INTROUCTION : CORRUPTION

 corruption is a type of strategic action in which two or more actors undertake an

exchange relation by way of a successful transfer of money (material) or power
(political or status) or promoting of gene (genetic), which sidesteps legality or
morality or civility to regulate the relation. it is a strategic interaction or an art of
nonviolent negotiation. as mentioned before, social action is strategic when it is aimed
at the successful realization of personally defined goals. corruption threatens people
and their governments. it makes societies unfair. it is argued that bribery is a
negotiated rent, as the beginning of all illegalities and tyranny. there is no more
powerful engine of injustice and cruelty, for bribery destroys both faith and state. the
serious consequence of corruption thus is not only state capture but also mind capture.
corruption is universal. it is present in developed and developing countries, in the
bureaus of public or private sectors, and in nonprofit or charitable organizations. shift
from governance to management only changes its residence. corruption is not merely
in the media or in the minds of people as it is sometimes made out. but it is in the
system all across the public services, is what this study highlights. and the users and
providers of those public services know what needs to be done to address the problem
as this study has brought out. corruption plays a central role in politics thus state
objectives. rent seeking and rent giving are major obstacles in the process of planned
change of economic layers. a promise of democracy remains undone. however it does
allow selective change in economic-cycle of an individual, an individual household
and a business. corruption is usually a kept secret and therefore the behavior of the
corrupt agent near impossible to observe in real life. the character of rent-seeking has
all the qualities one can ask for such as charm and acting talent to create a mirror
image of the truth i.e., of an actor; book keeping i.e., of an accountant; to understand
and manipulate rules and regulations and ability to protect, i.e. of a custodian.
campaigns against corruption have not met with much success. it is a worrisome
development. when the majority of people operate under such a system, individuals
have no incentive to try to change it or to refrain from taking part in it.
 Causes of corruption
 1-Low Pay scales/ Wages: Most of the employees in government sector are paid low
wages and salaries. Hence some employees go for corruption for financial assistance
 2-Low Job opportunities. This is another cause of corruption. Due to lack of job
opportunities at will, there are many people who like to go for corruption mode to get the job
offer. They will be ready to pay lump sum amounts for the job offer to the higher officials or
politicians.
 3- Lack of transparency in affairs and deals: Many seat selection processes like in
education, contracts for job, employee income reports (wealth possession), etc. lack
transparency.
 4-Lack of accountability: In government there is a big trend of corruption. This is
because of lack of accountability. The employee’s on government offices do not perform to
their par excellence. If they receive 100 files to be cleared in a week they may not even clear
50 of them in that week. They tend to post-pone the clearance of the files. So those who are in
urgency of the clearance have to get them done by rewarding the officials involved in the
clearance office. This lack of accountability in government offices is chief cause of
corruption. If there is a mandate that all the files or at-least 95% of files received by
government offices for clearance are cleared in the said period than corruption can be
minimized to a large extent.
 5- Decentralization: Decentralization mixed with inequality gives rise to corruption in
young democracies at a major level. Decentralization gives rise to corrupt networks. The
distribution of powers gives scope to rent seekers for petty corruption. Majority of the petty
corruption happens due to this reason.
 6-Lack of enough powers to the judicial system and other
independent organization: Like the election commission cannot ban a politician
from contesting in case they make a mistake or do not comply with the rules during election
campaign (like distributing money to people etc.). Similarly, the judicial system has low
options to punish someone who is found to be guilty.
 We’ve looked into the history of corruption and democracy in Thailand and the reasons for
that corruption. So I’d say that the corruption post democratization is inevitable. But the
corruption starts to fall after reaching a certain level. Corruption sort of follows an inverted
‘U’ pattern with time post democratization. It starts to rise sharply but then starts to fall after
reaching an apex level (maxima).
 Taking the view of India into context, India also faced these problems post democratization.
The reasons mentioned in the paper for which young democracies face corruption apply to
India too. Rising inequality coupled with and fueled by pervasive corruption can turn into an
ever-lasting nightmare for both political leaders and ordinary citizens in new democracies,
unless some external shocks (such as institutional reforms) successfully break down this
vicious circle. But on the brighter side, India has reached that apex level of corruption from
which it starts to fall. There has been a decrease in corruption in the recent times due to
increased awareness. We are now moving towards the other side of the Kuznets’s curve. But
if we don’t find a solution to the increasing inequality our country would be left to be
doomed. The possible solutions to these problems can be left for further research.
Overview

