2012 CULTURE OF CORRUPTION IN INDIA

PUBLIC WORLD PRESS

2012SatishchanderYadav
satishmjk@gmail.com

CULTURE OF CORRUPTION IN INDIA

2012

SATISHCHANDER SSM BA.DED.BED.MBA (HR) ALL READERS

Dear, Im writing in response to my book. I have over life experience as a writer, and although I do not have the associate writing skills youre looking for, I have strong technical skills and proficiency in book writing. Id like the opportunity to tell you more about my work experience and how my skill set could contribute to the successful day-to-day running of your teaching. Id be happy to supply strong references at your request. I look forward to discussing the position with you. Sincerely, SATISHCHANDER YADAV

SATISHCHANDER

CULTURE OF CORRUPTION IN INDIA

About the Author

Satishchander lives in Mohindergarh Town, Haryana. He currently teaches English at the Govt. School, and spends much of his time writing and listening to music. His passions include education, literature, development, creativity and spirituality. He is very grateful and blessed that you have read the book improve your English, and wishes you amazing levels of English, joy, power, knowledge and connection in your life. SATISHCHANDER B.A DED.BED MBA (HR) satishmjk@gmail.com

SATISHCHANDER

CULTURE OF CORRUPTION IN INDIA

Corruption and hypocrisy ought not to be inevitable products of democracy, as they undoubtedly are today

-Mahatma Gandhi

"Ethical and responsible behaviour needs to become the cornerstone of corporate behaviour" -ManMohan Singh

SATISHCHANDER

CULTURE OF CORRUPTION IN INDIA

CULTURE OF CORRUPTION IN INDIA

SATISHCHANDER

SATISHCHANDER

CULTURE OF CORRUPTION IN INDIA

CONTENTS
INTRODUCTION PAGE 1) Corruption 2) Who is Responsible? 3) Is Corruption a Global Typology? 4) The Donors Interest in Tackling Corruption 5) Prevention an Important Tool in Fighting Corruption? 6) Underlying Principles Of This New Governance Strategy 7) Prevention And Integrity Tools And Activities 8) More quests Than Answers 9) Challenges Ahead 10) Conclusion 11) Hypotheses of Corruption CULTURE OF CORRUPTION IN INDIA 12) Corruption in India 13) Corruption and Democracy 14) Effects on Politics, Administration, And Institutions CAUSES 15) Hawala 16) Money Laundering 17) Slush Fund 18) Mauritius Route 19) Rent-Seeking 20) Licence Raj EFFECTS 21) Black Money 22) Scandals 23) Slow Progress 24) Poverty CRIMES 25) Mafia Raj 26) Child Labour 27) Rape 28) Honor Killing
SATISHCHANDER

5 18 19 20 21 23 33 45 51 53 55

58 89 92

95 100 104 104 105 108

111 112 117 120

129 133 135 144

CULTURE OF CORRUPTION IN INDIA

29) Bankruptcy 30) Chit Fund Misused 31) Human Trafficking PREVENTION &REDUCTION TOOLS (ACTS) 32) Transparency International 33) UNOAC 34) RTI Acts 35) Ombudsmen 36) Whistleblowers 37) Alertness 38) Jan Lokpal Bill 39) Civil Society 40) Prevention of Corruption Act 1988 41) Money-Laundering Act, 2002 42) Vohra Report 43) 2011 Indian Anti-Corruption Movement 44) Present Anti-Corruption System & Watch dog agencies 45) E-Governance

148 151 152

156 159 160 167 170 174 175 178 179 182 183 194 198 214

SATISHCHANDER

A. INTRODUCTION 1. CORRUPTION
The word of corruption means the destruction, ruining or the spoiling of a society or a nation. A corrupt society stops valuing integrity, virtue or moral principles. It changes for the worse. Such a society begins to decay and sets itself on the road to self-destruction. Corruption is an old age phenomena. Selfishness and greed are two main cause of corruption. Political corruption is the abuse of their power by the state official for their unlawful private gain.

Over 1500 year ago the mighty Roman Empire disintegrated when its rulers became corrupt and selfish. Nations having tyrannical powerful ruling elite that refuses to punish the corrupt within it, face menace of corruption. A corrupt society is characterized by immorality and lack of fear and respect for law. Corruption cannot be divorced from the economics. Inequality of wealth, low wages and salaries are some of the economics cause of corruption. Employees often strike corrupt deals to supplement their meagre income. A license-permit regime or scarcity of basic commodities promotes corruption. In societies where traditional, religious, ethical teaching and standards of morality are weak, corruption often thrives. These values should revive among their congregation and subjects and in this effort religious leaders and chiefs have an important role to play. Of late, the media has carried out of large number of stories of prophets who misuse offerings and traditional healers who abuse penitents.

The judiciary, the law enforcement agencies and the education sector have an important role to play the corruption by changing prevailing laws, punishments and the education system. Corruption has prevailed in all form of government. Various forms of corruption include extortion, graft, bribery, cronyism, nepotism, embezzlement and patronage. Corruption allows criminal activities such as money laundering, extortion drug trafficking to thrive. At times, bribes are given to avoid punishment .For some people, being corrupt are a way to get what they desire. In societies which ignore corruption, it becomes a way of life. People getting very low wages feel they have to demand bribes in order to lead decent lives. But they do not realize that corruption cause suffering to other.

The consequences of corruption for social and economic development are bad. Corruptions hinder economic growth and deter investment. The impact of development assistance of reduced and natural resources are overexploited causing further harm to a countrys environment assets. Resources are diverted from the sectors such as education and heath to less important sectors or personal enrichment. The rule of eroded and the people no longer respect or trust the state. A few people manage to get rich at the expense of society as a whole, while the poor suffer terribly .In the long run unchecked corruption pushes more and more people into poverty which often destabilizes a society. Societies can fight corruption by letting the state know that they have had enough of it. The authorities move very quickly when the press or the television highlights instances of corruption. Education spreads political add social awareness and are some factor that help curb the menace of corruption.

Definition of corruption

Corruption is defined by the World Bank & transparency international (TI) of public office for private gain.

as the misuse

This definition considers the cause of corruption in public authority and its abuse, and links corruption to the state, its activities, state intervention on the market and the existence of the public sector. In other words, the use of this definition excludes the possibility of corruption in the private sector, and it focuses exclusively on corruption in the public sector. This definition is consistent with the behalf of Noble Prize laureate Gary Becker that If we abolish the state, we abolish corruption.

What is corruption? There are several answers to this question. Analytically speaking, the most promising answer is the one made by Vito Tanzi: Corruption is the intentional noncompliance with the arms-length principle aimed at deriving some advantage for oneself or for related individuals from this behaviour. There are three basic elements of this definition. The first element deals with the arms-length principle as it requires that personal or other relationships should play no part in the economic decisions that involve more than one party. Equal treatment of all economic agents is essential for a well-working market economy. Bias towards particular economic agents definitely violates the arms-length principle and fulfils a necessary condition for corruption. If there is no bias, there is no corruption.
SATISHCHANDER

There are two additional necessary conditions for corruption, or rather conditions that must be fulfilled for observed bias (non-compliance with the arms-length principle) to be specified as corruption. The first condition is that the bias must be intentional accidental violation of the arms-length principle because of, for example, imperfect information, does not represent corruption. Second, there must be some advantage for the individual who commits a violation of the arms-length principle; otherwise, there is no corruption.

Violating impartiality may sometimes represent racism, but it is not corruption. Deriving some advantage, or seizing some benefit for the corrupted economic agent, can have different forms. It is a rather widespread notion that corruption is receiving money (this form of corruption is most often called bribery), but similar gain can imply expensive gifts or various favours returned. Giving expensive jewellery to the wife of the person who violated the arms length principle and providing a well-paid job (with little work) for his son is definitely corruption. Seizing some benefit or deriving some advantage can be carried out simultaneously with a violation of the arms-length principle, but those two actions can be taken at different times.

Namely, biased behaviour of the one who is corrupted makes an informal, but sometimes binding obligation of the corruptor to return or repay the favour, and that obligation does not grow obsolete, so that seizing the benefits from the one who is corrupted moves into the future. If the returned favour is a well-paid job for the son, and the son has just started college, it is obvious that there is a time gap between the two actions. Furthermore, in formulating the corruption contract, the returned favour is sometimes not even specified, but the obligation is assumed. There is an alternative definition of corruption frequently used by the World Bank that specifies corruption as the abuse of public office for private gain. This definition considers the cause of corruption in public authority and its abuse, and links corruption to the state, its activities, state intervention on the market and the existence of the public sector. In other words, the use of this definition excludes the possibility of Corruption in the private sector and it focuses exclusively on corruption in the public sector.

This definition is consistent with the beliefs of Nobel Prize laureate Gary Becker that if we abolish the state, we abolish corruption. The problem with the alternative definition is that not all abuses of public office are corruption. Some of them are straightforward theft, fraud, embezzlement, or similar activities, but definitely not corruption. If a senior governmental official simply illegally appropriates a sum of money from the budget without providing any
SATISHCHANDER

service orator to anyone, that is not corruption it is a crime, but of another kind. It is socially unacceptable, but it is still not corruption, i.e. corruption is not the only thing that is socially unacceptable and illegal. In addition, extortion is something that provides intentional non-compliance with the arms length principle, but since there is no advantage for the victim of extortion (a judge or a prosecutor, for example) a violation of this kind is not corruption. It is important to distinguish between corruption and other illegal activities because factors of corruption and policies to fight corruption usually are or can be quite distinctive from factors and policies against other types of illegal activities.

From the enforcement point of view, corruption is a contract. It is an informal contract because it is illegal no court in the world will uphold it if there is a problem with its enforcement. On the contrary, a properly operating court would process corruption as a criminal offense. This very specific feature of corruption as an illegal contract generates its substantial transaction costs, the most important of which are: finding the counterpart, formulating the contract (particularly taking into account all foreseeable and unforeseeable contingencies), monitoring the contract, and enforcing the contract. This is not to say that standard legal contracts are free of transaction costs. This is to say that due to the illegal nature of the corruption contract, its transactions costs are multiplied. The transaction cost feature of corruption is of great relevance and must be taken into account when the consequences of corruption are analysed. From the point of view of its source, corruption is in most cases, the consequence of rent appropriation. Rent is a factors income that is above the competitive returns of the factor. Competitive returns are those achieved on the competitive market; hence in the world of perfectly competitive markets, there will be no rents. Corruption is just a form of rent appropriation and its dissipation, i.e. a situation in which economic agents are willing to pay a bribe to be included in the rent appropriation scheme they are paying to earn some rent. This origin of corruption should always be taken into account when discussing the factors of corruption. The factors that create rent are the ones that create fertile ground for corruption.

Corruption is a complex social, political and economic phenomenon that affects all countries. Corruption undermines democratic institutions, slows economic development and contributes to governmental instability. Corruption attacks the foundation of democratic institutions by distorting electoral processes, perverting the rule of law and creating bureaucratic quagmires whose only reason for existing is the soliciting of bribes. Economic development is stunted because foreign direct investment is discouraged and small businesses within the country often find it impossible to overcome the "start-up costs" required because of corruption.

SATISHCHANDER

A few words on the ethical aspects in defining corruption should be added. For an overwhelming majority of people corruption is something morally unacceptable; it is the evil that should be fought because its very existence is against basic moral principles. The analysis of corruption which follows is morally neutral. The issue of morality is irrelevant to the considerations in this document. In that sense Tanzis definition of corruption is morally neutral.

Basic Types of Corruption

The types of corruption are strictly linked to the theoretical view on corruption. Economic theory has developed two basic views of corruption. One view is set within the framework of the principle-agent theory. This approach is based on the assumption that there is an asymmetry of information between principles (politician or decision maker) and agent (civil servants or bureaucracy). Accordingly, benevolent politicians are not informed about the misdemeanours of their subordinates. This approach is analytically very clear; it is very well developed, and the models of theoretical models of corruption based on this approach are analytically rich, as they can explain a wide range of behaviours of civil servants, including administrative corruption. However, this approach cannot explain political corruption. According to the main assumption, the state is benevolent, so there is no possibility for political corruption. Only administrative corruption (corruption of civil servants) can be explained and predicted.

Since the list of corrupted politician and associated political scandals is lengthy in virtually all counties of the world, it seems that not only are the assumptions of the model unrealistic, but also its predictions regarding political corruption are wrong. Political corruption simply cannot be explained within this methodological framework. The crucial feature of this approach is that corruption is exogenous to the political process; hence principal-agent relations (and the scale and scope of asymmetry of information) are not as influenced by the political process and political constellations as by the outcomes of the process. In other words, corruption is not institutionalized. Nonetheless, if corruption is considered endogenous to the political process, corruption is institutionalized and its level and pattern depend on the political constellation, i.e. the political regime in the country. Corruption is nothing but a consequence of the political process. The methodological breakthrough of the kind has been recently achieved by Charap are Harms. The methodological approach based on recent contributions to literature on the economics of conflict and appropriation, the economics of organized crime and the political economy of dictatorship. Within such a framework, corruption is considered as a form rent appropriation by the ruler.
SATISHCHANDER

Corruption is the answer to the problem of internal cohesion of predatory teams. Corrupt civil servants are created to satisfy ruler desire to foster loyalty through patronage. Corrupt civil service is nothing but the extension of efficient rent appropriation by the ruler. The rent is extracted through sales of a limited number of permits and licenses for economic activity.

Furthermore, endowing only a few civil servants with the power to grant license enables the diversion of the licensing proceeds from the budget toward private gain. Finally, civil servants are cooperative because they have their share in the spoils. Corruption serves as a hostage mechanism to minimize the probability of defection or insurrection by lower level insiders of corrupted civil servants; they are effectively constrained, due to their own participation, from turning to the public to denounce the system. Dictators can, when and is necessary, find a reason why an uncooperative civil servant is found guilty of corruption. Hence, there is both the carrot and the stick to strengthen loyalty. This approach is tempting because it provides grounds for understanding and explaining the relationship between corruption and the political process. Nonetheless, this methodological approach does not provide a clear analytical framework for consideration, given the level the structure of corruption. The main problem is that the structure of incentives to the political decision makers and change of the structure are not explained, hence we have information on the driving force of the change, although the model provides information on the structure of incentives for rent appropriation.

In general, within one or other theoretical views, there basic types of corruption are identified. The first one is corruption for achieving or speeding-up materialization of some specific right that the citizen or legal entity is entitled to-corruption without theft, as suggested by Shleifer and Vishney. If a person bribes civil servants in charge of issuing a passport that a briber/corruptor is entitled to, i.e. there is no legal barrier for his passport to be issued, that is exactly the first types of corruption. Its specific and more aggressive version is bribing officials for jumping the queue for providing the service that is thoroughly legal. In other words, civil servants are corrupted to do their job or to do it more quickly then they usually do, instead of not doing it. The frequency of this type of corruption is a good indicator of the capacity and effectiveness of a countrys administration, i.e. its poor administrative capacities or a poor supply of administrative service. One should bear in mind that the shortage of supply of administrative services can be deliberately produced, aimed at creating the rent and its redistribution via corruption.

The second type of corruption is a corruption that violates the legal rules, or a very biased enforcement of the rules. This is administrative corruption and is the most modelled type of corruption the vast majority of theoretical contributions in the field are about
SATISHCHANDER

administrative corruption. This is due to very clear motives and incentives for each economic agent and very clear relation between them. This type of corruption corresponds to the principle-agent model of corruption, as the total supply of corruption (demand for the bribe for violating the rules) is provided by the civil servants. The most significant direct consequence of this type of corruption is that legislation and public policies are not justly enforced. A cynical approach to the issue within counties with widespread corruption is that some pubic polices are so bad, it is actually better for the society that they are not enforced. Accordingly, corruption is considered to be the second best solution. It would be better if these policies were not enforced at all. Nonetheless, since the political process resulted in bad policies (and no alternatives to political process are feasible in the foreseeable future), corruption is seen as a solution for bad public polices, whatever the source of these bad public polices, Nonetheless, one should take into account the costs of corruption as a method for circumventing bad public policies.

Finally, there is state capture- corruption that is aimed at changing the rules and regulations into rules and regulations that favour the interests of the corruptor. The concept of state capture was developed by the World Bank primarily for explaining the reality of political life in transitional economies. The underlying assumption is that legislation and public policies are influenced by the bribing of legislators by a few oligarchs-very powerful business people. In other words, public policies are inevitably formulated to favour the oligarchs, not the public. Although there is no doubt that such a process exists, and that this type of corruption can explain some elements of public policy in many counties (not only transitional ones), the concept of state capture lacks analytical clarity. The main problem is that interest group influence legislators decision making in all counties. Strong lobbying is an entirely legal and legitimate activity in mature democracies. The crucial analytical problem of the state capture concept is specifying a cut-offline between legitimate political lobbying and state capture created by corruption. The state can be captured both by aggressive lobbying and by effective corruption. Subsequently, the crucial question is to what extent are the outcomes regarding public policies from legitimate lobbying and illegal corruption different, and more specifically are the public policies designed by lobbying superior to ones designed through corruption? Additionally, the question is whether the social costs (in terms of the opportunity costs of resources uses) of lobbying are greater or less compared with the social costs of corruption. In brief, although the type of corruption that influences public policy is very important to consider, the analytical framework of state capture should be substantially improved in order to better explain its mechanisms and for an enhanced understanding of the process.

The other important distinction in the case of corruption is its industrial organization, as Shleifer and Vishney thoroughly analysed the phenomenon, emphasizing centralized
SATISHCHANDER

(monopolized) vs. decentralized pattern of corruption. The crucial prerequisite for centralized corruption is the ability to enforce joint profit in bribe collection. It is closely related to problem of the problem enforcing collusion in oligopoly. It has been pointed out that when governments have an effective policing machine to monitor the action of civil servants, such as the KGB in the former Soviet Union, corruption in the country is centralized. Within the methodological framework of a benevolent state, the analysis of industrial organization cannot answer why some (benevolent) governments are equipped with agencies like the KGB while others are not. Apart from the prerequisites for distinctive industrial organization of corruption, the crucial distinction is the one of transaction costs. In decentralized corruption, a single corruptor is dealing with multiple, rather than single, corruption contracts (transactions) hence the transaction costs are multiplied. In other words, a monopolized corruption pattern is superior to a decentralized one regarding the scale of transaction costs.

Basic Causes of Corruption

All economic agents are maximizing their individual utility, i.e. personal welfare (wealth).Accordingly; selfish interests of economic agents are the basic motive for economic transaction between them. Resources are allocated to the activities the greatest return on investment (an allocation decision). In short, people in all conceivable conditions behave economically rationally.

As described earlier, rent is a factor of income above the competitive returns (opportunity costs) of the factor. Because of that, i.e. because rent appropriations will maximize individual utility (welfare), economic agents are engaged in the rent-seeking process, the process of creation and distribution (appropriation) of rent. Theoretically speaking, rent can be created in a few distinctive ways, but in realty the most significant rent generator is government intervention, i.e. violation of free market operations. A frequently used synonym for this type of government intervention is regulation. In other words, instead of enabling the free market to regulate relations and transactions among economic agent on the market, the government, whatever the motive may be, steps in and regulations in a hands-on manner.

The majority of government intervention on the market is prohibitive, i.e. economic agents are precluded from doing something, unless the government explicitly empowers some of
SATISHCHANDER

them to do so. A typical regulation of kind is import licensing. Only the firms the obtain import certain goods and only the quantity specified in the license. That will inevitably create a shortage in the market; supply will not be formulated according to the marginal costs of the producer/importer, but by the administratively specified quantity. At that specified quantity, the commanded by demand (i.e. the amount of money consumers are prepared to pay for an additional unit of the good) will be substantially higher than the costs of its production/import.

That difference is economic rent which will be distributed, i.e. appropriated, at the end of the day. By paying a bribe to get an import license, a portion of the Rent is appropriated by the corruptor and the remaining Portion is appropriated (in the form of bribe) by the Corrupted. Needless to say, without introducing import License regulation there would be no rent and there would be no corruption. There are some cases of corruption not Linked to rent, but the most significant, most common, and consequentially dangerous forms of corruption are linked to Rent-seeking behaviour.

Accordingly, more government regulation ceteris paribus (all other things being equal), results in fewer free-market operations, and therefore more corruption. Nonetheless, apart from the content of legislation that introduces government regulation, it is very important how these rule and the process of the enforcement are specified. As to the specification of the rules, for efficient enforcement the rules should is simple, clear, and easily understandable by anyone. The more complicated, unclear, and ambiguous the rules, the more opportunity there is for corruption. A typical example of this occurs with a large variety of customs tariff rates in general and for rather similar products in particular. If the customs tariff rate for one product is 3% and for another similar product is 30%, there are strong incentives for corruption aimed at misclassification of the goods and illegally reducing the levy by applying the lower rate.

Furthermore, procedural legislation, which are rules regarding enforcement of rules and regulations, is very important for corruption. The complicated and non-transparent legislation specifying slow procedure (procedures with unspecified time limits or no binding deadlines), at the discretion of civil servants in the enforcement process, creates tremendous opportunity for corruption. Not only does such legislation create incentives for corruption, but it also decreases the probability of detection, making threats to the corruptors and corrupted less credible.

SATISHCHANDER

The analysis of corruption factors is a prerequisite for an effective strategy for fighting corruption, as the strategy should take into account and address the main sources of corruption. Taking into account that rent is the most important source of corruption and the government intervention that creates rent is the most important factor of corruption, the crucial element for any effective strategy for fighting corruption is deregulation. Deregulation means abolishing government intervention that is prohibitive, thus allowing market forces to function effectively. Market forces on the free market will drive all the factors returns to their competitive level and there will be no rent due to government intervention, hence there will be no source of corruption of that kind. There will be no shortage on the market, no queues for goods whose supply is limited, no black market and no rent generated and appropriated from long queues and the black-market.

From another perspective, deregulation will decrease and in some cases eliminate corruption due to the lack of discretionary power of civil servants. Then there will be no incentive for private parties to bribe civil servants, because civil servants will not be in a position to offer any favour to the corruptor. For example, there will be no import licenses because anyone can import whatever she likes in the quantity that she considers profitable or good for the business. There will be no barriers to entry that must be circumvented by a certificate issued by a civil servant, etc. Civil servants will lose their power to decisively influence the fortune of businesspeople and citizens.

Deregulation and decreasing the role of the government has its limits. The basic reason for the government to exist is to provide the rule of law. For economic agents the most important aspect of the rule of law is protection of private property rights through efficient contract enforcement. In the case of rule of law, government power should not be diminished, on the contrary it should be enhanced there is no room for the government to withdraw from this area as a key element of anticorruption strategy. On the contrary, strict rule of law is one of the elements of an effective strategy for fighting corruption. Accordingly, all measures that improve the rule of law will definitely contribute to the fight against corruption. One of the crucial elements of strengthening the rule of law is the creation of simple, clear, and transparent rules that are understood by all concerned parties. Such Rules of the game and the name of the game is market competition will minimize disputes regarding their enforcement which will minimize the uncertainty of economic agents and substantially decrease any room for corruption.

Streamlining procedural legislation and making it simple and transparent is also very important because it minimizes the uncertainty of economic agents, reduces the discretionary power of civil servants, and increases the visibility of corruption cases, i.e.
SATISHCHANDER

10

situations in which procedural legislation is violated. Such a framework increases the probability of detecting corruption misdeed sand apprehending corrupted civil servants. The increased probability of apprehension and punishment creates a deterrent for civil servants to accept bribes, therefore decreasing incentives for corruption. Increasing wages of civil servants is another important segment of the strategy for fighting corruption.

Nonetheless, this element of the strategy should be considered within the framework of the deterrent, i.e. punishment. Part of the punishment for corruption should be expulsion of the civil servant from the job that provides higher wages than those on the labour market, i.e. wages in the private sector. In this sense, high wages of civil servants (higher than in the private sector) can provide incentive to not accept bribes only if there is a substantial risk of apprehension and punishment that includes a decrease in their future (expected) incomes.

Accordingly, the wage scheme as a segment of an anticorruption strategy should always be considered along with the probability of apprehension. Furthermore, excessively high wages in the public sector can have an adverse effect on the allocation of the labour force as talent is moved away from the private, value-adding sector.

Nonetheless, the most important prerequisite for effective anticorruption strategies is strong and unconstrained political will. Such a will can be generated by identifying the most significant consequences of corruption. If such a will exists, government must send an unequivocal and credible signal to all concerned parties that it is committed to fighting Corruption. Strong words are necessary, but not sufficient, for credibility. These words must be followed by actions and accomplishments in the area of policy and institutional reform along the suggested lines as well as action in the area of the criminal prosecution of corruption.

Consequences of Corruption

As to the consequences of corruption, it should be recognized that the bribe itself is nothing but a redistribution of income. In other words, the bribe itself is not a welfare loss the scale of social welfare does not change, only its distribution. Although strictly speaking this is true, emphasizing only distributional aspects of corruption is one of the major fallacies of corruption research.
SATISHCHANDER

11

The first reason is the existence of huge transaction costs from corruption. As it has been pointed out, corruption is an illegal contract, and therefore its transaction costs are Massive. And transaction costs are real costs: the opportunity costs of resources engaged in transaction activities. According to some estimates (Tanzi), senior managers in countries with widespread corruption spend about 20% of their working time negotiating corruption and enforcing corruption contracts; this is the amount of transaction costs in terms of the opportunity costs of highly skilled labour.

There is a rather widespread notion that the corruption income of corrupted civil servants provides compensation for their lower wages. Hence there is no need for a wage increase and no need for increasing the tax burden. In other words, the corruption burden is its own kind of a tax burden that, according to this approach, enables the proper tax burden to be decreased. However, proper taxation (together with efficient tax administration) decreases Uncertainty and transaction costs. Hence, corruption taxation is inferior in terms of economic efficiency.

Furthermore, it was demonstrated that rent-seeking activities are closely related to corruption. The origin of rent-seeking is public policies that boost government intervention and disable free market operation. These public policies can be deliberately pursued specifically because they create rent, i.e. these policies can be influenced (irrespective of whether it is done by legitimate lobbying or illegitimate state capture corruption) by interest groups with a vested interest in creating and appropriating rents. Although these public policies are in favour of these interest groups, they are completely wrong regarding maximization of economic efficiency and social welfare, i.e. they are not in favour of the public interest.

Corruption violates the rule of law, and the rule of law is prerequisite for the market economy. If there is no rule of law, there is no protection of private property rights and noncontract enforcement. There is poor exchange between agents because there are no incentives for exchange due to poor protection of property rights and inadequate support of contract enforcement. Because of the poor exchange between firms, all firms produce the majority of inputs internally, instead of the purchasing these inputs on the market. In other words, there is no social division of labour and no prerequisite for specialization. Since there is no specialization, a significant source of increasing economic efficiency is absent. This is the indirect way in which corruption diminishes economic efficiency and consequently Social welfare.
SATISHCHANDER

12

Corruption increases basic business uncertainty, particularly regarding protection of property rights. This kind of uncertainty decreases the expected profit rate for potential investors. Investors, making their decisions based on expected profit rate (returns), are less likely to invest when lower returns are expected. This is particularly true for the foreign direct investors who compare expected returns, i.e. expected cash flow for investments in various countries and decide to invest their capital in the country with the highest expected returns. Since corruption decreases expected returns, corrupt countries receive less foreign direct investment and consequently record lower growth rates.

There is another reason that countries with widespread corruption cannot expect high growth rates that is directly related to entrepreneurship and innovations. As suggested by Baumol, entrepreneurship is a resource that can be alternatively allocated to productive activities or to unproductive and destructive activities. It will go to the activity that enables the entrepreneur the highest possible returns on his activity. Corruption is definitely an unproductive, and sometimes evens a destructive, activity. If corruption is widespread, i.e. if the highest possible returns are in the area of corruption, entrepreneurs, instead of focusing on productive, wealth creating activities will focus on corruption, redistributing activities and allocating their talents to it. As a consequence, other resources will be also be allocated to redistributive activities. Innovations that are a result of entrepreneurship will be allocated to redistribution and corruption. New methods of corruption will be introduced instead of new products and new methods of production.

This is a crucial dilemma for every nation: will the available resources be engaged in creating wealth or merely in its redistribution? Widespread corruption is a symptom of a severely ill society with a majority of resources and innovation allocated to the area of redistribution. Corruption is not about an amount of money changing hands or about grease in the wheels of business. It is about the future of the nation. And it is the nation that must make some difficult decisions regarding it.

2. WHO IS RESPONSIBLE?
Ultimately, all parts of society must share the responsibility for containing corruption because all are willing or unwilling participants. Each corrupt transaction requires a buyer
SATISHCHANDER

13

and a seller. The government is responsible for dealing with civil servants who engage in extortion and bribery but it is businesses and individuals who offer bribes to civil servants to obtain certain advantages.

In most countries, the demand for reform is being led by organizations of civil society and the International donor community. An active, involved and empowered citizenry is indeed essential to any anti-corruption campaign. Reformers can only achieve real gains when a Society changes its expectations and understanding of its entitlement to a government that is not corrupt. For their part, government leaders politicians and bureaucrats must provide the political will to address all forms of corruption. Governments need to introduce appropriate legislation to reduce corruption and provide whatever means is necessary to ensure that appropriate steps are taken to build systems of integrity and rule of law.

While all those who are part of the problem must be part of the solution, it would be Unrealistic and cost-prohibitive to attempt to eliminate corruption completely. Such a strategy would be likely to create new inefficiencies in government. Draconian anticorruption Programs, moreover, can have a negative effect on personal freedoms and fundamental human rights if regulations translate into excuses for public officials to become in caressingly abusive toward the citizenry. Additionally, bureaucratic discretion is necessary for effective administration. The aim, therefore, is not to achieve complete rectitude but rather a Fundamental increase in the honesty, efficiency, and fairness of government. The responsibility of containing corruption must not ignore the participation of international Firms, foreign governments and others engaged in corrupt practices either actively or passively. A number of instruments are available to curb cross-border corruption.

The new No bribery pledge initiated by OECD is one. Among stronger measures is the criminalization of bribery, including the prosecution of companies and governments in the North and tax deductibility of bribes paid by Northern companies in the South.

3. IS CORRUPTION GLOBLE TYPOLOGY?

Corruption does have some common characteristics. For instance, it occurs in all countries regardless of the level of social and economic development. For corruption-extortion or
SATISHCHANDER

14

bribery-to take place, there must be a public official with discretionary power followed by a misuse of that power. In the case of bribery, there is also collusion between the dishonest official and one or more public or private officials, and a benefit, in money or in kind, to all parties involved. Corruption most likely will occur in the interaction between the public and private sectors. And it is generally practiced by public officials who have direct responsibility to deliver services to the public, apply or enforce specific regulations, or levy fees or taxes.

Despite these common characteristics, corruption takes on very different features from one place to another. Corruption flourishes in different places in different forms including: land Re-joining, customs duties, income tax collection, and non-merit based appointments, promotions, and many more. The actors amenable to leading or supporting reform also vary significantly from country to country. Still, it is unlikely that a detailed attempt to achieve a global or even regional typology would serve a useful purpose because of the number of variables involved.

Corruption has a freer rein in some countries than in others. For example, in some countries, the failure to pay a living wage lies, at least in part, at the root of the problem. In other Countries, public servants still engage in corrupt behaviour despite adequate pay. Some Developing countries enjoy the rule of law and benefit from an independent judiciary that conscientiously reviews the legality of official actions; elsewhere the judiciary is suborned, acquiescent, or neutralized. Some governments have incentives that encourage law enforcement officers to be willing partners in anti-corruption activities. Others have politicians who create legislation that seems designed to render corrupters free from prosecution, even if they are caught. In some countries, the private sector and other elements of civil society are well-organized and poised to assume an assertive role; in others, they are weak and unaccustomed to having a voice or speak authoritatively to their government. All of these factors dictate the importance of carefully choosing the strategy and entry points for anti-corruption measures.

4. The Donors Interest in Tackling Corruption

The topic of anti-corruption has recently generated substantial academic interest as well as support from the highest levels of the World Bank, IMF and the international community in general. The new approach presented in this book is founded upon the premise that
SATISHCHANDER

15

corruption is a major hindrance to economic development. More and more development experts have come to the conclusion that it is impossible to alleviate poverty without first curbing corruption. Most donors are concerned not with the exercise of state powers in the broad sense but specifically with the appropriate management of the public sector and the creation of an enabling environment for the private sector. Some multilateral donors mandate dictates that they can only become legitimately involved when corruption is treated as an economic phenomenon and its actions or reactions to corruption must have economic development at their core.

More specifically, corruption can be addressed by World Bank and IMF staff as an economic Concern within the framework approved by the Board for governance issues. This framework allows for activities in which the Bank and IMF can advise countries on economic policy reform and strengthening institutional capacity. However, the Bretton Wood organizations mandate do not extend to the political aspects of controlling corruption, and though civil society is crucial to sustaining reform, there are limits on the extent to which the Bank, as a lender to governments, can directly support civil societys efforts.

As an example of a framework for addressing corruption at home the World Bank works at four levels:

-Preventing fraud and corruption within Bank-financed projects. -Helping countries that request support in their efforts to reduce corruption. -Greater consideration of corruption in country-assistance strategies, country-lending Considerations, policy dialogue, analytical work, and in the choice and design of Projects. -Adding its voice and support to international efforts to reduce corruption.

