When India liberalised its economy more than 25 years ago, many believed that the end of the ‘licence raj’ would reduce, if not eliminate, private and political corruption. However, this change did not occur, and corruption continues to haunt and define India’s political landscape.
In the last decade, corruption has become a particularly salient issue in democratic countries around the world. From the presidential election in the United States, where the victor ran his campaign against a ‘corrupt establishment’ on both sides of the aisle, to the National Capital Territory of Delhi, which is governed by the anti-corruption crusader, Arvind Kejriwal, corruption is increasingly becoming a ballot-box issue.
Given the heated nature of corruption in the public and private domain, Observer Research Foundation hosted former United Kingdom Attorney General, Lord Peter Goldsmith, on 6 October in New Delhi, India. In his talk, entitled, ‘Tackling Corruption: What Democracies Can Learn from Each Other,’ Lord Goldsmith spoke extensively about addressing corruption in the private sector.
In his introductory remarks, Mr. Sunjoy Joshi, Chairman, ORF, highlighted the great concerns about corruption among the Indian people. When India liberalised its economy more than 25 years ago, many believed that the end of the ‘licence raj’ would reduce, if not eliminate, private and political corruption. However, this change did not occur, and corruption continues to haunt and define India’s political landscape. The 2011 agitations, led by Anna Hazare, which were transformed into a political entity by Arvind Kejriwal, have demonstrated that the Indian people are determined in their desire to end public corruption.
As the former Attorney General of the United Kingdom, Lord Peter Goldsmith is no stranger to corruption and its many forms. In his remarks, he concentrated on corruption in business life, specifically by highlighting the established successes – and great potential – for Deferred Prosecution Agreements (DPAs). As the UK reaches its second anniversary of introducing DPAs, Lord Goldsmith underscored the great successes of the DPA system. For those not familiar with a Deferred Prosecution Agreement, it is essentially an alternative to adjudication, where a prosecutor and a corporate entity enter an agreement of amnesty for the corporation in exchange for the payment of fines, implementation of corporate reforms, and full cooperation with the authorities.
In contrast to the American system, where settlements take place outside the courtroom, the British judicial system oversees the DPA process, ensuring that they are in public interest. DPAs offer substantial mutual benefits: by allowing companies to bypass an unpredictable jury and avoid a conviction, which would blacklist them from receiving government contracts in sensitive sectors; without allowing directors or employees from escaping prosecution, as those individuals can be held liable for criminal conviction.
DPAs are a significant step towards eliminating business corruption. Lord Goldsmith outlined how they encourage companies to come forward since they know they will face a certain outcome and can continue running their businesses, while they enable prosecutors to pursue crimes that would have previously gone unnoticed by the judicial system. Perhaps most importantly, they establish a great amount of public confidence in the judicial system since companies, and the responsible individuals are held responsible.
Lord Goldsmith’s remarks were followed by a lively question and answer session, which focused on the exact nature of DPAs and whether such agreements would be suitable for India. Due to the significant delays in the Indian judicial system, Mr. Sanjeev Ahluwalia, Adviser, ORF, questioned why corporations would want to enter a DPA with the government. Since any case against a company would take years, if not decades to adjudicate, the delays in the judicial process would prove more beneficial than the instant penalties imposed by a Deferred Prosecution Agreement. Lord Goldsmith responded by highlighting that while he is aware of the delays in India’s judicial system, yet he also knows that “the system can reach speedy decisions on issues of great public interest.”
Another focal point during questioning was the fact that DPAs save corporations from criminal convictions, but allow prosecutors to convict individual employees. Lord Goldsmith highlighted his belief that this feature is indeed one of the biggest strengths of the DPA system. He argued that the ability to hold individual executives accountable is imperative, as these individuals “are the actual minds of the system.” If immune from prosecution, they could easily continue their wrong behavior at other corporations, free from any compunction.
This report is prepared by Vivan Marwaha, Researcher, Observer Research Foundation, New Delhi.