Global Investigations Review - The law and practice of international investigations

The Practitioner’s Guide to Global Investigations

India

06 January 2017

Archer & Angel

General context and principles

1          Identify the highest-profile corporate investigation under way in your country, describing and commenting on its most noteworthy aspects as it relates to your country.

Augusta Westland (AW), a wholly owned subsidiary of Finmeccanica, an Italian company, was indicted by an Italian court for allegedly bribing Indian public officials. It was alleged that AW had used middlemen to bribe public officials to secure a supply contract for sale of 12 helicopters.

Before the indictment by the Italian court, in 2013, Italian authorities had arrested AW’s CEO and Finmeccanica’s chairman over charges that they had engaged middlemen to bribe Indian politicians and Indian air force officials to secure the deal. Shortly thereafter, India’s Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED) started their own investigations. Meanwhile, the Indian government cancelled the helicopter contract citing breach of pre-contractual ‘integrity pact’, and also invoked the bank guarantee furnished by AW amounting to approximately 20.86 billion rupees.

A noteworthy aspect of the investigation has been the reliance placed by Indian investigative agencies on the judgment of the Italian court, and request for information sharing with the Italian authorities. Investigations are ongoing.


2          Outline the legal framework for corporate liability in your country.

The Supreme Court of India, in the case of Iridium India Telecom Limited v. Motorola Incorporated & Others, held that corporations cannot claim immunity from criminal prosecution on the ground that they are incapable of possessing the necessary mens rea required for commission of criminal offences. A corporation is virtually in the same position as any individual and may be convicted of common law as well as statutory offences, including those requiring mens rea. Criminal liability would be attributable to a corporation when an offence is committed, in relation to the business of the corporation, by a person or body of persons in control of its affairs and management. Since a corporation cannot be imprisoned, courts will levy a fine on the corporation guilty of wrongdoing.


3          In your country, what law enforcement authorities regulate corporations? How is jurisdiction between the authorities allocated? Do the authorities have policies relating to the prosecution of corporations?

The Ministry of Company Affairs through the Registrar of Companies (RoC) regulates private limited companies (i.e., closely held companies) and unlisted public companies. Listed public companies and public companies that propose to list their securities on the market are regulated by the Securities and Exchange Board of India (SEBI) as well.

SEBI monitors market activity, and reports illegal activities to its Investigations Department, which investigates illegal activities, and refers them to the Enforcement Department, which enforces action against market participants that violate securities laws. It is important to note that SEBI has the powers of a civil court, such as ordering discovery and production of books of accounts, summoning and enforcing the attendance of persons and examining registers and documents, and issuing commissions for the examination of witnesses.

The RoC is tasked with ensuring that companies comply with India’s company’s law. It has the power to initiate prosecution against defaulting companies.


4          What grounds must the authorities in your country have to initiate an investigation? Is a certain threshold of suspicion necessary to trigger an investigation?

India has a number of regulatory authorities that have been empowered by various statutory laws to investigate and prosecute offenders. The grounds for initiating investigation against a wrong-doer are many, and is usually specified in the statute empowering the authority.

Some of the important regulatory authorities are the Securities and Exchange Board of India (securities market regulator), the Reserve Bank of India (India’s central bank, and financial regulator), the Central Bureau of Investigation (tasked with investigation of serious fraud, cheating and corruption cases), the Serious Fraud Investigation Office (prosecutes white-collar crimes), the Central Vigilance Commission (supervises corruption cases in government departments), the Enforcement Directorate (enforces exchange control and money laundering regulations) and the Income Tax department.


5          Does double jeopardy, or a similar concept, apply to prevent a corporation from facing criminal exposure in your country after it resolves charges on the same core set of facts in another country?

Article 20 of the Constitution of India provides protection against double jeopardy. The doctrine of double jeopardy protects a person from being tried and punished twice for the same offence, but not from different offences arising out of violation of different laws by the same set of facts.

However, a corporation facing criminal exposure in India after it resolves charges on the same core set of facts in another country may not avail itself of protection against double jeopardy. For example, in the Louis Berger case, having been prosecuted in the US, the company and its executives are still being investigated in India.


