As US authorities hunt down corrupt practices, the risk posed by third parties takes centre stage. Vasu Muthyala and Nan Wang analyse what has changed and how to build a defence
The world’s third-largest economy, India has maintained actual and projected annual growth of 7.5% for 2015 and 2016. Its coming goods and services tax – the biggest makeover of its tax system – will further contribute to these strong growth figures. The country’s investment climate, as Prime Minister Narendra Modi proclaims, has become more welcoming for foreign investors and multinational corporations (MNCs) that are looking for greener pastures as the rest of the global landscape turns brown.
Despite this, India remains a challenging market for MNCs. Government officials who expect payments to perform and middlemen who serve as fixers and facilitators raise concerns for even the most seasoned compliance officers in India.
For MNCs operating in India, the risk of corruption takes on great importance given the ever-increasing enforcement of the US Foreign Corrupt Practices Act (FCPA). The FCPA is a criminal statute that extends to US individuals, entities and issuers of US securities and prohibits them from paying bribes to foreign government officials and political figures for the purpose of obtaining or retaining business.