The ultimate goal of most donors strategies on corruption is to help countries move from systemic corruption to an environment in which a well-performing government minimizes corruptions negative effects on development. The strategy is based on action coming from three directions: (a) economic policy reform, (b) institutional strengthening and (c) international action. The model assumes that corruption is a function of weak institutions and of policies that create economic rents. The majority of donors believe that tackling corruption is less a matter of new instruments than of reducing corruption through existing ones.
SATISHCHANDER

16

5. Prevention an important tool for fighting corruption

The approach presented in this paper is essentially holistic. Corruption is viewed as a systemic issue requiring the donors to work on several fronts and to collaborate with all branches of government and many parts of society. The approach to promote good governance through among other things, prevention, is to help client countries curb corruption and build integrity, and therefore, improve their public services and create an enabling environment for the private sector. The Governance and Anti-Corruption program comprises three principal activity areas: (a) improving public sector service delivery by focusing on public sector accountability and legal reform in order to re-introduce rule of law;(b) building integrity by promoting governmental accountability and transparency; and (c)building an prevention and anti-corruption capacity of the public sector-including parliament, watchdog and enforcement agencies, and the judiciary -and of civil society, particularly by strengthening non-governmental organizations (NGOs) and the media.

The program dovetails with other reforms such as: Public Sector Management program, which focuses on prevention through civil-service reform and public-expenditure planning and management, as well as, on supporting governance activities, research and dissemination of findings. Legislative reforms to strengthen parliament role in overseeing the executive but also the passing of new anticorruption legislation Legal reforms; that strengthen the rule of law Building integrity, which means using public powers for the public good, is the flip side of fighting corruption. Experience gained from work with client countries demonstrates that it is preferable to focus on prevention through the building of integrity, which suggests a positive, pro-active preventive approach. It is often easier to get various stakeholder groups to support preventive measures through the creation of a system of national integrity rather than specific measures designed to fight corruption.

SATISHCHANDER

17

SUSTAINABLE DELELOPMENT

IMPACT

OUTCOME

OUTPUT COST

INTEGRITY

CAPACITY

RESULTS ORIENTION

MACRO ECONOMIC FRAMEWORK

Figure 1: Key Focus Areas for Institutional Reform

The new approach links integrity to other key variables for sustainable development. As Shown in Figure 1, against the background of an appropriate macroeconomic framework, Three areas of focus combine to promote better delivery of public services.

A first element is to build systemic integrity within the society as a whole and establish the rule of law. A second and related element is to strengthen the institutional capacity of select public-sector and civil society organizations so that systemic integrity and better publicsector performance become possible. A third is to reorient government in order to improve performance or results. It is often necessary to explain to partners that what is sought is not merely the curbing of corruption or the improvement of integrity. The real impact these programs seeks is improved delivery of public services, established rule of law and creation of an enabling environment for the private sector.

SATISHCHANDER

18

6. Underlying principles of this new governance strategy

A. New Paradigms
In the old paradigm, donor agencies preferred to work almost entirely with government agencies. Governments and donors alike gave little recognition to the private sector, the general public or civil society organizations as important agents for change. Most capacity building focused on tools and skills for the executive branch of government with little emphasis on the capacities of the legislative and judicial branches of government or of civil society and the private sector. More attention was given to budgets and activities than to the economic outcomes and impacts that would be achieved by these activities. Results were seldom the focus.

And government accountability and transparency were not seen as particularly important. Underlying this new approach is the belief that elected politicians and public sector employees should focus on generating sustainable development results by meeting the needs of the general public and other clients. Politicians and employees should be held accountable individually and collectively for fulfilling governments responsibilities and commitments.

This new strategy can be expressed in the new paradigms shown are Accountability through transparency (access to information) Focus on prevention rather than enforcement Raise awareness and expectations of civil society Focus on results-oriented service to the public Develop the capacity of Pillars of Integrity to fight corruption New Paradigms of a Governance Strategy

SATISHCHANDER

19

B. Prevention through Increased Accountability

Lack of accountability by national and international politicians and civil servants is probably one of the most important reasons why sustainable development has not occurred in most of the worlds poorest countries. How can transparency and accountability be generated? The approach presented in this paper is to help clients change the mind set of public-sector employees. Through its work with client countries, tools have been developed that can help client ministries and municipalities increase government accountability and performance. In recent years, it has helped clients organize integrity workshops and administer informal surveys involving public sector officials to raise their awareness of the causes and consequences of corruption. To institute accountability and transparency in government, both internal and external pressure is needed. Accountability must be generated by a combination of political will from the top and public pressure from the base. Even if leaders are successful in changing attitudes within the government bureaucracy, more will need to be done because less than two per cent of the population in most developing countries works for the government. The new governance approach is based on the assumption that increased public sector accountability can only be achieved through the education, involvement and empowerment of the remaining98 per cent of the population, including the private sector, media and civil society.

C. Raising Public Awareness

Educating and involving the public in building integrity is the key to preventing corruption and thereby the key challenge and the keystone of this holistic integrated strategy and can take different forms:

Public education and awareness campaigns (radio, newspapers, TV). Conduct annual broad based national/municipal integrity workshops were all Stakeholders are invited to discuss problems and suggest changes. Inform citizens about their rights (Citizens Charter); and empower the citizens to Monitor the government through periodic service delivery surveys. Production and dissemination of a national integrity strategy and an annual corruption survey at national, municipal and sub-county level.
SATISHCHANDER

20

Production of integrity surveys at the municipal or sub-national level. Investigative journalism and information by the media. Dissemination.

D. Broad Based Capacity Building to strengthen all Pillars of Integrity

Capacity building has traditionally focused on expanding government facilities and skills. Typically, such projects financed infrastructure, equipment and technical skills training. These activities are important, but without a leadership confident in introducing Accountability, transparency and a focus on objectives and results, the sustainable effect of these initiatives are questionable. The new approach to capacity building encouraged and Pioneered by the Economic Development Institute (EDI) of the World Bank in close Collaboration with TI, involves two major shifts from traditional approaches. The new approach emphasizes the importance of leadership and an integrity mind set among Public servants. Mind set refers to the outlook and state of mind that policy-makers and Civil servants bring to their jobs. Donors work as facilitators with clients to establish Standards and ground rules for leaders in the public service through the introduction of Leadership codes, codes of conduct, and declarations and monitoring of assets. Integrity is critical when appointments of key executive or civil service positions are made and is equally important among politicians.

SATISHCHANDER

21

INPUT TRADITIONAL

CAPACITY BUILDING

NEW APPROACH OUTPUT

WHAT
TOOLS,SKILLS,MIND-SET.

WHO
ENFORCEMENT AGENCIES,WATCHDOG AGENCIES.PRIVATE SECTOR. PARLIAMENT,EXECUTIVE,JUDICIARY.

LEADERSHIP,INTEGRITY.

INFORMATION,INCENTIVES.

CIVIL SOCIATY,MEDIA.

Capacity Building - A New Definition

The second change is that the audience for the capacity building be broadened to include all Parts of society interested in creating and maintaining national integrity. Traditionally, the focus of donor attention has been on the Executive branch of government, particularly the relating to government ministries. However, capacity building focused most entirely on strengthening the capacity of ministries to deliver public services is insufficient. A more systemic approach to building integrity and sustainable development requires institutional strengthening of other pillars that is, domestic stakeholders both inside and outside government. Donors have in some of the more advanced countries been invited into help initiate awareness raising and skill building efforts with parliaments, law enforcement agencies, judiciaries, public account committees, NGOs and private-sector organizations.

Pillars of Integrity

To ensure that there is an enabling environment that is supportive of private- and publicsector Contributions to sustainable development, a National Integrity System needs to be built with mutually supportive pillars. The pillars of integrity in a society include actors outside the executive and outside government itself. The collection of stakeholder groups is referred to as pillars of integrity because it is incumbent on them to support and uphold
SATISHCHANDER

22

practices that promote public integrity. A National Integrity System is based on eight pillars of integrity:-

(1) Executive (2) Parliament (3) Judiciary (4) Watchdog agencies (5) Media (6) Private sector (Chambers of Commerce, etc.) (7) Civil society (8) Law enforcement agencies

The pillars are interdependent, a weakening of one pillar results in an increased load being shifted on the others. Where several pillars weaken, the system can no longer support sustainable development and effectively collapses illustrates the inter action of the different stakeholders in combating corruption. Examining a National Integrity System requires identifying gaps and opportunities for corruption within each of the pillars and then cocoordinating the work of the government, civil society, and donors into a coherent framework of institutional strengthening. The reasons for building an integrity system may differ from country to country. Three broad, almost generic, objectives are identified: rule of law, sustainable development, and quality of life. In the fifteen countries that have embraced the reform effort, inadequate rule of law could turn out to be the critical bottleneck for progress. This is particularly the Case in much of Latin America and Africa where it is estimated that many countries need ten To fifteen years of intensive work before effective rule of law can be established.

E. The Role of the National Integrity Unit in Integrating Reforms

Develop a systemic approach to building integrity by ensuring the inclusion of Integrity issues in the economic reform agenda;

1. Provide a direct link between government and institutions of civil society for research,
SATISHCHANDER

23

2. Information and public awareness-raising 3. Requesting, providing, and using Information in partnership with the media, NGOs, and citizens; 4. Facilitate integrity-building activities as part of the implementation of the governments economic and public-sector reform programs; 5. Conduct SDSs, public-education and awareness-raising activities, integrity-building Workshops and other events. The National Integrity Strategy should result in a wide range of reforms that are interrelated and integrated in order to create systemic change. The focus of the strategy is on achieving Specific out comes in the expectation that these will, in turn, contribute significantly to such impacts as improved public-service delivery and an enabling environment for privatesector development through the establishment of the rule of law.

Elements of a National Integrity System

INTEGRATED STRATEGY FOR CURBING CORRUPTION IN INDIA

INDEPENDENCE OF BRANCHES AND CHECKS AND BALANCES LEGISLATIVE REFORMS
BUILDING CAPACITY: -SKILLS & TOOLS -MINDSET -INTEGRITY -INCENTIVES -LEADERSHIP

JUDICIAL REFORMS
BUILDING INTEGRITY TO FIGHT CORRUPTION TO IMPROVE SERVICE DELIVERY

EXECUTIVE REFORMS
ECONOMIC REFORM: -TAX REFORM -DEREULATION -OPEN THE ECONOMY -CUSTOMS REFORM

EMPOWERING CIVIL SOCIETY AND THE MEDIA TO MONITOR THE STATE CITIZENS/YOUTH EMPOWERMENT

RESPONISIBLE MEDIA

CIVIL RIGHTS REFORM

POLITICAL

SATISHCHANDER

24

Each of the outcomes listed in represents a series of integrated activities and outputs. Following are two examples of a series of outputs that may be needed to achieve outcomes in terms of public administration and civil-service reform as an element of institutional reform, and in terms of deregulation as an element of economic/regulatory reform.

F. The Champions of Reform in India

A ninth pillar can be added to the eight organizational or institutional pillars. This pillar would be composed of those essential individuals or groups of people who provide the Political leadership necessary to give vision to the reforms and the political will to see them Implemented. Depending on the country, this group could be derived from municipalities or youth. Such groups increasingly have the power and influence needed to protect the Institutions undergoing reform from the enemies of reform. Ideally, a countrys Executive Would is the chief champion of reform and this is the case in most of the countries where Donors facilitate governance work. However, in other situations, the nations chief executive May be the formal client for governance work while the real champion is another senior Government official India...

Customs
1) 2) 3) 4) 5) 6) 7) Review customs precede legislation to strength incompliance. Have regular meetings with various stakeholders Establish Complaints Bureau (report to outsider) Code of Ethics for all officers Raise public awareness Increased transparency about where you get what service in customs Implement the declaration and monitoring of assets for customs officers.

Private Sector
1) 2) 3) 4) 5) Strengthen Code of Ethics for managers of private-sector companies Increase transparency of political party financing Implement declaration and monitoring of assets for private-sector managers Increase public accountability for private-sector managers Increase protection of shareholders interests

SATISHCHANDER

25

6) Increase control of monopolies and quasi-monopolies 7) Improve monitoring of financial services, banking, and insurance

Watchdog Agencies and Ombudsman

1) Review the role of the ombudsman 2) Reappraise institutions assigned to combat corruption 3) Strengthen anti-corruption legislation and institutions

Executive Branch
1) National Transport Authority: Clean up vehicle fitness test through privatization and improved Enforcement 2) Introduce and enforce Code of Ethics in the public service 3) Create a Human Resource Division and job appraisal review 4) Implement declaration and monitoring of assets for top civil servants 5) Introduce more realistic ceiling on funding of political parties 6) Demand registration with Electoral Supervisory Commission

Parliament
1) Shorten parliamentary holidays for MPs 2) Increase number of weekly sessions 3) Demand annual report of Ministries to Parliament 4) Introduce live broadcast of parliamentary proceedings 5) Introduce more regular meetings of Public Accounts Committee (PAC) 6) Improve staffing and resources of PAC 7) Have the PACs report debated in assembly, open to the media and the public 8) Sanction parasternal bodies for late submission of annual report to Parliament 9) Introduce more parliamentary committees to discuss corruption reforms 10) Introduce regulation of political funding before the next general election 11) Introduce written answers to PQs communicated in advance 12) Introduce annual returns of assets for MPs published in the media 13) Amend legislation to deal with corruption

Strategy for building integrity

A. Local Ownership
SATISHCHANDER

26

First among key elements in promoting new governance strategy is local ownership. Local Ownership must be rapidly achieved when a pilot governance program is launched. Local actors must drive the process for the very reason that they will be bringing about reform. It is naive for outsiders to believe they can solve another countrys corruption problems. Corruption takes a myriad of forms, and the internal dynamic vary subtly but distinctively from country to country. The local community is best positioned to know and understand its particular problems, the network of participants, and the best possible solutions.

The Role of Civil Society

Civil societys involvement is a central part of a strategy to build integrity. Government efforts have failed when the confidence and support of civil society were absent, so it is essential to develop broad coalitions supporting reform. An apathetic, cynical public could undermine even a governments best intentions, thus the stipulation that credible donors be invited into a country by government and an organization in civil society. The potential partner in civil society must be one the government feels comfortable with to enhance creativity. This protects the donors objectivity on political issues and ensures that work is directed towards the entire system rather than individuals. There are practical benefits to including an international NGO such as TI in the partnership. There are various stakeholders in the integrity system and success depends on involving as many as possible. Having an international NGO as a partner opens avenues into civil society through its contacts with leading individuals and opinion-makers in the country. Such a partnership also helps minimize risks and exposure for the donor in this admittedly sensitive area of activity.

The Role of Donors as External Facilitators

Most donors would probably today openly accept that they have more questions than answers and must work with partners in a learning process. There are no standard solutions that any donor can impose upon or recommend to a country. The donors competitive advantage lies in:

(a) The knowledge it acquires through its global experience and perspective; (b) Its ability to help identify the questions that should be asked; and
SATISHCHANDER

27

(c) Its capability of contributing relevant experiences from other countries and contexts into the answer-seeking processes.

With a shared understanding of objectives among all the partners and with the process being locally owned and driven, the donors should work as facilitators, focusing on the process, Rather than presenting themselves as policy experts. These facilitators should help governments determine how to manage a change process that results in increased transparency, accountability and improved service delivery. The strategy is to demonstrate an approach that can be incorporated into projects and to act as a resource for NGOs and local institutions. Ultimately, the objective is to help client countries mainstream integrity so anticorruption practices become institutionalized and systemic. One of the strategies is to initiate a process that will lead all the stakeholders to identify their roles and recognize that they are either part of the problem or part of the solution.

B. Action Research
Action research refers to learning by doing. Various instruments and tools are used, ranging from formal surveys, which provide baseline data and measure, change over time, to do establishment of integrity units within government. There are many questions to be answered, which might include:

1. What is the role and impact of bribes paid by companies from the North to civil servants in the South? 2. What is the role and impact of donors on corruption in a country? 3. Who is paying and who is receiving the bribes? 4. Where is the money going? 5. Is there a link between paying a small bribe and improved service delivery?

CICP and UNICRI both emphasize the piloting of new approaches to public-sector Management issues and the dissemination of lessons learned from such pilots and experiences elsewhere. The Governance Program works on a regional basis because a country is likely tube most interested in the experiences of other countries in the same region and therefore more receptive to their examples. While these efforts need to be
SATISHCHANDER

28

tailored carefully to each clients situation, some approaches based upon the Teams prior experiences have married well with the circumstances of other countries.

The strategy for building integrity systems must remain flexible at all times, adapting to case law and best practice experience in order to improve the strategys effectiveness. The Sequencing of reforms is an action-research issue of particular interest to CICPs and its Clients. While it is too soon to provide clear guidelines, this element is being studied in each country case. Facilitating the building of national integrity to curb corruption in sixteen countries or more allows for sharing and learning among them. In order to make this learning process as rich as possible, countries across all five regions have been chosen. The objective of the action-research process is to monitor the performance of different tools and processes within these countries, learn from the results as they become available, and adapt each national strategy accordingly.

C. Action-Oriented Data Collection

Critical to the success and sustainability of the integrated approach to governance is the innovative use of information. Data from different surveys and other economic and financial data are made available to all integrity pillars, opening up government to the public. The information disseminated about the governments responsibilities and what it is actually doing empowers the public and increases the accountability of public servants.

7. Prevention and integrity tools and activities

The process of strengthening a National Integrity System begins with a national dialogue followed by national action. To promote national reform, the following prevention and integrity tools have been developed.

1. Surveys focusing on service delivery 2. Integrity or corruption Surveys 3. Municipal and Sub-national Integrity Workshops 4. External oversight in tender process 5. Enforce code of conduct including declaration and monitoring of assets

SATISHCHANDER

29

6. National and Integrity Workshops (NIWs) (broad based action planning) 7. The Integrity Pledge 8. Islands of Integrity 9. National Integrity Steering Committee (NISC) 10. National Integrity Unit (NIU)

A. Service Delivery Surveys (SDSs)

In many countries, programs to increase the integrity, effectiveness, and efficiency of public management have had limited success. One reason for this is that programs are frequently designed with limited information about the quality of service delivery before reforms to improve delivery are implemented. The Service Delivery Survey (SDS) is an important tool used by governments to provide information about service quality, including factors constraining the delivery of public services. The SDS covers many aspects of service delivery and identifies the multiple reasons for inefficient and ineffective service delivery. Equally, If not more important, the SDS cycle employs processes which build local capacity for data collection and analysis. The NGO, CIET international, developed the SDS methodology and continues to administer the surveys for the government.

The SDS provides essential baseline data and periodic evaluation information to help design civil service, decentralization, privatization, and other reforms; monitor results; and ultimately make services more responsive to citizens demands. By obtaining more accurate information about service delivery, including information about the cost, timeliness, coverage, and quality of each service, government clients are better equipped to decide which services should be delivered by the State, private sector, and NGOs. If the information leads a government to privatize some services or to ask NGOs to deliver them, the surveys will also give the agencies responsible for the out-sourcing excellent information to manage the contracts.

The SDS process involves a number of steps. First, representatives of the public-service Institutions that will be the focus of the survey and representatives from the private sector help analyses any existing data and prepare the process. Second, the appropriate number of Local supervisors and interviewers are trained to organize the surveys and analyses the results. Several survey cycles are required to build local capacity sufficiently so that future
SATISHCHANDER

30

surveys may be conducted independently. Next, the survey is conducted; households and service providers are asked about their perceptions of the quality of public services, existing problems, and ways to overcome the problems. After the data is collected, the results are shared and interpreted by focus groups comprised of both the households and the service providers. Finally, workshops bringing all key stakeholders together are conducted to build consensus and find acceptable solutions to service delivery problems.

An SDS supplements existing institutional data with community-based data. The basic building block of the community-based data is the household survey. Since households have a wide range of contacts with public institutions (e.g., taxation, health, roads and police protection), the methodology is inherently inter-sectorial. A group of communities is chosen in given region or country, which permits comparison between communities over time in order to measure the effect of reforms. The SDS uses a large enough sample to permit statistical analysis of the survey results data. The quantitative data is supplemented with qualitative data collected through focus groups, key informant interviews, and institutional reviews. The survey results provide valuable information, which enables national and subnational public managers and policy makers to do their jobs more effectively. All SDSs observe the same guiding principles and methods, and in all cases, capacity building is a central theme. A large number of nationals are trained to sustain the process. The SDS process provides data for sub-national levels (such as regions and districts) as a basis for rational planning at these levels. It builds skills among planners and decision makers at local levels in the process of designing surveys, collecting data, interpreting findings and planning on the basis of timely, relevant information. By emphasizing analysis and communication capacities, SDSs can contribute substantively to national capacities for evidence-based planning. Thus, SDSs do not require highly developed capacities to be in place; instead, it develops from and along with national capacities.

Survey results are used in different ways by different stakeholders. The central government and a municipal government may use the data as a performance monitoring tool in part of a broader results-oriented management scheme. The public is empowered when the same data when it is disseminated by the media and other means to civil society and the private sector.

These additional pressure points outside the civil service should increase the accountability of the public sector and may lead to improved efficiency, effectiveness, and responsiveness. In each country, the objectives, instruments, and outcomes are different and reflect the particular countrys context, capacities, and needs. The SDS was part of an
SATISHCHANDER

31

effort financed by donors to reform public administration. A pilot cycle was run in ministries (urban transportation, environment, and customs services) that opted into the reform program. Survey questions dealt with specific problems that public-sector manager shad identified. By contrast, in Mali, SDSs were used further up-stream in program development. Regionally, a representative sample of households were asked open-ended questions about their contact with government services, which services were most important to them, which ones had problems, and their suggestions for improvements. The information gathered was used to raise the awareness of designers of an institutional development Program to improve service delivery. With the growing realization that an assessment of public-service delivery should consider the private sector, the SDS compares public and private services and highlights the areas where the public and private sectors interact. The surveys help identify areas of institutional weakness that prevent the optimal use of resources and allow individuals to use public power for private gain.

B. Integrity Surveys
Since 1997, client countries have found it useful to complement the extensive Service Delivery Surveys, which examine many aspects of service delivery and identify multiple reasons for inefficient and ineffective delivery, with smaller surveys focused specifically on corruption. The integrity surveys or corruption surveys are used to identify those areas in the public service where corruption is a problem and to raise awareness of the extent of corruption. They can also be used as part of an anti-corruption enforcement strategy. For most reformers and governments committed to change, enforcement remains one of their biggest challenges. New laws, rules and regulations serve little purpose without an adequately funded and staffed enforcement strategy. NGOs such as TI, with donor support, can play an important role in helping reformers to monitor the effectiveness of enforcement measures. One way of doing this is to conduct an annual bribery survey similar to the TI Index. In addition to the formal integrity surveys, informal participant surveys are sometimes Included as part of an integrity workshop or symposium to draw attention to a particular corruption issue.

C. National Integrity Workshops (NIWs)

The completion of an SDS or an Integrity Survey generally involves a workshop where different stakeholders discuss the causes of inefficiency and corruption and seek to form a consensus about possible solutions. The objective of an NIW is to promote better public service. Delivery is by facilitating actions and promoting reforms that increase accountability
SATISHCHANDER

32

and transparency in institutions and among stakeholder groups. The NIW assembles representatives of all the major stakeholders or integrity pillars in society: the executive branch of government, parliament, the judiciary, media, civil society, watchdog agencies, and others.

The workshop can start with a presentation of the SDS and Integrity Survey data, papers written by representatives of each of the integrity pillars describing how corruption is present in various stakeholder groups, and international experiences and best practices in controlling corruption. External actors can facilitate the process, but the dialogue and its results must be developed and therefore owned by the local stakeholders. In small discussion groups, the participants identify and form a consensus about where and how corruption affects their society. With a contextual understanding of the problem, these small groups are then encouraged to apply lessons learned and prepare an action plan. When this was done in Tanzania, 60 per cent of the proposed actions in the plan were accomplished within a year. Follow-up activities may aim to help prevent corruption, strengthen enforcement, raise public awareness, and build (or strengthen) institutions.

Examples of these activities include:-

-the declaration and monitoring of assets as occurred in Tanzania. -the establishment of Citizens Charters; - Payment of adequate wages. -The re-enforcement of anti-corruption laws (on election financing, gifts for civil Servants, etc.). -The strength inning of the court system and the police.

Awareness-raising activities include:

-dissemination of survey and workshop results to the media (Tanzania, Uganda, and Ukraine); -a media campaign and public-education program about corruption (Tanzania, Uganda, and Ukraine); and
SATISHCHANDER

33

-concrete expression of political will

A series of two or more NIWs is useful in building a National Integrity System. The main purpose of the initial NIW is to build a consensus for a National Integrity Action Plan involving representatives from each of the integrity pillars, including the political opposition. Another key objective of the workshop is to raise awareness about the negative effect of corruption in the country and the progress that has been made in curbing it. The workshop develops a general outline of a National Integrity System within the guidelines of the country. This is done by drawing on experience and identifying the relevant actors in the society and the roles they would assume in establishing a program where civil society can complement the efforts of government. During the initial workshop, the issues of integrity and ethics and their relation to corruption control are addressed. As part of this dialogue, the facilitators describe their experience in working with societies addressing comparable problems and actions taken internationally, especially within the OECD, to constrain transnational corruption and its impact on countries in the South.

Specifically, participants are invited to:

-discuss the needs of their country in the context of building a workable National Integrity System and in the light of evidence of corruption. -prepare an outline drawing on best practice that can serve as a basis for informed public discussion and political debate. -determine how the society as a whole might participate in continuing the debate on the issue of integrity and how to work with like-minded political players in a creative and constructive fashion. -establish ownership and commitment of the participants to the conclusions and an action plan. The integrity workshop model marshals the ideas and resources of key stakeholders by inviting them to contribute to the proceedings as equal partners. It also emphasizes the production of tangible outputs:-

A. An Integrity Pledge that expresses the consensus of the workshop on the issue of corruption. B. A National Integrity Action Plan by the end of the workshop; or
SATISHCHANDER

34

C. A review of progress made on an earlier Action Plan.

D. Municipal and Sub-national Integrity Workshops

Conscientious mayors and municipal managers are generally concerned about the quality of Municipal services and how to improve municipal efficiency, effectiveness, transparency, Accountability and value for money. They want to know residents opinions of the services provided, find out where corruption may be siphoning resources, install a Local Integrity System to improve service delivery, and enhance the image of the municipality. Municipal and other sub-national workshops are part of a four-phase program to introduce a Municipal (or subnational) Integrity System. Phase I is intended to help build a coalition in support of reform by focusing on discussions with local stakeholders and deciding on the modalities for a program. This is done through a Municipal Integrity Workshop. The specific objectives of this first workshop are to: Determine the views of the workshop participants regarding the provision of municipal services by conducting an informal opinion poll. Seek agreement on the importance of an improved service delivery system to increase the efficiency and effectiveness of delivery. Introduce the idea of a Local Integrity System to enhance accountability and transparency. Phase II focuses on carrying out an SDS directed at specific areas of concern. Phase III, the results of the SDS are presented at a second Municipal Integrity Workshop and an Action Plan is drafted. Phase IV involves implementing the action plan according to the agreed timetable, monitoring and evaluation. Drawing on the SDS findings, the content of the second workshop includes the following Topics:-

Define the nature and magnitude of corruption in the municipality Define the detrimental effects of corruption Define a Local Integrity System to fight corruption Raise public awareness and emphasize the role of the civil society Emphasize public participation and the democratic process Discuss anti-corruption strategies

SATISHCHANDER

35

Discuss watchdog agencies Discuss the judicial process Discuss role of the media Discuss role of the private sector Like the National Integrity Workshops, the municipal or other sub-national workshop should Produce tangible outputs, including: (a) an Integrity Pledge, which expresses the consensus of The workshop about corruption, and (b) a Local Integrity Action Plan which established a time Frame for specific actions to address priority areas and identifies a group (probably an NGO) That will be responsible for monitoring the achievement of the plans goals and tasks. Being Held accountable for decisions made at the workshop makes participants role models for accountability throughout the country. The results of the Local Integrity Action Plan can be measured in terms of progress made in building a Local Integrity System. Of particular importance is the extent to which the plan has been implemented. Each stakeholder should be encouraged to self-assess the outputs and outcomes achieved by the organization. Regularly repeated SDS will provide outside confirmation of changes in public-sector performance and of the factors that are responsible for these changes. Integrity surveys can provide additional information on the extent to which the public perceives that corruption has been curbed. Other indicators of progress can be established at the Municipal Integrity Workshop (e.g. media coverage of corruption, changes in revenue collection, changes in foreign direct investment, or evidence of successful prosecutions for corrupt practices).Measuring results may show progress in terms of outputs (e.g., introducing a Code of Conduct and periodic appraisals of the performance of municipal employees) and the desired outcomes of these changes such as a decline in requests for bribes. The sustainable impacts of these changes in terms of less corruption and improvements in public services overall will be influenced, however, by factors (such as wage scales and offers of bribes from the private sector) beyond the control of a particular municipality.

E. Special Integrity Workshops for Each Integrity Pillar

Special workshops have been held for peer groups, which focus on corruption as seen from their perspective and what it means for them in carrying out their public roles and responsibilities. For example, a workshop for parliamentarians includes discussion on how to prevent or curb corrupt practices among the parliamentarians themselves and seeks to strengthen Parliament as a watchdog agency. Workshops for ministers have similar objectives. Occurrences of ministerial indiscretions being vaguely defined and being defended as being in the public interest are all too common. To give one example, this
SATISHCHANDER

36

kind of reasoning has been used by an Attorney General to justify the action taken by a Minister of Finance who exempted his own car from import duties.

The overall objective of these workshops is to create a pool of trainers in the region equipped with skills to assist local authorities in developing and setting up a Local Integrity System to fight corruption. More specifically, these workshops aim at:

1. making participants appreciate the detrimental effects of corruption. 2. Fostering discussion of what will be needed to set up a Local Integrity System with all Integrity pillars. 3. Assisting/facilitating local authorities in setting up Local Integrity Systems. 4. Defining the roles of relevant actors (donors, NGOs, and other integrity pillars).

F. Action Plans
Translating dialogue into action is a critical step in the process of building a National Integrity System. The same principles apply to all action plans, whether they are a National Integrity Action Plans, municipal or other sub-national action plans.

First, to be successful, the effort must be wholly owned and driven by the subject country. In particular, the countrys political leader and his/her deputy play a central role in setting the Tone and asserting moral authority. The action plan should be endorsed or issued by an executive commission.

Second, a major effort must be made to draw civil society into the process in imaginative and Constructive ways. Public opinion surveys, which proved successful in the INDIA reform efforts, can be used.

As a third principle, any action plan should call for major initiatives in four separate areas: awareness-raising, both top-down and bottom-up; institution building; prevention of corruption by minimizing opportunities and increasing risks of detection; and enforcement Expectations must be managed carefully to ensure that promises are realistic, that some
SATISHCHANDER

37

changes are made quickly and that they are communicated to the public to maintain their confidence in the process.

Fourth, a high level of co-ordination within the government will be needed as actors and Stakeholder execute the program. Implementing the national action plan, for example, will typically involve the auditor-generals office the ombudsmans office, prosecution agencies, the civil service, public procurement agencies, government departments, and professional Associations among other groups. Donors will also need to co-ordinate their actions as the undertaking will be too all-embracing to allow for the luxury of ad hoc assistance. The process of devising a National or Local Integrity Action Plan is event-driven. A time table with benchmarks, staggered events, and monitoring schedules is necessary but there should be some room for flexibility. Stakeholders should be held accountable for achieving results. Donors can help organizations achieve reform by providing resources, space and protection. Most action plans developed so far have had concrete action items for each of the pillars Workshop emphasized the importance of:

Agree on a focused and realistic action plan (no more than 5 items) - Select actions where the participants have authority to change things - Pick areas that are visible and important to the public - Pick action items that you can afford to implement - Agree on who is responsible for the implementation and a time frame

G. The Integrity Pledge

Another tool used is an integrity pledge that participants sign at the end of integrity workshops. These pledges are not legally binding, but participants commit themselves with their signatures to take certain actions against corruption. Pledges have included the Following; launching a local chapter of Transparency International; committing to act honestly and openly in all aspects of their lives; putting the well-being of the people ahead of their personal and party interests; uniting to fight corruption by using all opportunities both in their place of work and in their private lives; and sensitizing the public to the effects of corruption on the development of their countries. These pledges are given wide publicity at the end of the workshops by both print and broadcast media, and the names and signatures of participants are printed in newspapers in most cases. Such public commitment
SATISHCHANDER

38

by participants, who include parliamentarians, journalists, educators, civil servants, ordinary citizens, non-governmental organizations, etc., puts added pressure on the participants to take the fight against corruption seriously.

H. Islands of Integrity
The Island of Integrity or enclave approach was developed by Transparency International as one way of guaranteeing a transparent process in procurement. The approach fences off an area of government activity to address corruption in a manner isolated from other influences.

For example, in the area of procurement, the approach is based on pledges by bidders not to pay bribes to win government contracts. Sizeable bonds are subject to forfeiture in the event of non-compliance. Other consequences could include, disqualification from further Involvement in the project or other publicly-funded projects (blacklisting) for all private sector parties who violate the pledge and immediate dismissal of those in the public sector.

Who are found guilty of violation? This approach has been tried in countries like Ecuador, Argentina, and Panama, sends a definitive message that private industry is no longer a party to defraud the government and the public. Key donors have been including this approach as one of the integrity tools in the fight against corruption. Although it is too early to pass judgment on its successes, the challenge of this approach is to introduce integrity into the process before any irregularity takes place and to obtain a credible commitment by all stakeholders involved, to ensure the rules are not broken.

I. The National Integrity Steering Committee

A first practical step in strengthen a National Integrity System is to establish a National Integrity Steering Committee (NISC) which brings together all stakeholders. Within government this would include representatives of the nations executive, judiciary, cabinet, electoral governing body, and civil servants in key departments such as customs, procurement, revenue collection, and local government. Representatives from outside government would include leaders from religious groups, business, the media and special interest groups.