6          Describe the principal challenges in your country that arise in cross-border investigations, and explain whether and how such challenges are dependent on other countries involved.

Key challenges in conducting cross-border investigations include obtaining information relevant to the investigation from a foreign government; tracing the money trail, and obtaining bank records from abroad; and getting custody, or extraditing the accused from a foreign jurisdiction.

India has signed mutual legal assistance treaties (MLATs) with 39 countries for sharing of information, and to obtain evidence from within the other country’s jurisdiction. In the absence of an MLAT, a letter rogatory (i.e., formal request for information) is sent to a foreign court, or alternatively, an informal request for information is also made, but these requests for information lack predictability and oversight.


7          What bearing do the decisions of foreign authorities have on an investigation of the same matter in your country?

Decisions of foreign authorities on matters under investigation in India are of interest to Indian prosecuting agencies. This was best illustrated in the Augusta Westland investigation (see question 1) where the CBI sought a copy of the judgment passed by the Milan Court of Appeal that had found sufficient evidence to prove that the Augusta Westland deal was tainted by corruption. It had, among other things, observed that improper payments were wired to a former Indian Air Force Chief’s cousins to influence the procurement process for supply of helicopters.

These revelations had an immediate impact on the Indian investigation, and investigators scrambled to investigate and corroborate the facts noted by the Italian Court. However, it is yet to result in any conviction in India.


8          Do your country’s law enforcement authorities have regard to corporate culture in assessing a company’s liability for misconduct?

The jurisprudence on corporate culture, as a tool to assess a company’s liability for misconduct, is at a nascent stage of development in India. The Satyam Computer Services scandal brought to light the importance of ethics, and its relevance to corporate culture. The culture at Satyam symbolised an unethical culture that eventually resulted in fudging of accounts and misappropriation of money by the company’s promoter.

An aftermath of the Satyam scandal has been the increasing emphasis placed by regulators on corporate governance standards. In this regard, India’s new company’s law has prescribed higher governance standards to set the right culture in corporations.


9          What are the top priorities for your country’s law enforcement authorities?

In recent years, a slew of corruption cases, most notably regarding 2G telecom/spectrum licences, the coal block allocation, the commonwealth games, Adarsh Housing Society and Augusta Westland have sharply drawn the focus of law enforcement agencies to corruption at higher levels of the government. It appears this trend is likely to continue in the foreseeable future. The Indian government has also prioritised stamping out of undisclosed income held by Indian citizens, overseas and in India.


10        How are internal investigations viewed by local enforcement bodies in your country?

Voluntary disclosure of wrongdoing by corporations is almost non-existent in India, perhaps attributable to the low rate of conviction in corruption cases. Therefore, there is little or no incentive for corporations to conduct and voluntarily disclose findings of their internal investigations to the authorities.


Before an internal investigation

11        How do allegations of misconduct most often come to light in companies in your country?

Allegations of misconduct most often come to light by way of whistleblower complaints, suspicious activity reports, internal audit or litigation processes initiated against the company’s parents company in another jurisdiction. However, whistleblowers are usually hesitant in revealing their identities and co-operating in any court proceedings for fear of repercussions and lack of adequate protection.


12        Are search warrants or dawn raids on companies a feature of law enforcement in your country? Describe any legal limitations on authorities executing search warrants or dawn raids, and what redress the company has if those limits are exceeded.

Search warrants or dawn raids on companies are provided for under specific laws such as tax regulations and competition law. Authorities would normally look for two independent and respectable witnesses from the locality to observe that the raid is carried out according to law. A list of items seized would be made and copy of the list of items prepared will be given to the person where the search was carried out.

If search warrants or dawn raids are not carried out according to law, the concerned person or company may approach the courts and challenge such action. Any prosecution based on the illegal raids can be challenged.


13        How can privileged material be lawfully protected from seizure during a dawn raid or in response to a search warrant in your country?

The company may object to the review or taking of copies of ‘privileged documents’ including confidential communication between the client and its external attorney during a dawn raid. However, attorney client documents are not protected in the strictest sense from police or other law enforcement agencies, should they be found during a dawn raid or a search under a valid warrant. It would depend on the law enforcement agency’s discretion whether to respect the company’s request not to access such documents.