 Taking a worldwide perspective, countries like New Zealand and the

Scandinavian countries are "models of integrity" for the world in terms of
their corruption control. And almost all of the most corrupt countries are
developing nations and many of them are in Asia. Among the Top 20
most corrupt states in the world, a half of them are in Asia; Myanmar
(Burma), Afghanistan, Kyrgyzstan, Turkmenistan, Tajikistan, Indonesia,
Bangladesh, Cambodia, Laos and Pakistan are all on the list, according to
the Worldwide Governance Indicators. And India and China are the two
"most corrupt trade nations" among the world's Top 30 exporting
countries. Corruption is a way of life across Asia. While talking about
high-level corruption in Asia's three largest countries -- India, China and
Indonesia -- there is a saying, "In India, corruption is under the table; in
China, it is over the table; and in Indonesia, corruption includes the
table." Whichever way one may wish to read the proverb, "what remains
undeniable," says Chan Akya of Asia Times, "is that corruption is more
firmly rooted in Asian culture than is commonly acknowledged." Take a
look at today's China. As John Lee of the Center for Independent Studies
in Sydney, writes, "While the Chinese state is rich and the Chinese
Communist Party powerful, civil society is weak and the vast majority of
people remain poor. According to studies by the Chinese Academy of
Social Sciences, stealing from the public purse by officials amounts to
about 2 percent of GDP each year, and it is rising." Another China
corruption watcher, Hong Kong-based Political and Economic Risk
Consultancy (PERC), painted an even gloomier picture, "Graft is endemic
in China: according to the most conservative estimates, the magnitude of
corruption ranges from 3 percent to 5 percent of annual GDP." A 5
percent of China GDP amounts to approximately $1.5 trillion Yuan ($225
billion in U.S. dollars) or one half of China's GDP annual growth . In
today's China, it is no secret that those who have power enjoy countless
"fringe benefits." A $500 per plate dinner is done in the name of official
business, a $5,000 overseas trip is made in the name of research or study
and a $50,000 government car is purchased for private use only. If
China's authoritarian one-party state has pushed corruption ahead, India's
democratic multiparty system might be worse. As Chan Akya puts it,
 "Indians do not have a choice when it comes to corruption as most of
their political parties (with the notable exception of the communists) offer
simply varying levels of corruption. The choice is therefore to vote for
the communists and risk economic stagnation, or vote for another party
and hope that the benefits of growth exceed the cost of corruption." So
there is some good news for the corrupted Chinese officials or something
they could be proud of: On the PERC's Corruption Index, China is not the
most corrupt country in the region. China scored 8.33 on a scale of 10 (10
represents the worst possible score), Indonesia topped the list with a score
of 9.33, with India's 9.3 following close behind. Even two of America's
most important allies in East Asia, South Korea and Taiwan, are not
exempt from corruption. Former South Korean president Roh Moo hyun
committed suicide in late May when he was caught up in corruption
investigations. Then in September, in what the media called a "trial of the
century,"
 Taiwan's former president Chen Shui-bian was sentenced to life in prison
for corruption. Why are Asian politicians and bureaucrats so corrupt?
Some analysts believe that in Asian culture, corruption helps "grease the
wheels" of an otherwise inefficient bureaucracy and economy. Others
argue that Asia's "corruption culture" is based on traditional Asian
emphasis on "rule of man," not "rule of law," and law is seen as
malleable, not absolute. Whether a cultural flaw or a symptom of a sick
state, however, the severity of corruption in Asian states and the failure to
contain such endemic corruption among political leaders and government
officials poses one of the most serious threats to Asia's future economic
development and political stability.

