Delhi recently started enforcing new traffic regulations to reduce pollution levels. In October 2015, the city -- properly the National Capital Territory, where 10 million people live -- imposed a Green Tax on vehicles.
The Green Tax (formally known as an Economic Compensation Charge) is supposed to be collected by the toll collection agencies at 124 entry points to Delhi.
In May last year, a the toll collection contract was awarded through a tender process to SMYC Consortium (a consortium of select contractors). After some delay, at the instruction of Supreme Court of India, the contractor started collecting Green Tax in November 2015.
India Today, a respected new agency, reported the outcome of a sting operation that allegedly showed the toll collection agency allowing vehicles into Delhi at a fixed fee but without issuing receipts across multiple points of entry.
If the India Today was accurate, what implications could there be for multinational companies subject to the Green Tax or other aspects of the toll collection process?
Toll booth centers in India are traditional areas of bribe risk, raising red flags at the start for compliant organizations.
Usually, MNCs would come into contact with the toll booths indirectly -- that is, through transport and logistics contractors hired to move goods overland in India.
The country's private transportation and logistics sector is still largely unorganized and hasn't matured enough to show any real levels of antibribery compliance. There is still in India a limited history of bribe prosecution of private individuals and entities, as well as a lack of available basic information about such transporters and their reputations. So desktop or subscribed database-based due diligence tools used by large multinationals may be unproductive.
In most cases the individual bribe payments at toll booths are small amounts. But because corrupt payments are primarily to avoid taxes (tolls), the payments probably won't fall under the definition of facilitation payments under the Foreign Corrupt Practices Act and wouldn't be legally excused.
Further, contractors involved in toll collections in India act as a functionaries of the government, likely bringing them within the definition of "foreign officials." So corrupt payments to them could be prohibited by the U.S. law.
That's my legalistic view of the situation. But we should also take a wider view.
The people who live in Delhi are all hurt by the air pollution. And compliance failures at the toll booths will add to the pollution.