However, any such documentation may not be produced as evidence in the course of court proceedings.


14        Are there any privileges in your country that would prevent an individual or company from providing testimony? Under what circumstances may an individual’s testimony be compelled in your country? What consequences flow in your country from such compelled testimony?

Article 20(3) of the Constitution of India provides that no person accused of any offence shall be compelled to be a witness against himself or herself. Further, section 161 of the Code of Criminal Procedure, 1973 provides the following:


  1. Any police officer making an investigation, or any police officer not below such rank as the state government may, by general or special order, prescribe in this behalf, acting on the requisition of such officer, may examine orally any person supposed to be acquainted with the facts and circumstances of the case.
  2. Such person shall be bound to answer truly all questions relating to such case put to him by such officer, other than questions the answers to which would have a tendency to expose him to a criminal charge or to a penalty or forfeiture.

A person is required to assist a public servant in the execution of his public duty such as a police officer executing a search warrant. Failure to assist may result in the public servant filing a criminal complaint against such person.


15        What legal protections are in place for whistleblowers in your country?

The Whistle Blowers Protection Act, 2011 was passed by the Indian Parliament in May 2014. The Act provides for a mechanism of receiving and inquiring into complaints (also known as disclosures) relating to corruption, commission of an offence, and wilful misuse of power and discretion by a public servant. The Act, however, does not provide any protection to whistleblowers who make a complaint involving the actions within a private organisation. The Act provides protection to whistleblowers and provides safeguards against their victimisation. However, the Act is yet to be brought into effect.

Moreover, the revised Clause 49 of the Listing Agreement has made it compulsory for companies listed on the stock exchange to have a whistleblower mechanism for their employees and directors.


16        What rights do employees possess under local employment law that determine how they are treated within a company if their conduct is within the scope of an investigation? What employment rights would attach if they are deemed to have engaged in misconduct? Does it differ for officers and directors of the company?

There are various labour related statutes in India, which differ slightly from state to state. However, there is no at-will employment in India. Employers are expected to follow principles of natural justice and maintain proper documentation if action on the basis of internal investigation is to be initiated against an employee.

Officers (including key managerial personnel) as well as whole-time directors are also considered employees of the company and their terms of employment are governed as per their employment agreement. The only difference is the directors appointed by the board, who can only cease to hold the office of directorship under the circumstances provided for under the Indian Companies Act.


17        Are there disciplinary or other steps that a company must take in your country when an employee is implicated or suspected of misconduct, such as suspension or in relation to compensation? Can an employee be dismissed for refusing to participate in an internal investigation?

Depending on the type and gravity of the offence, various actions can be initiated against an employee, including suspension, warning, denial of pay rises, termination from employment etc., keeping in mind the employment contract and policies of each company. If a company has adequate proof of misconduct against an employee who refuses to participate in an internal investigation, the company may dismiss the employee.


Commencing an internal investigation

18        Is it common practice in your country to prepare a document setting out terms of reference or investigatory scope before commencing an internal investigation? What issues would it cover?

Detailing the precise purpose and scope of an internal investigation is a common practice before commencing an internal investigation.

Terms of reference would, among other things, include:

  • the reason for undertaking the investigation and its objectives;
  • what the investigation is required to examine;
  • how investigation findings should be presented, for instance, an investigator will often be required to present his findings in some form of investigation report; and
  • who the findings should be reported to, and who to contact for further direction if unexpected issues arise or advice is needed.

19        If an issue comes to light prior to the authorities in your country becoming aware or engaged, what internal steps should a company take? Are there internal steps that a company is legally or ethically required to take?

There is no statutory or legal prescription that requires a company to take any internal steps on becoming aware of any issue, except in the case of a complaint alleging sexual harassment at the workplace.

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013 requires every branch or office of a company employing 10 or more persons to constitute an internal complaints committee. Complaints of workplace sexual harassment must be investigated by the ICC.

In all other cases, companies usually follow their internal code of conduct for escalating or reporting any issue internally for investigation and resolution.


20        At what point must a company in your country publicly disclose the existence of an internal investigation or contact from law enforcement?