Corruption in india

 Corruption in India is a consequence of the nexus between Bureaucracy, politics and

criminals. India is now no longer considered a soft state. It has now become a
consideration state where everything can be had for a consideration. today, the
number of ministers with an honest image can be counted on fingers. at one time,
bribe was paid for getting wrong things done but now bribe is paid for getting right
things done at right time. in india, corruption attacks the fundamental values of
human dignity and political equality of the people and hence there is a pressing need
to formulate a fundamental human right to corruption-free service. the development of
a fundamental human right to a corruption-free society will be observed initially from
an international perspective so as to elevate the violation of this right to the status of
an international crime. this would provide the comparative basis to elevate the right to
corruption-free service to the status of a fundamental right within the framework of
the indian constitution. one of the definitions of the term corruption is "giving
something to someone with power so that he will abuse his power and act favouring
the giver". another definition is "the offering, giving, soliciting or acceptance of an
inducement or reward, which may influence the action of any person". it includes
bribery and extortion which involve at least two parties, and other types of
malfeasance that a public official can commit alone, including fraud and
embezzlement. the appropriation of public assets for private use and the
embezzlement of public funds by politicians and bureaucrats have such clear and
direct adverse impact on india's economic development that their costs do not warrant
any complex economic analysis. there are many myths about corruption, which have
to be exploded if we really want to combat it. some of these myths are: corruption is a
way of life and nothing can be done about it. only people from underdeveloped or
developing countries are prone to corruption. we will have to guard against all these
crude fallacies while planning measures to fight corruption as with many developing
nations, corruption is widespread in india. india is ranked 85 out of a 179 countries
in transparency international's corruption perceptions index, although its score has
improved consistently from 2.7 in 2002 to 3.4 in 2008.corruption has taken the role of
a pervasive aspect of indian politics and bureaucracy. the size of india’s parallel
economy at 40% of gdp does provide fertile ground for corruption. lack of deterrence
against corruption and importance to wealth begotten by whatever means enormously
promoted corruption in india. more important, corruption in india flows from above
from the political class under covers like party and election funds, and senior
bureaucrats who are seld investigated or punished, either through conspiratorial
silence or through conspiratorial legislative manipulations. further, political patronage
gave an aura of invincibility and respectability to corruption and deprived it of all
moral and legal fears. the central bureau of investigation in the centre and criminal
investigation departments in the states and union territories have become political
tools in the hands of the ruling party and grossly politicised the criminal investigation
process in the country. what is worse, the conviction rate is hardly 6% in criminal
cases. corruption flourishes in india because it is perceived to be a low risk and high
profit business. lack of transparency in administration provides an opportunity for
public servants to mislead citizens and extract bribes. it is only the supreme court in
india seems waging a war against corruption. the government of india converted the
central vigilance commission into a statutory body through an executive order in 1998
on the directive of the supreme court. it rendered the cvc at least statutorily
independent of the political and bureaucratic set-ups. indian administration is tainted
with scandals. india is among 55 of the 106 countries where corruption is rampant,
according to the corruption perception index 2004 report released by transparency
international india. corruption in india leads to promotion not prison. it is very
difficult to catch big sharks. corruption in india has wings not wheels. as nation
grows, the corrupt also grow to invent new methods of cheating the government and
public. the significance of corruption as a factor that adversely affects the growth of a
country is being increasingly recognized. corruption, in the words of indira gandhi, is
a world phenomenon. it exists in developed countries too. corruption is
institutionalised as a part of the democratic process in the usa as lobbying and public
relations activities and the country prides in its mushrooming lobbying and public
 RANKING OF STATES As per the composite ranking of states on petty
corruption, involving common citizen And in the context of eleven public services, Kerala
stands out as the least corrupt State In India. Bihar, on the other hand is the most corrupt
State. In fact, on all parameters and in the context of all the eleven services, Bihar stands out
as the most corrupt State. Himachal Pradesh is less corrupt – even compared to States like
Tamil Nadu, Maharashtra or Gujarat. Madhya Pradesh, Karnataka, Rajasthan and Assam are
Afflicted with the problem and score high on the index.
 States highlights
 Kerala: All 11 public services considered for the study are ranked as the least corrupt in the
country.
 Himachal Pradesh: Most services in the State are ranked as relatively lower corrupt in the
country
 Gujarat: Overall the State is ranked as less corrupt in comparison to other States. However
certain services like Education, Land Administration and Judiciary are relatively ranked as
more corrupt in comparison to others services in the State.
 Andhra Pradesh: Govt Hospital and Water Supply services are ranked more corrupt in
comparison to other services in the State . Maharashtra: Municipal services in the State rank
among the top five corrupt in the country.
 Chhattisgarh: On the corruption index all the services in the State are much better ranked
than the parent State Madhya Pradesh
 Punjab: PDS, Police, Judiciary and Municipal services are ranked more corrupt in
comparison to other services in the State.
 West Bengal: Water Supply service in the State is ranked as the most corrupt in the country.
 Orissa: Judiciary ranks among the top four corrupt in the country
 Uttar Pradesh: Electricity, Schools and Income Tax figure high in the corruption rankings.
 Delhi: PDS in Delhi is ranked as the second most corrupt in the country
 Tamil Nadu: While over all the State ranks 12th on the Corruption Index, Schools, Hospital,
Income Tax and Municipalities rank among the top corrupt in the country. This is surprising
given that the State has one of the best health infrastructure and also ranks quite high on the
Education Development Index.
 Haryana: Schools, Land Administration and Police figure among the top corrupt in the
country.
 Jharkhand: On the corruption index all the services in the State are much better ranked than
the parent State Bihar.
 Assam: Police is the most corrupt in the country. Electricity figures among the top
corrupt.
 Rajasthan: Judiciary ranks among the less corrupt in the country
 Karnataka: The state ranks fourth on the corruption index because key services like
Income Tax, Judiciary, Municipalities & RFI figure among the top corrupt services in
the country. However, Electricity & Schools rank among the least corrupt in the
country.
 Madhya Pradesh: Despite initiating reforms in service delivery, the State still ranks
as third most corrupt among States included in the survey. Only Municipal services
are ranked relatively better than other services.
 J&K: Except Hospital & RFI, most other services rank among most corrupt in the
country. Not surprising that it is the second most corrupt State.
 Bihar: All the services are ranked among the most corrupt in the country.
Corruption in Politics