SATISHCHANDER

39

The committees task is to analyses the framework, identify and priorities areas for reform, and develop a plan that includes short-term, medium-term, and long-term goals along with a public awareness-raising program. It should assign subcommittees to follow up action and receive reports on the progress toward stated goals. The working group should publish the names of its members, its overall plan, and regular status reports. Input from the general public should be solicited from the beginning and regularly throughout the national integrity working groups existence. The endorsement of the working group and its plan by political leaders and the public is essential and must be solicited for the duration of the committees existence. The group should pay particular attention to achieving several quick wins to build public confidence early in the process. In doing their work, the NISC members should be guided by certain key principles.

Key Principles

-Local Ownership -Increase accountability through increased transparency -Enforce access to information to all -Balancing of powers across executive, legislative and judiciary -Broad-based capacity building -Public empowered to monitor the state -Administration based on rules -Rule of law -Focus on corruption initiated both from the North and South -Overall objective is improved service delivery and high quality growth

8. MORE QUESTS THAN ANWERS

SATISHCHANDER

40

Despite the work done over the past few years, its intensity and the involvement of both academics and activists, reformers and development agencies, there are still more questions than answers.

We have found very clearly that what outsiders have to offer is process: substance has to be provided by the internal actors. Outsiders can facilitate and provide information, but they cannot diagnose and they cannot prescribe. Only the local people are in a position to do either. However, together, the facilitators and the facilitated, there can be potentially powerful impact emerging from informed discussion, particularly through the creation of action plans. We have found, too, that the concept of the single national integrity system is an extraordinarily useful one and one which helps put the various components into a coherent perspective. It also can throw short-comings into sharp relief, especially where discourse takes place in the setting of a national integrity workshop.

A classic example is provided by experience in Uganda. There a stakeholder innocently asked of the Inspector General of Government how it was that although many cases of corruption were unearthed by him, few if any people appeared in court. The IGG said that his was not the job to prosecute, simply investigate, and so the files were sent to the Director of Public Prosecutions for action. The DPP said that his office did not receive the files. Why not, asked the questioner, have the IGG prosecute, as this would eliminate the gap through which the files appeared to be leaking and make it plain where accountability lay? The DPP agreed to a recommendation that the constitution be amended to provide for this, and the amendment was made several weeks later. One of the morals of the story is that the DPP and the IGG might well never meet in a work environment, and so the workshop provided a unique opportunity for pillars of the integrity system to discuss their difficulties in ways that otherwise would not have eventuated. It has also appeared very clearly that an effective anti-corruption strategy must be integrated and holistic. Ad hoc, standalone reforms are unlikely to achieve much progress, at least in the short term. It matters little, for example, to tidy up a judicial system is the prosecution and Investigation pillars are left to crumble.

There can be longer term advantagesthe reforms in Kenya which have strengthened the office of the Auditor-General have resulted in much more transparency and greater awareness of the extent of corruption in that country, but because of an enfeebled parliament and a dominant executive, despite the media discharging its role and getting the messages out, the levels of corruption do not appear to have abated.

SATISHCHANDER

41

A clear lessonand a widely accepted approachis that prevention is better than prosecution. The move to clean up a system through prosecution depends on having a working judiciary and good prosecution service in place and numbers of people being charged who can be accommodated within the system, and the available resources, both human and material, to conduct the necessary investigations. It thus lends itself more for tidying up a strong integrity system which has hit a bumpy patch, rather than resolving problems of systemic corruption. Enforcement is certainly essential if the corruption equation of Corruption = High Profit, Low Risk is to be converted into a deterrent which says Corruption = High Risk, Low Profit. But it can seldom be the major tool. Enforcement is retrospective, and what matters most is to stop the leakages at once, not chase after the Leakages after they have taken place. This in turn points to the need to address the system rather than the individual. There is little point in indulging in indiscriminate witchhunts (though some scalps may well assist raise public confidence in the credibility of the reform process).

Corruption is generally being a secret undertaking, with benefit flowing to both giver and receiver; we are left with having to battle against perceptions of where corruption is taking place. The need for hard facts is obvious, but obtaining them may be another matter. One way is to install telephone call-in lines, guaranteeing anonymity, and inviting the public to ring in with their complaints. Another is to establish a commission of inquiry, such as the Warioba Commission in Tanzania (although this unearthed so much corruption that popular perception seemed to be that matters were getting worse, not better, pointing to other lessons, particularly to information management being essential).

More recently, in some countries we have seen municipalities start to realize that there is space for them to reform local practices, enabling local mayors and councils to clean up local government without having to rely on central government (which may itself be paralyzed by corruption or otherwise be unwilling to take the issue on). Mayors are starting to develop strategies, drawing civil society watch-dogs into the frame to inform and to authenticate the processes, and there will be many interesting insights gained at the local level in the coming months.

We have also seen very starkly that what will work in one country, and work well, may be wholly ineffectual in another. The most outstanding example of this would be the Independent commission Against Corruption, which was introduced so successfully in Hong Kong, and copied with a high degree of success in Singapore. What was it about the Asian model that helped it succeed there, whilst failing dismally in e.g. Africa? The Hong Kong environment was an ideal one for the Commission approach. There was a head of
SATISHCHANDER

42

government (a Colonial Governor) from outside the colony, with no family or business links into the local scene. He was well paid and could look forward to a comfortable, respectable and respected future as a member of the U.K. House of Lords. There was also determined to see the experiment succeed and so honoured the independence of the Commission, even though this was nominally accountable to himself. Added to this there was a working judiciary and a pool of well-paid, highly professional Investigators and prosecutors to conduct enforcement work, and a robust economy (particularly over the later years) capable of delivering significant budgets to the Commission for its public awareness and prevention work. The country was undemocratic, and thus could sustain the shocks of a police strike and an enforced partial amnesty being granted for past sins which shocked the populace and might well have brought down a popularly-elected government. Singapore took the model, and again it worked. The same ingredients were there, with the exception of an outsider as head of government. Instead there was a Prime Minister who was well-paid and ruthlessly determined to rid the country of corruption, which he had identified as the major barrier to the country succeeding. Thus, although the Commission (actually an Agency) was accountable to the Prime Minister (and formed part of his office), it knew that it had the whole-hearted support of the Prime Minister and so could and did investigate even cabinet ministers where these were suspected as having transgressed. The fact that the country was a de facto one party state also meant that the room for politicization of anti-corruption work was kept to a minimum. Yet when the same models were established in Africa they undoubtedly failed. The Prevention of Corruption Bureau in Tanzania was been blunt about political interference in its work.

Reporting to the Office of the President, once the unquestionably clean Julius Nyrere stepped down as president, its reports simply disappeared into a black hole, and although they were largely free to investigate the system determined that none could touch the untouchables who developed around the office of former President Mwinyi. Zambia is another country that had a similar problem. It tried to resolve these at times by bringing in expatriates to head the office, but these departed in situations surrounded by controversy. In both countries the resources available for the agencies were grotesquely insufficient, the rule of law was far from entrenched, courts were unpredictable to say the least, and many of those working in the public sector were poorly paid, inadequately motivated and professionally lacking. The fatal flaw was unquestionably taking the Hong Kong and Singapore models and applying them into different situations where they simply would never be able to function.

By contrast, Botswanaan African country well-run, well-resourced and where the rule of law was functioningadopted the Hong Kong model after scandals involving ministers had
SATISHCHANDER

43

been uncovered. The fact that these discoveries were triggered by police at a car accident scene finding a considerable sum of money in US treasury bills say much for the prevailing ethical environment (in many countries, north, east or south, the money would have vanished and the story would have ended then and there). Quickly, a Commission was established under the Hong Kong model and a former Deputy from the Hong Kong ICAC brought in to run it. Just as quickly a rash of prosecutions began against low level civil servants and are form introduced to snare big fish was scooping up minnows. The development in Botswana are too recent for us to be able to judge the success of the reforms, but without doubt the presence of ethical leadership at the highest levels of government have played a significant role in the achievements to date. This, then, highlights the problem of transition. As the Vice President of Uganda remarked to donor mission, a government that has corruption at the highest levels lacks moral authority to act against those, who are corrupt at the lower levels. How do I explain to a family why it is their brother or their sister who has been singled out for treatment? she fairly asked.

So if prosecution for all past transgressions is not a viable optiontoo many people, hugely disruptive and the state lacking moral authority to acthow does one achieve an amnesty, both to set minds at rest and to ensure that there is not a huge spate of prosecutions such as appears to have been the case in Botswana? The public (as was the case in Hong Kong) deeply resent corrupt police being given an amnesty for their illegal actions against the public. Rationally one can explain why this might be necessary, but it is easy for a political opponent to blow the case out of the water with a blast of populist oratorySoft on crime, soft on the causers (sic) of crime, etc.

An alternative approachor a supplemental onecan be the introductions of systems whereby senior decision makers declare their assets, whether publicly or privately. This is now widely seen as the key to unlocking the anti-corruption chest. Indeed, it might be. But for the monitoring of assets to work there must be several thresholds metthe declarations must be true and correct (and so able to serve as a benchmark against which future assets can be measured), the procedure must be such as to deter people from making false declarations (e.g. They must be subject to random audit if they are made in confidence; or they must be Accessible to the press and the public to enable civil society to do its own monitoring), the assets covered must include all the areas that lend themselves to be used to store looted public funds (an excellent example of how to ensure that legislation is wholly ineffectual is provided by the law in Tanzania, which requires that all assets be declared but then goes on to exempt just about everything imaginable), and the immediate family of the of the official must also be covered in appropriate ways (the debates in legislatures are wonderfully instructive, with legislators notorious for their male chauvinism suddenly
SATISHCHANDER

44

becoming advocates of the rights of wives to earn and hold wealth separate and apart from, and unknown by, their spouse).

It has to be said that the authors are not aware of a serious recent attempt to get on top of the problem through this route. There are many legislatures who have been going through motions of one sort or another, but the jury is still out as to whether ways will be found to cut through a classic conflict of interest: the legislators/executive are being asked to provide firm rules to keep themselves honest. There are very real problems. If a person has survived for some time in a systematically corrupt environment and risen to a position of prominence, the chances are that he will have (perhaps have been forced by economic circumstances to have) augmented his income in irregular ways, whether through unnecessary foreign travel, ghost up-country trips or simply servicing his private car in the public service garage. One way or another he or she will have acquired assets and a style of life that is out of line with their official income particularly where this has not constituted a living wage. This means that anyone filling out a declaration of assets will in effect be declaring that they possess illicit wealth. And if they do not complete the forms correctly, the whole exercise is valueless. The same questions overhang another simple reform. Hong Kong introduced the offence of a civil servant living beyond known means. It was not necessary to show a corrupt act. It was enough for a person in a position to prosper illicitly as being in possession with wealth or leading a life style wholly out of line with official income, unless and until he or she can Produce an affirmative defence and show that the wealth came from licit sources. This has proved powerful in Hong Kong, Singapore and Malaysia to name three. But again, in Africa the provision has been enacted but there have been no prosecutions. Why not? Again, an EDI/TI team was told that the provision was a bit harsh and that we do not like it very much.

Part of the answer lies in the participation of civil society and the active involvement of the professions and the private sector in cleaning out their own houses as well as helping the government with prevention strategies. A large part of the answer lies in non-legal approaches: In dismissing public servants in the public interest and not risking an endless succession of hazardous and time-consuming trials through an incompetent and perhaps corrupt legal system. In building accountability between officials and the public they are meant to be serving, both by the use of surveys and, even more potently, by organizing Meetings in which officials explain to people at the grass roots just where the money has an excellent model for this latter approach is provided by activities in India.

SATISHCHANDER

45

The Indian village of Surajpura is a long way from Washington D.C., yet access to informationwhich forced President Nixon from office in the USA after the Watergate Tapes become publicproved no less potent there. The Government of Rajasthan recently recognized the peoples right to access to official documents at the local level, landmark legislation itself the culmination of a 53-day hunger strike. Now an NGO, the Mazdoor Kisan Shakti Sangathan (MKSS) is taking that information to the people. A public hearing, attended by village leaders, on 19 January 1998 in Surajpura village began with a puppet show dealing with the abuse of development funds by politicians and government functionaries. A crowd soon gathered and most stayed for the next six hours. Some had been involved in development works as labourers or masons and followed with interest as the accounts for 23 development projects were publicly examined. Schools, drainage and sewage schemes and other projects were looked at and as confidence among the crowd grew, more and more started to ask questions and to identify a wide range of frauds. The accounts listed some as being paid who had not been. Some showed inflated bills. Others suggested that payments had been made for materials that were never used. The crowd roared with mirth when the name of a person long dead was listed as a paid labourer.

Throughout, the meeting was surprisingly constructive and orderly, made possible through skilful facilitation by MKSS and its success in persuading officials that they really had no alternative but to take part. At its end, about 20 per cent of the funds were found to have been misappropriated and leaders involved had agreed to co-operate with a follow-up process to recover the funds, some even agreeing on the spot to return money where personal liability had been established. Unpaid workers and suppliers were promised payment.

These may seem small victories, but across rural India small development projects have been undertaken in the name of the poor only to have the funds looted for private gain by contractors and officials. The looted money then helps pay for the buying of votes and so distorts democracy as well as development. Aside from being a creative exercise in government for the people by the people, these meetings are small but significant steps towards a transition from representative to participatory democracy. This points to access to information being a powerful tool if creatively used by civil society and suggests that more work needs to be done in this are, if necessary at the expense of some of the work that has been going on in more traditional governance research areas.

Overall, there is a Gordian knot that needs to be cut if it cannot be untangled. We know where we are. We know where we want to be. Just how do we get there? The answers are coming, but not just yet.
SATISHCHANDER

46

9. CHALLENGES AHEAD
If there are many unanswered questions, there are also as many challenges. First, the question is the sequencing of reforms. This will differ from country to country, but actually working out precisely where to start in the process is an important one as it will dictate much of the path ahead. It is in this context that the national integrity system workshop can be most effective, providing as it does an opportunity for all stakeholders to participate in a process that otherwise tends to be dominated, for no good or compelling reason, by lawyers.

A particular challenge for the outsider is to identify the appropriate (and clean) partners in a given country. There may be many who offer themselves, but the outsider must be able to determine what hidden agendas there may be and what individual motivations are as well as gain a reading on where the people concerned stand in their community. This dictates a Special role for civil society in a country from the very outset so as to ensure that the reform process is fostered with the right champions. The road blocks, too, need to be identified from the outset, and the base line of acceptable (or perhaps better described as tolerable)conduct which the people are prepared to live with, defined.

The credibility of enforcement and watchdog agencies is crucial to the building of public trust and confidence. Credible agencies will attract public co-operation, both as complainants and as witnesses. An institution lacking in trust will not. And at the heart of credible institutions lies their manifest and popularly-accepted integrity. Their leaders must role model conduct of the highest kind.

The donor community also has a significant role to play in developing countries, both as part of the problem and as part of the solution. They are part of the problem because in many quarters they are viewed as having turned a blind eye to corruption in the projects they have been funding, and to tolerate the misappropriation of public funds to suit their own ends.

However, unfair some may think this to be, it is a perception that is very real. And in many instances there is substance to the complaint. So donor organizations must re-examine their
SATISHCHANDER

47

own practices, something which many have been doing. And as part of the solution there are activities which donors can, should and do fund, but it is essential that these be locally owned and driven. The traditional form of expert aida foreigner flying in for a short period, doing a job and goinghas been conspicuous by its failure to achieve sustainable development. Whatever may have been the position in the past, most countries now have the human resources to tackle their own problems, but they may need access to information, the tools they need to undertake the job and, at times, a word of encouragement. Thus the donors role is to be low key, supportive and facilitative. The more conspicuous is the role of the donor, (dominating small group discussions etc.) the less likely the efforts are to bear fruit. The donor community can; in particular, back up the data collection processes needed to empower civil society to hold the civil service accountable to turn public servants into servants for the public.

And they can help stress a focus on the bribe giver, and not just the bribe receiver. This is particularly the case in so-called grand corruption, where for a generation or more exporters from the industrialized countries have been accustomed to bribing officials in developing countries to win business or to create what in many cases became white elephant projects. Frank acknowledgement of the role of the rich countries in contributing to the present decline, and with it an equally frank admission that no country can claim any sort of moral supremacy when it comes to corrupt practices goes a long way towards cementing a meaningful partnership. The hand that gives must also be addressed at the national level, but concerted action against the grand corrupters from abroad (and the OECD treaty signed in December 1998 offers a way forward for the industrialized world) creates a climate of change and the moral ground necessary to address forms of corruption at lower levels.

There are many lessons to learn, and the final one is information sharing. The task countries Confront is daunting and everyone needs access to as much experience and information as possible. This is not an area in which experts should develop stand-alone and discreet information bases. This is why TI are joining with the Vienna-based UN Crime Prevention Programme and the Commonwealth Secretariat in London to build a web site which will contain as much best practice as possible. This will be added to, and pruned from, as experience grows. And we would conclude with an invitation to others to join in this project as being one from which all can benefit through sharing.

SATISHCHANDER

48

10. CONCLUSION
The process of building national integrity systems is as important as the content. The following are six final thoughts about the process.

1) Successful reform requires a country to integrate and harmonies all reforms in to a National Reform Program, including: sector reforms, financial reforms, economic reforms, constitutional reforms, civil-service reform, decentralization, army demobilization, privatization, and legal reforms. 2) Reform is a long-term process where attitudes and conduct must be examined and reevaluated for effectiveness at all levels. 3) Successful reformers will have to manage both expectations and change while introducing realistic incentive structures and sanctions. 4) Initially, reform should only tackle areas: (a) that can show credible impact on issues Important to key stakeholders; (b) where the return on investment is greatest; (c) that are discrete and where reformers can control implementation, (d) that are within the budget; and(e) that can have some short-term positive impact. 5) Reform is a process of instituting building blocks that must be put in place over a number of years.

The process of and commitment to reform must be visibly supported from the top Essential to curbing corruption is undertaking and maintaining the publics confidence in the State as an institution. It is dependent upon the peoples loyalty to its philosophy and policies regarding the development of the societys social, economic, and political welfare. At the heart of successful reform is the States.

These ten country examples are important since they act as regional examples, which are Often more relevant and easier to sell to other countries in the same region. All CICP country based activities should be compatible with the other donors general strategy and an overall larger framework of country reform (CDF) Collaboration between all active donors to put -corruption into an effective overall strategy can only facilitate these efforts. Some the anti-models based upon the governance groups prior experiences have been
SATISHCHANDER

49

effective, but the strategy must remain adaptable. The model should change as case law or best practice experience increases with the final objective being improved effectiveness. Surveys help establish baseline on which to judge progress. The growing realization that the private and public sectors should be examined supports efforts to develop effective, actionoriented information-gathering procedures. They play an important role in measuring the places where the private sector interacts with the public, such as the case of the TI survey. It is significant to note that surveys used for pure awareness raising and problem identification are going to be less involved and smaller than surveys used for problem description or in the development of a broader reform program. The so-called Service Delivery Surveys (SDSs), done in partnership with CIET International, are in the latter category and are consequently expensive. However, to ensure effectiveness, much of the governance work should be done at the sub-national level. As decentralization becomes a growing priority, more analyses are needed to assess the relative advantages of decentralization and the process for the efficient delivery of public services.

11. Hypotheses of corruption

Additional Literature and the Hypotheses

1. Higher Levels of Income and Education

In most all studies of the determinants of corruption whether at the national or subnational level studies have found that most affluent and better educated countries or regions are associated with lower levels of corruption. Essentially, the theoretical Foundations for this hypothesis come from Lip sets theory of modernization (Lip set 1960) combined with the standard principle-agent model oftentimes employed in the corruption literature (Rose-Ackerman 1975). Lip set posits that as citizens (the agents) become wealthier and better educated they will be more capable of monitoring their public representatives (the principle). Due to the greater likelihood of being caught, incentives are reduced for politicians and bureaucrats to engage in rent-seeking behaviour. The higher levels of wealth also give more citizens the resources to mobilize and take action against corrupt public officials. This sentiment is essentially echoed by Huntington (1968), in that he claims that in earlier stages of development there are greater opportunities for corruption due to the changes in the socio-economic system of the state. Numerous studies have shown strong empirical support for the impact of income and education on corruption (Treisman 2000; Alt and Lasson 2003; La Porta et al 1999; Montinola and Jackman 2002). We
SATISHCHANDER

50

would thus hypothesize that regions in India with greater levels of education and affluence, would, on average, be less corrupt.

2. The Heterogeneity/ Fractionalization Hypothesis

India, a country of 1.16 billion inhabitants, is a country with high levels of ethnic, linguistic and religious diversity3. It has two major ethnic groups (Indo-Aryan and Dravidian), 15 official languages and at least 5 major religious (Hindu, Islam, Christianity, Buddhism and Sikh) 4. Thus a discussion about the effects of heterogeneity on corruption applies quite well in the case of India. As Mauro (1995) argues, regions or countries with higher levels of ethno-linguistic fractionalization might reduce the Like LaHood that citizens will oppose or penalize corrupt public officials. Citizens are more apt to back a politician that is of their religion or ethnicity and in return, leaders of various groups might be more inclined to allocate resources in a systematically unfair way to benefit their own ethnic, religious or linguistic group. Several studies have found evidence suggesting that on average, greater diversity is associated with higher levels of corruption (Alesina et al 2003; La Porta et al 1999; Charron 2009). We would thus expect that, ceteris paribus, regions that have greater levels of heterogeneity will be more susceptible to clientalism and politics of division that lead to greater corruption in the public sector.

3. Income Inequality Hypothesis

Although admittedly it is next to impossible to distinguish a distinct causal direction between these two variables, inequality and corruption are expected to be related. Several recent studies have demonstrated a significant relationship between these two variable, with some finding that corruption has a positive effect on income inequality (Gupta et al 2002; Gyimah-Brempong 2002) and others showing support that inequality increases corruption, in particular in democratic states (You and Khagram 2004). The argument as to why these two forces are related is rather straight-forward. In areas that are more unequal, more of the citizens will of course be poorer, which should compel them to pressure the state for greater redistribution, which would come from taxing the wealthier class (Meltzer and Richard 1983). In response to redistributive pressures, the wealthy have greater incentives to engage in political corruption to avoid paying higher tax along with bureaucratic corruption to avoid tax payments. In this scenario, the poorer Citizens have fewer resources to keep the wealthy in check or monitor their behaviour and are likely to receive poor services such as health and education from the state. They are thus themselves more likely to be dependent on petty corruption to receive services because bureaucrats are in a better position to extort them in exchange for basic public services (You and
SATISHCHANDER

51

Khagram 2004). Additionally, you and Khagram (2004) show that in democracies, inequality is likely to have a greater impact on corruption than in dictatorships because the wealthier classes are forced to rely on corruption over repression of the masses. Further, the greater number the poor, the more opportunities for vote buying during a political campaign. Based on this, we would anticipate that on average, higher levels of income inequality in Indian states are associated with higher levels of corruption.

4. The Effect of Decentralization on Corruption

The impact of decentralization whether political, financial or administrative - on corruption is a hotly contested topic. India is a long-time federal system with state-level elected official and parliaments which are represented by both national and regional parties. Today it contains a total of 28 states and 7 unit territories, most of which under the States Reorganization Act in 1956 were draw around linguistic lines5. Each state is primarily responsible for issues such as law enforcement, education, public works and services, and hospital care within their borders. On the one hand, Tanzi (2001) and others argue that fiscal decentralization might lead to greater levels of corruption, especially in developing countries, because local leaders are expected to be less competent than those at the national level and might be more prone to clientalism because of closer and more frequent contact with citizens. Moreover, the lines of responsibility are more blurred than in a strict unitary, centralized system, thus voters do become more confused regarding to whom they should assign blame for corrupt politics. Gerring and Thacker (2004) find empirical evidence in a cross-sectional study supporting this argument with respect to political decentralization. On the other hand, the greater the political or fiscal decentralization, the closer the voters come to their politicians, who should increase accountability, encourage responsible governance and reduce corruption. Provincially elected governments that are more responsible for collecting their own revenues via citizens in their state should be less inclined to rent-seeking than a regional government that is mainly subsidized by the central government meaning that public officials are less accountable for their funds and policies. Fisman and Gatti (2002) and Gurgur and Shah (2005) find empirical evidence for greater levels of decentralization being associated with lower corruption levels. However, most of the tests of this hypothesis have been conducted using national level data on corruption and aggregated levels of decentralization. India provides an excellent test case in that there are substantial variations in the level of decentralization especially fiscal decentralization among the states. Thus it will be fruitful and interesting to test whether greater levels of instate fiscal responsibility are correlated with higher or lower corruption across the sample.

5. The Media
SATISHCHANDER

52

Several studies have argued and found empirical evidence to support the idea that countries with greater media access and an independent free press have lower corruption at the national level, ceteris paribus (Brunetti and Weder 2003; Lindstedt and Naurin 2005; Ahrend 2002). At the provincial level, Ferraz and Finan (2008) and Francken et al (2005) demonstrate the medias pivotal role in helping curb corruption in certain regions due to higher volume of radio listeners in Brazil and Madagascar respectively. Since this analysis is examining a sample of state within one country, variations in press freedom are expected to be low to non-existent across regions. However, one might expect that states with higher levels of media consumption might have a more informed public on political matters, thus building a population that is better suited to monitor and penalize corrupt behaviour in the public sector.

B. CULTURE OF CORRUPTION IN INDIA

12. Corruption in India

Corruption is widespread in India. Corruption has taken the role of a pervasive aspect of Indian politics and bureaucracy. Political and bureaucratic corruption in India is major concerns. A 2005 study conducted by Transparency International in India found that more than 45% of Indians had first-hand experience of paying bribes or influence peddling to get jobs done in public offices successfully. In India, corruption takes the form of bribes, evasion of tax and exchange controls, embezzlement, etc.

Transparency International estimates that truckers pay US$5 billion in bribes annually. In 2010 India was ranked 87th out of 178 countries in Transparency International's Corruption Perceptions Index (3.3).

Overview

Although former Prime Minister and Congress party leader Indira Gandhi is quoted as saying that corruption is a misuse of power, she also publicly stated "nonchalantly" that "corruption was a global phenomenon" and her government was no different. Successive
SATISHCHANDER

53

central governments and members of India's famous Nehru-Gandhi political dynasty have often been accused most of corruption and amassing illegal wealth among India's political class. The year 2011 has proved to be a watershed in the public tolerance of political corruption in India, with widespread public protests and movements led by social activists against corruption and for the return of illegal wealth stashed by politicians and businessmen in foreign banks over the six decades since independence.

Since 1991, economic liberalization in India has reduced red tape and bureaucracy, supported the transition towards a market economy and transformed the economy, with record growth rates of 9.2% in 2007and 9.6% in 2006. However, though the Indian economy has become the 6th largest in the world, its growth has been uneven across social and economic groups, with sections of society experiencing some of the highest levels of poverty in the world. Endemic corruption contributes to this uneven distribution of wealth. The cost of corruption, perceptible in public sector inefficiencies and inadequate infrastructure, is undermining efforts to reduce poverty and promote sustainable growth.

Criminalization is also a serious problem in contemporary Indian politics. In July 2008 The Washington Post reported that nearly a fourth of the 540 Indian Parliament members faced criminal charges, "including human trafficking, immigration rackets, embezzlement, rape and even murder".

India tops the list for black money in the entire world with almost US$1456 billion in Swiss banks (approximately USD 1.4 trillion) in the form of black money. According to the data provided by the Swiss Banking Association Report (2006), India has more black money than the rest of the world combined. To put things in perspective, Indian-owned Swiss bank account assets are worth 13 times the countrys national debt.

The recent scams involving unimaginably big amounts of money, such as the 2G spectrum scam, are well known. It is estimated that more than trillion dollars are stashed away in foreign havens, while 80% of Indians earn less than 2$ per day and every second child is malnourished. It seems as if only the honest people are poor in India and want to get rid of their poverty by education, emigration to cities, and immigration, whereas all the corrupt ones, like Hassan Ali Khan are getting rich through scams and crime. It seems as if India is a rich country filled with poor people", the organizers of Dandi March II in the United States said.

SATISHCHANDER

54

The Comptroller and Auditor General of India said, As on March 31, 2010, unutilized committed external assistance was of the order of Rs.1, 05,339 crore.

In a most recent example of corruption, even as the Enforcement Directorate (ED) probes US$8 billion worth transactions allegedly involving suspected money launderer Hassan Ali Khan, evidence available with a news source in India shows that he had transactions of over Rs 112,000 crore (US$24.86 billion) between years 2005 and 2006. This amount is enough to fund the national drinking water project in all the six lakh (600,000) villages in India for the next 10 years.

History

The economy of India was under socialist-inspired policies for an entire generation from the 1950s until the late 1980s. The economy was subject to extensive regulation, protectionism, and public ownership, leading to pervasive corruption and slow growth. License Raj was often at the core of corruption.

The Vohra Report, submitted by the former Indian Union Home Secretary, N.N. Vohra, in October 1993, studied the problem of the criminalization of politics and of the nexus among criminals, politicians and bureaucrats in India.

The report contained several observations made by official agencies on the criminal network which was virtually running a parallel government. It also discussed criminal gangs who enjoyed the patronage of politicians of all political parties and the protection of government functionaries. It revealed that political leaders had become the leaders of gangs. They were connected to the military. Over the years criminals had been elected to local bodies, State Assemblies, and even the Parliament. The unpublished annexures to the Vohra Report are believed to contain highly explosive material.

According to Jitendra Singh, "in the bad old days, particularly pre-1991, when the License Raj held sway, and by design, all kinds of free market mechanisms were hobbled or stymied, and corruption emerged almost as an illegitimate price mechanism, a shadowy quasimarket, such that scarce resources could still be allocated within the economy, and decisions could get made. These were largely distortions created by the politico-economic
SATISHCHANDER

55

regime. While a sea change has occurred in the years following 1991, some of the distorted cultural norms that took hold during the earlier period are slowly being repaired by the sheer forces of competition. The process will be long and slow, however. It will not change overnight." One of the major problems and obstacles to development that many developing countries face is corruption by greedy, power-hungry politicians, which is endemic in certain parts of the world.

Forms of Corruption
Most reports and studies emphasize that the country continues to face major governance challenges. There is a lack of transparency in governance rules, procedures are complicated and the bureaucracy enjoys broad discretionary power. Nepotism is embedded in the civil service, journalists are harassed for reporting on corruption and recent years have seen an increase in off-the-books campaign finance arrangements. The country is further characterized by rigid bureaucratic structures, an exclusivist process of decision-making, overly centralized government, poorly-paid civil servants and the absence of effective internal control mechanisms. Political corruption and corruption scandals involving high ranking officials and ministers periodically hit the headlines, undermining the legitimacy of democratic processes and citizens trust in public institutions.

Political corruption

Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by private persons or corporations not directly involved with the government. An illegal act by an officeholder constitutes political corruption only if the act is directly related to their official duties. Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, patronage, graft, and embezzlement. While corruption may facilitate criminal enterprise such as drug trafficking, money laundering, and human trafficking, it is not restricted to these activities. The activities that constitute illegal corruption differ depending on the country or jurisdiction. For instance, certain political funding practices that are legal in one place may be illegal in another. In some cases, government officials have broad or poorly defined powers, which make it difficult to distinguish between legal and illegal actions. Worldwide, bribery alone is estimated to involve over 1 trillion US dollars annually. A state of
SATISHCHANDER

56

unrestrained political corruption is known as a kleptocracy, literally meaning "rule by thieves".

Types

Bribery
A bribe is a payment given personally to a government official in exchange of his use of official powers. Bribery requires two participants: one to give the bribe, and one to take it. Either may initiate the corrupt offering; for example, a customs official may demand bribes to let through allowed (or disallowed) goods, or a smuggler might offer bribes to gain passage. In some countries the culture of corruption extends to every aspect of public life, making it extremely difficult for individuals to stay in business without resorting to bribes. Bribes may be demanded in order for an official to do something he is already paid to do. They may also be demanded in order to bypass laws and regulations. In addition to using bribery for private financial gain, they are also used to intentionally and maliciously cause harm to another (i.e. no financial incentive). In some developing nations, up to half of the population has paid bribes during the past 12 months.

Bribery, a form of corruption, is an act implying money or gift given that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or other person in charge of a public or legal duty. The bribe is the gift bestowed to influence the recipient's conduct. It may be any money, good, right in action, property, preferment, privilege, emolument, object of value, advantage, or merely a promise or undertaking to induce or influence the action, vote, or influence of a person in an official or public capacity.

Forms of bribery

Many types of bribes exist: tip, gift, perk, skim, favor, discount, waived fee/ticket, free food, free ad, free trip, free tickets, sweetheart deal, kickback/payback, funding, inflated sale of an object or property, lucrative contract, grease money, donation, campaign contribution,

SATISHCHANDER

57

fund raiser, sponsorship/backing, higher paying job, stock options, secret commission, or promotion (rise of position/rank).

One must be careful of differing social and cultural norms when examining bribery. Expectations of when a monetary transaction is appropriate can differ from place to place. Political campaign contributions in the form of cash, for example, are considered criminal acts of bribery in some countries, while in the United States they are legal. Tipping, for example, is considered bribery in some societies, while in others the two concepts may not be interchangeable.

In some Spanish-speaking countries, bribes are referred to as "mordida" (literally, "bite"); in Arab countries they are Baksheesh or Bakshish. However, Bakshish is more akin to tipping. French-speaking countries often use the expressions "dessous-de-table" ("under-the-table" commissions), "pot-de-vin" (literally, "wine-pot"), or "commission occultes" ("secret commission" or "kickback"). While the last two expressions contain inherently a negative connotation, the expression "dessous-de-table" can be often understood as a commonly accepted business practice (for instance, on the occasion of a real estate transaction before the notary, a partial payment made between the buyer and seller; needless to say, this is a good way to launder money).

