What happened?
The Government of Rajasthan, on July 24, 2023, passed the Rajasthan Platform Based Gig Workers (Registration and Welfare) Act, 2023 (“Act”). With this initiative, Rajasthan has become the first state in India to pass a legislation, which regulates the engagement of gig workers and aims to provide social security and other benefits to platform-based gig workers.
Background
As on date there is no legislation governing the rights of the people engaged in the gig economy. While at the Central level, the Code on Social Security, 2022, recognizes gig and platform workers as a separate class of workers and seeks to extend a variety of benefits to them, the same is yet to be brought in force.
Key Aspects and Implications
The Act defines ‘gig workers’ and regulates the conduct of the ‘aggregators’ (digital intermediaries connecting buyers and sellers) and ‘primary employers’ (individuals or organisations engaging platform-based gig workers).
Key aspects of the Act are:
• Registration: All gig workers and aggregators in the state will be registered to provide gig workers with social security benefits and address their concerns.
• Welfare Board: The state will establish “The Rajasthan Platform Based Gig Workers Welfare Board,” comprising two members each from gig workers and aggregators, along with two civil servants. This board will oversee the registration process and create a social security fund for gig workers.
• Unique ID: The state government will assign a unique ID to every gig worker for efficient record-keeping.
• Welfare Fee: Aggregators will pay a fee based on the value of each transaction related to gig workers, which will contribute to the “Platform Based Gig Workers Fund and Welfare Fee.”
• Social Security Schemes: Gig workers will gain access to general and specific social security schemes.
• Grievance Redressal: The Act ensures gig workers can voice their grievances and participate in decisions related to their welfare through representation on the board.
• Penalties for Non-Compliance: Aggregators who fail to pay the welfare fee on time may face fines ranging from ₹5 lakhs for the first offence to ₹50 lakhs for subsequent violations.
• Welfare and Development Fund: A ₹200 crore fund will be created to support gig workers’ welfare and development.
The United States Department of Justice announced a series of new Foreign Corrupt Practices Act (FCPA)-related charges, resulting in hefty penalties and fines amounting to USD 91 million for various companies.
A research and consulting services company was fined over $2.45 million for violating various provisions of FCPA in connection with a corrupt arrangement with a South African consulting firm to obtain and retain contracts from the South African Revenue Service. (5/26/2023)
A medical device manufacturer faced a staggering $62 million penalty for violating the books and records and internal accounting controls provisions of the FCPA through its subsidiaries in China. Employees in Chinese subsidiaries sought to improperly influence government hospital officials to secure tenders through questionable tactics. (05/11/23)
An oil services company settled for approximately $8 million after being charged with FCPA violations related to payments made by its subsidiaries to an Angolan government official through a purported sales agent. (4/26/23)
A Europe based gaming giant paid a $4 million civil penalty for violating the books and records and internal accounting control provisions of FCPA in connection with payments to consultants in Russia. The payments were linked to the company’s operations and efforts to have poker legalized. (03/06/23)
A global mining company agreed to a $15 million civil penalty for violating the FCPA’s provisions. The charges were related to payment of $10.5 made to a consultant to retain mining rights to certain mining blocks by offering or paying money to benefit government officials. (03/06/23)
Key Takeaway
The above charges are indicative that the FCPA-related risks continue to pose a serious compliance challenge to U.S-based businesses that operate in high-corruption-risk countries.
How DMD can help?
The professionals at DMD advocates help you by conducting compliance assessments, risk analysis, and developing tailored policies and procedures to ensure FCPA compliance. It is imperative to provide employee training, implement due diligence on third parties, review internal controls, and establish monitoring systems. Staying updated on regulatory changes, the firm can help companies maintain high governance standards and navigate international business confidently.
In a research paper published in Harvard University’s Quarterly Journal of Economics in February 2003, researchers shared results of a nine-year study (1990-1999) conducted on 1,500 large companies. The study analyzed these companies based on 24 governance-related parameters and ranked them on a governance index (G). The results revealed that companies with higher G scores (Democracy portfolio) consistently outperformed companies with lower G scores (Dictatorship Portfolio) in terms of overall corporate performance.
The research found that the Democracy Portfolio outperformed the Dictatorship Portfolio by 8.5% per year. A $1 investment in a Dictatorship Portfolio would have grown to $3.39 over a period of 9 years which was a 14% annualized return. In contrast, a $1 investment in the Democracy Portfolio increased to $7.07 over the same period yielding a 23% annualized return, a difference of 9%. The Democracy Portfolio also had a better valuation than the Dictatorship Portfolio. This finding was also consistent with vast study conducted elsewhere that has found a positive correlation between corporate governance and company value.
How DMD Advocates can help?
Determining the adequacy of the corporate governance provisions can be a daunting task for any company as these provisions are usually very specific to a business and industry. Governance professionals can assess the current maturity level of a company’s corporate governance framework and recommend a desired state of maturity and an implementation plan to successfully get there.
Reach out to our corporate governance experts, Rashi Dhir & Varun Mowar for assessing adequacy of your company’s corporate governance framework.
What happened?
JPMorgan Chase sued Charlie Javice, Founder and CEO of Frank, a college financial aid start-up acquired two years ago for $175 million, for fabricating its scale of operations and number of users. The lawsuit claims that Charlie Javice duped the bank into believing Frank had more than 4 million customers. The startup had fewer than 300,000 customers, as stated by JPMorgan in its suit. The bank discovered the discrepancy when 70% of emails sent to a batch of about 400,000 Frank customers bounced back.
Why did this happen?
Insufficient forensic due diligence during pre-investment stage.
How this could have been avoided?
Conducting thorough forensic due diligence on the financial and operational data – including cross-checking user data with customer data or implementing authenticity checks on the user data.
Key Takeaway
It is imperative to conduct sophisticated forensic data analytics procedures on operational and financial data to ascertain whether data has been “massaged” or falsified. Data analytics procedures are adept at identifying trends and patterns that indicate falsification, regardless of how deep-rooted or organised data manipulation is.
How DMD can help?
DMD has an innovative Investigations and Governance Advisory practice. Our team has expertise in providing practical & in-depth analysis of complex financial transactions, conducting investigations, implementing and monitoring compliance programs, preparing comprehensive reports, and assisting in litigation and arbitration matters.