 The extensive role of the Indian state in providing services and promoting economic
development has always created the opportunity for using public resources for private
benefit. As government regulation of business was extended in the 1960s and
corporate donations were banned in 1969, trading economic favors for under-the-table
contributions to political parties became an increasingly widespread political practice.
During the 1980s and 1990s, corruption became associated with the occupants of the
highest echelons of India's political system. Rajiv Gandhi's government was rocked
by scandals, as was the government of P.V. Narasimha Rao. Politicians have become
so closely identified with corruption in the public eye that aTimes of Indiapoll of
1,554 adults in six metropolitan cities found that 98 percent of the public is convinced
that politicians and ministers are corrupt, with 85 percent observing that corruption is
on the increase.
 The prominence of political corruption in India in the 1990s is hardly unique to India.
Other countries also have experienced corruption that has rocked their political
systems. What is remarkable about India is the persistent anti-incumbent sentiment
among its electorate. Since Indira's victory in her 1971 "garibi hatao " election, only
one ruling party has been reelected to power in the central government. In an
important sense, the exception proves the rule because the Congress (I) won
reelection in 1984 in no small measure because the electorate saw in Rajiv Gandhi a
"Mr. Clean" who would lead a new generation of politicians in cleansing the political
system. Antiincumbent sentiment is just as strong at the state level, where the ruling
parties of all political persuasions in India's major states lost eleven of thirteen
legislative assembly elections held from 1991 through spring 1995. And few
governments which has done very good for their states like Bihar and Andhra Pradesh
have done excellent in parliament election in 2009 election. Still India has most
number of MPs, MLAs, and ministers with criminal record.
Major Corruption Scandals in India

 Bombay Stock Exchange Manipulation & Fraud by

Harshad Mehta (1992)

 In April 1992, the Indian stock market crashed, and Harshad Mehta, the person who
was all along considered as the architect of the Bull Run was blamed for the crash. It
transpired that he had manipulated the Indian banking systems to siphon off the funds
from the banking system, and used the liquidity to build large positions in a select
group of stocks. When the scam broke out, he was called upon by the banks and the
financial institutions to return the funds, which in turn set into motion a chain
reaction, necessitating liquidating and exiting from the positions which he had built in
various stocks. The panic reaction ensued, and the stock market reacted and crashed
within days. He was arrested on June 5, 1992 for his role in the scam.