In German the common term is Schmiergeld ("greasing money"), but according to the Transparency International corruption perception index, corruption would be rare in that part of the world.

The offence may be divided into two great classes: the one, where a person invested with power is induced by payment to use it unjustly; the other, where power is obtained by purchasing the suffrages of those who can impart it. Likewise, the briber might hold a powerful role and control the transaction; or in other cases, a bribe may be effectively extracted from the person paying it, although this is better known as extortion.

The forms that bribery takes are numerous. For example, a motorist might bribe a police officer not to issue a ticket for speeding, a citizen seeking paperwork or utility line connections might bribe a functionary for faster service. In Eugene, Oregon, bribery is an important aspect of the local SLUG Queen pageant that sets it apart from other pageants. The Slug Queens set the rare example of creating an environment where bribery is both
SATISHCHANDER

58

accepted and encouraged. The moment a new queen is crowned, the old queens, who are the judges of the pageant, are open to bribery.

Bribery may also take the form of a secret commission, a profit made by an agent, in the course of his employment, without the knowledge of his principal. Euphemisms abound for this (commission, sweetener, kick-back etc.) Bribers and recipients of bribery are likewise numerous although bribers have one common denominator and that is the financial ability to bribe.

Bribery around the world is estimated at about $1 trillion (494bn).

Trading in influence

Trading in influence, or influence peddling in certain countries, refers to the situation where a person is selling his/her influence over the decision process involving a third party (person or institution). The difference with bribery is that this is a tri-lateral relation. From a legal point of view, the role of the third party (who is the target of the influence) does not really matter although he/she can be an accessory in some instances. It can be difficult to make a distinction between this form of corruption and certain forms of extreme and poorly regulated lobbying where for instance law- or decision-makers can freely "sell" their vote, decision power or influence to those lobbyists who offer the highest retribution, including where for instance the latter act on behalf of powerful clients such as industrial groups who want to avoid the passing of certain environmental, social, or other regulations perceived as too stringent, etc. Where lobbying is (sufficiently) regulated, it becomes possible to provide for distinctive criteria and to consider that trading in influence involves the use of "improper influence", as in article 12 of the Criminal Law Convention on Corruption (ETS 173) of the Council of Europe.

Patronage

SATISHCHANDER

59

Patronage is the support, encouragement, privilege, or financial aid that an organization or individual bestows to another. In the history of art, arts patronage refers to the support that kings or popes have provided to musicians, painters, and sculptors. It can also refer to the right of bestowing offices or church benefices, the business given to a store by a regular customer, and the guardianship of saints. The term derives from the Latin patrons, the formal relationship between a Patronus and his Cliens.

In some countries the term is used to describe political patronage, which is the use of state resources to reward individuals for their electoral support. Some patronage systems are legal, as in the Canadian tradition of allowing the Prime Minister to appoint the heads of a number of commissions and agencies; in many cases, these appointments go to people who have supported the political party of the Prime Minister. As well, the term may refer to a type of corruption or favoritism in which a party in power rewards groups, families, ethnicities for their electoral support using illegal gifts or fraudulently-awarded appointments or government contracts.

Patronage refers to favoring supporters, for example with government employment. This may be legitimate, as when a newly elected government changes the top officials in the administration in order to effectively implement its policy. It can be seen as corruption if this means that incompetent persons, as a payment for supporting the regime, are selected before more able ones. In no democracies many government officials are often selected for loyalty rather than ability. They may be almost exclusively selected from a particular group (for example, Sunni Arabs in Saddam Hussein's Iraq, the nomenklatura in the Soviet Union, or the Junkers in Imperial Germany) that support the regime in return for such favors. A similar problem can also be seen in Eastern Europe, for example in Romania, where the government is often accused of patronage (when a new government comes to power it rapidly changes most of the officials in the public sector).

Nepotism and cronyism

Favoring relatives (nepotism) or personal friends (cronyism) of an official is a form of illegitimate private gain. This may be combined with bribery, for example demanding that a business should employ a relative of official controlling regulations affecting the business. The most extreme example is when the entire state is inherited, as in North Korea or Syria. A milder form of cronyism is an "old boy network", in which appointees to official positions

SATISHCHANDER

60

are selected only from a closed and exclusive social network such as the alumni of particular universities instead of appointing the most competent candidate.

Seeking to harm enemies becomes corruption when official powers are illegitimately used as means to this end. For example, trumped-up charges are often brought up against journalists or writers who bring up politically sensitive issues, such as a politician's acceptance of bribes.

In the Indian political system, leadership of national and regional parties are passed from generation to generation creating a system in which a family holds the center of power, some examples are most of the Dravidian parties of south India and also the largest party in India Congress.

Electoral fraud

Electoral fraud is illegal interference with the process of an election. Acts of fraud affect vote counts to bring about an election result, whether by increasing the vote share of the favored candidate, depressing the vote share of the rival candidates, or both. Also called voter fraud, the mechanisms involved include illegal voter registration, intimidation at polls, and improper vote counting.

Embezzlement

Embezzlement is outright theft of entrusted funds. It is a misappropriation of property. Another common type of embezzlement is that of entrusted government resources; for example, when a director of a public enterprise employs company workers to build or renovate his own house.

Kickbacks

SATISHCHANDER

61

A kickback is an official's share of misappropriated funds allocated from his or her organization to an organization involved in corrupt bidding. For example, suppose that a politician is in charge of choosing how to spend some public funds. He can give a contract to a company that is not the best bidder, or allocate more than they deserve. In this case, the company benefits, and in exchange for betraying the public, the official receives a kickback payment, which is a portion of the sum the company received. This sum itself may be all or a portion of the difference between the actual (inflated) payment to the company and the (lower) market-based price that would have been paid had the bidding been competitive. Kickbacks are not limited to government officials; any situations in which people are entrusted to spend funds that do not belong to them are susceptible to this kind of corruption. Kickbacks are also common in the pharmaceutical industry, as many doctors and physicians receive pay in return for added promotion and prescription of the drug these pharmaceutical companies are marketing.

Unholy alliance

An unholy alliance is a coalition among seemingly antagonistic groups, especially if one is religious, for ad hoc or hidden gain. Like patronage, unholy alliances are not necessarily illegal, but unlike patronage, by its deceptive nature and often great financial resources, an unholy alliance can be much more dangerous to the public interest. An early, well-known use of the term was by Theodore Roosevelt (TR):

"To destroy this invisible Government, to dissolve the unholy alliance between corrupt business and corrupt politics is the first task of the statesmanship of the day." 1912 Progressive Party Platform, attributed to TR and quoted again in his autobiography where he connects trusts and monopolies (sugar interests, Standard Oil, etc.) to Woodrow Wilson, Howard Taft, and consequently both major political parties.

Involvement in organized crime

An illustrative example of official involvement in organized crime can be found from 1920s and 1930s Shanghai, where Huang Jinrong was a police chief in the French concession, while simultaneously being a gang boss and co-operating with Du Yuesheng, the local gang
SATISHCHANDER

62

ringleader. The relationship kept the flow of profits from the gang's gambling dens, prostitution, and protection rackets undisturbed.

The United States accused Manuel Noriega's government in Panama of being a "narcokleptocracy", a corrupt government profiting on illegal drug trade. Later the U.S. invaded Panama and captured Noriega.

Conditions favorable for corruption

It is argued that the following conditions are favorable for corruption: Information deficits

o Lacking freedom of information legislation. The Indian Right to Information Act 2005 has "already engendered mass movements in the country that is bringing the lethargic, often corrupt bureaucracy to its knees and changing power equations completely." o Lack of investigative reporting in the local media. o Contempt for or negligence of exercising freedom of speech and freedom of the press. o Weak accounting practices, including lack of timely financial management. o Lack of measurement of corruption. For example, using regular surveys of households and businesses in order to quantify the degree of perception of corruption in different parts of a nation or in different government institutions may increase awareness of corruption and create pressure to combat it. This will also enable an evaluation of the officials who are fighting corruption and the methods used. o Tax havens which tax their own citizens and companies but not those from other nations and refuse to disclose information necessary for foreign taxation. This enables large scale political corruption in the foreign nations. Lacking control of the government.

o Lacking civic society and non-governmental organizations which monitor the government. o An individual voter may have a rational ignorance regarding politics, especially in nationwide elections, since each vote has little weight. o Weak civil service and slow pace of reform. o Weak rule of law.
SATISHCHANDER

63

o o o o

Weak legal profession. Weak judicial independence. Lacking protection of whistle-blowers. Lack of benchmarking that is continual detailed evaluation of procedures and comparison to others who do similar things, in the same government or others, in particular comparison to those who do the best work. The Peruvian organization Ciudadanos al Dia has started to measure and compare transparency, costs, and efficiency in different government departments in Peru. It annually awards the best practices which has received widespread media attention. This has created competition among government agencies in order to improve.

Opportunities and incentives

o Individual officials routinely handle cash, instead of handling payments by giro or on a separate cash deskillegitimate withdrawals from supervised bank accounts are much more difficult to conceal. o Public funds are centralized rather than distributed. For example, if Rs 1,000 is embezzled from a local agency that has Rs 2,000 funds, it is easier to notice than from a national agency with Rs 2,000,000 funds. o Large, unsupervised public investments. o Sale of state-owned property and privatization. o Poorly-paid government officials. o Government licenses needed to conduct business, e.g., import licenses, and encourage bribing and kickbacks. o Long-time work in the same position may create relationships inside and outside the government which encourage and help conceal corruption and favoritism. Rotating government officials to different positions and geographic areas may help prevent this; for instance certain high rank officials in French government services (e.g. treasurerpaymasters general) must rotate every few years. o Costly political campaigns, with expenses exceeding normal sources of political funding, especially when funded with taxpayer money. o Less interaction with officials reduces the opportunities for corruption. For example, using the Internet for sending in required information, like applications and tax forms, and then processing this with automated computer systems. This may also speed up the processing and reduce unintentional human errors. See e-Government. o A windfall from exporting abundant natural resources may encourage corruption. o War and other forms of conflict correlate with a breakdown of public security. Social conditions

SATISHCHANDER

64

o Self-interested closed cliques and "old boy networks. o Family-, and clan-centered social structure, with a tradition of nepotism/favouritism being acceptable. o A gift economy, such as the Soviet blat system, emerges in a Communist centrally planned economy. o Lacking literacy and education among the population. o Frequent discrimination and bullying among the population. o Tribal solidarity, giving benefits to certain ethnic groups

Politics

The public trust in democratic processes in India is seriously undermined by opaque financing of electoral processes, widespread bribery and other forms of corrupt practices. Political corruption is the use of legislated powers by government officials for illegitimate private gain. Misuse of government power for other purposes, such as repression of political opponents and general police brutality, is not considered political corruption. Neither are illegal acts by private persons or corporations not directly involved with the government. An illegal act by an officeholder constitutes political corruption only if the act is directly related to their official duties.

Forms of corruption vary, but include bribery, extortion, cronyism, nepotism, patronage, graft, and embezzlement. While corruption may facilitate criminal enterprise such as drug trafficking, money laundering, and human trafficking, it is not restricted to these activities. The activities that constitute illegal corruption differ depending on the country or jurisdiction. For instance, certain political funding practices that are legal in one place may be illegal in another. In some cases, government officials have broad or poorly defined powers, which make it difficult to distinguish between legal and illegal actions. Worldwide, bribery alone is estimated to involve over 1 trillion US dollars annually. A state of unrestrained political corruption is known as a kleptocracy, literally meaning "rule by thieves".

The entry of criminals into politics - despite laws requiring public disclosure of candidates assets, criminal records and educational backgrounds is another alarming facet of political corruption in India.

SATISHCHANDER

65

According to The Economist, more than a fifth of federal parliament members in 2008 faced criminal charges. Of the 522 members of Indias current parliament, 120 are facing criminal charges; around 40 of these are accused of serious crimes, including murder and rape. Many of the biggest scandals since 2010 have involved very high levels of government, including Cabinet Ministers and Chief Ministers, such as in the 2G spectrum scam and the Adarsh Housing Society Scam.

Bureaucracy

The purpose of a bureaucracy is to successfully implement the actions of an organization of any size (but often associated with large entities such as government, corporations, and non-governmental organizations), in achieving its purpose and mission, and the bureaucracy is tasked to determine how it can achieve its purpose and mission with the greatest possible efficiency and at the least cost of any resources.

Development

Modern bureaucracies arose as the government of states grew larger during the modern period, and especially following the Industrial Revolution. As the authors David Osborne and Ted Gaebler pointed out in 1993:

It is hard to imagine today, but a hundred years ago bureaucracy meant something positive. It connoted a rational, efficient method of organization something to take the place of the arbitrary exercise of power by authoritarian regimes. Bureaucracy brought the same logic to government work that the assembly line brought to the factory. With the hierarchical authority and functional a specialization, they made possible the efficient undertaking of large complex tasks.

Weberian Bureaucracy

Bureaucratic administration means fundamentally domination through knowledge. Max Weber

SATISHCHANDER

66

Weber described many ideal types of public administration and government in his magnum opus Economy and Society (1922). His critical study of the bureaucratization of society became one of the most enduring parts of his work. It was Weber who began the studies of bureaucracy and whose works led to the popularization of this term. Many aspects of modern public administration go back to him, and a classic, hierarchically organized civil service of the Continental type is called "Weberian civil service". As the most efficient and rational way of organizing, bureaucratization for Weber was the key part of the rationallegal authority, and furthermore, he saw it as the key process in the on-going rationalization of the Western society.

Weber listed several preconditions for the emergence of the bureaucracy. The growth in space and population being administered and the growth in complexity of the administrative tasks being carried out and the existence of a monetary economy resulted in a need for a more efficient administrative system. Development of communication and transportation technologies made more efficient administration possible but also in popular demand, and democratization and rationalization of culture resulted in demands that the new system treats everybody equally.

Weber's ideal bureaucracy is characterized by hierarchical organization, delineated lines of authority in a fixed area of activity, action taken on the basis of and recorded in written rules, bureaucratic officials need expert training, rules are implemented by neutral officials, and career advancement depends on technical qualifications judged by organization, not individuals.

The decisive reason for the advance of bureaucratic organization has always been its purely technical superiority over any other form of organization. Max Weber

While recognizing bureaucracy as the most efficient form of organization, and even indispensable for the modern state, Weber also saw it as a threat to individual freedoms, and the on-going bureaucratization as leading to a "polar night of icy darkness", in which increasing rationalization of human life traps individuals in the aforementioned "iron cage" of bureaucratic, rule-based, rational control. In order to counteract bureaucrats, the system needs entrepreneurs and politicians.
SATISHCHANDER

67

Corruption in Bureaucracy in India

These findings confirm the prevalence of the bureaucratic and administrative forms of corruption that take place at the implementation end of politics, where the public meets public officials. Bureaucratic corruption pervades the Indian administrative system with widespread practices of bribery, nepotism, and misuse of official positions and resources.

A 2005 study done by Transparency International (TI) in India found that more than 50% of the people had first-hand experience of paying bribe or peddling influence to get a job done in a public office. Taxes and bribes are common between state borders; Transparency International estimates that truckers pay annually US$5 billion in bribes. A 2009 survey of the leading economies of Asia, revealed Indian bureaucracy to be not just least efficient out of Singapore, Hong Kong, Thailand, South Korea, Japan, Malaysia, Taiwan, Vietnam, China, Philippines and Indonesia; further it was also found that working with India's civil servants was a "slow and painful" process.

Police corruption
Police corruption is a specific form of police misconduct designed to obtain financial benefits, other personal gain, and/or career advancement for a police officer or officers in exchange for not pursuing, or selectively pursuing, an investigation or arrest. One common form of police corruption is soliciting and/or accepting bribes in exchange for not reporting organized drug or prostitution rings or other illegal activities. Another example is police officers flouting the police code of conduct in order to secure convictions of suspects for example, through the use of falsified evidence. More rarely, police officers may deliberately and systematically participate in organized crime themselves.

Police sector

The percentage of people affected by corruption in Police sector is about 2% of the entire population of India. 53% have said that political intervention has been the key corruption that they have faced. 14% have pointed out that money has been demanded for making an FIR. 50% of the people admit having paid money. However this is lower in the West (36%)
SATISHCHANDER

68

and the metros (39%). The duty police officer (54%) is seen as the chief beneficiary. Other beneficiaries are the investigation officer, officer in charge, clerk in the police station.

Corrupt acts by police officers

Police officers have various opportunities to gain personally from their status and authority as law enforcement officers. The Knapp Commission, which investigated corruption in the New York City Police Department in the early 1970s, divided corrupt officers into two types: meat-eaters, who "aggressively misuse their police powers for personal gain," and grasseaters, who "simply accept the payoffs that the happenstances of police work throw their way."

The sort of corrupt acts that have been committed by police officers have been classified as follows:

1) Corruption of authority: police officers receiving free drinks, meals, and other gratuities. 2) Kickbacks: receiving payment from referring people to other businesses. This can include, for instance, contractors and tow truck operators. 3) Opportunistic theft: from arrestees and crime victims or their corpses. 4) Shakedowns: accepting bribes for not pursuing a criminal violation. 5) Protection of illegal activity: being "on the take", accepting payment from the operators of illegal establishments such as brothels, casinos, or drug dealers to protect them from law enforcement and keep them in operation. 6) "Fixing": undermining criminal prosecutions by withholding evidence or failing to appear at judicial hearings, for bribery or as a personal favour. 7) Direct criminal activities: of law enforcement officers themselves. 8) Internal payoffs: prerogatives and perquisites of law enforcement organizations, such as shifts and holidays, being bought and sold. 9) The "frame-up": the planting or adding to evidence, especially in drug cases.

Prevalence of police corruptions

SATISHCHANDER

69

Accurate information about the prevalence of police corruption is hard to come by, since the corrupt activities tend to happen in secret and police organizations have little incentive to publish information about corruption. Police officials and researchers alike have argued that in some countries, large-scale corruption involving the police not only exist but can even become institutionalized. One study of corruption in the Los Angeles Police Department (focusing particularly on the Rampart scandal) proposed that certain forms of police corruption may be the norm, rather than the exception, in American policing.

Where corruption exists, the widespread existence of a Blue Code of Silence among the police can prevent the corruption from coming to light. Officers in these situations commonly fail to report corrupt behavior or provide false testimony to outside investigators to cover up criminal activity by their fellow officers. The well-known is case of Frank Serpico, a police officer who spoke out about pervasive corruption in the NYPD despite the open hostility of other members, illustrates how powerful the code of silence can be. In Australia in 1994, by 46 votes to 45, independent politician John Hatton forced the New South Wales state government to override the Independent Commission against Corruption and the advice of senior police to establish a ground-breaking Royal Commission into Police Corruption.

Police and Prosecution

1) Set up of an independent police complaints board with its own investigators 2) Have complaints go to media, DPP, or ombudsman 3) Introduce an independent group within the police force to investigate corruption within the police 4) Implement a declaration and monitoring of assets for police officers 5) Implement and monitor Code of Ethics for police

Suggestions for improvement

1) Suspension / suitable punishment for corrupt officials 2) Bribery to be penalized 3) Authorities to be more vigilant for prevention of corrupt activities

Land and property

SATISHCHANDER

70

Officials often steal state property. In cities and villages throughout India, Mafia Raj consisting of municipal and other government officials, elected politicians, judicial officers, real estate developers and law enforcement officials, acquire, develop and sell land in illegal ways.

Land Administration

The percentage of people affected by corruption in Land administration sector is about 3% of the entire population of India. 1) There are two main forms of corruption faced in this sector. The first one is waiting a long time for getting documents and the second one is an offshoot of the money involved in various activities such as mutation, services and tax. 2) On an average, 36% of those interacted talk of money being demanded. This incidence is the strongest in the North (58%). In 59% of the cases money is directly demanded. 3) The key beneficiaries of corruption in this sector are perceived to be Surveyors (45%), Revenue officers (30%) and Tehsildars (23%).

Tendering processes and awarding contracts

Government officials having discretionary powers in awarding contracts engage in preferential treatment for selected bidders and display negligence in quality control processes. Many state-funded construction activities in India, such as road building, are dominated by construction mafias, which are groupings of corrupt public works officials, materials suppliers, politicians and construction contractors. Shoddy construction and material substitution (e.g. mixing sand in cement while submitting expenses for cement) result in roads and highways being dangerous, and sometimes simply washed away when India's heavy monsoon season arrives.

Medicine
In Government Hospitals, corruption is associated with non-availability of medicines (or duplicate/fake medicines), getting admission, consultations with doctors and availing diagnostic services. There have been cases of diversion of medical supplies from

SATISHCHANDER

71

government hospitals and clinic as well as supply and distribution of medicines of inferior quality.

Income tax

There have been several cases of collusion of officials of the income tax department of India for a favourable tax treatment in return for bribes.

Preferential award of public resources

As detailed earlier, land in areas with short supply is relatively common with government entities awarding public land to private concerns at negligible rates. Other examples include the award of mining leases to private companies without a levy of taxes that is proportionate to the market value of the ore.

Judiciary
The Indian court system consists of a supreme court, high courts at state level and subordinate courts at district and local level. Court procedures are very slow and complicated; and the court system is severely backlogged and understaffed. This results in delays in the processing of cases, and a loss of confidence in the law and in the justice system. There is also a high level of discretion in the processing of paperwork during trials and multiple points where court officials can misuse their power with impunity. In such contexts, people are tempted to resort to bribes, favours, hospitality or gifts not only to obtain a favourable decision but to move the case through the system and speed up the court proceedings.

According to Transparency International, judicial corruption in India is attributable to factors such as "delays in the disposal of cases, shortage of judges and complex procedures, all of which are exacerbated by a preponderance of new laws".

1) Introduce Code of Conduct for all sectors within Judiciary 2) Conduct speedy investigations into allegation of misconduct made against judicial staff according to Existing regulations
SATISHCHANDER

72

3) Entrust responsibility of recruitment and discipline to the judicial and legal service 4) Commission for administrative staff as well 5) Introduce Code of Conduct for administrative staff in the judiciary

Suggestion for improvement in judiciary

1) Punishment / suspension of the wrong doer 2) Judgment to be correctly made / and fast This is the crux of all suggestions made for curbing corruption in this sector. Also to add to this point Justice delayed is justice denied.

Public Distribution System

Public Distribution System (PDS) is a national food security system, established by the Government of India under Ministry of Consumer Affairs, Food and Public Distribution and managed jointly with state governments in India. It distributes subsidized food and non-food items to India's poor. Major commodities distributed to consumers include staple food grains such as wheat, rice, sugar, and kerosene through a network of Fair Price Shops (FPS) established in several states across the country. Food Corporation of India, a PSU, distributes food grains to FPS throughout the country, which are managed by state governments. As of date there are about 4.99 lakh Fair Price Shops (FPS) across India.

In terms of both coverage and public expenditure, it is considered to be the most important food security network. However the food grains supplied by the ration shops are not enough to meet the consumption needs of the poor or are of inferior quality. The average level of consumption of PDS grains in India is only 1 kg per person / month. The PDS has been criticized for its urban bias and its failure to serve the poorer sections of the population effectively. The targeted PDS is costly and gives rise to a lot of corruption in the process of extricating the poor from those who are not poor.

Fallouts of P.D.S System

1. Generally, the consumers get inferior food grains in ration shops. 2. Deceitful dealers replace good supplies received from the F.C.I (Food Corporation of India) with inferior stock. 3. Many retail shopkeepers have large number of bogus cards to sell food grains in the open market.
SATISHCHANDER

73

4. Many FPS dealers resort to malpractice since they acquire little profit. 5. Despite the PDS, India accounts for over 400 million poor and hungry people. Numerous malpractices make safe and nutritious food inaccessible and unaffordable to many poor.

Several schemes have augmented the number of people aided by PDS, but the number is still extremely low. Poor supervision of FPS and lack of accountability have spurred a number of middlemen who eat up (literally) a good proportion of the stock meant for the poor. There is also no clarity as to which families should be included in the BPL list and which excluded. This results in the genuinely poor being excluded whilst the ineligible get several cards. Also, the stock assigned to a single family cannot be bought in instalments. This is one of the biggest bottlenecks in the efficient functioning of PDS in India. Many BPL families are not able to acquire ration cards either because they are seasonal migrant workers or because they live in unauthorized colonies. A lot of families also mortgage their ration cards for money.

To improve the current system of the PDS, the following suggestions are furnished for:

1. Vigilance squad should be strengthened to detect corruption, which is an added expenditure for taxpayers. 2. Personnel in charge of the Department should be chosen locally. 3. Margin of profit should be increased for honest business, in which case the market system is more apt anyway. 4. F.C.I. and other prominent agencies should provide quality food grains for distribution, which is a tall order for an agency that has no real incentive to do so. 5. Frequent checks & raids should be conducted to eliminate bogus and duplicate cards, which is again is an added expenditure and not fool proof. 6. The Civil supplies Corporation should open more Fair Price shops in rural areas. 7. The Fair Price dealers seldom display rate chart and quantity available in the block-boards in front of the shop. This should be enforced. In aggregate, only about 42% of subsidized grains issued by the Central Pool reach the target group, according to a Planning Commission study released in March 2008, which would cause reasonable belief that the PDS system is only fuelling starvation in India.

SATISHCHANDER

74

Suggestion for improvement in PDS

1) 2) 3) 4)

Proper and timely inspection of Ration shops Ration shop owner to stop black marketing Product should be given on time Weights should be proper

Corruption mars Indias healthcare system

"Doctors who concerned themselves with mass disease and the health of the population had to be committed to political activity if they wishes to may progress"

But in India today, the same India that has developed nuclear weapons, and is even talking of putting people on the Moon, there is still polio, somewhere a child dies every minute of every day from diarrhoea and every 6 minutes a woman dies from pregnancy related causes. Infant female foeticide is raging - ironically in wealthier districts, and even in districts where female literacy is the highest e.g. in Orissa). Road traffic accidents in Delhi alone are of epidemic proportions.

Tackling these problems does not require more research or the application of more expensive technologies. Each of these deaths is preventable with low tech technology already well known for decades. We do not need a better polio vaccine or better oral rehydration salts. So what is causing these problems, and a myriad more that leave countless millions every year disabled, dysfunctional and often dead?

The biggest killer in India today is not the mosquito, not the salmonella, staphylococcus or streptococcus bacteria, not tobacco, and certainly not the polio bacterium despite the disproportionate effort spent on eradicating it, it is corruption. To make it sound more technical and acceptable to the medical profession perhaps we need to label it. Corruption may be.

Logically, I should take a step back and focus on what causes or enables corruption to thrive, but trying to change human nature, or cultural values enshrined in centuries or millennia of cultural attitudes and beliefs, is too big a step at this stage. So let us focus on this one cause, and consider its role in the morbidity and mortality of hundreds of millions of people across
SATISHCHANDER

75

the globe today, and what might be done about it. Such a study may seem outside the responsibility of the health professional, but I would argue that we are largely wasting our time with massive health projects and programmes, training courses, investments in buildings, mass distribution of drugs and vaccines, because of the undermining effects of corruption in all areas of the health system.

Doctors and other health professionals have an ethical responsibility to highlight the contribution of corruption to the health status of their patients, and to become politically active to control such a significant cause of death. But we also need to address it because it is alive and well amongst health professionals themselves.

Let us look at some of its manifestations first, then at what might be done about it:

Phone doesnt work because of lack of bribe to telephone lines-man, a woman with an obstructed labour cant call an ambulance, and she dies. Education of SCs and STs and slum dwellers neglected because teachers concentrate on children whose parents pay them, so another generation grows up ignorant of basic health measures. Drivers can bribe policemen on side of road so speeding and ignoring red lights is common-place. Spurious and adulterated drugs proliferate because high level politicians protect the killers who sell them. Students bribe college staff resulting in under-experienced/ qualified staff taking up posts. Buildings fall down in earthquakes because of building violations. Issuing of licences to service providers and manufacturers inappropriately. Subversion of licensing, accreditation and legal systems intended to promote quality and root out negligence. Doctors dont attend place of work despite drawing a wage from the Government. Failure of drugs and other consumables to reach the intended point of use. Misappropriation of vehicles (and much more) by officials and doctors.

SATISHCHANDER

76

Staff not paid or reimbursed for outreach work because of embezzlement of their wages or babus demanding favours to move their files. Inattention to ensuring clean water and hygienic environments resulting in filthy hospitals - because officials know there is no accountability. Lack of electrical energy because politicians will not tackle theft of electricity, and power breakdowns compromise the safety of hospitals. Official government and externally funded programmes are neglected as senior District health officials are more interested in recouping the cost of buying their post. Unnecessary duplication and irrational drug prescribing by doctors, due to lack of accountability and incentives from unscrupulous pharmaceutical companies. Under the desk payments demanded from patients by everyone for the watchman to the doctor. Lack of accountability of staff and contractors due to corrupt supervisors/ masters Buildings constructed at inappropriate sites to please politicians and others, discouraging proper use. Theft and sabotage of instruments by staff wanting to make their private practices look more efficient than the public sector. The wrong staff is sent on training courses (even abroad) because of patronage, similarly incompetent consultants and advisers are appointed to assist projects. Politicians and public servants badger development agencies or private sector banks for loans which have little or no technical justification.

It is easy to blame the masses for voting short-sightedly for the wrong sorts of politicians. To blame are the politicians for veniality or civil servants (especially the IAS) for their unholy alliances with the political classes. It is easy to blame the effects of globalisation, or to blame development agencies. And certainly for far too long development agencies have ignored or connived in such corruption. Development agencies are under pressure to spend money and to show short term results, so they do not properly challenge the non-appropriateness of buildings, sites or non-maintenance.

SATISHCHANDER

77

But if anything is to happen to improve governance Indias health sector doctors and other health professionals need to start putting their own house in order. They also need to take seriously the challenge of political medicine, to become active combatants in a crusade to eradicate this mass killer.

Let us look back again into medical history. At about the time Virchow was active in Silesia a doctor in Vienna was growing more and more perturbed by puerperal fever and the unacceptable high maternal mortality it caused. Semmelweiss became convinced that he and his colleagues were transmitting the disease (caused by a variety of infectious agents) and experimented with using limewater to wash hands between examinations and deliveries. Despite his successful demonstration of the efficacy of this simple remedy, he was hounded out of Vienna and finally died in a mental asylum, so we must not necessarily anticipate universal admiration of our efforts to tackle Coruptionomia. However, his pioneering work led to better aseptic practices in hospitals and clinics around the world, and also led indirectly to more hygienic conditions in non-health settings, thereby promoting healthier living (unless one accepts the hypothesis that such over-attention to hygiene causes low tolerance to infection and a tendency to asthma, etc.).

If the health professionals of India and other developing countries (led by the profession primus inter pares, medicine) were to start with a zero tolerance campaign within the sector itself, who knows how far the ripples would spread out?

What are some of the practical steps that Indias health care workers could start taking themselves? The sorts of moves I have in mind would be:

Hippocratic type oath to be promulgated by IMA which would make it a matter of professional self-discipline to: O Refuse to give, receive or countenance bribery in their sphere of influence; O To anonymously report for collective action to highlight where and when outside interference occurs (there is safety in numbers); O To commit themselves to rational drug use, referral and evidence based interventions. O To shun errant colleagues

SATISHCHANDER

78

For professional are associations to support the Medical Council of India in making violations of the above a striking-off the register offence, and to set up their own selfdisciplinary machinery if the official machinery wont do it. Participate actively in designing and pressurising for governance systems that are transparent and fool proof. Refusing pharmaceutical companies and others incentives. Refusing to buy posts or co-operate with those who buy post. Refusing to tolerate bribery among junior staff. It is only when Indias health professionals decide that enough is enough and recognise that their calling includes stamping out this major cause of death and disease that the health status of Indias people will begin to improve significantly again.

Health Sector

The percentage of people affected by corruption in Health sector is about 8% of the entire population of India. 1) Payment of money through hospital staff is the dominant irregular process encountered for admission, followed by direct payments being made. Payments made for admission to hospitals are higher in the South. 2) The dominant corruption after getting admission is non-proper care by doctors and nurses and also in terms of non-proper medicine, food etc. 3) 25% of those who has interacted with the health sector talk of money being demanded and it is especially high in the South (38%) 4) The key actors leading to corruption in this sector across zones are allegedly Doctors (77%) followed closely followed by Hospital staff (67%).

Improvement in Health Sectors

SATISHCHANDER

79

1) Government to keep close vigil on the working of the hospitals. 2) Better medicines arrangement: Availability of Medicines to patients should be improved 3) Doctors should come on time. This could also mean that more doctors should be employed in the hospitals depending upon the demand of doctors in a particular department. 4) Doctors should demand less money.

Education

The percentage of people affected by corruption in Education sector is about 5.3% of the entire population of India.

A. The key process that seeds corruption in this sector is the Admission process. The Study shows that 18% of those who interacted with this sector, got admission through an irregular process. This trend was strongest in South (39%) and lowest in East (6%). B. The two main dominant modes of corruption in the Admissions process are (a) Donations (57%) and (b) Use of an influential relative (19%). Receiving donations is a custom strongly rooted in the South zone (70%).

Education Sectors

A. Management to see teacher teaches responsibly. If the management of all Schools and other educational institutions are able to ensure good quality education, then people will not have to unnecessarily flock to only some reputed institutions, and give in to their unreasonable demands. B. Inspection of teachers / schools Proper and timely inspection of all educational institutions and teachers would also ensure the above stated point.

C. Private tuition should be stopped It was suggested that private tuition in all its forms should be prohibited. Even otherwise, if the quality of education imparted is improved, the students will not have to seek private tuitions.

SATISHCHANDER

80

D. Proper punishment for offenders This would be necessary if norms are broken and would further ensure accountability in the system by rule of the stick.