There is no statutory or legal prescription that requires a company to disclose the existence of an internal investigation, or contact from law enforcement agencies. In the case of a company whose securities are listed on a recognised stock exchange, care must be taken to comply with any disclosure obligation set out in the listing agreement signed between the company and the stock exchange.


21        When would management typically brief the board of a company in your country about an internal investigation or contact from law enforcement officials?

There is no legal or statutory prescription that requires the management to brief the board of directors about an internal investigation, or contact from law enforcement officials. The general principle should be to inform people on a need-to-know basis. Having said that, each company has a different policy on reporting matters to its board of directors.


22        What internal steps should a company in your country take if it receives a notice or subpoena from a law enforcement authority seeking the production or preservation of documents or data?

A company that is the subject of an inquiry must extend full co-operation and furnish complete and correct information and documents within the given time to the law enforcement authority.

If the law enforcement authority has requested production or preservation of certain documents or data, company should impose a document hold to ensure preservation of documents and information that may be necessary for completion of the inquiry, or in anticipation of any future litigation. In a similar vein, appointing a document custodian to maintain control over the relevant documents and information would be advisable.


23        How can the lawfulness or scope of a notice or subpoena from a law enforcement authority be challenged in your country?

The company can file a writ petition before the High Court challenging the notice or subpoena issued by a law enforcement authority and request the court to quash it. However, the High Court does not normally quash the notice or subpoena unless, in its opinion, grave prejudice will be or is being caused to the person to whom it has been issued.


Attorney–client privilege

24        May attorney–client privilege be claimed over any aspects of internal investigations in your country? What steps should a company take in your country to protect the privilege or confidentiality of an internal investigation?

Professional communications between attorneys (or advocates) and clients are protected as ‘privileged communications’ under the Indian Evidence Act, 1972 (the Evidence Act). Therefore, documents that are created during an internal investigation for the purpose of giving or obtaining legal advice (including advice as to what should prudently be done in the particular legal context) are privileged.

Privilege or confidentiality of an internal investigation may be protected by marking documents ‘confidential and privileged’; sending a note to all relevant staff at the start of an investigation reminding them not to create additional documentation, for instance, notes or emails, commenting on the matters under investigation and which the company may have to produce because it’s not privileged; and segregating privileged material from non-privileged material and taking care to ensure that privilege is not waived by including privileged information in a document that is not privileged.


25        Set out the key principles or elements of the attorney–client privilege in your country as it relates to corporations. Who is the holder of the privilege? Are there any differences when the client is an individual?

The Evidence Act, which has codified the law on attorney–client privilege, specifically refers to a ‘client’ and does not have different principles for a client that is a corporation or an individual. Therefore, the client enjoys a right to privilege with respect to information disclosed or documents provided to an external legal counsel for the purposes of an internal investigation.


26        Does the attorney–client privilege apply equally to inside and outside counsel in your country?

Professional communications between an external counsel and client are privileged; however, attorney–client privilege may not extend to communications exchanged between an in-house counsel and the company. The law on the subject is far from being settled.

From a practical perspective though, companies usually insert a confidentiality clause in the employment contract of in-house counsel to afford protection to any information disclosed to such counsel during the course of his or her employment, which usually serves as an effective deterrent. Any disclosure made by in-house counsel in contravention of such a clause could amount to breach of contract, for which the company may claim damages in some circumstances.


27        To what extent is waiver of the attorney–client privilege regarded as a co-operative step in your country? Are there any contexts where privilege waiver is mandatory or required?

Waiver of attorney–client privilege to obtain co-operation credit, as a concept, is non-existent in India. Also, there are no circumstances under which waiver of attorney–client privilege is mandatorily required by law.


28        Does the concept of limited waiver of privilege exist as a concept in your jurisdiction? What is its scope?

Limited waiver of privilege, as a concept, does not exist in India. However, privilege may be waived, in its entirety, by a party to a judicial proceeding who calls his or her lawyer as a witness, and questions the lawyer on a matter that might otherwise be privileged.


29        If privilege has been waived on a limited basis in another country, can privilege be maintained in your own country?

Waiver of privilege, on a limited basis, in a foreign jurisdiction will not affect privilege with respect to the same matter in India.


30        Do common interest privileges exist as concepts in your country? What are the requirements and scope?

The concept of common interest privilege does not exist in India.


31        Can privilege be claimed over the assistance given by third parties to lawyers?

Yes, privilege can be claimed with respect to assistance given by interpreters, clerks or assistants to lawyers.


Witness interviews

32        Does your country permit the interviewing of witnesses as part of an internal investigation?

There is no specific legislation governing how internal investigations are to be conducted in India, and as such there are no restrictions on interviewing of witnesses as part of an internal investigation, which is fairly common.


33        Can the attorney–client privilege be claimed over internal witness interviews or attorney reports in your country?

Section 126 of the Evidence Act, 1872 prohibits barristers or attorneys from disclosing to a third party any communication made to them by clients, any documents they came upon for the purpose of their professional engagement, and any advice given to clients, unless clients expressly consent to the disclosure. Therefore, companies enjoy a right to privilege with respect to information disclosed or documents provided to external legal counsel for the purposes of an internal investigation.

However, whether Section 126 confers privilege on in-house lawyers is a grey area, with courts of different jurisdictions coming to different conclusions on this topic. The matter is yet to be conclusively put to rest by the Supreme Court (i.e., the apex court in India).


34        When conducting a witness interview of an employee in your country, what legal or ethical requirements or guidance must be adhered to? Are there different requirements when interviewing third parties?

At the outset, there are no set legal rules for conducting witness interview of an employee in India and the purpose of the interview usually determines what kind of procedures must be followed.

Further, there is no concept of issuing Miranda or Upjohn warnings in India. However, in essence, the principles behind these warnings are usually recommended when conducting witness interview. Personnel conducting the interview should clarify whom they represent at the outset of interviews, to prevent a scenario where employees’ co-operation is solicited, with the employee understanding that the company’s in-house counsel represents them as well. Employees should also be informed if waiver of the privilege is likely. Recording of the interview should only be conducted after obtaining consent of the employee.

The same principles apply when interviewing third parties.


35        How is an internal interview typically conducted in your country? Are documents put to the witness? May or must employees in your country have their own legal representation at the interview?

No procedure for conducting interviews has been prescribed under law. However, as good practice, an interview should usually:

  • interview the complainant/whistleblower;
  • interview the alleged accused;
  • interview other witnesses;
  • document the investigation;
  • reach a conclusion and prepare investigation report;
  • send investigation report to decision takers in the company;
  • take appropriate corrective action;
  • communicate results to complainant and accused.

There is no statutory requirement to present documents to the witness and each company can decide on this having regard to the circumstances of each case. However, with respect to investigations pertaining to termination of an employee’s services, it is usually recommended that a thorough investigation process is undertaken, which includes presentation of documents, if any, to the employee.

No legal requirement mandates that an employee should have legal representation at the interview. From a practical perspective, employees usually do not express interest in having their own legal representation during an interview and such demands are not common.However, if such a demand is raised, the company’s response may vary depending on the circumstances. For instance, if the investigation is being conducted by the company’s HR personnel, then a request by the employee to have legal representation at the interview could be rejected. However, if the company’s interviewing panel comprises in-house or external legal counsel, the company could consider allowing employee’s legal representative to accompany him or her.

At times, after an internal investigation is completed, a company may decide that an individual’s employment be terminated, or other disciplinary action must be taken. Depending on the company’s policies and status of the individual, a show-cause notice may need to be issued to the individual, giving the person an opportunity to raise a defence and show cause why action should not be taken.


Reporting to the authorities

36        Are there circumstances under which reporting misconduct to law enforcement authorities is mandatory in your country?

The obligation to report to government authorities is determined case by case, having regard to the specific nature of the offence committed, and the corresponding Indian statute that has been violated. However, listed companies must check their disclosure obligations in accordance with the listing agreement signed with the stock exchange.


37        In what circumstances might you advise a company to self-report to law enforcement even if it has no legal obligation to do so? In what circumstances would that advice to self-report extend to countries beyond your country?

In India, the self-reporting mechanism is not very evolved. Few regulations provide leeway or an advantage for self-reporting in India, and it is very rare to find cases where voluntary self-reporting is beneficial.