Fodder Scamin Bihar (1996)

 TheFodder Scam was acorruption scandal that involved the alleged embezzlement of
about Rs.950 crore (US$195.7 million)from the governmenttreasuryof theIndianstate
ofBihar. The alleged theft spanned many years, was engaged in by many Bihar state
government administrative and elected officials across multiple administrations (run
by opposing political parties), and involved the fabrication of "vast herds of fictitious
livestock" for which fodder, medicines andanimal husbandryequipment was
supposedly procured.

The Jessica Lall murder case (1999)

 Jessica Lall(1965-1999) was a model in New Delhi, who was working as a celebrity
barmaid at a crowded socialite party when she was shot dead on April 29,1999.
Dozens of witnesses pointed to Siddharth Vashisht, a.k.a. Manu Sharma, the son
ofVenod Sharma, a wealthy Congress politician inHaryana, as the murderer. In the
ensuing trial over seven years, Manu Sharma and a number of others were acquitted
on February 21, 2006.
 Following intense media and public pressure, the prosecution appealed and the Delhi
High Court conducted proceedings on a fast track with daily hearings over 25 days.
He was sentenced to life imprisonment on December 20, 2006.

Tehelka Scandal(2001)
 In 2001 a stunning exposé by aNew Delhinews portal claimed the jobs ofIndia’s
defence minister, senior party functionaries of the ruling coalition, and at least five
high-ranking members ofthe armed forces. The exposé, which appeared in March on
 Tehelka.com, included videotapes showing senior government officials accepting
money in exchange for defence

Telgiscandal (2003)

 Telgi had appointed 300 people as agents who sold the fakes to bulk purchasers,
including banks, FIs, insurance companies, and share-broking firms. His monthly
profits have been estimated as being in the neighborhood of Rs 202 crore (slightly
more than US $40 million).
 The Telgi case brought corruption in theKarnataka police force to light, causing a
national scandal in India. On 17 January 2006, Telgi and several associates were
sentenced to ten years'rigorous imprisonment.

The Cash-for-votes scandal (2008)

 Notes-for-vote or cash-for-votes scandalis an alleged scandal in which theUnited

Progressive Alliance, the majority-holding parliamentary-party alliance ofIndia,
openly bribed IndianMPsin cash or currency-notes to the tune of multi-millions to
survive its very firstconfidence voteon22 July2008in theLok Sabhaafter
theCommunist Party of India ledLeft Frontwithdrew support from the government
over India approaching theIAEAforIndo-US nuclear deal.

The Satyam Scandal (2009)

 On 7 January 2009, company Chairman Ramalinga Raju resigned after notifying
board members and theSecurities and Exchange Board of India(SEBI) that Satyam's
accounts had been falsified.
 Raju confessed that Satyam's balance sheet of 30 September 2008 contained inflated
figures for cash and bank balances, an accrued interest ofRs.376 crore (US$77.46
million)which was non-existent, an overstated debtors' position and an understated
liability ofRs.1,230 crore (US$253.38 million)on account of funds was arranged by
himself. Satyam's shares fell to 11.50 rupees on 10 January 2009, their lowest level
since March1998, compared to a high of 544 rupees in 2008.
Corruption and its impact on governance in India:-