Power Sector

The percentage of people affected by corruption in Power sector is about 5.9% of the entire population of India.

A. Improper supply of electricity and Payment of excess bill were the key corruptions faced. B. About 50% respondents who had interacted with the Power sector in the past one year had to pay the office staff. Of these 50%, in most cases (67%) money is directly demanded. C. About every second person having interacted with the power sector had to make repeated visits to the office just to get their complaint registered or addressed. The incidence of this experience was much higher in West Zone (72%). D. The key actors in corruption in this sector are Linesmen (37%), Officers (24%), Meter readers (23%) and Billing clerks (22%).

Solutions

A. Punishment for wrong doers B. Time to time checking against corruption C. Stealing of electricity to be stopped: This is more or less a subset of the above suggestion.

Telecom

A. Punishment for wrong doers Proper punishment in the form of Suspension of corrupt officials was suggested

SATISHCHANDER

81

B. Quick rectification of faults this would prevent people from falling prey into the unreasonable demands made by linesmen and the like. C. Privatization of telecom sector D. Close watch on the linesmen by officers The above suggestions are more or less inter-related and are mainly in line with a strong desire to bring accountability to this sector.

Taxation
The percentage of people affected by corruption in Taxation sector is about .66% of the entire population of India.

A. Surprisingly this sector has garnered a lower Corruption score as compared to other sectors. B. In the North zone, and metros, more than 50% people who had interacted claimed to be paying Income tax. On the other hand, Municipal tax (80%) features are very strongly in the West and South. C. The key corruption faced is paying for getting reduced or correct assessment. However, only about 11% talk about paying money. D. The tax officer (44%) and the clerk in tax department (35%) are the key actors in the corruption in this sector.

Armed forces

The Indian Armed Forces have frequently witnessed corruption involving senior armed forces officers from the Indian Army, Indian Navy and Indian Air Force. Many officers have been caught for allegedly selling defence stores in the black market in the border districts of Indian states and territories. Recent sukhna land scandal involving four Indian Lieutenant Generals has shaken public faith in the country's growing military at a time when large sums are being spent on modernizing the armed forces. A string of eye-popping fraud cases has damaged the institution in recent years. The latest Adarsh land scam is another example of the nexus between the armed forces, bureaucracy and the politicians in the embezzlement of government property.

SATISHCHANDER

82

Media

The role of media in systemic corruption cannot be undermined at it shows it involvement through paid news and sometimes unethical support to corrupt.

Media bias in India

Media bias in India refers to the bias of journalists and news producers within the mass media in the selection of which events and stories are reported and how they are covered. Many privately operated television channels have been formed since the privatization of Indian television in 1991.

Political bias

There have been events when the media has been accused of political bias. However, in April 2011 the incumbent information and broadcasting minister, Ambika Soni claimed that it was "probably the freest in the world". At the same gathering, a representative from Tanzania commented that he had not seen evidence of political bias in Indian newspapers, although the chairman for the Centre for Media Studies believed that the content, particularly on television, "smack (sic) of elitism".

Media
1) 2) 3) 4) 5) 6) Leg-is-late liberalization of broadcasting Leg-is-late more access to information in ministries Demand more balanced reporting Implement Code of Conduct for journalists Introduce more specialized training (e.g. investigative journalism) Demand more balanced coverage between private-sector and public-sector on corruption issues 7) Have media engage in public awareness campaign on corruption issues

SATISHCHANDER

83

Religious institutions
In India, the corruption has also crept into religious institutions. Some of the Church of North India is making money by selling Baptism certificates. A group of church leaders and activists has launched a campaign to combat the corruption within churches. The chief economic consequences of corruption are the loss to the economy an unhealthy climate for investment and an increase in the cost of government-subsidized services. The TI India study estimates the monetary value of petty corruption in 11 basic services provided by the government, like education, healthcare, judiciary, police, etc., to be around 21,068 crore (US$4.7 billion). India still ranks in the bottom quartile of developing nations in terms of the ease of doing business, and compared to China and other lower developed Asian nations, the average time taken to secure the clearances for a start-up or to invoke bankruptcy is much greater.

13. Corruption and Democracy

What We Know

Both theory and case evidence provide compelling support for a democratization breeds corruption hypothesis, at least up to a point. At the theoretical level, Mohtadi and Roe (2003) model corruption as the monopolistically competitive behaviour of private sector agents who can either invest in productive activity Orin rent-seeking (corruption). In their model, young democracies suffering from insufficient checks and balances and lack of transparency, provide rent-seekers with greater access to public officials and hence greater opportunities for collecting public sector rents, at least up to a point, without making the corrupt acts of rent-seekers and officials open to public scrutiny. Because of free entry into rent-seeking, competition among rent-seekers ultimately reduces returns to individual rent seekers even as it drives aggregate rents up. But as the institutions of transparency and accountability in new democracies rise as they mature, aggregate rents and corrupt activity fall because rents per rent seeker fall and because the cost of rent-seeking (including the probability of getting caught and punished) to rent-seekers and the government officials, who accept bribes, rises. Taken together, this combination implies an inverted U pattern between corruption and the durability or maturity of new democracies.

SATISHCHANDER

84

The case evidence, at least from Indonesia and Thailand, is broadly consistent with this picture. In both polities, corrupt networks were more or less tightly controlled by political elites in government, the bureaucracy and the army (Rock 2003, Rock 2000, Rock and Bonnett, 2004). As Rock (1994, 2000) and Rockand Bonnett (2004) argue with respect to Thailands bureaucratic polity, democratization led to the break-up of a centralized corruption network between political elites, senior bureaucrats and senior army officials on the one hand and the Sino-Thai entrepreneurs who drove the growth process following the growth coalition assembled by General Sarit in 1960. In this centralized network, government officials, including army officers, provided protectionist rents to a surprisingly small number of Sino-Thai entrepreneurs in exchange for kickbacks. As in Indonesia, the government protected private property and extracted rents at a low enough tax rate to entice entrepreneurs to invest, which they did.

A combination of rapid growth and democratization ultimately led to at least a semidemocratic polity by the early 1980s (Chai-Anan 1990). For a while, during the time Prem was the prime minister (1980-88), Thailands bureaucratic polity evolved toward both a broker polity (Ramsay 1985) and a Northeast Asian style developmental state (Anek 1988) as core economic agencies, peak business associations, and key business leaders regularly met in a high level Joint Public Private Sector Consultative Committee to work our problems associated with Thailands policy shift which favoured the export of manufactures.

But this transformation did not last as unscrupulous up-country provincial politicians subsequently captured both the legislature and the prime ministers office (Girling 1997; Callahan and McCargo 1996; King 1996). They used their control of both to carry out a frontal and corrupt assault on the state to reward their supporters and build their coffers for the next election (King 1996: 136-137).6 They did so, by among other things, politicizing the core institutions of macroeconomic policythe Ministry of Finance, the Central Bank, and the national planning agency, the National Economic and Social Development Board (Rock 2000: 197-198; Murray 1996). This led at least one long time analyst to ask whether new democracies could manage their macro-economies (Ammar 1997). The rise of shadowy provincial businessmen in politics and their corrupt frontal assault on the state ultimately led bureaucratic and political elites in Bangkok to try and slow the spread of corruption by enacting a new constitution in the late 1990s designed to reign in the corruption associated with money politics and rural vote buying (Callahan 2005).7 Although it is difficult to know whether the new constitution reduced corruption in Thailand, the new constitution recentralized politics by significantly reducing the number of political parties (Hicken 2006).

SATISHCHANDER

85

One outcome of this process was the rise of another provisional businessman Thaksin Shinawata, who became prime minister in a government that for the first time in Thai history captured a majority in parliament for his Thak Rai Thai Party (McCargo and Ukrist 2005).

Poor Democracy

Poor democracies do not lack the structural mechanisms that help constrain corruption: reelection pressures, competitive party systems, intra-government checks and balances, free media and free speech that make open and transparent government possible. The Westminster parliamentary democracy, of which India is one, is also supposed to be the least corrupt structurally among the variety of parliamentary and presidential democracies. Its plurality voting system tends to produce national parties and reduces extortions by individuals, factions and small parties with narrow interests and constituencies.

Poor Democracy with Corruption in India

In a poor democracy, the combination of elite accessibility and meagre economic opportunity can contribute to a fragmented patronage system leading to extreme corruption. The clientalism literature establishes a causal relation between democracy and corruption by suggesting that clients or voters desire patronage politics because it supplies extra-bureaucratic material benefits. In such a political setting, political elites are not only accessible but they seek power amid weak institutions, intense political competition, and scarce economic opportunities. They therefore depend on building personal patronage systems to seek and maintain power. Yet because material rewards are scare and political opportunities more plentiful, patronage politics is fragmented. Elites build personal followings, rather than broad-based parties, and find them hard to control due to a chronic shortage of material rewards yet availability of political alternatives for followers. Such patronage politics may also involve more sinister groups that resort to intimidation and violence.

These characteristics have indeed afflicted Indias political system. Efforts by politicians to create broad organizational support have often failed because the ordinary voter has an
SATISHCHANDER

86

extremely narrow view of public responsibility and is not willing to give time and effort without the promise of immediate material reward.

The strength of the state is a strong determinant of corruption because the relative autonomy of political elites is critical for shaping the corruption scenario in a political setting. Corruption takes many forms, and the dominant patterns in modern political and economic systems take the form of illicit exchange between state power and societal interests. If democracy or the lack thereof is characterized by different relationships between the state and society (aside from institutional differences), then these different relationships should have an important impact on the types of corruption resulted.

In short, a weak state (elite accessibility), combined with political opportunities and economic scarcities, produce in India decentralized structures in the corruption process, encouraging independent monopoly or fragmented rent seeking and a greater dissipation of rents. A stronger state (elite autonomy); along with economic opportunities and political scarcities, are produces in other country more centralized corruption with a lesser degree of rent seeking.

Conclusion

Democracy in a poor, developing country has not been more successful at tackling corruption than an authoritarian developmental state. The reasons are a combination of the sources of corruption that characteristically affect democracies on one hand and those that typically afflict developing countries on the other. Though the socialist legacy and economic liberalization are compounding factors in the Indian scenario.

14. Effects On institutions

politics,

administration,

and

Corruption poses a serious development challenge. In the political realm, it undermines democracy and good governance by flouting or even subverting formal processes. Corruption in elections and in legislative bodies reduces accountability and distorts representation in policymaking; corruption in the judiciary compromises the rule of law; and
SATISHCHANDER

87

corruption in public administration results in the inefficient provision of services. It violates a basic principle of republicanism regarding the centrality of civic virtue. More generally, corruption erodes the institutional capacity of government as procedures are disregarded, resources are siphoned off, and public offices are bought and sold. At the same time, corruption undermines the legitimacy of government and such democratic values as trust and tolerance.

Economic effects

Corruption undermines economic development by generating considerable distortions and inefficiency. In the private sector, corruption increases the cost of business through the price of illicit payments themselves, the management cost of negotiating with officials, and the risk of breached agreements or detection. Although some claim corruption reduces costs by cutting bureaucracy, the availability of bribes can also induce officials to contrive new rules and delays. Openly removing costly and lengthy regulations are better than covertly allowing them to be bypassed by using bribes. Where corruption inflates the cost of business, it also distorts the playing field, shielding firms with connections from competition and thereby sustaining inefficient firms.

Corruption also generates economic distortions in the public sector by diverting public investment into capital projects where bribes and kickbacks are more plentiful. Officials may increase the technical complexity of public sector projects to conceal or pave the way for such dealings, thus further distorting investment. Corruption also lowers compliance with construction, environmental, or other regulations, reduces the quality of government services and infrastructure, and increases budgetary pressures on government.

Economists argue that one of the factors behind the differing economic development in Africa and Asia is that in the former, corruption has primarily taken the form of rent extraction with the resulting financial capital moved overseas rather than invested at home (hence the stereotypical, but often accurate, image of African dictators having Swiss bank accounts). In Nigeria, for example, more than $400 billion was stolen from the treasury by Nigeria's leaders between 1960 and 1999. University of Massachusetts researchers estimated that from 1970 to 1996, capital flight from 30 sub-Saharan countries totaled $187bn, exceeding those nations' external debts. (The results, expressed in retarded or suppressed development, have been modeled in theory by economist Mancur Olson.) In the case of Africa, one of the factors for this behavior was political instability, and the fact that
SATISHCHANDER

88

new governments often confiscated previous government's corruptly-obtained assets. This encouraged officials to stash their wealth abroad, out of reach of any future expropriation. In contrast, Asian administrations such as Suharto's New Order often took a cut on business transactions or provided conditions for development, through infrastructure investment, law and order, etc.

Environmental and social effects

Corruption facilitates environmental destruction. Corrupt countries may formally have legislation to protect the environment; it cannot be enforced if officials can easily be bribed. The same applies to social rights worker protection, unionization prevention, and child labor. Violation of these laws rights enables corrupt countries to gain illegitimate economic advantage in the international market.

The Nobel Prize-winning economist Amartya Sen has observed that "there is no such thing as an apolitical food problem." While drought and other naturally occurring events may trigger famine conditions, it is government action or inaction that determines its severity, and often even whether or not a famine will occur. Governments with strong tendencies towards kleptocracy can undermine food security even when harvests are good. Officials often steal state property. In Bihar, India, more than 80% of the subsidized food aid to poor is stolen by corrupt officials. Similarly, food aid is often robbed at gunpoint by governments, criminals, and warlords alike, and sold for a profit. The 20th century is full of many examples of governments undermining the food security of their own nations sometimes intentionally.

Other areas: health, public safety, education, trade unions, etc.

Corruption is not specific to poor, developing, or transition countries. In western countries, there have been cases of bribery and other forms of corruption in all possible fields: underthe-table payments made to reputed surgeons by patients willing to be on top of the list of forthcoming surgeries, bribes paid by suppliers to the automotive industry in order to sell poor quality connectors used for instance in safety equipment such as airbags, bribes paid by suppliers to manufacturers of defibrillators (to sell poor quality capacitors), contributions paid by wealthy parents to the "social and culture fund" of a prestigious university in
SATISHCHANDER

89

exchange for it to accept their children, bribes paid to obtain diplomas, financial and other advantages granted to unionists by members of the executive board of a car manufacturer in exchange for employer-friendly positions and votes, etc. Examples are endless. These various manifestations of corruption can ultimately present a danger for the public health; they can discredit certain essential institutions or social relationships.

Corruption can also affect the various components of sports activities (referees, players, medical and laboratory staff involved in anti-doping controls, members of national sport federation and international committees deciding about the allocation of contracts and competition places).

There have also been cases against (members of) various types of non-profit and nongovernment organisations, as well as religious organisations.

Ultimately, the distinction between public and private sector corruption sometimes appears rather artificial and national anti-corruption initiatives may need to avoid legal and other loopholes in the coverage of the instruments.

D. CAUSES 15. HAWALA

Hawala (also known as hundi) is an informal value transfer system based on the performance and honour of a huge network of money brokers, which are primarily located in the Middle East, North Africa, the Horn of Africa, and South Asia.

Origins

SATISHCHANDER

90

Hawala has its origins in classical Islamic law and is mentioned in texts of Islamic jurisprudence as early as the 8th century. Hawala itself later influenced the development of the agency in common law and in civil laws such as the aval in French law and the avallo in Italian law. The words aval and avallo were themselves derived from Hawala. The transfer of debt, which was "not permissible under Roman law but became widely practiced in medieval Europe, especially in commercial transactions", was due to the large extent of the "trade conducted by the Italian cities with the Muslim world in the Middle Ages." The agency was also "an institution unknown to Roman law" as no "individual could conclude a binding contract on behalf of another as his agent." In Roman law, the "contractor himself was considered the party to the contract and it took a second contract between the person who acted on behalf of a principal and the latter in order to transfer the rights and the obligations deriving from the contract to him." On the other hand, Islamic law and the later common law "had no difficulty in accepting agency as one of its institutions in the field of contracts and of obligations in general."

Hawala is believed to have arisen in the financing of long-distance trade around the emerging capital trade centres in the early medieval period. In South Asia, it appears to have developed into a fully-fledged money market instrument, which was only gradually replaced by the instruments of the formal banking system in the first half of the 20th century. Today, Hawala is probably used mostly for migrant workers' remittances to their countries of origin.

How Hawala works

In the most basic variant of the Hawala system, money is transferred via a network of Hawala brokers, or Hawaladars. A customer approaches a Hawala broker in one city and gives a sum of money to be transferred to a recipient in another, usually foreign, city. The Hawala broker calls another Hawala broker in the recipient's city, gives disposition instructions of the funds (usually minus a small commission), and promises to settle the debt at a later date.

The unique feature of the system is that no promissory instruments are exchanged between the Hawala brokers; the transaction takes place entirely on the honor system. As the system does not depend on the legal enforceability of claims, it can operate even in the absence of a legal and juridical environment. Informal records are produced of individual transactions, and a running tally of the amount owed by one broker to another is kept. Settlements of debts between Hawala brokers can take a variety of forms, and need not take the form of
SATISHCHANDER

91

direct cash transactions. In addition to commissions, Hawala brokers often earn their profits through bypassing official exchange rates. Generally, the funds enter the system in the source country's currency and leave the system in the recipient country's currency. As settlements often take place without any foreign exchange transactions, they can be made at other than official exchange rates.

Hawala is attractive to customers because it provides a fast and convenient transfer of funds, usually with a far lower commission than that charged by banks. Its advantages are most pronounced when the receiving country applies distortive exchange rate regulations (as has been the case for many typical receiving countries such as Pakistan or Egypt) or when the banking system in the receiving country is less complex (e.g. due to differences in legal environment in places such as Afghanistan, Yemen, Somalia). Moreover, in some parts of the world it is the only option for legitimate funds transfers, and has even been used by aid organizations in areas where it is the best-functioning institution.

Furthermore, the transfers are usually informal and not effectively regulated by governments, which are a major advantage to customers with tax, currency control, immigration, or other concerns. In some countries however, Hawala are actually regulated by local governments and Hawaladars are licensed to perform their money brokering services.

Hundis

On a similar note, Hundis referred to legal financial instruments evolved on the Indian subcontinent. These were used in trade and credit transactions; they were used as remittance instruments for the purpose of transfer of funds from one place to another. In the era of bygone kings and the British Raj these Hundis served as Travellers Cheques. They were also used as credit instruments for borrowing and as bills of exchange for trade transactions. Technically, a Hundi is an unconditional order in writing made by a person directing another to pay a certain sum of money to a person named in the order. Being a part of an informal system, Hundis now have no legal status and were not covered under the Negotiable Instruments Act, 1881. They were mostly used as Cheques by indigenous bankers.

Angadia
SATISHCHANDER

92

The word Angadia means courier (in Hindi) but it is also used for people who act as Hawaladars within the country (India). These people mostly act as a parallel banking system for businessmen. They charge a commission of around 0.2-0.5% per transaction from transferring money from one city to another.

Hawala after September 11, 2001

Hawala has been made illegal in some U.S. states and other countries as it is seen to be a form of money laundering and can be used to move wealth anonymously. It continues, however, to be a legal and effective system in many countries across the globe.

After the September 11 terrorist attacks, the American government suspected that some Hawala brokers may have helped terrorist organizations to transfer money to fund their activities. The 9/11 Commission Report has since confirmed that the bulk of the funds used to finance the assault were not sent through the Hawala system, but rather by inter-bank wire transfer to a SunTrust Bank in Florida, where two of the conspirators had opened a personal account. However as a result of intense pressure from the U.S. authorities, widespread efforts are currently being made to introduce systematic anti-money laundering initiatives on a global scale, to better curb the activities of the financiers of terrorism and those engaged in laundering the profits of drug smuggling.

Whether these initiatives will have the desired effect of curbing such activities has yet to be seen; although a number of Hawala networks have been closed down and a number of Hawaladars have been successfully prosecuted for money laundering, there is little sign that these actions have brought the authorities any closer to identifying and arresting a significant number of terrorists or drug smugglers. Experts emphasize, though, that the overwhelming majority of those who use these informal networks are doing so for legitimate purposes.

In November 2001, the Bush administration froze the assets of AL-Barakat a Somali remittance Hawala company used primarily by the large Somali diaspora. Many of its agents in several countries were initially arrested, though later freed after no concrete evidence
SATISHCHANDER

93

against them was found. In August 2006 the last Al-Barakat representatives were taken off the U.S. terror list, though some assets remain frozen. In October 2009, the Swedish branch of Al-Barakat was removed from the United Nations' list of terrorist organizations; the company had been on the list for the past eight years, and had had its bank account funds frozen. According to the Swedish Public Radio broadcaster SR, the UN did not explain why it had elected to remove Al-Barakat from its terror list. However, it has been suggested that the recent change in the European Union's position regarding the many organizations "that have been too easily included in the UN terror list" might have influenced the UN's position. Al-Barakat is now able again to access its bank account funds.

Media has been speculating that Somali pirates use the Hawala system to move funds internationally, for example into neighbouring Kenya, where corruption is high and these transactions are neither taxed nor recorded. The 2010 court case United States v. Banki dealt with the question of whether Hawala transactions violated the current U.S. sanctions against trade with Iran. In January 2010, the Kabul office of New Ansari Exchange, Afghanistan's largest Hawala money transfer business, was shuttered following a raid by the Sensitive Investigative Unit, the country's national anti-graft task force vetted and trained by the US Drug Enforcement Administration (DEA), allegedly because this company could be involved in laundering profits from the illicit opium trade and moving the cash earned by Taliban through extortion and drug trafficking. Thousands of records were seized to dig into the movement of billions of dollars in and out of Afghanistan. There were links between the money transfers by this company and political and business figures in the country, including relatives of President Hamid Karzai. In August 2010, Karzai took control of the taskforce that staged the raid, and another US-advised anticorruption group, the Major Crimes Task Force. He ordered a commission to review scores of past and current anti-corruption inquests. Senior US military and civilian officials viewed Karzai's move as an effort to protect those close to him and, in the process, to quash the investigation into New Ansari.

The Hawala system is in Afghanistan also instrumental in providing financial services for the delivery of emergency relief and humanitarian and developmental aid for the majority of international and domestic NGOs, donor organizations, and development aid agencies. On September 1, 2010, the Financial Crimes Enforcement Network issued an advisory on "Informal Value Transfer Systems".

Hawala scandal in India

SATISHCHANDER

94

The Hawala scandal or Hawala scam was an Indian political scandal involving payments allegedly received by politicians through Hawala brokers, the Jain brothers. It was a US$18 million bribery scandal that implicated some of the country's leading politicians. Many were acquitted in 1997 and 1998, partly because the Hawala records (including diaries) were judged in court to be inadequate as the main evidence.

16. Money Laundering

Money laundering is the practice of disguising the origins of illegally-obtained money. Ultimately, it is the process by which the proceeds of crime are made to appear legitimate. The money involved can be generated by any number of criminal acts, including drug dealing, corruption, accounting and other types of fraud, and tax evasion. The methods by which money may be laundered are varied and can range in sophistication from simple to complex. Many regulatory and governmental authorities quote estimates each year for the amount of money laundered, either worldwide or within their national economy. In 1996 the International Monetary Fund estimated that two to five per cent of the worldwide global economy involved laundered money. However, the FATF, an intergovernmental body set up to combat money laundering, admitted that "overall it is absolutely impossible to produce a reliable estimate of the amount of money laundered and therefore the FATF does not publish any figures in this regard." Academic commentators have likewise been unable to estimate the volume of money with any degree of assurance.

Regardless of the difficulty in measurement, the amount of money laundered each year is in the billions and poses a significant policy concern for governments. As a result, governments and international bodies have undertaken efforts to deter prevent and apprehend money launderers. Financial institutions have likewise undertaken efforts to prevent and detect transactions involving dirty money, both as a result of government requirements and to avoid the reputational risk involved.

SATISHCHANDER

95

Often linked in legislation and regulation, terrorist financing and money laundering are conceptual opposites. Money laundering is the process where cash raised from criminal activities is made to look legitimate for re-integration into the financial system, whereas terrorist financing cares little about the source of the funds, but it is what the funds are to be used for that defines its scope. An in-depth study of the symbiotic relationship between organized crime and terrorist organizations detected within the United States of America and other areas of the world referred to as crime-terror nexus points has been published in the forensic literature. The Perri, Lichtenwald and Mackenzie article emphasizes the importance of multi-agency working groups and the tools that can be used to identify, infiltrate, and dismantle organizations operating along the crime-terror nexus points.

Terrorists use low value but high volume fraud activity to fund their operations. Paramilitary groups in Northern Ireland are using legitimate businesses such as hotels, pubs and taxi operators to launder money and fund political activities. Even beyond Ireland, terrorists are buying out/controlling front-end businesses especially cash-intensive businesses including in some cases money services businesses to move monies. Bulk cash smuggling and placement through cash-intensive businesses is one typology. They are now also moving monies through the new online payment systems. They also use trade linked schemes to launder monies. Nonetheless, the older systems have not given way. Terrorists also continue to move monies through MSBs/Hawala, and through international ATM transactions. Charities also continue to be used in countries where controls are not so stringent.

Suspicious activity

Operation Green Quest was the US multi-agency task force set up in October 2001 to combat terrorist financing and had developed a checklist of suspicious activities. The following patterns of activity indicate collection and movement of funds that could be associated with terrorist financing:

A. Account transactions that are inconsistent with past deposits or withdrawals such as cash, Cheques, wire transfers, etc.

SATISHCHANDER

96

B. Transactions involving a high volume of incoming or outgoing wire transfers, with no logical or apparent purpose that come from, go to, or transit through locations of concern that is sanctioned countries, non-cooperative nations and sympathizer nations. C. Unexplainable clearing or negotiation of third party Cheques and their deposits in foreign bank accounts. D. Structuring at multiple branches or the same branch with multiple activities.

Corporate layering, transfers between bank accounts of related entities or charities for no apparent reasons.

1) Wire transfers by charitable organisations to companies located in countries known to be bank or tax havens. 2) Lack of apparent fund raising activity, for example a lack of small Cheques or typical donations associated with charitable bank deposits. 3) Using multiple accounts to collect funds that are then transferred to the same foreign beneficiaries 4) Transactions with no logical economic purpose, that is, no link between the activity of the organization and other parties involved in the transaction. 5) Overlapping corporate officers, bank signatories, or other identifiable similarities associated with addresses, references and financial activities. 6) Cash debiting schemes in which deposits in the US correlate directly with ATM withdrawals in countries of concern. Reverse transactions of this nature are also suspicious. 7) Issuing Cheques, money orders or other financial instruments, often numbered sequentially, to the same person or business, or to a person or business whose name is spelled similarly. It would be difficult to determine by the activity alone whether the particular act was related to terrorism or to organized crime. For this reason, these activities must be examined in context with other factors in order to determine a terrorist financing connection. Simple transactions can be found to be suspect and money laundering derived from terrorism will typically involve instances in which simple operations had been performed (retail foreign exchange operations, international transfer of funds) revealing links with other countries including FATF blacklisted countries. Some of the customers may have police records, particularly for trafficking in narcotics and weapons and may be linked with foreign terrorist groups. The funds may have moved through a state sponsor of terrorism or a country where there is a terrorism problem. A link with a Politically Exposed Person (PEP) may ultimately link up to a terrorist financing transaction. A charity may be a link in the transaction. Accounts (especially student) that only receive periodic deposits
SATISHCHANDER

97

withdrawn via ATM over two months and are dormant at other periods could indicate that they are becoming active to prepare for an attack.

The Operation Green Quest raids led to the convictions of two people, including Abdurrahman Alamoudi, who worked for the SAAR Foundation. Alamoudi admitted that he plotted with Libya to assassinate the Saudi ruler and was sentenced to 23 years in jail.

Bank processes

In addition to normal AML controls, banks must focus on the CFT angle with renewed vigor and knowledge derived from the extensive databank of case studies now available. Banks must focus on not just name matching with sanctions databases but also with other know your customer (KYC) high-risk databases of good third party vendors. They must use technologies like link analysis to establish second and third level links that identify transactions as potentially suspicious from a CFT perspective. Focus on preventing identity theft is an integral part of any CFT program. Detection rules designed to capture the suspicious activity list given above, should be evaluated. Controls out of the transaction monitoring process, for example, account openings by groups of individuals, are also important to watch for. Any bank that is used for terrorist financing will suffer tremendous reputational damage and also a real business impact in terms of share price and expensive fines. To safeguard against this, financial institutions purchase anti-money laundering software from companies such as Lexis Nexis and C6 along with databases of high risk individuals and organizations developed by companies such as World Compliance and C6.

India

The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005.

Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries (a) to maintain records detailing the nature and value of transactions which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month; (b) to furnish information of transactions referred to in clause (a) to
SATISHCHANDER

98

the Director within such time as may be prescribed and t records of the identity of all its clients. Section 12 (2) prescribes that the records referred to in sub-section (1) as mentioned above, must be maintained for ten years after the transactions finished. The provisions of the Act are frequently reviewed and various amendments have been passed from time to time.

The recent activity in money laundering in India is through political parties corporate companies and share market.

The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005. Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries (a) to maintain records detailing the nature and value of transactions which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month; (b) to furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed and t records of the identity of all its clients. Section 12 (2) prescribes that the records referred to in sub-section (1) as mentioned above, must be maintained for ten years after the transactions finished. The provisions of the Act are frequently reviewed and various amendments have been passed from time to time. The recent activity in money laundering in India is through political parties corporate companies and share market.

17. Slush fund

A slush fund, colloquially, is an auxiliary monetary account or a reserve fund. However, in the context of corrupt (including but not limited to) political dealings by governments, large corporations or other bodies and individuals, a slush fund can have particular connotations of illegality, illegitimacy, or secrecy in regard to the use of this money and the means by which the funds were acquired.

Political dealings with slush funds tend to create suspicions of quid pro quo (buying political favors), and can be viewed on the surface as corrupt and subversive of the democratic process. For example, Richard Nixon's "Checkers speech" of 1952 was a successful effort to dispel a scandal concerning a rumored slush fund of campaign contributions.

SATISHCHANDER

99

The term slush fund is used in accounting to describe a general ledger account in which all manner of transactions can be posted to commingled funds and "loose" monies by debits' and credits' cancelling each other out.

18. Mauritius route

Mauritius route is a channel to evade paying taxes in India amounting to thousands of crore of rupees with the help of loopholes in a bilateral agreement on double taxation.

Double Taxation Avoidance Convention

The key to the apparent paradox lies in the provisions of a two-decade-old bilateral agreement, the Double Taxation Avoidance Convention (DTAC). Foreign entities have set up paper companies in Mauritius, claiming to be Mauritian residents. These companies, masquerading as Mauritian companies, have invested in India and taking advantage of the DTAC they save paying taxes in India.

19. Rent-seeking
In economics, rent-seeking is an attempt to derive economic rent by manipulating the social or political environment in which economic activities occur, rather than by adding value. An example of rent-seeking is the limitation of access to skilled occupations imposed by medieval guilds.

Many current studies of rent-seeking focus on efforts to capture various monopoly privileges stemming from government regulation of free enterprise competition. The term itself derives, however, from the far older practice of appropriating a portion of production by gaining ownership or control of land.
SATISHCHANDER

100

Description of concept

Rent-seeking generally implies the extraction of uncompensated value from others without making any contribution to productivity, such as by gaining control of land and other preexisting natural resources, or by imposing burdensome regulations or other government decisions that may affect consumers or businesses. Rent-seeking agents will spend money in socially unproductive ways, such as political lobbying, in order to attain, maintain or increase monopoly power.

In modern industrialized countries, economic benefits derived by most people involve some form of rent-seeking, but in the aggregate such behaviors may result in substantial social losses.

Studies of rent-seeking are focus on efforts to capture special monopoly privileges such as government regulation of free enterprise competition.

The term "monopoly privilege rent-seeking" is an often-used label for the former type of rent-seeking. Often-cited examples include a farm lobby that seeks tariff protection or an entertainment lobby that seeks expansion of the scope of copyright. Other rent-seeking is held to be associated with efforts to cause a redistribution of wealth --- by shifting the government tax burden or government spending allocation, for instance.

Development of theory

The phenomenon of rent-seeking in connection with monopolies was first formally identified in 1967 by Gordon Tullock. The expression rent-seeking was coined in 1974 by Anne Krueger. The word "rent" does not refer here to payment on a lease but stems instead from Adam Smith's division of incomes into profit, wage, and rent. Rent-seeking behavior is distinguished in theory from profit-seeking behavior, in which entities seek to extract value by engaging in mutually beneficial transactions.

SATISHCHANDER

101

Critics of the concept point out that in practice, there may be difficulties distinguishing between beneficial profit-seeking and detrimental rent-seeking. Often a further distinction is drawn between rents obtained legally through political power and the proceeds of private common-law crimes such as fraud, embezzlement and theft. This viewpoint sees "profit" as obtained consensually, through a mutually agreeable transaction between two entities (buyer and seller), and the proceeds of common-law crime non-consensually, by force or fraud inflicted on one party by another. Rent, by contrast with these two, is obtained when a third party deprives one party of access to otherwise accessible transaction opportunities, making nominally "consensual" transactions a rent-collection opportunity for the third party.

The abnormal profits of the illegal drug trade are considered rents by this definition, as they are neither legal profits nor the proceeds of common-law crimes. Taxi medallions are another commonly referenced example of rent-seeking. To the extent that the issuing of medallions constrains overall supply of taxi services (rather than ensuring competence or quality), forbidding competition by non-medallion taxis makes the otherwise consensual transaction of taxi service a forced transfer of wealth from the passenger to the medallion holder.