However, it is advisable to report cases where misconduct or fraud might lead to criminal acts. More particularly, in cases relating to sexual harassment within work places, it is important to follow the mandate prescribed in the statute.

Cases of bribery and corruption may need to be reported to governments of countries where there are strict anti-corruption laws and legislations such as the USA and the UK. However, it is advisable to seek counsel from attorneys in these jurisdictions before self-reporting.


38        What are the practical steps you need to take to self-report to law enforcement in your country?

In practice, it is important to conduct a proper investigation involving interviews and preparation of an internal report, so as to get clarity on the alleged offence prior to reporting to any law enforcement agency.


Responding to the authorities

39        In practice, how does a company in your country respond to a notice or subpoena from a law enforcement authority? Is it possible to enter into dialogue with the authorities to address their concerns before or even after charges are brought? How?

This depends on a number of factors, including the identity of the authority issuing the notice or subpoena. For instance, if a notice is issued by authorities from the legal metrology division, the company may discuss aspects of the violation and address the authorities’ concern before charges are brought (through compounding of the offence). Similarly, if notice is issued to the company in the course of a police investigation, it might be possible to discuss the issues with the police official to aid the investigation. However, this option may not be available in every situation.

If a notice is received by a company from the court, the company can present its defence only after entering proceedings before the court of law, and no dialogue may be possible after the charges are brought.


40        Are ongoing authority investigations subject to challenge before the courts?

There is no restriction on internal investigations being challenged before courts. For instance, if disciplinary action is initiated against an employee on the basis of an internal investigation, such action may be challenged by the employee before the court.


41        In the event that authorities in your country and one or more other countries issue separate notices or subpoenas regarding the same facts or allegations, how should the company approach this?

In India, there is no specific concept of consistent disclosure packages. In cases where separate notices or subpoenas have been issued to a company, it would have to deal with each of them separately.

However, there may be some scope to request the courts to admit information (e.g., a decision in a court of another country) which would maybe have been provided in a different country, but even this would be at the discretion of the courts.


42        If a notice or subpoena from the authorities in your country seeks production of material relating to a particular matter that crosses borders, must the company search for and produce material in other countries to satisfy the request? What are the difficulties in that regard?

Technically, courts in India do not have extraterritorial jurisdiction. Therefore, if an Indian court seeks production of material relating to the Indian company’s foreign parent company, the Indian company is not obligated to procure such materials from other countries.

A recent example of this is the Louis Berger case, where the company was prosecuted in the United States under the Foreign Corrupt Practices Act and the Indian government has requested the US government for information from the findings.


43        Does law enforcement in your country routinely share information or investigative materials with law enforcement in other countries? What framework is in place in your country for co-operation with foreign authorities?

The Indian authorities do share information with law enforcement in other countries case by case. The extent of co-operation with other countries is determined by the nature of the relationship between the countries.


44        How would you advise a company that has received a request from a law enforcement authority in your country seeking documents from another country, where production would violate the laws of that other country?

There is technically no legal power or legislation in place for an Indian law enforcement agency to request a company in India to provide documents from another country. We would normally advise them to refrain and to reject the request. However, the advice may change if other aspects are at play, such as the gravity of the offence and the charges.


45        Does your country have data protection statutes or blocking statutes? What related issues are implicated by complying with a notice or subpoena?

There are no blocking statutes in India. India has legislation on protection of sensitive personal data. However, the data protection statutes are more aimed at ensuring sensitive data is not shared without permission of the data provider.

Protection granted under these data protection laws do not apply when a government authority seeks the information. Companies must comply with court or government requests for information as long as it is available within the country.


46        What are the risks in voluntary production versus compelled production of material to authorities in your country? Is this material discoverable by third parties? Is there any confidentiality attached to productions to law enforcement in your country?

Any document submitted on demand of law enforcement agencies or courts in India are technically confidential documents and may not be discoverable by third parties. The exception to this may be a scenario wherein an international agency (such as Interpol) seeks the help of Indian police agencies in respect of records of some individual under investigation.

The material so reproduced before law enforcement agencies would be discoverable if it is reproduced in the final judgment by the court. Basically, it is at the discretion of the courts if the information or material produced should form part of the judgment.