 Corruption affects India at all levels of governmental decision-making and in the

distribution of state largesse. India is ranked 72nd out of 91 countries in the
Corruption Perception Index, 2001, prepared by Transparency International (TI).
Corruption in India not only poses a significant danger to the quality of governance,
but also threatens in an accelerated manner the very foundations of its democracy and
statehood. The recent revelations of corrupt practices in defence purchases and related
contracts not only tend to undermine the security of the Indian state, but also
fundamentally shake the people's trust and belief in the Government of India and its
institutions.
 The mid-1960s are perceived to be the great divide in the history of governance
administration in India. It paved the way for the blurring of the Gandhian and
 Nehruvian era of principled politics and the emergence of a new system of politics
that began to tolerate and even encourage dishonesty and corruption. The scams and
scandals of the 1990s revealed that among the persons accused of corruption were
former Prime Ministers, Chief Ministers, Governors and even members of the
judiciary. India's experience with corruption has shown that laws, rules, regulations,
procedures and methods of transaction of government business, however sound and
excellent they are, cannot by themselves ensure effective and transparent
administration if the political and administrative leadership that is entrusted with their
enforcement fails to do so and abuses its powers for personal gain (Sunil Sondhi,
2000).
 Gunnar Myrdal has described Indian society as a "soft society". According to him, a
soft society is one that does not have the political will to enact laws that are necessary
for its progress and development and/or does not possess the political will to
implement the laws, even when made, and one where there is no discipline. He has
stressed that if there is no discipline in society, no real or meaningful development or
progress is possible. Corruption and indiscipline survive on each other's willingness to
accommodate, tolerate and provide encouragement. Corruption affects governance in
a significant manner and it is anti-poor. For instance, a substantial portion of
foodgrains, sugar and kerosene meant for the public distribution system (PDS) and for
welfare schemes for the poor, including the Scheduled Castes (S.C.s) and the
Scheduled Tribes (S.T.s), goes into the black market. Hardly 16 per cent of the funds
meant for the S.T.s and the S.C.s reach them (Consultation Paper on Probity in
Governance, National Commission to Review the Working of the Constitution, 2001).
The rest are misappropriated by members of the political and official classes and
unscrupulous dealers and businessmen.
 Like other social evils, the problem of corruption brings out numerous responses. As a
lawyer, my response would inevitably involve changes in the laws and in this case an
amendment to the Constitution. While I propose this amendment, I am mindful of the
 inherent weaknesses of any law or legal response if the enforcement mechanism is
weak - that would only amount to paying lip service to the law. This may be the case
with several other laws, mostly criminal laws that are already in place to punish the
corrupt, or for that matter the case of anti-terrorism laws, which are available in plenty
even as the present government enacted the Prevention of Terrorism Act. Corruption
has flourished in India because of the drawbacks of the criminal justice system. We
see more and more examples of acquittals in corruption cases. Several corruption-
related cases filed in India in the recent past were poorly founded upon, were backed
by incomplete and inefficient investigation, and were followed by delayed trials that
resulted in morally ill-deserved but legally inevitable acquittals

 Like other social evils, the problem of corruption brings out numerous responses. As a
lawyer, my response would inevitably involve changes in the laws and in this case an
amendment to the Constitution. While I propose this amendment, I am mindful of the
inherent weaknesses of any law or legal response if the enforcement mechanism is
weak - that would only amount to paying lip service to the law. This may be the case
with several other laws, mostly criminal laws that are already in place to punish the
corrupt, or for that matter the case of anti-terrorism laws, which are available in plenty
even as the present government enacted the Prevention of Terrorism Act. Corruption
has flourished in India because of the drawbacks of the criminal justice system. We
see more and more examples of acquittals in corruption cases. Several corruption-
related cases filed in India in the recent past were poorly founded upon, were backed
by incomplete and inefficient investigation, and were followed by delayed trials that
resulted in morally ill-deserved but legally inevitable acquittals.
Corruption laws in India

Public servants in India can be penalized for corruption under the Indian Penal Code, 1860 and the
Prevention of Corruption Act, 1988. The Benami Transactions (Prohibition) Act, 1988 prohibits
benami transactions. The Prevention of Money Laundering Act, 2002 penalises public servants for the
offence of money laundering. India is also a signatory (not ratified) to the UN Convention against
Corruption since 2005. The Convention covers a wide range of acts of corruption and also proposes
certain preventive policies.

Key Features of the Acts related to corruption

Indian Penal Code, 1860:
• The IPC defines “public servant” as a government employee, officers in the military, navy or air
force; police, judges, officers of Court of Justice, and any local authority established by a central or
state Act.