Rent-seeking is held to occur often in the form of lobbying for economic regulations such as tariffs. Regulatory capture is a related concept which refers to collusion between firms and the government agencies assigned to regulate them, which is seen as enabling extensive rent-seeking behavior, especially when the government agency must rely on the firms for knowledge about the market.

The concept of rent-seeking has been applied to corruption by bureaucrats who solicit and extract bribe or rent for applying their legal but discretionary authority for awarding legitimate or illegitimate benefits to clients. For example, tax officials may take bribes for lessening the tax burden of the tax payers. Faizul Latif Chowdhury suggested that bribery is a kind of rent-seeking by the government officials.

Possible consequences

SATISHCHANDER

102

From a theoretical standpoint, the moral hazard of rent-seeking can be considerable. If "buying" a favorable regulatory environment is cheaper than building more efficient production, a firm may choose the former option, reaping incomes entirely unrelated to any contribution to total wealth or well-being. This results in a sub-optimal allocation of resources money spent on lobbyists and counter-lobbyists rather than on research and development, improved business practices, employee training, or additional capital goods which retards economic growth. Claims that a firm is rent-seeking therefore often accompany allegations of government corruption, or the undue influence of special interests. Rent-seeking may be initiated by government agents, such agents soliciting bribes or other favors from the individuals or firms that stand to gain from having special economic privileges, which opens up the possibility of exploitation of the consumer. It has been shown that rent-seeking by bureaucracy can push up the cost of production of public goods. It has also been shown that rent-seeking by tax officials may cause loss in revenue to the public exchequer.

Rent-seeking behavior, in terms of land rent, figures in Georgist economic theory, where the value of land is largely attributed to provision of government services and infrastructure (e.g., road building, provision of public schools, maintenance of peace and order, etc.) and the community in general, rather than resulting from any action or contribution by the landowner.

20. License Raj

License Raj, the Permit Raj, refers to the elaborate licenses, regulations and accompanying red tape that were required to set up and run businesses in India between 1947 and 1990.The License Raj was a result of India's decision to have a planned economy where all aspects of the economy are controlled by the state and licenses are given to a select few. Up to 80 government agencies had to be satisfied before private companies could produce something and, if granted, the government would regulate production.

Reforms since the mid-1980s have significantly reduced regulation, but Indian labour laws still prevent manufacturers from reducing their workforce without prohibitive burdens.

SATISHCHANDER

103

Term

The term plays off "British Raj", the period of British rule in India. It was coined by Indian statesman Chakravarthi Rajagopalachari, who firmly opposed it for its potential for political corruption and economic stagnation and founded the Swatantra Party to oppose these practices.

"I want the corruptions of the Permit/License Raj to go. [...] I want the officials appointed to administer laws and policies to be free from pressures of the bosses of the ruling party, and gradually restored back to the standards of fearless honesty which they once maintained. [...] I want real equal opportunities for all and no private monopolies created by the Permit/License Raj." Swarajya Newspaper, C. Rajagopalachari

History

The architect of the system of License Raj was Jawaharlal Nehru, India's first Prime Minister. Inspired by the economy in the Soviet Union, he implemented a mixed economy in India. A mixed economy is one in which capitalism is combined with government intervention. Private players could manufacture goods only with official licenses. The quantity of goods they were allowed to produce was determined by the license regime, not by free-market demand. The key characteristic of the License Raj is a Planning Commission that centrally administers the economy of the country. Like a command economy, India has five-year plans on the lines of the Five Year Plans in the former Soviet Union.

Before the process of reform began in 1991, the government attempted to close the Indian economy to the outside world. The Indian currency, the rupee, was inconvertible and high tariffs and import licensing prevented foreign goods reaching the market. India also operated a system of central planning for the economy, in which firms required licenses to invest and develop. The labyrinthine bureaucracy often led to absurd restrictions up to 80 agencies had to be satisfied before a firm could be granted a license to produce and the state would decide what was produced, how much, at what price and what sources of capital were used. The government also prevented firms from lying off workers or closing factories. The central pillar of the policy was import substitution, the belief that India needed to rely on internal markets for development, not international trade a belief generated by a mixture of socialism and the experience of colonial exploitation. Planning
SATISHCHANDER

104

and the state, rather than markets, would determine how much investment was needed in which sectors.

Consequences

India had started out in the 1950s with good era.

High growth rates Openness to trade and investment

A promotional state Social expenditure awareness Macro stability

However, by the 1980s, the country was left with bad age.

Low growth rates Closure to trade and investment A license-obsessed, restrictive state Inability to sustain social expenditures Macro instability, indeed crisis

Current status

The License Raj-system was in place for four decades. The government of India initiated a liberalization policy under the Prime Minister ship of Rajiv Gandhi, though much of the actual progress was made under P.V.Narasimha Rao. Liberalization resulted in substantial growth in the Indian economy, which continues today The License Raj is considered to have been significantly reduced in 1991 when India had only two weeks of dollars left: "In return for an IMF bailout, Gold bullion was transferred to London as collateral, the Rupee devalued and economic reforms were forced upon India." The federal government, with DrMan Mohan Singh as finance minister, reduced licensing regulations; lowered tariffs, duties and taxes; and opened up to international trade and investment.

SATISHCHANDER

105

However, manufacturing organizations still encounter a permit process (though not as extensive as earlier) in procurement of land, importing equipment, etc. Recently, this liberalization may be altered under a draft bill seeking to regulate broadcasting media.

E. EFFECTS 21. BLACK MONEY

Black money refers to funds earned on the black market, on which income and other taxes have not been paid. The total amount of black money deposited in foreign banks by Indians is unknown, but one estimate by R Vaidyanathan, a Professor of Finance, estimated the total at over Rs 7,280,000 Crore (USD $1.4 trillion).

In January 2011 the Supreme Court of India asked why the names of those who have stashed money in the Liechtenstein Bank have not been disclosed. The court argued that the government should be more forthcoming in releasing all available information on what it called a "mind-boggling" amount of money that is believed to be held in illegally in foreign banks.

Black money in Swiss banks

While official numbers are not available, Swiss banking officials have said that the largest depositors of illegal foreign money in Switzerland are Indian.

SATISHCHANDER

106

India tops the list for black money in the entire world with almost US$1456 billion in Swiss banks (approximately USD 1.4 trillion) in the form of black money. According to the data provided by the Swiss Banking Association Report (2006), India has more black money than the rest of the world combined. To put things in perspective, Indian-owned Swiss bank account assets are worth 13 times the countrys national debt.

In August 2010, the government revised the Double Taxation Avoidance Agreement to provide means for investigations of black money in Swiss banks. This revision, expected to become active by January 2012, will allow the government to make inquiries of Swiss banks in cases where they have specific information about possible black money being stored in Switzerland.

Tax Information Exchange Agreement

To curb black money, India has signed TIEA with 10 countries - Bahamas, Bermuda, the British Virgin Islands, the Isle of Man, the Cayman Island, and the British island of jersey, Monaco, St Kitts and Nevis, Argentina and the Marshal Islands - where money is believed to have been stashed away

Prominent cases

In April 2011, Hassan Ali Khan was arrested on charges of stashing over 36,000 crore in foreign banks.

22. SCANDALS
Major scandals involving high level public officials have shaken the Indian public service in recent years, with politicians and public servants regularly caught accepting bribes or mismanaging public resources. This suggests corruption has become a pervasive aspect of Indian politics and bureaucracy.
SATISHCHANDER

107

The following is a list of alleged scams and scandals in India since independence. These include political, financial, corporate and others.

2011
Hassan Ali Khan scandal Devas-Antrix deal scandal Cash-for-votes scandal Indian Black Money in Swiss Banks

2010
2G spectrum scam and Radia Tapes Controversy Adarsh Housing Society scam Commonwealth Games Scam 2010 housing loan scam in India Belekeri port scam Lavasa Scandal Uttar Pradesh Food Grain Scam Andhra Pradesh Industrial Infrastructure Corporation Controversy ISRO-Devas S band Scam Indian Premier League Cricket Scandals

2009
Madhu Koda mining scam

2008
Cash for Votes Scandal Pune billionaire Hassan Ali Khan tax The Satyam scam
SATISHCHANDER

108

2006
Stamp Paper Scam Kerala Ice Cream Parlor Sex Scandal Scorpion Deal Scam Navy War Room spy scandal (related to Scorpion Deal Scam)

2005
Oil-for-food programme scam

2004
Gegong Apang PDS Scam

2003
Taj corridor scandal

2002
Kargil Coffin Scam

2001
Ketan Parekh securities scam Barak Missile Scandal Calcutta Stock Exchange Scam

1997
Sukh Ram telecom scam SNC Lavalin scandal Hawala Scandal

1996
Bihar fodder scam Sukh Ram Telecom Equipment Scandal C R Bhansali Scam
SATISHCHANDER

109

1995
SNC Lavalin scandal Purulia arms drop case Telgi scam

1992
Harshad Mehta securities scam Palmolein Oil Import Scam

1989
Bofors Scandal

1982
Cement Scam

1971
Nagarwala Scandal

1957
Haridas Mundhra scandal

1948
Jeep Scandal

The Top Scams in India

1) 2G Spectrum Scam
We have had a number of scams in India; but none bigger than the scam involving the process of allocating unified access service licenses. At the heart of this Rs.1.76-lakh crore worth of scam is the former Telecom minister A Raja who according to the CAG, has evaded norms at every level as he carried out the dubious 2G license awards in 2008 at a
SATISHCHANDER

110

throw-away price which were pegged at 2001 prices. The 2G spectrum scam in India involved the issue of 122 licenses by the ruling Congress-led UPA alliance of the 2G spectrum to 85 companies including many new telecom companies with little or no experience in the telecom sector. The scam involved allegations regarding... 1) The under-pricing of the 2G spectrum by the Department of Telecommunications which resulted in a heavy loss to the exchequer. 2) The illegal manipulation of the spectrum allocation process to favour select companies. The scam came to public notice when the Supreme Court of India took Subramaniam Swamy's complaints on record.

2) Commonwealth Games Scam

Another feather in the cap of Indian scandal list is Commonwealth Games loot. Yes, literally a loot! Even before the long awaited sporting bonanza could see the day of light, the grand event was soaked in the allegations of corruption. It is estimated that out of Rs. 70000 crore spent on the Games, only half the said amount was spent on Indian sportspersons. The Central Vigilance Commission, involved in probing the alleged corruption in various Commonwealth Games-related projects, has found discrepancies in tenders like payment to non-existent parties, will-full delays in execution of contracts, over-inflated price and bungling in purchase of equipment through tendering and misappropriation of funds.

3) Telgi Scam
As they say, every scam must have something unique in it to make money out of it in an unscrupulous manner- and Telgi scam had all the suspense and drama that the scandal needed to thrive and be busted. Abdul Karim Telgi had mastered the art of forgery in printing duplicate stamp papers and sold them to banks and other institutions. The tentacles of the fake stamp and stamp paper case had penetrated 12 states and was estimated at a whooping Rs. 20000 crore plus. The Telgi clearly had a lot of support from government departments that were responsible for the production and sale of high security stamps.

4) Satyam Scam
The scam at Satyam Computer Services is something that will shatter the peace and tranquillity of Indian investors and shareholder community beyond repair. Satyam is the biggest fraud in the corporate history to the tune of Rs. 14000 crore. The companys disgraced former chairman Ramalinga Raju kept everyone in the dark for a decade by fudging the books of accounts for several years and inflating revenues and profit figures of Satyam. Finally, the company was taken over by the Tech Mahindra which has done wonderfully well to revive the brand Satyam.

SATISHCHANDER

111

5) Bofors Scam
The Bofors scandal is known as the hallmark of Indian corruption. The Bofors scam was a major corruption scandal in India in the 1980s; when the then PM Rajiv Gandhi and several others including a powerful NRI family named the Hindujas, were accused of receiving kickbacks from Bofors AB for winning a bid to supply Indias 155 mm field howitzer. Most of all, the Bofors scam had a strong emotional appeal because it was a scam related to the defence services and Indias security interests.

6) The Fodder Scam

If you havent heard of Bihars fodder scam of 1996, you might still be able to recognize it by the name of Chara Ghotala, as it is popularly known in the vernacular language. In this corruption scandal worth Rs.900 crore, an unholy nexus was traced involved in fabrication of vast herds of fictitious livestock for which fodder, medicine and animal husbandry equipment was supposedly procured.

7) The Hawala Scandal

The Hawala case to the tune of $18 million bribery scandal, which came in the open in 1996, involved payments allegedly received by countrys leading politicians through Hawala brokers. From the list of those accused also included was then the Leader of Opposition. Thus, for the first time in Indian politics, it gave a feeling of open loot all around the public, involving all the major political players being accused of having accepted bribes and also alleged connections about payments being channelled to Hizbul Mujahedeen militants in Kashmir.

8) IPL Scam
Well, I am running out of time and space over here. The list of scandals in India is just not ending and becoming grave by every decade. Most of us are aware about the recent scam in IPL and embezzlement with respect to bidding for various franchisees. The scandal already claimed the portfolios of two big-wigs in the form of Shashi Tharoor and former IPL chief Lalit Modi.

9, 10) Harshad Mehta & Ketan Parekh Stock Market Scam

Although not corruption scams, these have affected many people. There is no way that the investor community could forget the unfortunate Rs. 4000 crore Harshad Mehta scam and over Rs. 1000 crore Ketan Parekh scam which eroded the shareholders wealth in form of big market jolt.

SATISHCHANDER

112

23. Slow Progress

According to a report by KPMG, "high-level corruption and scams are now threatening to derail the country's credibility and [its] economic boom".

Will Growth Slow Corruption In India?

Now that India is playing an ever larger role in the world economy, the issue of corruption, in both the private and public sectors, is coming into sharper focus. Two scenarios are possible: As India's multinational corporations develop both economic and political muscle; they may act as a broom, sweeping corruption from the economic sphere. On the other hand, entrenched practices may prove the stronger force, and corruption could end up being a significant brake on India's economic rise. Widespread corruption in India costs billions of dollars and threatens to derail the countrys growth, a survey says. The report by consultancy firm KMPG said that the problem had become so endemic that foreign investors were being deterred from the country, BBC News informs. Over (2010) the last six months India has been hit by a series of corruption scandals including a Multi-billion dollar telecoms scandal, alleged financial malpractices in connection with the Commonwealth Games and allegations that houses for war widows were diverted to civil Servants.

The License Raj and the Spoils System

One strand in the knot of corruption is the legacy of the License Raj, which ended in the early 1990s. The system created bureaucracies that were all but self-perpetuating. In a context where government workers were routinely underpaid, graft became an industry all its own. Civil servants were, and remain, anything but disinterested administrators.

SATISHCHANDER

113

Wharton management professor Jitendra Singh and Ravi Ramamurti, professor of international business at North-eastern University, have been studying the emergence of multinational corporations in emerging economies such as India. In late June, they organized a conference on this topic in Boston; the conference's papers will form the core of an edited volume which is planned for publication in 2008.

"In the bad old days," Singh said in an interview, "particularly pre-1991, when the License Raj held sway, and by design, all kinds of free market mechanisms were hobbled or stymied, and corruption emerged almost as an illegitimate price mechanism, a shadowy quasimarket, such that scarce resources could still be allocated within the economy, and decisions could get made.

"Of course, this does not in any way condone the occurrence of such corruption. The shameful part of all this was that while value was captured by some people at the expense of others, it did not go to those who created the value, as it should in a fair and equitable system."

The real failing, he said, "was a distortion of incentives within the economy, such that people began expending efforts toward fundamentally unproductive behaviours because they saw that such behaviours could lead to short-term gains. Thus, cultivating those in positions of power who could bestow favours became more important than coming up with an innovative product design. The latter was not as important, anyway, because most markets were closed to foreign competition--automobiles, for example--and if you had a product, no matter how uncompetitive compared to global peers', it would sell.

"These were largely distortions created by the politico-economic regime. While a sea change has occurred in the years following 1991, some of the distorted cultural norms that took hold during the earlier period are slowly being repaired by the sheer forces of competition. The process will be long and slow, however. It will not change overnight."

India's advancement producing valuable goods is of limited utility if they cannot be transported in a timely fashion, for example. Transparency International estimates that Indian truckers pay something in the neighbourhood of $5 billion annually in bribes to keep freight flowing. "Corruption is a large tax on Indian growth," Ramamurti said in an interview after the conference. "It delays execution, raises costs and destroys the moral fibre."
SATISHCHANDER

114

Corruption also cripples the effort to ameliorate poverty in India and to improve the country's stock of "human capital." The rate at which this happens varies tremendously from region to region. Edward Luce, for example, author of In Spite of the Gods: The Strange Rise of Modern India notes that "Rates of theft vary widely from state to state in India, with the better states, such as Kerala and Tamil Nadu, getting more than 80% of subsidized government food to their poor. Meanwhile, in the northern state of Bihar, India's second poorest with a population of 75 million, more than 80% of the food is stolen."

Indian MNC's as Change Agents

"A few Indian companies," Ramamurti said, "such as the Tata group or Wipro, have taken the high road, but most firms find it impossible to get anything done without greasing palms." Wipro, headed by Azim Premji, is India's third-biggest global tech services provider (behind Tata Consultancy Services (other-etc.: TACSF - new - people) and Infosys).

In Bangalore Tiger: How Indian Tech Upstart Wipro Is Rewriting the Rules of Global Competition, business journalist Steve Hamm writes that "Wipro is not just a company, it's a quest." That quest, according to some observers, is as much about moral rectitude as it is about business success. For example, according to Hamm, the company pays no bribes and has a zero tolerance policy for corruption.

"The paradox," Ramamurti said, "is that even though India's faster growth in recent years is the result of fewer government controls, most Indian managers would tell you that corruption has increased, not decreased, in tandem.

"How could this be? The explanation is that faster growth has created new choke points at which politicians and bureaucrats can extract payments, such as land regulation, spectrum allocation or college admissions--all of which have become much more valuable in this century. Faster growth has also raised the economic cost to firms of delays in public approvals, giving officials that much more 'hold-up' leverage over private investors."

SATISHCHANDER

115

24. Poverty
Poverty is widespread in India, with the nation estimated to have a third of the world's poor. According to a 2005 World Bank estimate, 41.6% of the total Indian population falls below the international poverty line of US$ 1.25 a day (PPP, in nominal terms Rs 21.6 a day in urban areas and Rs 14.3 in rural areas).

Poverty estimates

There has been no uniform measure of poverty in India. The Planning Commission of India has accepted the Tendulkar Committee report which says that 37% of people in India live below the poverty line.

The Arjun Sengupta Report (from National Commission for Enterprises in the Unorganized Sector) states that 77% of Indians live on less than Rs 20 a day (about $0.50 per day).The N.C. Saxena Committee report states that 50% of Indians live below the poverty line.

Estimates by NCAER (National Council of Applied Economic Research) show that 48% of the Indian households earn more than Rs 90,000 (US$1,998) annually (or more than US$ 3 PPP per person). According to NCAER, in 2009, of the 222 million households in India, the absolutely poor households (annual incomes below Rs 45,000) accounted for only 15.6% of them or about 35 million (about 200 million Indians). Another 80 million households are in income levels of Rs 45,000 90,000 per year. These numbers also are more or less in line with the latest World Bank estimates of the below-the-poverty-line households that may total about 100 million (or about 456 million individuals).

The World Bank estimates that 80% of India's population lives on less than $2 a day which means a higher proportion of its population lives on less than $2 per day as compared with sub-Saharan Africa.

The World Bank estimates that 80% of India's population lives on less than $2 a day which means a higher proportion of its population lives on less than $2 per day as compared with sub-Saharan Africa.

Impact of poverty
SATISHCHANDER

116

Since the 1950s, the Indian government and non-governmental organizations have initiated several programs to alleviate poverty, including subsidizing food and other necessities, increased access to loans, improving agricultural techniques and price supports, and promoting education and family planning. These measures have helped eliminate famines, cut absolute poverty levels by more than half, and reduced illiteracy and malnutrition.

Presence of a massive parallel economy in the form of black (hidden) money stashed in overseas tax havens and underutilization of foreign aid have also contributed to the slow pace of poverty alleviation in India.

Although the Indian economy has grown steadily over the last two decades, its growth has been uneven when comparing different social groups, economic groups, geographic regions, and rural and urban areas. Between 1999 and 2008, the annualized growth rates for Gujarat (8.8%), Haryana (8.7%), or Delhi (7.4%) were much higher than for Bihar (5.1%), Uttar Pradesh (4.4%), or Madhya Pradesh (3.5%). Poverty rates in rural Orissa (43%) and rural Bihar (41%) are among the world's most extreme. Despite significant economic progress, one quarter of the nation's population earns less than the government-specified poverty threshold of 12 rupees per day (approximately US$ 0.25).

According to a recently released World Bank report, India is on track to meet its poverty reduction goals. However by 2015, an estimated 53 million people will still live in extreme poverty and 23.6% of the population will still live under US$1.25 per day. This number is expected to reduce to 20.3% or 268 million people by 2020.However, at the same time, the effects of the worldwide recession in 2009 have plunged 100 million more Indians into poverty than there were in 2004, increasing the effective poverty rate from 27.5% to 37.2%.

As per the 2001 census, 35.5% of Indian households availed of banking services, 35.1% owned a radio or transistor, 31.6% a television, 9.1% a phone, 43.7% a bicycle, 11.7% a scooter, motorcycle or a moped, and 2.5% a car, jeep or van; 34.5% of the households had none of these assets. According to Department of Telecommunications of India the phone density has reached 33.23% by December 2008 and has an annual growth of 40%.

SATISHCHANDER

117

These tallies with the fact, that a family of four with an annual income of 1.37 lakh rupees could afford some of these luxury items.

Causes of poverty in India

Caste system

According to S. M. Michael, Dalits constitute the bulk of poor and unemployed. Another cause is corruption.

According to William A. Havilland, casteism is widespread in rural areas, and continues to segregate Dalit. Others, however, have noted the steady rise and empowerment of the Dalit through social reforms and the implementation of reservations in employment and benefits. Caste explanations of poverty fail to account for the urban/rural divide. Using the Definition of poverty, 65% of rural forward castes are below the poverty line. In 1947, the average annual income in India was US$439, compared with US$619 for China, US$770 for South Korea, and US$936 for Taiwan. By 1999, the numbers were US$1,818; US$3,259; US$13,317; and US$15,720, respectively. (Numbers are in 1990 international Maddison dollars) In other words, the average income in India was not much different from South Korea in 1947, but South Korea became a developed country by 2000s. At the same time, India was left as one of the world's poorer countries.

License Raj refers to the elaborate licenses, regulations and the accompanying red tape that were required to set up and run business in India between 1947 and 1990. The License Raj was a result of India's decision to have a planned economy, where all aspects of the economy are controlled by the state and licenses were given to a select few. Corruption flourished under this system.

The labyrinthine bureaucracy often led to absurd restrictions - up to 80 agencies had to be satisfied before a firm could be granted a license to produce and the state would decide what was produced, how much, at what price and what sources of capital were used.
SATISHCHANDER

118

BBC India had started out in the 1950s with; high growth rates, openness to trade and investment, a promotional state, social expenditure awareness and macro stability but ended the 1980s with: low growth rates, closure to trade and investment, a licenseobsessed, restrictive state (License Raj), inability to sustain social expenditures and macro instability, indeed crisis.

Poverty has decreased significantly since reforms were started in the 1980s. Also: Vote bank and use their votes to resist reallocation of land for higher-income industrial projects. While services and industry have grown at double digit figures, agriculture growth rate has dropped from 4.8% to 2% Over-reliance on agriculture. There is a surplus of labour in agriculture. Farmers are a large about 60% of the population depends on agriculture whereas the contribution of agriculture to the GDP is about 18%.High population growth rate, although demographers generally agree that this is a symptom rather than cause of poverty.

Liberalization policies and their effects

Other points of view hold that the economic reforms initiated in the early 1990s are responsible for the collapse of rural economies and the agrarian crisis currently underway. As journalist and the Rural Affairs editor for The Hindu, P Sainath describes in his reports on the rural economy in India, the level of inequality has risen to extraordinary levels, when at the same time; hunger in India has reached its highest level in decades. He also points out that rural economies across India have collapsed, or on the verge of collapse due to the neoliberal policies of the government of India since the 1990s. The human cost of the "liberalization" has been very high. The huge wave of farm suicides in Indian rural population from 1997 to 2007 totalled close to 200,000, according to official statistics. That number remains disputed; with some saying the true number is much higher. Commentators have faulted the policies pursued by the government which, according to Sainath, resulted in a very high portion of rural households getting into the debt cycle, resulting in a very high number of farm suicides. As professor Utsa Patnaik, Indias top economist on agriculture, has pointed out, the average poor family in 2007 has about 100 kg less food per year than it did in 1997.

SATISHCHANDER

119

Government policies encouraging farmers to switch to cash crops, in place of traditional food crops, has resulted in an extraordinary increase in farm input costs, while market forces determined the price of the cash crop. Sainath points out that a disproportionately large number of affected farm suicides have occurred with cash crops, because with food crops such as rice, even if the price falls, there is food left to survive on. He also points out that inequality has reached one of the highest rates India has ever seen. In a report by Chetan Ahya, Executive Director at Morgan Stanley, it is pointed out that there has been a wealth increase of close to US$1 Trillion in the time frame of 2003-2007 in the Indian stock market, while only 4-7% of the Indian populations hold any equity. During the time when Public investment in agriculture shrank to 2% of the GDP, the nation suffered the worst agrarian crisis in decades, the same time as India became the nation of second highest number of dollar billionaires. Sainath argues that Farm incomes have collapsed. Hunger has grown very fast. Public investment in agriculture shrank to nothing a long time ago. Employment has collapsed. Non-farm employment has stagnated. (Only the National Rural Employment Guarantee Act has brought some limited relief in recent times.) Millions move towards towns and cities where, too, there are few jobs to be found.

In one estimate, over 85 per cent of rural households are landless, sub-marginal, marginal or small farmers. Nothing has happened in 15 years that has changed that situation for the better. Much has happened to make it a lot worse.

Those who have taken their lives were deep in debt peasant households in debt doubled in the first decade of the neoliberal economic reforms, from 26 per cent of farm households to 48.6 per cent. Meanwhile, all along, India kept reducing investment in agriculture (standard neoliberal procedure). Life was being made more and more impossible for small farmers.

As of 2006, the government spends less than 0.2% of GDP on agriculture and less than 3% of GDP on education. However, some government schemes such as the mid-day meal scheme and the NREGA have been partially successful in providing a lifeline for the rural economy and curbing the further rise of poverty. But now there is no.1 country.

Rich Indians not generous

SATISHCHANDER

120

There are 115,000 individuals in India with high net-worth. Since 2000, this elite group has grown an average of 11 per cent annually. Between 2006 and 2007, the number of wealthy individuals in India surged by 23 per cent, which is the highest growth rate in the world.

However, the wealthiest have the lowest level of giving at 1.6% of their household income for charitable purposes.

"While the 'high class', which is ranked one level below the 'upper class' on the income and education scale, donates 2.1% to charity, the middle class gives 1.9% of household income to philanthropy," says Arpan Seth, partner, Bain & Company.

The percentage of India's GDP that is spent for charitable purposes is only 0.6 where the percentage is 2.2 in the United States.

Reduction in Poverty

Despite all the causes, India currently adds 40 million people to its middle class every year. Analysts such as the founder of "Forecasting International", Marvin J. Cetron writes that an estimated 300 million Indians now belong to the middle class; one-third of them have emerged from poverty in the last ten years. At the current rate of growth, a majority of Indians will be middle-class by 2025.

Despite government initiatives, corporate social responsibility (CSR) remains low on the agenda of corporate sector. Only 10 percent of funding comes from individuals and corporates, and "a large part of CSR initiatives are artfully masqueraded and make it back to the balance sheet". The widening income gap between the rich and the poor over the years has raised fears of a social backlash.

Efforts to alleviate poverty

SATISHCHANDER

121

Since the early 1950s, govt. has initiated, sustained, and refined various planning schemes to help the poor attain self-sufficiency in food production. Probably the most important initiative has been the supply of basic commodities, particularly food at controlled prices, available throughout the country as poor spend about 80 per cent of their income on food. The schemes have however not been very successful because the rate of poverty reduction lags behind the rapid population growth rate.

Outlook for poverty alleviations

Eradication of poverty in India is generally only considered to be a long-term goal. Poverty alleviation is expected to make better progress in the next 50 years than in the past, as a trickle-down effect of the growing middle class. Increasing stress on education, reservation of seats in government jobs and the increasing empowerment of women and the economically weaker sections of society, are also expected to contribute to the alleviation of poverty. It is incorrect to say that all poverty reduction programs have failed. The growth of the middle class (which was virtually non-existent when India became a free nation in August 1947) indicates that economic prosperity has indeed been very impressive in India, but the distribution of wealth is not at all even.

After the liberalization process and moving away from the socialist model, India is adding 60 to 70 million people to its middle class every year. Analysts such as the founder of "Forecasting International", Marvin J. Cetron writes that an estimated 390 million Indians now belong to the middle class; one-third of them have emerged from poverty in the last ten years. At the current rate of growth, a majority of Indians will be middle-class by 2025. Literacy rates have risen from 52 per cent to 65 per cent during the initial decade of liberalization (19912001).

Controversy over extent of poverty reduction

The definition of poverty in India has been called into question by the UN World Food Programme. In its report on global hunger index, it questioned the government of India's definition of poverty saying:

SATISHCHANDER

122

The fact that calorie deprivation is increasing during a period when the proportion of rural population below the poverty line is said to be declining rapidly, highlights the increasing disconnect between official poverty estimates and calorie deprivation.

While total overall poverty in India has declined, the extent of poverty reduction is often debated. While there is a consensus that there has not been increase in poverty between 199394 and 200405, the picture is not so clear if one considers other non-pecuniary dimensions (such as health, education, crime and access to infrastructure). With the rapid economic growth that India is experiencing, it is likely that a significant fraction of the rural population will continue to migrate toward cities, making the issue of urban poverty more significant in the long run.

Some, like journalist P Sainath, hold the view that while absolute poverty may not have increased India remains at an abysmal rank in the UN Human Development Index. India is positioned at 132ond place in the 2007-08 UN HDI index. It is the lowest rank for the country in over 10 years. In 1992, India was at 122ond place in the same index. It can even be argued that the situation has become worse on critical indicators of overall well-being such as the number of people who are undernourished (India has the highest number of malnourished people, at 230 million, and is 94th of 119 in the world hunger index), and the number of malnourished children (43% of India's children under 5 are underweight (BMI<18.5), the highest in the world) as of 2008. Economist Pravin Visaria has defended the validity of many of the statistics that demonstrated the reduction in overall poverty in India, as well as the declaration made by India's former Finance Minister Yashwant Sinha that poverty in India has reduced significantly. He insisted that the 1999-2000 survey was well designed and supervised and felt that just because they did not appear to fit preconceived notions about poverty in India, they should not be dismissed outright. Nicholas Stern, vice president of the World Bank, has published defences of the poverty reduction statistics. He argues that increasing globalization and investment opportunities have contributed significantly to the reduction of poverty in the country. India, together with China, has shown the clearest trends of globalization with the accelerated rise in per-capita income.

A 2007 report by the state-run National Commission for Enterprises in the Unorganized Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees per day (USD 0.50 nominal, USD 2.0 in PPP), with most working in "informal labour sector with no job or social security, living in abject poverty." However, a new report from the UN disputes this, finding that the number of people living on US$1.25 a day is expected
SATISHCHANDER

123

to go down from 435 million or 51.3 per cent in 1990 to 295 million or 23.6 per cent by 2015 and 268 million or 20.3 per cent by 2020.

A study by the McKinsey Global Institute found that in 1985, 93% of the Indian population lived on a household income of less than 90,000 rupees a year, or about a dollar per person per day; by 2005 that proportion had been cut nearly in half, to 54%. More than 103 million people have moved out of desperate poverty in the course of one generation in urban and rural areas as well. They project that if India can achieve 7.3% annual growth over the next 20 years, 465 million more people will be lifted out of poverty. Contrary to popular perceptions, rural India has benefited from this growth: extreme rural poverty has declined from 94% in 1985 to 61% in 2005, and they project that it will drop to 26% by 2025. Report concludes that India's economic reforms and the increased growth that has resulted have been the most successful anti-poverty programs in the country.

Persistence of malnutrition among children

According to the New York Times, is estimated that about 42.5% of the children in India suffer from malnutrition. The World Bank, citing estimates made by the World Health Organization, states that "About 49 per cent of the world's underweight children, 34 per cent of the world's stunted children and 46 per cent of the world's wasted children, live in India." The World Bank also noted that "while poverty is often the underlying cause of malnutrition in children, the superior economic growth experienced by South Asian countries compared to those in Sub-Saharan Africa, has not translated into superior nutritional status for the South Asian child."

A special commission to the Indian Supreme court has noted that the child malnutrition rate in India is twice as great as sub-Saharan Africa.

F. CRIMES 25. Mafia Raj

SATISHCHANDER

124

Mafia Raj refers to an economic and political situation where public goods, property and funds are controlled and systematically embezzled by a criminalized nexus (or "mafia") of government officials, elected politicians, business interests and other entities (such as lawenforcement authorities, non-governmental organizations, trade unions or criminal organizations).The phenomenon of Mafia Raj is highly prevalent in Pakistan and Bangladesh as well, countries which share a similar culture to that of India.

The term is used primarily in India, and can refer to cities, states, government departments, public sector businesses or entire sectors of the economy that are subject to these conditions. Due to the ability of these mafias to operate their illegal activities in a sustained fashion, sometimes openly and with the use of violent intimidation, terms like Goonda Raj (rule of the Dons), Jungle Raj (law of the jungle) and Anarchy are used to refer to the same phenomenon.