Confidentiality for voluntarily produced documents cannot be ensured.


Global settlements

47        Prior to any settlement with a law enforcement authority in your country, what considerations should companies be aware of?

The following points should ideally be kept in consideration while settling with an enforcement agency in India:

  • The settlement must be clear on whether the matter is being settled and whether charges, if any, are being dropped.
  • It should be made clear that future enquiries through the same matter should not take place.
  • The settlement should clarify that the case would not be reopened.
  • In case there is an inquiry, it should be for a fresh matter and not for the same.
  • It should be clear that the settlement cannot be used against the party as evidence for another matter.

48        What types of penalties may companies or their directors, officers or employees face for misconduct in your country?

Under the provisions of the Indian Companies Act, directors are termed as officers in default unless a specific officer or director is designated by the company for overseeing compliance. Further, it defines the duties and responsibilities that directors should keep in mind while undertaking the operations of a company. For contraventions, the Act provides penalties on the part of company as well as directors which range between 100,000 and 2.5 million rupees. Some of the contraventions also result in an automatic vacation of office. In most cases, the penalties are monetary. However, a few provisions also provide for imprisonment depending upon the gravity of the offences (such as misrepresentation of financial data or fraud).


49        What do the authorities in your country take into account when fixing penalties?

In India, authorities usually take the penalty prescribed by law and the gravity of the offence into account when fixing penalties.


50        Are non-prosecution agreements or deferred prosecution agreements available in your jurisdiction for corporations?

The concepts of non-prosecution agreements or deferred prosecution agreements are not available in India for corporations. These terms are not recognised under any statutes in the country.


51        Is there a regime for suspension and debarment from government contracts in your country? Where there is a risk of suspension or debarment or other restrictions on continuing business in your country, what are the options available to a corporate wanting to settle in another country?

Each government contract comes with its own terms, and there is no master document prescribing a regime for suspension and debarment from government contracts. Typically, companies can get suspended or debarred from future government contracts for non-fulfilment of contractual obligations in its dealings with any governmental body or if the company has been found guilty of any major corporate misconduct in the past.

Usually a company settling in another country may not result in automatic suspension or debarment in India, depending on the nature and magnitude of the offence and if that offence is listed in the suspension criteria in the particular government contract.


52        Are ‘global’ settlements common in your country? What are the practical considerations?

In the recent past, India has not been involved in any global resolutions. There is currently no specific legislation dealing with the same in India.


53        Are parallel private actions allowed? May private plaintiffs gain access to the authorities’ files?

Parallel private actions may be permitted only under certain limited circumstances. For instance, parallel private antitrust action is allowed, subject to India’s antitrust law.

The Right to Information Act, 2005 empowers a private person (whether plaintiff or not) to request public information. This Act allows an Indian citizen to request from the government any government record, document, etc., not considered confidential.


Publicity and reputational issues

54        Outline the law in your country surrounding publicity of criminal cases at the investigatory stage and once a case is before a court.

In India, no specific law or policy guides publicity of criminal cases at the investigatory stage. In practice, the media may print any information at any time, be it at the investigatory stage or during the pendency of the case.

In our experience, we have seen media reporting investigations into the functioning of a company almost as soon as the investigation starts.


55        What steps do you take to manage corporate communications in your country? Is it common for companies to use a public relations firm to manage a corporate crisis in your country?

Larger companies usually have their own in house communications and publicity managers to deal with corporate crises. However, it is very common for companies in India to outsource this service to a third party better experienced at handling publicity tasks.


56        How is publicity managed when there are ongoing, related proceedings?

Since not all investigations by government agencies are made public, companies would normally attempt to ensure that no public disclosure is made at all. If the investigations or proceedings become public, it is customary to engage PR agencies to work behind the scenes to manage the media. At times, consultants who specialise in government relations are also engaged for damage limitation.


Duty to the market

57        Is disclosure to the market in circumstances where a settlement has been agreed but not yet made public mandatory?

No, there is no such requirement. In the case of a company whose securities are listed on a recognised stock exchange, care must be taken to comply with any disclosure obligation set out in the listing agreement signed between the company and the stock exchange.

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