US fines Dow Chemicals for bribery by Indian subsidiary
on february 13, 2007, Dow Chemical Co was fined us $325,000 by the United States Securities and Exchange Commission (sec) on bribery charges against one of its Indian subsidiaries, De-Nocil. Dow wholly owns De-Nocil, which was rechristened Dow AgroSciences India Pvt Ltd on January 13, 2005. According to sec, De-Nocil was found guilty of making improper payments of us $200,000 to officials in India in 1996-2001 through contractors and unrelated companies.
Dow, the top us chemical maker, with annual sales of us $49 billion, paid the fine for violating the Foreign Corrupt Practices Act, without admitting or denying wrongdoing, sec said. Dow also denied knowledge or approval for these payments.
De-Nocil was tying to circumvent the registration process for three pesticides Pride (NI-25), Nurelle-D, and Dursban. First, nearly $32,000 was paid in two instalments to a senior official of the Central Insecticides Board (cib), the agency responsible for registering and monitoring pesticides. The official was part of the registration committee and influenced its decision in favour of the company. In 1996, a fund was created by accumulating and siphoning off money to pay the cib official through contractors, by adding fictitious "incidental charges' on its bills.
Dow claimed the demand for bribes came from the official and once he left cib in 2000, the demand for bribes stopped. According to Dow, the official in question had the power to determine whether and when agricultural chemical products would be registered and would refuse or delay registrations unless he received payments. A commercial vice-president of De-Nocil drew up a plan for bribing officials to facilitate the registration of De-Nocil's products which then became part of De-Nocil's management practices.
Cloaked in secrecy The name of the official has not been made public either by Dow or the Indian government, but sec files indicate that he left the committee in 2000. Garry Hamlin, a spokesperson for Dow AgroSciences, refused to divulge the official's name even though he had the information. Hamlin said "the name of the official and other information regarding this case has been given to the Indian government and Dow has also agreed to fully participate in any investigation led by the Indian government'.
Down To Earth (DTE) asked the present member secretary of the registration committee, Sandhya Kulshrestha, about its composition from 1996 to 2000 and who left in 2000. "It is very difficult to say. I will have the check the records of that time which I am currently unwilling to do as I am very busy,' she said, adding that she had no idea who the impugned official was. dte has been given to understand that it may be possible to identify the officer who was bribed. If that is indeed the case, it is imperative in the public interest that the government makes the disclosure so that action can be taken publicly to prevent a recurrence of such malpractice, says a senior advocate.
"The person who handles the secretariat and all the administrative functions in the registration committee is the member secretary,' says R L Rajak, former plant protection advisor (ppa) to the government of India. He held the post till 1999, regularly attending committee meetings between 1996 and 1999."If the member secretary and the sectoral experts in the committee get hand-in-glove with industry then that particular industry can get favours,' Rajak adds.
The current ppa, P S Chandurkar, knows of the case but he doesn't have all the details. He read it in the news. The staff of N B Singh, agriculture commissioner and current head of the committee refused access to him. "All agenda and other details are finalised by the member secretary. Even if he knows anything he will not answer your questions,' an aide said.
cib and the registration committee have been notorious for their corruption. dte had reported in July 2002 that "corruption in cib is rampant'. It had revealed the modus operandi. The Dow indictment confirms their existence. "Companies are wary of directly approaching cib officials, so they use the services of a broker. Bribing of junior and senior officials at cib takes place through these designated agents,' says the dte report (see