In the Indian and Pakistani media, the mafias are usually mentioned by the name of the economic sector in which they are involved. Terms such as coal mafia, timber mafia (sometimes, forest mafia), contractor mafia (sometimes, road construction mafia or road contract mafia) and land mafia are commonly used.

Coal Mafia

An Indian coal mine, The Dhanbad mine complex is allegedly dominated by a coal mafia. The state-owned coal mines of Jharkhand were among the first areas in India to see the emergence of a sophisticated mafia, beginning with the mining town of Dhanbad. It is alleged that the coal industry's trade union leadership forms the upper echelon of this particular arrangement, and employs caste allegiances to maintain its power. Pilferage and sale of coal on the black market, inflated or fictitious supply expenses, falsified worker contracts and the expropriation and leasing-out of government land have allegedly become routine. A parallel economy has also developed with a significant fraction of the local population employed by the mafia in manually transporting the stolen coal for long distances over unpaved roads to illegal mafia warehouses and points of sale. The coal mafia has had a negative effect on Indian industry, with coal supplies and quality varying erratically. Higher quality coal is sometimes selectively diverted, and missing coal replaced with stones and boulders in railway cargo wagons. Once, even a human corpse has been discovered in a sealed coal wagon.
SATISHCHANDER

125

Illegal mining in India

Illegal mining in India is widespread in various ore-rich states of India, and has generated controversy, which spans encroachment of forest areas, underpayment of government royalties, and conflict with tribal regarding land-rights. The spill-over of the effects of illegal mining into problems such as Naxalism and the distortion of Indian democracy by mixed political and mining interests, has gained international attention.

Timber Mafias

India's Himalayan and other forests are vulnerable to timber mafias. Protected forest areas in several parts of India, such as Jammu and Kashmir, Himachal Pradesh, Karnataka and Jharkhand, are vulnerable to illegal logging by timber mafias that have coped or intimidated forestry officials, local politicians, businesses and citizenry. Terrorist groups have also joined the nexus in militancy-affected areas such as Kashmir. Clear-cutting is sometimes coveredup by conniving officials who report fictitious forest fires.

Many studies indicate large losses of forest cover to indiscriminate logging by timber mafias, with over a million hectares in the environs of Chhotanagpur alone being illegally transferred by the forest department directly to industrial, mining and logging companies. Besides the environmental degradation, public financial losses can be substantial, and one 1994 estimate of stolen timber in the state of Karnataka amounted to Rs 1,000 crore (about US$ 230 million). Veerappan was a notorious bandit who, until his shooting death by state police in 2004, specialized in illegally logging sandalwood in Karnataka and Tamil Nadu.

As with coal, there have also been incidents of substitution, of low-grade wood, for highquality timber, when the procurement of wood is, in fact, authorized for government use. In an incident in 2005, officials determined that high-quality deodar wood meant for military and railway use had been substituted with lower-quality chir wood in Jammu and Kashmir State, and the higher quality wood was intercepted in the process of being smuggled across the state border into Punjab.

SATISHCHANDER

126

Contractor Mafias

Public works, such as road construction, are sometimes dominated by contractor mafias. Many state-funded construction activities in India, such as road building, are dominated by construction mafias, which are groupings of corrupt public works officials, materials suppliers, politicians and construction contractors. Shoddy construction and material substitution (e.g. mixing sand in cement while submitting expenses for cement) result in roads and highways being dangerous, and sometimes simply washed away when India's heavy monsoon season arrives.

In a widely covered case, Satyendra Dubey, a project director with the National Highways Authority of India, was murdered in 2003, allegedly because he had written a letter exposing deep-seated contractor mafia involvement in the construction of a section of the prestigious Golden Quadrilateral project to the Prime Minister's office. Although a CBI investigative report after the assassination stated that there was no contractor mafia involvement in Dubey's murder, his family and supporters maintained that an attempt at a cover-up was being made.

Attempts have been made to reduce mafia influence by making construction tendering processes more transparent, sometimes by attempting to move them online, so that a complete audit trail of bids and activity is maintained. Construction mafias are alleged to have used their political influence decisively to frustrate many such attempts, for example in the public works for which the Municipal Corporation of Delhi is responsible.

Land Mafias

A local land mafia reportedly attempted to seize land planned to be used by the Central Zoo Authority as the site for India's first night safari. In cities and villages throughout India and Pakistan, mafias consisting of municipal and other government officials, elected politicians, judicial officers, real estate developers and law enforcement officials, acquire, develop and sell land in illegal ways for profit. Sometimes, government land or land ostensibly acquired
SATISHCHANDER

127

for some legitimate government purpose is then handed over to real estate developers who build commercial and residential properties and sell them in the open market, with the connivance of administrative and police officials.

In one set of allegations in Karnataka, a lake was filled in and government buildings torn down after illegal transfers to a developer by mafia-connected officials.s Eminent domain laws, intended to procure private land at relatively low prices for public benefit or redistribution to poorer people under social justice programs, are abused to pressure existing landholders to sell land to a government entity, which transfers the land to developers at those low prices, and who in turn sell it back on the market at much higher prices.

Computerization of records relating to the classification of tracts and land ownership is a key tool in countering the illegal activities of land mafias, since it creates transparency on all information relating to a given parcel of land. This approach has been effective in Bangalore, but efforts to extend it elsewhere have sometimes met with strong resistance by land mafias, manifesting itself as bureaucratic inaction.

Focused vigilance in specific areas by government agencies has also acted as a deterrent to land mafia activities. For example, the land mafia in the Noida area, on the outskirts of Delhi, was reported to have illegally begun carving out plots for commercial sale on land identified by the Central Zoo Authority of India as the site for India's first night Safari park. Subsequent to coverage in the press, vigorous legal action by the Greater Noida Authority reportedly led to this mafia alliance backing away from this theft, although it may have shifted its attention to illegally encroaching on land along the planned Taj Expressway, connecting Delhi and Agra, which is expected to become quite valuable once the highway is inaugurated.

26. Child labour

Of 12.6 million children in hazardous occupations, India has the highest number of labourers in the world less than 14 years of age. Although the Constitution of India guarantees free and compulsory education to children between the age of 6 to 14 and prohibits employment of children younger than 14 in any hazardous environment, child labour is present in almost all sectors of the Indian economy. Companies including Gap, Primark, and Monsanto etc. have been criticised for using child labour in either their operations in India
SATISHCHANDER

128

or by their suppliers in India. In 1998, Madhura Swaminathan from the Indira Gandhi Institute of Development Research argued that economic growth in Western India was associated with an increase in the number of child workers over the last 15 years and that children work at simple repetitive manual tasks that do not require long years of training or experience in low-paying hazardous works that involves drudgery and forecloses the option of school education for most children. Human Rights Watch estimates that at least 350,000 bonded children are employed by the silk industry in India. As per Human Rights Watch, children as young as five years old are employed and work for up to 12 hours a day and six to seven days a week. Children are forced to dip their hands in scalding water to palpate the cocoons and are often paid less than Rs 10 per day.

Official estimates for child labour working as domestic labour and in restaurants is more than 2,500,000 while NGOs estimate the figure to be around 20 million. The Government of India expanded the coverage of The Child Labour Prohibition and Regulation Act and banned the employment of children as domestic workers and as workers in restaurants, dhabas, hotels, spas and resorts effective from October 10, 2006.

The misuse of adult labour can be found in the construction industry too. Adults are found in construction of both home and office buildings. In 2011, for the construction of the Asian Games care house, the contractors had employed adults, for they had to be paid more, making it a small issue. Each year, thousands of children are rescued from brick kilns, working in awful conditions. Some of the children are actually sold to the brick kiln owners, and are not paid.

Initiatives against child labour

In 1979, the Indian government formed the Gurupadswamy Committee to find about child labour and means to tackle it. The Child Labour Prohibition and Regulation Act were enacted based on the recommendations of the committee in 1986. A National Policy on Child Labour was formulated in 1987 to focus on rehabilitating children working in hazardous occupations. The ministry of Labour and Employment had implemented around 100 industry-specific National Child Labour Projects to rehabilitate the child workers since 1988.

SATISHCHANDER

129

Legislation

The Child Labour Prohibition and Regulation Act (1986) bans employment of children in occupations related to

Transport of passengers Manufacture and selling of crackers and fireworks Abattoirs Carpet weaving Manufacture of Beedi, cement, matches, explosives, soap, slate pencils, agate products, agarbatti etc. Building and construction industry Hazardous processes under the factory act Brick kilns etc. The violation of the act can result in punishments ranging from imprisonment for one month to two years.

Non-Governmental Organizations

Many NGOs like CARE India, Child Relief and You, Global march against child labor etc. have been working to eradicate child labour in India. In 2005, Pratham, an Indian NGO was involved in one of the biggest rescue operations when around 500 child laborers were rescued from zari sweatshops in North East Delhi.

27. Rape
Rape is a type of sexual assault usually involving sexual intercourse, which is initiated by one or more persons against another person without that person's consent. The act may be carried out by physical force, coercion, abuse of authority or with a person who is incapable
SATISHCHANDER

130

of valid consent. The term is most often defined in criminal law. A person who commits an act of rape is known as a rapist.

Internationally, the incidence of rapes recorded by the police during 2008 varied between 0.1 in Egypt per 100,000 people and 91.6 per 100,000 people in Lesotho with 5.0 per 100,000 people in Russia as the mean. According to the American Medical Association (1995), sexual violence, and rape in particular, is considered the most under-reported violent crime. The rate of reporting, prosecution and convictions for rape varies considerably in different jurisdictions. The U.S. Bureau of Justice Statistics (1999) estimated that 91% of U.S. rape victims are female and 9% are male, with 99% of the offenders being male. Rape by strangers is usually less common than rape by persons the victim knows, and several studies argue that male-male and female-female prison rape are quite common and may be the least reported forms of rape.

When part of a widespread and systematic practice, rape and sexual slavery are recognized as crimes against humanity and war crimes. Rape is also recognized as an element of the crime of genocide when committed with the intent to destroy, in whole or in part, a targeted ethnic group.

Definitions

The definition of rape varies both in different parts of the world and at different times in history. It is defined in many jurisdictions as sexual intercourse, or other forms of sexual penetration, of one person by another person without the consent of the victim. The United Nations defines it as "sexual intercourse without valid consent," and the World Health Organization defined it in 2002 as "physically forced or otherwise coerced penetration even if slight of the vulva or anus, using a penis, other body parts or an object. Some countries such as Germany are now, however, using more inclusive definitions which do not require penetration and the 1998 International Criminal Tribunal for Rwanda defines it as "a physical invasion of a sexual nature committed on a person under circumstances which are coercive". In some jurisdictions, the term "rape" has been phased out of legal use in favor of terms such as "sexual assault" or "criminal sexual conduct".

Some jurisdictions continue to define rape to cover only acts involving penile penetration of the vagina, treating all other types of non-consensual sexual activity as sexual assault. In
SATISHCHANDER

131

Brazil, for example, the legal code defines rape as non-consensual vaginal sex. Thus male rape, anal rape, and oral rape are not included. The FBI uses the following definition of rape in compiling their annual Uniform Crime Reports: "The carnal knowledge of a female forcibly and against her will." This has been interpreted to mean only forced penile-vaginal penetration.

Consent

In any allegation of rape, the absence of consent to sexual intercourse on the part of the victim is critical. Consent need not be expressed, and may be implied from the context and from the relationship of the parties, but the absence of objection does not of itself constitute consent. Lack of consent may result from either forcible compulsion by the perpetrator or incapacity to consent on the part of the victim (such as persons who are asleep, intoxicated or otherwise mentally helpless). The law can also invalidate consent in the case of sexual intercourse with a person below the age at which they can legally consent to such relations with older persons. Such cases are sometimes called statutory rape or "unlawful sexual intercourse", regardless of whether it was consensual or not, as people who are under a certain age in relation to the perpetrator are deemed legally incapable of consenting to sex. Consent can always be withdrawn at any time, so that any further sexual activity after the withdrawal of consent constitutes rape.

Duress, in which the victim may be subject to or threatened by overwhelming force or violence, and which may result in absence of objection to intercourse, leads to the presumption of lack of consent. Duress may be act or threatened force or violence against the victim or somebody else close to the victim. Even blackmail may constitute duress. Abuse of power may constitute duress. For instance, in Philippines, a man commits rape if he engages in sexual intercourse with a woman "By means of fraudulent machination or grave abuse of authority. The International Criminal Tribunal for Rwanda in its landmark 1998 judgment used a definition of rape which did not use the word 'consent': "a physical invasion of a sexual nature committed on a person under circumstances which are coercive."

Marital rape, also known as spousal rape, is non-consensual sex in which the perpetrator is the victim's spouse. As such, it is a form of partner rape, of domestic violence, and of sexual abuse. Historically, and still in some countries, consent was assumed within the marriage contract, thus making spousal rape an impossibility; however, spousal rape is now repudiated by international conventions and increasingly criminalized. In 2006, it was
SATISHCHANDER

132

estimated that marital rape could be prosecuted in at least 104 countries (in four of these countries, marital rape could be prosecuted only when the spouses were judicially separated), and since 2006 several other countries have outlawed spousal rape. In the US, spousal rape is illegal in all 50 states; the first state to outlaw it was South Dakota in 1975 and the last North Carolina in 1993. Other developing countries outlawed it in the 2000s. In many countries, it is not clear if marital rape may or may not be prosecuted under ordinary rape laws. However, in the absence of a spousal rape law it may be possible to bring prosecutions for what is effectively rape by characterizing it as an assault

Types

There are several types of rape, generally categorized by reference to the situation in which it occurs, the sex or characteristics of the victim, and/or the sex or characteristics of the perpetrator. Different types of rape include but are not limited to: date rape, gang rape, marital rape or spousal rape, ancestral rape, child sexual abuse, prison rape, acquaintance rape, war rape and statutory rape.

Causes and motivation

There is no single theory that conclusively explains the motivation for rape; the motives of rapists can be multi-factorial and are subject to debate. Several factors have been proposed: anger, a desire for power, sadism, sexual gratification, and evolutionary pressures.

Effects

Victims of rape can be severely traumatized by the assault and may have difficulty functioning as well as they had been used to prior to the assault, with disruption of concentration, sleeping patterns and eating habits, for example. They may feel jumpy or be on edge. After being raped, it is common for the victim to experience acute stress disorder, including symptoms similar to those of posttraumatic stress disorder, such as intense, sometimes unpredictable emotions, and they may find it hard to deal with their memories of the event. In the months immediately following the assault, these problems may be severe and upsetting and may prevent the victim from revealing their ordeal to friends or
SATISHCHANDER

133

family, or seeking police or medical assistance. Additional symptoms of Acute Stress Disorder include:-

1) Depersonalization or dissociation (feeling numb and detached, like being in a daze or a dream, or feeling that the world is strange and unreal) 2) Difficulty remembering important parts of the assault 3) Reliving the assault through repeated thoughts, memories, or nightmares 4) Avoidance of things, places, thoughts, and/or feelings that remind the victim of the assault 5) Anxiety or increased alertness (difficulty sleeping, concentrating, etc.) 6) Avoidance of social life or place of rape For one-third to one-half of the victims, these symptoms continue beyond the first few months and meet the conditions for the diagnosis of posttraumatic stress disorder. In general, rape and sexual assault are among the most common causes of PTSD in women.

Victim blaming

"Victim blaming" is holding the victim of a crime to be in whole or in part responsible for the crime. In the context of rape, this concept refers to the Just World Theory and popular attitudes that certain victim behaviours (such as flirting, or wearing sexually-provocative clothing) may encourage rape. In extreme cases, victims are said to have "asked for it", simply by not behaving demurely. In most Western countries, the defense of provocation is not accepted as mitigation for rape. A global survey of attitudes toward sexual violence by the Global Forum for Health Research shows that victim-blaming concepts are at least partially accepted in many countries. In some countries, victim-blaming is more common, and women who have been raped are sometimes deemed to have behaved improperly. Often, these are countries where there is a significant social divide between the freedoms and status afforded to men and women. Amy M. Buddie and Arthur G. Miller, in a review of studies of rape myths, state:

Rape victims are blamed more when they resist the attack later in the rape encounter rather than earlier (Kopper, 1996), which seems to suggest the stereotype that these women are engaging in token resistance (Malamuth & Brown, 1994; Muehlenhard & Rogers, 1998) or leading the man on because they have gone along with the sexual experience thus far. Finally, rape victims are blamed more when they are raped by an acquaintance or a date
SATISHCHANDER

134

rather than by a stranger (e.g., Bell, Kuriloff, & Lottes, 1994; Bridges, 1991; Bridges & McGrail,1989; Check & Malamuth, 1983; Kanekar, Shaherwalla, Franco, Kunju, & Pinto, 1991; L'Armand & Pepitone, 1982; Tetreault & Barnett, 1987), which seems to evoke the stereotype that victims really want to have sex because they know their attacker and perhaps even went out on a date with him. The underlying message of this research seems to be that when certain stereotypical elements of rape are in place, rape victims are prone to being blamed.

However, they also state that "individuals may endorse rape myths and at the same time recognize the negative effects of rape."

A number of gender role stereotypes can play a role in rationalization of rape. In the case of male-on-female rape, these include the idea that power is reserved to men whereas women are meant for sex and objectified, that women want forced sex and to be pushed around, and that male sexual impulses and behaviors are uncontrollable and must be satisfied. In the case of female-on-male rape, the victim may either be perceived as weak or, in cultures where men acquire status by sexual conquest, as fortunate.

Prosecution

Reporting
Sexual violence and rape in particular, is considered the most under- reported violent crime (American Medical Association, 1995). Thus, the number of reported rapes is lower than both incidence and prevalence rates (Wallaby and Allen, 2004).

The legal requirements for reporting rape vary by jurisdiction each U.S. state may have different requirements while other countries may have less stringent limits.

Investigation

SATISHCHANDER

135

Since the vast majority of rapes are committed by persons known to the victim, the initiation and process of a rape investigation depends much on the victim's willingness and ability to report and describe a rape.

Biological evidence such as semen, blood, vaginal secretions, saliva, vaginal epithelial cells (typically collected by a rape kit) may be identified and genetically typed by a crime lab. The information derived from the analysis can often help determine whether sexual contact occurred, provide information regarding the circumstances of the incident, and be compared to reference samples collected from patients and suspects.

Conviction

In the United Kingdom, figures on reported rape cases show an ongoing decline in the conviction rate, putting it at an all-time low of 5.6% in 2002. The government has been expressed its concern at the year-on-year increase in attrition of reported rape cases, and pledged to address this "justice gap" (Home Office, 2002a).

Prevention and treatment

As sexual violence affects all parts of society, the response to sexual violence is comprehensive. The responses can be categorized as: individual approaches, health care responses, community-based efforts and actions to prevent other forms of sexual violence. "Recovery from sexual assault is a complicated and controversial concept." Support groups, usually accessed by "umbrella" organizations (see List of anti-sexual assault organizations in the United States) are prevalent, including some on-line.

War rape

In 1998, Judge Navanethem Pillay of the International Criminal Tribunal for Rwanda said:

SATISHCHANDER

136

From time immemorial, rape has been regarded as spoils of war. Now it will be considered a war crime. We want to send out a strong message that rape is no longer a trophy of war.

Rape, in the course of war, dates back to antiquity, ancient enough to have been mentioned in the Bible. The Israelite, Persian, Greek and Roman armies reportedly engaged in war rape. The Mongols, who established the Mongol Empire across much of Eurasia, caused much destruction during their invasions. Documents written during or after Genghis Khan's reign say that after a conquest, the Mongol soldiers looted pillaged and raped. Rogueries, a monk who survived the Mongol invasion of Hungary, pointed out not only the genocidal element of the occupation, but also that the Mongols especially "found pleasure" in humiliating women.

The systematic rape of as many as 80,000 women by the Japanese soldiers during the six weeks of the Nanking Massacre is an example of such atrocities. During World War II an estimated 200,000 Korean and Chinese women were forced into prostitution in Japanese military brothels, as so-called "Comfort women". French Moroccan troops known as Goumiers committed rapes and other war crimes after the Battle of Monte Casino. Rape by soldiers was common in many areas occupied by the Red Army.

It has been alleged that an estimated 200,000 women were raped during the Bangladesh Liberation War by the Pakistani army (though this has been disputed by many including the Indian academic Sarmila Bose), and that at least 20,000 Bosnian Muslim women were raped by Serb forces during the Bosnian War. Wartime propaganda often alleges, and exaggerates, mistreatment of the civilian population by enemy forces and allegations of rape figure prominently in this. As a result, it is often very difficult, both practically and politically, to assemble an accurate view of what really happened. Commenting on rape of women and children in recent African conflict zones UNICEF said that rape was no longer just perpetrated by combatants but also by civilians. According to UNICEF rape is common in countries affected by wars and natural disasters, drawing a link between the occurrence of sexual violence with the significant uprooting of a society and the crumbling of social norms. UNICEF states that in Kenya reported cases of sexual violence doubled within days of post-election conflicts. According to UNICEF rape was prevalent in conflict zones in Sudan, Chad and the Democratic Republic of Congo. It is estimated that more than 200,000 females living in the Democratic Republic of the Congo today have been raped in recent conflicts. Some estimate that around 60% of combatants in Congo are HIVinfected.

SATISHCHANDER

137

In 1998, the International Criminal Tribunal for Rwanda found that systematic rape was used in the Rwandan genocide. The Tribunal held that "sexual assault [in Rwanda] formed an integral part of the process of destroying the Tutsi ethnic group and that the rape was systematic and had been perpetrated against Tutsi women only, manifesting the specific intent required for those acts to constitute genocide." An estimated 500,000 women were raped during the 1994 Rwandan Genocide. The Rome Statute, which defines the jurisdiction of the International Criminal Court, recognizes rape, sexual slavery, enforced prostitution, forced pregnancy, enforced sterilization, "or any other form of sexual violence of comparable gravity" as crime against humanity if the action is part of a widespread or systematic practice.

Rape was first recognized as crime against humanity when the International Criminal Tribunal for the former Yugoslavia issued arrest warrants based on the Geneva Conventions and Violations of the Laws or Customs of War. Specifically, it was recognised that Muslim women in Foa (southeastern Bosnia and Herzegovina) were subjected to systematic and widespread gang rape, torture and enslavement by Bosnian Serb soldiers, policemen and members of paramilitary groups after the takeover of the city in April 1992.

The indictment was of major legal significance and was the first time that sexual assaults were investigated for the purpose of prosecution under the rubric of torture and enslavement as a crime against humanity. The indictment was confirmed by a 2001 verdict of the International Criminal Tribunal for the former Yugoslavia that rape and sexual enslavement are crimes against humanity. Amnesty International stated that the ruling challenged the widespread acceptance of the torture of women as an intrinsic part of war.

Rape culture

Rape culture is a term which originated in women's studies and feminist theory, describing a culture in which rape and sexual violence against women are common and in which prevalent attitudes, norms, practices, and media condone, normalize, excuse, or tolerate sexual violence against women. Examples of behaviors commonly associated with rape culture include victim blaming and sexual objectification. Now India is making a rape culture.

SATISHCHANDER

138

28. Honor killing

An honor killing or honour killing is the killing of a member of a family or social group by other members, due to the belief of the perpetrators (and potentially the wider community) that the victim has brought dishonor upon the family or community. Honour killings are directed mostly against women and girls.

The perceived dishonor is normally the result of one of the following behaviors, or the suspicion of such behaviors: (a) dressing in a manner unacceptable to the family or community, (b) wanting to terminate or prevent an arranged marriage or desiring to marry by own choice, (c) engaging in heterosexual sexual acts outside marriage, or even due to a non-sexual relationship perceived as inappropriate, and (d) engaging in homosexual acts. Women and girls are killed at a much higher rate than men.

The United Nations Population Fund (UNFPA) estimates that perhaps as many as 5,000 women and girls a year are killed by members of their own families. Many women's groups in the Middle East and Southwest Asia suspect the victims are at least four times more.

Definitions

In the modern age, the term was first used by a Dutch scholar of Turkish society, Ane Nauta in 1978. Nauta sought a term that could be used in distinguish honour killings from blood feuds. Human Rights Watch defines "honor killings" as follows:-

Honor killings are acts of vengeance, usually death, committed by male family members against female family members, who are held to have brought dishonor upon the family. A woman can be targeted by (individuals within) her family for a variety of reasons, including: refusing to enter into an arranged marriage, being the victim of a sexual assault, seeking a
SATISHCHANDER

139

divorceeven from an abusive husbandor (allegedly) committing adultery. The mere perception that a woman has behaved in a way that "dishonors" her family is sufficient to trigger an attack on her life.

The loose term "honor killing" applies to killing of both males and females in cultures that practice it. For example, during the year 2002 in Pakistan, it is estimated that 245 women and 137 men were killed in the name of Karo-karis in Sindh. These killings target women and men who choose to have relationships outside of their family's tribal or religious community.

Some women who bridge social divides, publicly engage other communities, or adopt some of the customs or the religion of an outside group may be attacked. In countries that receive immigration, some otherwise low-status immigrant men and boys have asserted their dominant patriarchal status by inflicting honor killings on women family members who have participated in public life, for example in feminist and integration politics. Women in the family tend to support the honor killing of one of their own. Alternatively, matriarchs may be motivated not by personal belief in the misogynistic ideology of women as property, but by pragmatic calculations. Sometimes a mother may support an honor killing of an "offending" female family member in order to preserve the honor of other female family members, since many men in these societies will refuse to marry the sister of a "shamed" female whom the family has not chosen to punish, thereby failing to "purify" the family name.

There is some evidence that homosexuality can also be perceived as grounds for honor killing by relatives. In one case, a gay Jordanian man was shot and wounded by his brother. In another case, a homosexual Turkish student, Ahmet Yildiz, was shot outside a cafe and later died in hospital. Sociologists have called this Turkey's first publicized gay honor killing. Men can also be the victims of honour killings by members of the family of a woman with whom they are perceived to have an inappropriate relationship.

As a cultural practice

Sharif Kanaana, professor of anthropology at Birzeit University, says that honor killing is:-

SATISHCHANDER

140

A complicated issued that cuts deep into the history of Arab society. What the men of the family, clan, or tribe seek control of in a patrilineal society is reproductive power. Women for the tribe were considered a factory for making men. The honour killing is not a means to control sexual power or behavior. What's behind it is the issue of fertility, or reproductive power.

An Amnesty International statement adds:-

The regime of honor is unforgiving: women on whom suspicion has fallen are not given an opportunity to defend themselves, and family members have no socially acceptable alternative but to remove the stain on their honor by attacking the woman.

The lawyer and human rights activist Henna Jilani says, "The right to life of women in Pakistan is conditional on their obeying social norms and traditions.

Nighat Taufeeq of the women's resource center Shirkatgah (Lahore, Pakistan) says: "It is an unholy alliance that works against women: the killers take pride in what they have done, the tribal leaders condone the act and protect the killers and the police connived to the coverup."

A July 2008 Turkish study by a team from Deckle University on honor killings in the Southeastern Anatolia Region, the predominantly Kurdish area of Turkey, has so far shown that little if any social stigma is attached to honor killing. It also comments that the practice is not related to a feudal societal structure, "There are also perpetrators who are welleducated university graduates. Of all those surveyed, 60 percent are either high school or university graduates or at the very least, literate."

India

Honor killings have been reported in northern regions of India, mainly in the Indian states of Punjab, Rajasthan, Haryana, Uttar Pradesh and Bihar, as a result of people marrying without their family's acceptance, and sometimes for marrying outside their caste or religion. In
SATISHCHANDER

141

contrast, honour killings are rare to non-existent in South India and the western Indian states of Maharashtra and Gujarat. In some other parts of India, notably West Bengal, honor killings ceased about a century ago, largely due to the activism and influence of reformists such as Vivekananda, Ramakrishna, Vidyasagar and Raja Ram Mohan Roy.

Among Rajputs, marriages with members of other castes can provoke the killing of the married couple and immediate family members. This form of honour killing is attributed to Rajput culture and traditional views on the perceived "purity" of a lineage.

The Indian state of Punjab is notorious for honour killings. According to data compiled by the Punjab Police, 34 honour killings were reported in the state between 2008 and 2010: 10 in 2008, 20 in 2009, and four in 2010.

Haryana also is known for incidents of honour killing. Bhagalpur in the northern Indian state of Bihar has also been notorious for honour killings. Recent cases include a 16-year-old girl, Imrana, from Bhojpur who was set on fire inside her house in a case of what the police called moral vigilantism. The victim had screamed for help for about 20 minutes before neighbours arrived, only to find her still smoldering. She was admitted to a local hospital, where she later died from her injuries. In May 2008, Jayvirsingh Bhadodiya shot his daughter Vandana Bhadodiya and struck her on the head with an axe. In June 2010 some incidents were reported even from Delhi.

In a landmark judgment in March 2010, Karnal district court ordered the execution of the five perpetrators of an honour killing, and imprisoning for life the khap (local caste-based council) head who ordered the killings of Manoj Banwala (23) and Babli (19), a man and woman of the same clan who eloped and married in June 2007. Despite having been given police protection on court orders, they were kidnapped; their mutilated bodies were found a week later in an irrigation canal. In 1990 the National Commission for Women set up a statutory body in order to address the issues of honor killings among some ethnic groups in North India. This body reviewed constitutional, legal and other provisions as well as challenges women face. The NCW's activism has contributed significantly towards the reduction of honor killings in rural areas of North India. According to Pakistani activists Henna Jilani and Emans M. Ahmed, Indian women are considerably better protected against honor killings by Indian law and
SATISHCHANDER

142

government than Pakistani women, and they have suggested that governments of countries affected by honor killings use Indian law as a model in order to prevent honor killings in their respective societies.

In June 2010, scrutinizing the increasing number of honour killings, the Supreme Court of India issued notices to the Central Government and six states including Uttar Pradesh, Punjab, Haryana and Rajasthan to take preventive measures against honor killings.

Alarmed by the rise of honour killings, the Government planned to bring a bill in the Monsoon Session of Parliament July 2010 to provide for deterrent punishment for 'honour' killings.

29. Bankruptcy
Bankruptcy or insolvency is a legal status of a person or organisations that cannot repay the debts it owes to its creditors. Creditors may file a bankruptcy petition against a business or corporate debtor ("involuntary bankruptcy") in an effort to recoup a portion of what they are owed or initiate a restructuring. In the majority of cases, however, bankruptcy is initiated by the debtor (a "voluntary bankruptcy" that is filed by the insolvent individual or organisations). An involuntary bankruptcy petition may not be filed against an individual consumer debtor who is not engaged in business.

The word bankruptcy is formed from the ancient Latin bancus (a bench or table), and ruptus (broken). A "bank" originally referred to a bench, which the first bankers had in the public places, in markets, fairs, etc. on which they tolled their money, wrote their bills of exchange, etc. Hence, when a banker failed, he broke his bank, to advertise to the public that the person to whom the bank belonged was no longer in a condition to continue his business.

Fraud

Bankruptcy fraud is a white-collar crime. While difficult to generalise across jurisdictions, common criminal acts under bankruptcy statutes typically involve concealment of assets,
SATISHCHANDER

143

concealment or destruction of documents, conflicts of interest, fraudulent claims, false statements or declarations, and fee fixing or redistribution arrangements. Falsifications on bankruptcy forms often constitute perjury. Multiple filings are not in and of themselves criminal, but they may violate provisions of bankruptcy law.

Bankruptcy fraud should be distinguished from strategic bankruptcy, which is not a criminal act, but may work against the filer.

All assets must be disclosed in bankruptcy schedules whether or not the debtor believes the asset has a net value. This is because once a bankruptcy petition is filed; it is for the creditors, not the debtor to decide whether a particular asset has value. The future ramifications of omitting assets from schedules can be quite serious for the offending debtor. A closed bankruptcy may be reopened by motion of a creditor or the U.S. trustee if a debtor attempts to later assert ownership of such an "unscheduled asset" after being discharged of all debt in the bankruptcy. The trustee may then seize the asset and liquidate it for the benefit of the (formerly discharged) creditors.

India

India does not have a clear law on corporate bankruptcy even though individual bankruptcy laws have been in existence since 1874. The current law in force was enacted in 1920 called Provincial Insolvency Act.

Legal meaning of the terms bankruptcy, insolvency, liquidation and dissolution are contested in the Indian legal system. There is no regulation or statute legislated upon bankruptcy which denotes a condition of inability to meet a demand of a creditor as is common in many other jurisdictions.

Winding up of companies is in the jurisdiction of the Courts which can take a decade even after the Company has actually been declared insolvent. On the other hand, supervisory restructuring at the behest of The Board of Industrial and Financial Reconstruction is generally undertaken using receivership by a Public Finance Institution.

SATISHCHANDER

144

BANKING SECRECY

Bank secrecy (or bank privacy) is a legal principle in some jurisdictions under which banks are not allowed to provide to authorities personal and account information about their customers unless certain conditions apply (for example, a criminal complaint has been filed). In some cases, additional privacy is provided to beneficial owners through the use of numbered bank accounts or otherwise. Bank secrecy is prevalent in certain countries, such as Switzerland, Singapore, Lebanon and Luxembourg, as well as offshore banks and other tax havens under voluntary or statutory privacy provisions. Each State Party shall ensure that, in the case of domestic criminal Investigations of offences established in accordance with this Convention, there are appropriate mechanisms available within its domestic legal system to overcome Obstacles that may arise out of the application of bank secrecy laws.

BANKING SECRECY IN INDIA

Finance minister of India Pranab Mukherjee on 13 June 2011 called for stepping up multilateral cooperation to end the era of banking secrecy and deal with the abusive transfer pricing mechanism that is robbing developing nations of their scarce natural resources. Mukherjee, while addressing a seminar on international taxation jointly organized by his ministry and the Organisation for the Economic Cooperation and Development (OECD), regretted that the banking system is still opaque in various non-tax and low tax jurisdictions. Despite efforts made at the global level and statements issued by G-20 leaders at their London summit in April 2009,We cannot say with certainly that the bank secrecy is over in all cases, the minister said.

