United States: Diwali: An Opportune Time For An Anti-Corruption Compliance Reminder

This piece was co-authored by:
Sherbir Panag, Partner at the Law Offices of Panag & Babu in New Delhi, India.
J.S. Bhullar, Partner at the Law Offices of Panag & Babu in New Delhi, India.

This year, India celebrates Diwali on October 19, 2017. "The Festival of Lights," as Diwali (or Deepavli) is commonly called, is celebrated across India with great aplomb, joy and, of course, delicious sweets. Diwali signifies the victory of light over darkness and, traditionally, family, friends and business acquaintances will often exchange gifts as part of the festivities. Apart from the Diwali cheer, however, the provision of gifts to Indian public servants can also present risk under the U.S. Foreign Corrupt Practices Act (FCPA) of 1977 and Indian law.

Diwali conveniently provides a fitting opportunity to review the legal framework and best practices surrounding the provision of gifts under U.S. and Indian law. The hope is that, with this guidance, your company can focus more on celebrating Diwali than worrying about compliance risks.

What's the Risk?

The exchange of business courtesies, such as providing gifts, meals, entertainment and travel, can help strengthen existing relationships, foster new opportunities and express respect and appreciation for business partners. However, companies run the risk of triggering the FCPA and Indian anti-corruption laws if their provision of business courtesies to Indian public servants crosses a line into conduct that could be characterized as bribery, or if it lends to the appearance of attempting to induce a breach of trust or impartiality on the part of the public servant.

While the U.S. Department of Justice (DOJ) and Securities Exchange Commission (SEC) have recognized that a "small gift or token of esteem is often an appropriate way for business people to display respect for each other" and "[i]tems of nominal value ... are unlikely to improperly influence an official, and, as a result, are not, without more, items that have resulted in enforcement action by DOJ or SEC," companies continue to find themselves in the FCPA-enforcement crosshairs for inappropriate or excessive gift-giving.1 Indeed, many recent FCPA enforcement actions have involved excessive gift-giving, travel accommodations and entertainment to foreign officials.2

Likewise, India's Prevention of Corruption Act (PCA) of 1988 regulates the provision of gifts or other things of value to Indian public servants. As detailed below, public servants in India are further subject to Conduct Rules established by their respective services or organizations, which set specific threshold limits as the value of business courtesies that they may accept.

Who Qualifies as a Public Servant under Indian Law?

Section 2(c) of the PCA has a fairly exhaustive definition of a public servant. A public servant includes all government officials, local authorities, judicial officers, any holder of office to perform a public duty and – worth highlighting – all employees of government-owned or government-controlled entities.

The PCA's definition of "public servant" overlaps with the FCPA's definition of a "foreign official." Thus, for compliance purposes, companies should assume public servants under Indian law would be deemed foreign officials under the FCPA.

What Regulations Govern Gift-Gifting to Indian Public Servants?

The FCPA does not set any fixed values or limits on permissible gift giving to foreign officials. Rather, in the FCPA Guide, the DOJ and SEC identify some hallmarks of appropriate gift-giving. Specifically, gifts must be of "modest value" and may be provided "when the gift is given openly and transparently, properly recorded in the giver's books and records, provided only to reflect esteem or gratitude, and permitted under local law."3

Under Indian law, the PCA prohibits "any gratification whatsoever, other than legal remuneration" when such gratification is given with the intention to (i) motivate, influence or reward a public servant to perform or forbear performance of an official act; (ii) show favor or disfavor to any persons; or (iii) render, or attempt to render, any service or disservice to a public servant. The provision of gifts or hospitality to public servants, in any amount, may thus qualify as a bribe under Indian law if provided with the intent to influence a public servant into performing (or not performing) his or her public duties. To this extent, the PCA's prohibition against giving gifts for improper purposes aligns with the FCPA's restrictions on gift-giving.

In India, every public servant is also governed by the Conduct Rules of his or her service or organization. And, in contrast to the FCPA, the Conduct Rules do establish specific threshold limits on the value of business courtesies that can be accepted by the public servant and the circumstances under which he or she can accept them. For example, the All India Services (Conduct) Rules, 1968, cover public servants in the Indian Administrative Services and the Indian Police Service; employees of the state-owned Oil and Natural Gas Corporation (ONGC) are governed by the ONGC Conduct, Discipline, and Appeal Rules, 1994 (Amended 2011); and government ministers of both the Union and the States are governed by the Code of Conduct for Ministers. These threshold values vary among the different services and organizations, based on the class and seniority of the recipient public servants, and can range broadly between 500 – 25,000 Rupees (approximately $8 – $375 U.S. dollars).

Gift-Giving Best Practices for India

When providing Diwali gifts or other business courtesies to public servants in India, companies should read the Conduct Rules alongside the applicable provisions and objectives of the PCA and the FCPA. The following bullet points offer some best practices to consider when developing gift-giving policies and procedures for companies (or subsidiaries) operating in India:

  • Companies should review the Conduct Rules applicable to the public servants who may receive gifts or other business courtesies from the company and maintain a system of tracking and communicating to employees the specific threshold limits of allowable gift-giving to these public servants.
  • Company executives and employees should receive periodic training on business courtesies/gifts and entertainment policies, and should be instructed to confirm the threshold values for each class of public servant before giving a gift or extending hospitality to him or her.
  • Threshold values of allowable gift-giving should be communicated in Indian Rupees, to ensure clarity and to avoid potential misunderstandings due to fluctuating foreign exchange rates.
  • Gifts should never be given with the expectation of, or as a reward for, the public servant taking a favorable official action that benefits the company.
  • Gifts should be of modest value (subject to the threshold limits noted above). Gifts of cash or cash equivalents (e.g., gift cards, shopping cards) should not be provided.
  • Gifts should not be provided by non-Indian companies, contracting with the Indian government, to public servants who are involved with official dealings relating to those contracts.
  • Employees should consult with legal counsel before providing gifts to public servants with whom the company has official dealings or to public servants with regulatory oversight of the company.
  • Employees should not provide gifts that have been specifically requested by public servants and should notify their supervisors of any such requests.
  • Gifts should be accurately documented and reported in the company's books and records, including identifying recipients who qualify as public servants (and, accordingly, foreign officials under the FCPA) in order to satisfy the FCPA's books and records and internal controls provisions.
  • U.S.-based compliance officers with responsibility for India should mark their calendars and follow up with their Indian counterparts on compliance procedures and process at least four-to-six weeks in advance of Diwali.
  • For additional guidance and best practices, please refer to our Anti-Bribery and Foreign Corrupt Practices Act Compliance Guide for U.S. Companies Doing Business in India.


1A Resource Guide to the U.S. Foreign Corrupt Practices Act, (the "FCPA Guide"), U.S. Department of Justice and Securities & Exchange Commission, November 14, 2012, available at: https://www.justice.gov/sites/default/files/criminal-fraud/legacy/2015/01/16/guide.pdf.

2See, e.g., Avon Products, Inc., ($8 million in gifts, cash, travel, meals and entertainment to Chinese government officials); FLIR Systems, Inc. ($40,000 in gifts and travel to Saudi Arabian officials); and NCH Corporation ($44,545 in cash, gifts, meals and entertainment to employees of China state-owned companies).

3Id., p. 15.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions