medical Council of India's former president Ketan
Desai and three others under this act, for allegedly accepting a bribe to permit
Patiala-based Gyan Sagar Medical College to recruit a fresh batch of students
without having an adequate infrastructure.

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Notable scandals

Amount
Scam Year (in Place Scammers Notes
crores)

Notable are his flimsy arguments,

Manoj C along with Vaikkan,
2017 60,000 Kerala contradictory statements and
Mullan Poosai
preposterous views

Financial scam caused by the

collapse of a Ponzi scheme run
by Saradha Group, a consortium
of over 200 private companies
that was believed to be running
collective investment schemes
popularly but incorrectly referred
to as chit funds.[4][5][6][7] As a result
of this scam (Odisha and
W.B),[8][9] Rajya Sabha MP Kunal
Ghosh (All India Trinamool
Congress) is in jail since Nov,
2013 for
Saradha Kunal Ghosh,
interrogations. Odisha MP
Group West Sudipto Sen, Madan
2013 40,000 Ramchandra Hansda (Biju Janata
financial Bengal Mitra and many
Dal) MLA Pravat Tripathy (Biju
scandal more[1][2][3]
Janata Dal) and
former Odisha MLAs Subarna
Naik (Biju Janata Dal)and Hitesh
Kumar Bagarti (Bharatiya Janata
Party) have also been arrested
for ponzi scam. Rajya Sabha MP
from West Bengal Srinjay Bose
(All India Trinamool Congress)
has also been arrested.[10] West
Bengal transport minister and All
India Trinamool
Congress MLA Madan Mitra was
also arrested.[11]

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Amount
Scam Year (in Place Scammers Notes
crores)

Defense scandal caused by an

American attorney who turned
whistleblower[12] after hacking into
emails and documents retained
on the US based servers of arms
dealer Abhishek Verma who is
globally known as 'Lord of
War'[13] and his wife former Miss
Universe Romania Anca Verma's
global weapons companies SIG
SAUER and GANTON.[14] Leaked
Abhishek documents were sent to Indian
Verma politicians Arvind
Defense Abhishek
arms 2012 80,000 Kejriwal & Prashant
sector Verma, Anca Verma
deals Bhushan who released these to
scandal the press[15] as a
result CBI and Enforcement
Directorate arrested Abhishek
and his wife Anca in multiple
cases of defense sector
purchases related corruption[16] &
money laundering[17] aggregating
to US$12 billion (₹80,000
crores).[18][19] Presently, Abhishek
and his wife Anca are
incarcerated in Tihar Jail Delhi
awaiting trial.[20]

It is estimated that out of ₹70000

crores spent on the Games, only
half of the said amount was spent
Common Suresh Kalamadi, on Indian sportspersons. The
Wealth New Sheila Dixit- the then Central Vigilance Commission,
2010 70,000
Games Delhi Chief Minister of the involved in probing the alleged
Scam State. corruption in various
Commonwealth Games-related
projects, has found discrepancies
in tenders – like payment to non-
existent parties, will-ful delays in

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Amount
Scam Year (in Place Scammers Notes
crores)

execution of contracts, over-

inflated price and bungling in
purchase of equipment through
tendering – and misappropriation
of funds.

coal blocks allotted, not

auctioned, leading to estimated
Comptroller and
losses as per the Comptroller and
Indian Auditor General of
Auditor General of
coal India, the coal
2012 185,591 National India[22][23][24] Supreme Court
allocation ministry, many
cancels all 214 coal blocks
scam[21] electricity boards and
allocations since 1993.
private companies
Government to e-auction the coal
blocks now.[25]

Uttar Babu Singh Kushwaha and IAS

Pradesh Uttar Mayawati, Babu Pradeep Shukla behind bars for
2012 10,000
NRHM Pradesh Singh Kushwaha their involvement in NHRM
scam scam.[26][27][28][29][30][31][32]

communication bandwidth
Nira Radia, A. auctioned for lower than market
Raja, M. K. value.A. Raja and M. K.
2G scam 2008 176,000 National Kanimozhi, many Kanimozhi have been in Tihar
telecommunications Jail for 15 months and 5 months
companies respectively.They have been
charge framed.[33][34]

Arms Dealers Abhishek

Abhishek
Navy War Verma and Ravi
Verma, Ravi
Room Defense Shankaran compromised senior
2006 18,000 Shankaran assisted
Leak sector defense officials working in the
by other defence
scandal Navy War Room located inside
personnel
Prime Minister's Secretariat in
India & obtained sensitive data

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Amount
Scam Year (in Place Scammers Notes
crores)

pertaining to military purchases &

ongoing defence acquisitions for
securing lucrative multibillion-
dollar contracts relating
to Scorpene Submarines deal of
the Indian Navy worth US$6
billion.[35] Ravi Shakaran fled to
United Kingdom in 2006. Red
corner Interpol notice was issued
for him.[36] Even after 8 years of
arduous legal battle in UK Courts,
Indian Govt failed in his
extradition.[37] Abhishek
Verma was granted bail in this
case in 2008 by Delhi High
Court.[38]

Food which the government

Uttar
purchased to give to the poor was
Pradesh Uttar Mulayam Singh
2003 30[39] instead sold on the open
food grain Pradesh Yadav, Mayawati
market[40][41][42][43]
scam

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