Govt Feels Expanding Ambit Of Prevention Of Corruption Act Will Hurt Biz
The government has virtually ruled out amending the Prevention of Corruption Act (PCA) to extend it to the private sector, a move that was recommended by the Special Investigation Team (SIT) on black money to check the circulation of unaccounted wealth in the education and religious institutions.
Sources in the government indicated that extending the scope of the anti-corruption law to companies and private individuals could be detrimental to the interests of business and the overall economy at a time when the government is looking to accelerate growth.
Although Indian industry is yet to comment on the issue formally , the fear is that including private entities within the purview of “public servants“ could result in misuse of the provisions. Currently , in case of corruption cases, officials and ministers are charged under PCA along with provisions of other laws, while private sector executives are charged for conspiracy and for other offences.
In fact, the government has already introduced a bill in Parliament to amend PCA as top government officials repeatedly cited some of the draconian provisions to ar gue that decision-making was hampered. Top sources in the government have in fact acknowledged that the law has been a major hurdle in pushing through decisions such as sale of residual stake in Hindustan Zinc, where the government currently holds nearly 30% stake.
The clarification on amending PCA comes a day after the government sought to calm jittery investors over the concerns expressed by the SIT on use of participatory notes (PNs), a derivative instrument used by overseas investors. “It is too early to say what view the government would take.But, it will certainly not make any knee-jerk reaction, particularly one that can have any adverse impact on investment environment,“ finance minis ter Arun Jaitley said, adding that the policy response would be a well-considered one.
On Monday , TOI had reported that the India Inc and foreign institutional investors may not be comfortable with the two recommendations made by the panel. Apart from the government, even Sebi is said to against blanket sharing of information related to beneficial ownership, fearing that there could be misuse by other agencies. “Sebi has indicated that it can share the information if there are specific issues raised by the tax department,“ said a source. Similarly , the other recommendation regarding restricting transfer of ownership of PNs has also been rejected on the grounds that it is not feasible.