• Section 169 pertains to a public servant unlawfully buying or bidding for property. The public
servant shall be punished with imprisonment of upto two years or with fine or both. If the property is
purchased, it shall be confiscated.

• Section 409 pertains to criminal breach of trust by a public servant. The public servant shall be
punished with life imprisonment or with imprisonment of upto 10 years and a fine.

The Prevention of Corruption Act, 1988

• In addition to the categories included in the IPC, the definition of “public servant” includes office
bearers of cooperative societies receiving financial aid from the government, employees of
universities, Public Service Commission and banks.

• If a public servant takes gratification other than his legal remuneration in respect of an official act or
to influence public servants is liable to minimum punishment of six months and maximum
punishment of five years and fine. The Act also penalizes a public servant for taking gratification to
influence the public by illegal means and for exercising his personal influence with a public servant.

• If a public servant accepts a valuable thing without paying for it or paying inadequately from a
person with whom he is involved in a business transaction in his official capacity, he shall be
penalized with minimum punishment of six months and maximum punishment of five years and fine.
• It is necessary to obtain prior sanction from the central or state government in order to prosecute a
public servant.

The Benami Transactions (Prohibition) Act, 1988

• The Act prohibits any benami transaction (purchase of property in false name of another person who
does not pay for the property) except when a person purchases property in his wife’s or unmarried
daughter’s name.
• Any person who enters into a benami transaction shall be punishable with imprisonment of upto
three years and/or a fine.

• All properties that are held to be benami can be acquired by a prescribed authority and no money
shall be paid for such acquisition.
The Prevention of Money Laundering Act, 2002
• The Act states that an offence of money laundering has been committed if a person is a party to any
process connected with the proceeds of crime and projects such proceeds as untainted property.
“Proceeds of crime” means any property obtained by a person as a result of criminal activity related to
certain offences listed in the schedule to the Act. A person can be charged with the offence of money
laundering only if he has been charged with committing a scheduled offence

. • The penalty for committing the offence of money laundering is rigorous imprisonment for three to
seven years and a fine of upto Rs 5 lakh. If a person is convicted of an offence under the Narcotics
Drugs and Psychotropic Substances Act, 1985 the term of imprisonment can extend upto 10 years.

• The Adjudicating Authority, appointed by the central government, shall decide whether any of the
property attached or seized is involved in money laundering. An Appellate Tribunal shall hear appeals
against the orders of the Adjudicating Authority and any other authority under the Act.

• Every banking company, financial institution and intermediary shall maintain a record of all
transactions of a specified nature and value, and verify and maintain records of all its customers, and
furnish such information to the specified authorities.

Process followed to investigate and prosecute corrupt public servants

• The three main authorities involved in inquiring, investigating and prosecuting corruption cases are
the Central Vigilance Commission (CVC), the Central Bureau of Investigation (CBI) and the state
Anti-Corruption Bureau (ACB). Cases related to money laundering by public servants are investigated
and prosecuted by the Directorate of Enforcement and the Financial Intelligence Unit, which are
under the Ministry of Finance

. • The CBI and state ACBs investigate cases related to corruption under the Prevention of Corruption
Act, 1988 and the Indian Penal Code, 1860. The CBI’s jurisdiction is the central government and
Union Territories while the state ACBs investigates cases within the states. States can refer cases to
the CBI.

• The CVC is a statutory body that supervises corruption cases in government departments. The CBI
is under its supervision. The CVC can refer cases either to the Central Vigilance Officer (CVO) in
each department or to the CBI. The CVC or the CVO recommends the action to be taken against a
public servant but the decision to take any disciplinary action against a civil servant rests on the
department authority.

• Prosecution can be initiated by an investigating agency only after it has the prior sanction of the
central or state government. Government appointed prosecutors undertake the prosecution proceeding
in the courts. • All cases under the Prevention of Corruption Act, 1988 are tried by Special Judges
who are appointed by the central or state government.
REFERENCE
http://www.corruptie.org/en/corruption/what-is-corruption/

https://www.u4.no/topics/anti-corruption-basics/basics

https://www.intechopen.com/books/trade-and-global-market/corruption-causes-and-consequences

https://www.transparency.org/what-is-corruption