While countries have accepted to end bank secrecy in the general, come countries have agree to do so only from a prospective date and are not willing to exchange past banking information, he said. Such issue put a question mark on the efficacy of exchange of banking information, he said.

SATISHCHANDER

145

30. Chit fund misused

Chit Funds are also misused by its promoters and there are many instances of the founders running what is basically a Ponzi scheme and absconding with their money. Chit funds are the Indian equivalent of the Rotating Savings and Credit Associations (ROSCA) that are famous throughout the world. ROSCAs are a means to save and borrow simultaneously. It is considered one of the best instruments to cater to the needs of the poor. It enables poor people to convert their small savings into lump sums. The concept of chit funds originated more than 1000 years ago. Initially it was in the form of an informal association of traders and households within communities, wherein the members contributed some money in return for an accumulated sum at the end of the tenure. Participation in Chit funds was mainly for the purpose of purchasing some property or, in other words, for consumption purposes. However, in recent times, there have been tremendous alterations in the constitution and functioning of Chit funds.

Whiles in most places ROSCAs are user-owned and organized informally, in India, chit funds have been formally institutionalized as well. Legally recognized firms provide a variety of chit schemes. Under the Chit Fund Act, this industry has been highly regulated and is governed by stringent rules. This institutionalization of the chit funds (a) makes it easier for poor or illiterate people to know exactly what different chit schemes the chit companies offer, (b) provides an option to people to participate in schemes where members need not know each other; hence there is a larger diversification of the idiosyncratic risks. This makes it easier to provide chit schemes in urban settings where social linkage among members might be weak, (c) to some extent ensures transparency in the operations, (d) given that the law determines the size of the bidding and the commission the company can charge, it encourages competition among chit fund firms to improve services to clients, and (e) legal recognition also helps the chit fund operators to scale their operations. It allows the chit fund operator to use the legal means to handle defaults and more importantly it infuses faith in the clients that there are sufficient checks and balances which will prevent opportunistic behaviour. In return the chit fund companies take a fee from the clients to cover their expenses, in the form of a commission. The chit fund company provides a variety of mechanisms by which the savings of the members can be transformed into lump sums. The main mechanisms are; savings deposit which allow a lump sum to be enjoyed in future in exchange for a series of savings made at present, loans which allow a lump sum to be enjoyed at present in exchange for a series of savings to be made in the future and, insurance which allows a lump sum to be enjoyed at some unspecified future time (for

SATISHCHANDER

146

example, daughters marriage) in exchange for a series of savings made both at present and in the future.

A Chit fund is a kind of savings scheme practiced in India. A Chit fund company means a company managing, conducting or supervising, as foremen, agent or in any other capacity, chits as defined in Section 2 of the Chit Funds Act, 1982. According to Section 2(b) of the Chit Fund Act, 1982, "Chit means a transaction whether called chit, chit fund, chitty, kuri or by any other name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain instead) by way of periodical installments over a definite period and that each such subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to the prize amount".

Such chit fund schemes may be conducted by organized financial institutions or may be unorganized schemes conducted between friends or relatives. There are also variations of chits where the savings are done for a specific purpose. Chit funds also played an important role in the financial development of people of south Indian state of Kerala, by providing easier access to credit. In Kerala chitty (chit fund) is a common phenomenon practiced by all sections of the society. In Kerala, there exists a company under the State Government, called Kerala State Financial Enterprise, the main business activity of it being the chitty business.

31. Human trafficking in India

India is a source, destination, and transit country for men, women, and children trafficked for the purposes of forced labor and commercial sexual exploitation. Internal forced labor may constitute Indias largest trafficking problem; men, women, and children are held in debt bondage and face forced labor working in brick kilns, rice mills, agriculture, and embroidery factories. While no comprehensive study of forced and bonded labor has been completed, NGOs estimate this problem affects 20 to 65 million Indians. Women and girls are trafficked within the country for the purposes of commercial sexual exploitation and forced marriage especially in those areas where the sex ratio is highly skewed in favor of men. Children are subjected to forced labor as factory workers, domestic servants, beggars,

SATISHCHANDER

147

and agriculture workers, and have been used as armed combatants by some terrorist and insurgent groups.

India is also a destination for women and girls from Nepal and Bangladesh trafficked for the purpose of commercial sexual exploitation. Nepali children are also trafficked to India for forced labor in circus shows. Indian women are trafficked to the Middle East for commercial sexual exploitation. There are also victims of labor trafficking among the thousands of Indians who migrate willingly every year to the Middle East, Europe, and the United States for work as domestic servants and low-skilled laborers. In some cases, such workers are the victims of fraudulent recruitment practices that lead them directly into situations of forced labor, including debt bondage; in other cases, high debts incurred to pay recruitment fees leave them vulnerable to exploitation by unscrupulous employers in the destination countries, where some are subjected to conditions of involuntary servitude, including nonpayment of wages, restrictions on movement, unlawful withholding of passports, and physical or sexual abuse.

Prosecutions

The Government of India prohibits some forms of trafficking for commercial sexual exploitation through the Immoral Trafficking Prevention Act (ITPA). Prescribed penalties under the ITPA ranging from seven years to life imprisonment are sufficiently stringent and commensurate with those for other grave crimes. India also prohibits bonded and forced labor through the Bonded Labor Abolition Act, the Child Labor Act, and the Juvenile Justice Act.

These laws are ineffectually enforced, however, and their prescribed penalties a maximum of three years in prison are not sufficiently stringent. Indian authorities also use Sections 366(A) and 372 of the Indian Penal Code, prohibiting kidnapping and selling minors into prostitution respectively, to arrest traffickers. Penalties under these provisions are a maximum of ten years imprisonment and a fine.

In addition to this, bonded labor and movement of sex trafficking victims, is facilitated by corrupt officials and people having a stake in this lucrative business. They protect brothels that exploit victims, and protect traffickers and brothel keepers from arrest and other threats of enforcement.
SATISHCHANDER

148

Usually, there are no efforts made to tackle the problem of government officials complicity in trafficking workers for overseas employment. Bulk of bonded labor heads for Middle East to emerging economies and there are several media reports which testify the plight of Indian workers.

State governments regularly conduct campaigns through their welfare departments along with police raids. However, sustained efforts in combating trafficking for commercial sexual exploitation usually come to a naught because of ineffectual laws as well as delays in prosecution.

Indias Central Bureau of Investigation incorporated anti-trafficking training into its standard curriculum. In November, the State of Maharashtra developed an action plan to combat trafficking; it did not, however, allocate appropriate funding to accomplish the objectives of this plan.

The government does not break down these statistics by sections of the law, meaning that law enforcement data regarding trafficking offenses may be conflated with data regarding arrests of women in prostitution pursuant to Section 8 of the ITPA.

Protection

Indias effort to protect victims of trafficking varies from state to state, but remains inadequate in many places. Victims of bonded labor are entitled to 10,000 rupees ($225) from the central government for rehabilitation, but this program is unevenly executed across the country. Government authorities do not proactively identify and rescue bonded laborers, so few victims receive this assistance. Although children trafficked for forced labor may be housed in government shelters and are entitled to 20,000 rupees ($450), the quality of many of these homes remains poor and the disbursement of rehabilitation funds is sporadic. Some states provide services to victims of bonded labor, but Non-Governmental Organisations provide the majority of protection services to these victims. The central government does not provide protection services to Indian victims trafficked abroad for forced labor or commercial sexual exploitation. Indian diplomatic missions in destination
SATISHCHANDER

149

countries may offer temporary shelter to nationals who have been trafficked; once repatriated, however, neither the central government nor most state governments offer any medical, psychological, legal, or reintegration assistance for these victims.

Section 8 of the ITPA permits the arrest of women in prostitution. Although statistics on arrests under Section 8 are not kept, the government and some NGOs report that, through sensitization and training, police officers no longer use this provision of the law; it is unclear whether arrests of women in prostitution under Section 8 have actually decreased. Because most law enforcement authorities lack formal procedures to identify trafficking victims among women arrested for prostitution; some victims may be arrested and punished for acts committed as a result of being trafficked.

Some foreign victims trafficked to India are not subject to removal. Those who are subject to removal are not offered legal alternatives to removal to countries in which they may face hardship or retribution. NGOs report that some Bangladeshi victims of commercial sexual exploitation are pushed back across the border without protection services. The government also does not repatriate Nepali victims; NGOs primarily perform this function. Many victims decline to testify against their traffickers due to the length of proceedings and fear of retribution by traffickers.

NGOs that receive funding indirectly from either the central or state government do not want to be brought within the scrutiny of anybody.

Prevention

Ministry of Labor and Employment displays full-page advertisements against child labor in national newspapers at periodic intervals. The government has also instituted pre-departure information sessions for domestic workers migrating abroad on the risks of exploitation. Most of the Indian workers pay huge sums of money to agents who facilitate their emigration outside the official channels and willingly emigrate despite being aware of the conditions prevailing in those destinations. This is because of the fact that most of the destinations abroad pay better sums of money. Therefore, a dream of better future ahead often lures the people abroad and hence trafficking cannot entirely be prevented. India has not ratified the 2000 UN TIP Protocol.

SATISHCHANDER

150

G. PREVENTION &REDUCTION TOOLS (ACTS) 32. Transparency International

Transparency International (TI) is a non-governmental organization that monitors and publicizes corporate and political corruption in international development. It publishes an annual Corruption Perceptions Index, a comparative listing of corruption worldwide. The headquarters is located in Berlin, Germany but operates through more than 70 national chapters.

History

TI was founded in May 1993 through the initiative of Peter Eigen, a former regional director for the World Bank. Founding board members included Eigen, Hansjrg Elshorst, Joe Githongo, Fritz Heimann, Michael Hershman, Kamal Husain, Dolores L. Espaol, George Moody Stuart, Jerry Parfitt, Jeremy Pope and Frank Vogl. Eigen acted as Chairman and Pope was Managing Director.

In 1995, TI developed the Corruption Perceptions Index (CPI). The CPI ranked nations on the prevalence of corruption within each country, based upon surveys of business people. The CPI was subsequently published annually. It was criticized for poor methodology and unfair treatment of developing nations, while also being praised for highlighting corruption and embarrassing governments.

In 1999, TI began publishing the Bribe Payers Index (BPI) which ranked nations according to the prevalence that a country's multinational corporations would offer bribes.

SATISHCHANDER

151

Organization and role

TI is organized as a group of some 100 national chapters, with an international secretariat in Berlin, Germany. Originally founded in Germany in May 1993 as a not-for-profit organization, TI is now an international non-governmental organization, and claims to be moving towards a completely democratic organizational structure. TI says of itself:

"Transparency International is the global civil society organization leading the fight against corruption. It brings people together in a powerful worldwide coalition to end the devastating impact of corruption on men, women and children around the world. TI's mission is to create change towards a world free of corruption."

Since 1995, TI has issued an annual Corruption Perceptions Index (CPI); it also publishes an annual Global Corruption Report, a Global Corruption Barometer and a Bribe Payers Index.

TI does not undertake investigations on single cases of corruption or expose individual cases. It develops tools for fighting corruption and works with other civil society organizations, companies and governments to implement them. The goal of TI is to be nonpartisan and to build coalitions against corruption. TI's biggest success has been to put the topic of corruption on the world's agenda. International Institutions such as the World Bank and the International Monetary Fund now view corruption as one of the main obstacles for development, whereas prior to the 1990s this topic was not broadly discussed. TI furthermore played a vital role in the introduction of the United Nations Convention against Corruption and the OECD Anti-Bribery Convention.

Corruption Perceptions Index

The CPIbesides the World Bank corruption indexis the most commonly used measure for corruption in countries worldwide. To form this index, TI compiles surveys that ask businessmen and analysts, both in and outside the countries they are analysing, their perceptions of how corrupt a country is. Relying on the number of actual corruption cases

SATISHCHANDER

152

would not work since laws and enforcement of laws differ significantly from country to country.

The CPI has received criticisms over the years. The main one stems from the difficulty in measuring corruption, which by definition happens behind the scenes. The CPI therefore needs to rely on third-party surveys which have been criticized as potentially unreliable. Data can vary widely depending on the public perception of a country, the completeness of the surveys and the methodology used. The second issue is that data cannot be compared from year to year because TI uses different methodologies and samples every year. This makes it difficult to evaluate the result of new policies. The CPI authors replied to these criticisms by reminding that the CPI is meant to measure perception and not "reality". They argue that "perceptions matter in their own right, since... firms and individuals take actions based on perceptions".

Competitiveness and corruption

A review of the linkages between countries' competitiveness and the incidence of corruption was initiated at a TI workshop in Prague, November 1998 and picked-up in the International Anti-Corruption Conference three years later.

Mara Faccio (Purdue University, USA) has issued a number of papers on this subject, including a study entitled Differences between Politically Connected and Non-Connected Firms: A Cross Country Comparison.

With governments committing huge sums to tackle the world's most pressing problems, from the instability of financial markets to climate change and poverty, corruption remains an obstacle to achieving much needed progress. The 2010 Corruption Perceptions Index shows that nearly three quarters of the 178 countries in the index score below five, on a scale from 10 (highly clean) to 0 (highly corrupt). These results indicate a serious corruption problem.

To address these challenges, governments need to integrate anti-corruption measures in all spheres, from their responses to the financial crisis and climate change to commitments by the international community to eradicate poverty. Transparency International advocates
SATISHCHANDER

153

stricter implementation of the UN Convention against Corruption, the only global initiative that provides a framework for putting an end to corruption. Denmark, New Zealand and Singapore are tied at the top of the list with a score of 9.3, followed closely by Finland and Sweden at 9.2. Bringing up the rear is Somalia with a score of 1.1, slightly trailing Myanmar and Afghanistan at 1.4 and Iraq at 1.5.

Notable among decliners over the past year are some of the countries most affected by a financial crisis precipitated by transparency and integrity deficits. Among those improving in the past year, the general absence of OECD states underlines the fact that all nations need to bolster their good governance mechanisms. The message is clear: across the globe, transparency and accountability are critical to restoring trust and turning back the tide of corruption. Without them, global policy solutions too many global crises are at risk.

33. United Nations Convention against Corruption

The United Nations Convention against Corruption (UNCAC) is the only legally binding universal anti-corruption instrument. The Convention's far-reaching approach and the mandatory character of many of its provisions make it a unique tool for developing a comprehensive response to a global problem. The UNCAC covers five main areas: prevention, criminalization and law enforcement measures, international cooperation, asset recovery, and technical assistance and information exchange. The UNCAC covers many different forms of corruption, such as trading in influence, abuse of power, and various acts of corruption in the private sector. A further significant development was the inclusion of a specific chapter of the Convention dealing with the recovery of assets, a major concern for countries that pursue the assets of former leaders and other officials accused or found to have engaged in corruption. The rapidly growing number of States that have become parties to the Convention is further proof of its universal nature and reach.

34. RTI Acts

SATISHCHANDER

154

AS a Corruptions Reduction Tools in India

The fight against corruption has been declared a high priority by Prime Minister Man Mohan Singh. However, corruption remains widespread in the country and there have been many instances of political and bureaucratic corruption, public funds embezzlement, fraudulent Procurement practices and judicial corruption. High ranking officials have also been involved in major corruption scandals. The sectors most affected by corruption include public procurement, tax and customs administration, infrastructure, public utilities, and the police. The latter has been identified as one of the most corrupt institutions by various surveys. The Government has put in place a well-developed legal and institutional framework, with institutions including the Central Bureau of Investigation, the Office of the Comptroller and the Auditor General, and the Central Vigilance Commission. The Supreme Court, in particular, has taken a firm stance against corruption in recent years and made several important rulings. Another achievement in the fight against corruption has been the enactment of the Right to Information (RTI) Act in 2005, which grants citizens access to government information and a mechanism to control public spending. In spite of progress, however, law enforcement remains weak and reforms have a long way to go.

Right to information act

The Right to Information Act (2005) and equivalent acts in the states that require government officials to furnish information requested by citizens or face punitive action, computerization of services and various central and state government acts that established vigilance commissions have considerably reduced corruption or at least have opened up avenues to redress grievances. The 2006 report by Transparency International puts India at the 70th place and states that significant improvements were made by India in reducing corruption.

Salient Features of Right to Information Act, 2005

SATISHCHANDER

155

Right to information (RTI) is inherent in democratic functioning and a precondition to good governance and realization of all other human rights, including education and health care that have intense and pervasive impact on all the human activities.

Specifically, the main objectives of the law on RTI are: to operationalize the fundamental right to information; to set up systems and mechanisms that facilitate peoples easy access to information; to promote transparency and accountability in governance; to minimize corruption and inefficiency in public offices and to ensure peoples participation in governance and decision making.

RTI is based on the key concepts: i) The right of the public to access the information and the corresponding duty of the Government to meet the request, unless specifically defined exemptions apply; (ii) The duty of the Government to proactively provide certain key information even in absence of a request.

The Act promises to make the right to information more progressive, participatory and meaningful, as it encourages the common citizen to enthusiastically participate in the whole process of governance.

The citizens are not only free to ask for information from the Government, but also have the right to get it. The scope of the Act extends to all authorities and bodies under the Constitution or any other law, and inter alia includes all authorities under the Central Government, State Government sand Local Bodies. The non-governmental organizations (NGOs) substantially funded, directly or indirectly, by the public funds also fall within the ambit of this Act.

A duty has been cast, in section 4 of the Act, on every public authority to suo motu provide to the public with the information as prescribed therein, so that the public has to take minimum recourse to the use of this legislation for obtaining information.

The procedure of securing information as provided in section 6 of the Act, prescribes a procedure, which is very simple. A citizen has to merely make a request to the concerned
SATISHCHANDER

156

Public Information Officer (PIO) specifying the information sought by him. The fee payable is reasonable and information is to be provided free of cost to citizens living below the poverty line.

To assure that the information sought is provided quickly, section 7 of the Act, makes it mandatory for the PIO to provide the information within 30days. If the information requested concerns the life or liberty of a person, it has been made mandatory to provide it within 48 hours of the receipt of the request. The Act provides for penalties in case of failure to provide information in time, or for refusing to accept application for information, or forgiving incorrect, incomplete or misleading information, or destroying information and so on. In addition, the Information Commission has also been empowered to recommend disciplinary action against the government servants.

The Act establishes a two-tier mechanism for appeal. The first appeal lies to an officer within the organization who is senior in rank to PIO. The second appeal lies in the Information Commission. The jurisdiction of the lower court is barred under section 20 of the Act. The categories of information exempted from disclosure in this Act are kept to a bare minimum. Even the exemptions are not absolute if disclosure of the information outweighs the harm to the public authorities.

Even in the case of security and intelligence agencies and organizations, which are exempted from the provisions of this Act, if there were cases of allegation of corruption and human rights violation, such exemption would not be available. In cases of allegations of violation of human rights, information would be made available after the approval of the Information Commission. This Act, thus, paves the way for an empowered citizen, as well as an alert, efficient, responsive, transparent and accountable government.

The Central/State Information Commission has a major role in enforcing the implementation of the provisions of the Act as well as for educating the parties, mainly information seekers and providers. The Commission is vested with the power of a Court. Under Section 20, the Commission may impose penalty on the concerned officials for denial of information and recommend disciplinary action against the errant officials, who do not comply with the requirements of the Act. Moreover, under Section 25(5) of the Act, the Commission may also advise the appropriate Government in the matters of maintenance and preservation of records and the norms for disclosure of information with a view to enabling the people to observe and scrutinize the decision making process. The powers
SATISHCHANDER

157

vested with the Information Commissioner, who are appointed by the President of India/Governor of a state, ensure effective implementation of the Act.

Impact of RTI on the Elements of Good Governance

The RTI Act was implemented in October 2005. Though a period of less than three years is too a short period to assess the success of RTI, it may be worthwhile to analyse some evidences, for developing an understanding on how it works and what it does or does not do. We, therefore, propose to find an answer to the question: whether the objectives of the Act are being realized?

It must be admitted that the assessment of the RTI on good governance and development is indeed a daunting task, since data are lacking to permit methodological rigour of analysis. However, reliance is made on (i) the responses of the RTI requesters and the activists, particularly during the course of hearings conducted by the Author in the cases listed before the Commission to resolve the disputes between information seekers and providers; (ii) media reports on the issues pertaining to RTI matters; and (iii) preliminary research studies and publications of results, mainly those relating to corruption and accountability of public bodies. The assessment of impact is proposed to be made in terms of the stated objectives of the RTI Act, which are outlined in its preamble, as under:

An Act to provide for setting out the practical regime of righto information for citizens to secure access to information under the control of public authorities, in order to promote transparency and accountability in the working of every public authority.

It is stated furthermore that:Democracy requires an informed citizenry and transparency of information which are vital to its functioning and also to contain corruption and to hold Governments and their instrumentalities accountable to the governed;

In addition to the above, the Prime Minister of India, while piloting the Bill for its passage by the National Parliament, stated, as under, on May 11, 2005:

SATISHCHANDER

158

I believe that the passage of this Bill will see the dawn of a new era in our processes of governance, an era of performance and efficiency, an era which will ensure that benefits of growth flow to all sections of our people, an era which will eliminate the scourge of corruption, an era which will bring the common mans concern to the heart of all processes of governance, an era which will truly fulfil the hopes of the founding fathers of our Republic.

Evidently, the major objectives of the Act are:-

1) Greater Transparency in functioning of public authorities. 2) Improvement in accountability and performance of the Government. 3) Promotion of partnership between citizens and the Government in decision making process; 4) Reduction in corruption in the Government departments. All these parameters are critical elements of good governance. An attempt is therefore made below to examine the extent to which the RTI has been successful in influencing the above factors in desirable direction.

Transparency

With a view to ensuring maximum disclosure of information regarding government rules, regulations and decisions, every public authority is mandated to `maintain all its records duly catalogued and indexed in a manner and the form which facilitates the right to information under the Act. The public authorities are therefore required to make pro-active disclosures through publication of relevant documents. Besides, the public authorities are also required to provide as much information suo motu to the public at regular intervals through various means of communication, including internet, so that the public have minimum resort to the use of this Act to obtain information.

In compliance of the above provisions of the Act, all the levels of the Government the Centre, States and Local Bodies, including Village level Panchayats have put the records in public domain, through publications as well as internet in the regional languages. And, to facilitate the access to information, a citizen has the right to:

SATISHCHANDER

159

(i) Inspection of work, documents, records; (ii) Taking notes extracts or certified copies of the documents or records; (iii) Taking certified sample of material; (IV) Obtaining, information in electronic form, if available.

Thus, all the public authorities have duly placed the information in public domain and that a citizen has the right to observe as to what is going on inside an organization. In the cases where the information sought for are not provided within the stipulated period of 30 days or the information furnished are incomplete, misleading or incorrect, a requester is free to file a complaint or appeal before the Information Commission (IC), for necessary directions to the parties as per the provisions of the Act.

In effect, thus, there is greater transparency than before in the working of the public bodies. In a large number of cases, the Commission has ordered for providing the details of the decision-making processes, which include file notings, cabinet papers, records of recruitment, selection and promotion of staff, documents pertaining to tender processes and procurement procedure, the lists of beneficiaries of the Governments subsidized schemes, such as, food grains supplied through ration shops, water and electricity, domestic gas, educational and health facilities, shelter for poor, muster rolls underemployment guarantee schemes, etc. The disclosure of vital information, such as above, has thus resulted in checking corrupt practices in delivery of services and ensuring the reach of entitlements to the poor. The disclosure of information relating to use of funds allocated to rural employment guarantee scheme, MLA/MP local area funds, etc. have contributed to advocacy in favour or against the policies and/or political leaderships.

Accountability

The RTI provides people with the mechanism to access information, which they can use to hold the government to account or to seek explanation as to why decisions have been taken, by whom and with what consequences or outcomes. In addition, every public authority is required to provide reasons for its administrative or quasi-judicial decisions to the affected persons u/s4 (1) (d) of the Act.

SATISHCHANDER

160

Until the implementation of the RTI Act, it was not possible for an ordinary persons to seek the details of a decision making process, which was found most often, as ineffective in terms of its outcome. It was, therefore, not possible to hold a free and frank discussion on issues of common concern of people or to fix the responsibility for any action. Such an era of darkness in policy planning is over.

The information regime has, in effect, created conducive conditions for every One to have a better understanding of how the government works or how a Particular decision was reached. Such a chance given to people empowers them to make appropriate choice of leadership and the policies that affects them. This has begun to happen with salutary effects on delivery of socioeconomic services, particularly for the poor.

For instance, being full aware that the records pertaining to the decision-making process, including file notings, are required to be put in public domain, the concerned officials at all levels objectively record the reasons for the observations made by them. Attempts are also made to effectively implement the programs as the relevant details are proactively disclosed. In effect, thus, the quality of decision making and delivery of services have duly improved.

Reduction in Corruption

Lack of transparency and accountability encourage the government officials to indulge in corrupt practices, which result in lower investments due to misuser diversion of funds for private purposes. As a result, the governments social spending yields no worthwhile benefits, because, for instance, the teachers do not teach, doctors and nurses do not attend health centres, ration card holders do not receive subsidized food grains and the promised jobs are not provided to the people. In the process, it perpetuates poverty and harms the poor. It creates an environment of distrust between the people and the government, which impinge upon the development and jeopardize democratic governance.

RTI has enabled people to participate in the process of development, which has resulted in reduction of corruption. It has just begun to happen for the first time for establishing an open and participatory governance system that protects and promotes the socio-economic
SATISHCHANDER

161

interests of every citizen, particularly the poor, who are receiving the benefits of development as per their entitlements.

As the functioning of public authorities becomes more transparent and ensure proactive disclosure of the policies, programmes and their outcomes, there would be greater participation by people in every sphere of development. It is important therefore to enhance the capacity of public authorities as well as the citizens to develop awareness and understanding of information, to make its effective use for the benefits of citizens. In effect, endeavours should be made to increase the effective demand for improvement in delivery of services.

35. Ombudsmen
An ombudsman (conventional English plural: ombudsmen) is a person who acts as a trusted intermediary between an organization and some internal or external constituency while representing not only but mostly the broad scope of constituent interests. An indigenous Danish, Norwegian, and Swedish term, Ombudsman is etymologically rooted in the Old Norse word umbosmar, essentially meaning "representative". An ombudsman is an official, usually appointed by the government or by parliament, who is charged with representing the interests of the public by investigating and addressing complaints reported by individual citizens.

Ombudsman in politics

In general, an ombudsman is a state official appointed to provide a check on government activity in the interests of the citizen, and to oversee the investigation of complaints of improper government activity against the citizen. If the ombudsman finds a complaint to be substantiated, the problem may get rectified, or an ombudsman report is published making recommendations for change. Further redress depends on the laws of the country concerned, but this normally involves financial compensation. Ombudsmen in most countries do not have the power to initiate legal proceedings or prosecution on the grounds of a complaint. This role is sometimes referred to as a "tribunitian" role, and has been traditionally fulfilled by elected representatives the term refers to the ancient Roman

SATISHCHANDER

162

"tribunes of the plebians" (tribuni plebis), whose role was to intercede in the political process on behalf of common citizens.

The major advantage of an ombudsman is that he or she examines complaints from outside the offending state institution, thus avoiding the conflicts of interest inherent in selfpolicing. However, the ombudsman system relies heavily on the selection of an appropriate individual for the office, and on the cooperation of at least some effective official from within the apparatus of the state. Perhaps for this reason, outside Scandinavia, the introduction of ombudsmen has tended to yield mixed results.

Industry and organizational ombudsman

Many private companies, universities, non-profit organizations and government agencies also have an ombudsman (or an ombuds office) to serve internal employees, and managers and/or other constituencies. These ombudsman roles are structured to function independently, by reporting to the CEO or board of directors, and according to the International Ombudsman Association (IOA) Standards of Practice do not serve any other role in the organization. They are beginning to appear around the world within organizations, sometimes as an alternative to anonymous hot-lines in countries where these are considered inappropriate or are illegal, and in addition to hot lines because ombuds offices typically receive many more calls than do hot lines.

INDIA

The Government of India has designated several ombudsmen (sometimes called Chief Vigilance Officer or CVO) for the redressal of grievances and complaints from individuals in the banking, insurance and other sectors being serviced by both private and public bodies and corporations. The CVC (Central Vigilance Commission) was setup on the recommendations of Santhanams Committee (196264).

In India, Ombudsman is called as Lokpal or Lokayukta. An Administrative Reforms Commission (ARC) was set up on 5 January 1966 under the Chairmanship of Shri Morarji
SATISHCHANDER

163

Desai. It recommended two-tier machinery: Lokpal at the Centre (Parliamentary commissioner as in New Zealand) and one Lokayukta each at the State level for redressal of people's grievances. However, the jurisdiction of the Lokpal is not extended for judiciary like in New Zealand. The central Government introduced the first Lokpal Bill, Lokpal and Lokayukta Bill in 1968 and lastly in 2005, which has so far not been enacted.

Lokayukta institution has come into existence in different years, in different States in India. Orissa is the first state to present a bill on establishment of Lokayukta in 1970; however, Maharashtra is the first state to have established the institution in 1972. Thereafter, this institution was established in different States in different years namely: Maharashtra (1972), Bihar (1974), Uttar Pradesh (1977), Madhya Pradesh (1981), Andhra Pradesh (1983), Himachal Pradesh (1983), Karnataka (1984), Assam (1986), Gujarat (1988), Delhi (1995), Punjab (1996), Kerala (1998), Chhattisgarh (2002), Uttaranchal (2002) and West Bengal (2003) and Haryana (2004). The structure of the Lokayukta is not uniform across all the states. Some states have UpaLokayukta under Lokayukta and in some states; the Lokayukta doesn't have suo moto powers of instigating an enquiry.

Kerala State has an Ombudsman for Local Self Government institutions like Panchayats, Municipalities and Corporations. He or she can enquire/investigate into allegations of action, inaction, corruption and mal administration. A Retd-Judge of the High Court is appointed by the Governor for a term of 3 years. The appointment is made under the provisions of the Kerala Panchayats Raj Act.

In the State of Rajasthan, the Lokayukta institution was established in the year 1973 after the Rajasthan Lokayukta and Up-Lokayukta Act, 1973 was passed by the State Legislature and received assent of the President on 26.3.1973.

The Lokayukta is an anti-government corruption organization in the Indian states. These institutions are based on the Ombudsman in Scandinavian countries. An amendment to the Constitution has been proposed to implement the Lokayukta uniformly across Indian states as a three-member body, headed by a retired Supreme Court judge or high court chief justice, and comprise of the state vigilance commissioner and a jurist or an eminent administrator as other members.

SATISHCHANDER

164

At the national level, there is no ombudsman. However, ombudsmen at state level (Lok Ayutka) have been created in some Indian states such as Karnataka. However, three issues that have clearly emerged across states where the institution exists need to be highlighted. In the first place, the success and visibility of the institution has more to do with the person who occupies the position than the authority and powers vested in the office. Second, in many states the Lok Ayutka is hampered by the fact that it does not have an independent investigating agency and is dependent on the government agencies to carry forward its investigations. Third, the Lokayukta is largely recommendatory and enjoys limited powers to initiate action.

Social welfare worker Anna Hazare has led a movement to compel the Indian Government to notify the Committee for the implementation of the Lokayukta against corruption as an independent body and also giving enough powers to the Lokayukta to also receive corruption complaints against politicians, bureaucrats and even sitting judges. Anna Hazare has achieved this big success through his non-violence measures like fasting till death at the Jantar Mantar place in Delhi Capital City of India. The public also gave nation-wide support to Anna Hazare in his demand for strong and tough anti-corruption law.

36. Whistleblowers
A whistle-blower is a person who tells the public or someone in authority about alleged dishonest or illegal activities (misconduct) occurring in a government department, a public or private organization, or a company. The alleged misconduct may be classified in many ways; for example, a violation of a law, rule, regulation and/or a direct threat to public interest, such as fraud, health/safety violations, and corruption. Whistle-blowers may make their allegations internally (for example, to other people within the accused organization) or externally (to regulators, law enforcement agencies, to the media or to groups concerned with the issues).One of the first laws that protected whistle-blowers was the 1863 United States False Claims Act (revised in 1986), which tried to combat fraud by suppliers of the United States government during the Civil War. The act encourages whistle-blowers by promising them a percentage of the money recovered or damages won by the government and protects them from wrongful dismissal. Whistle-blowers frequently face reprisal, sometimes at the hands of the organization or group which they have accused, sometimes from related organizations, and sometimes under law.

Overview
SATISHCHANDER

165

The term whistleblower comes from the phrase "blow the whistle," which refers to a whistle being blown by a policeman or a referee to indicate an activity that is illegal or a foul.

Definition

Most whistleblowers are internal whistleblowers, who report misconduct on a fellow employee or superior within their company. One of the most interesting questions with respect to internal whistleblowers is why and under what circumstances people will either act on the spot to stop illegal and otherwise unacceptable behavior or report it. There is some reason to believe that people are more likely to take action with respect to unacceptable behavior, within an organization, if there are complaint systems that offer not just options dictated by the planning and control organization, but a choice of options for individuals, including an option that offers near absolute confidentiality.

External whistleblowers, however, report misconduct on outside persons or entities. In these cases, depending on the information's severity and nature, whistleblowers may report the misconduct to lawyers, the media, law enforcement or watchdog agencies, or other local, state, or federal agencies. In some cases, external whistleblowing is encouraged by offering monetary reward.

Common reactions

Ideas about whistleblowing vary widely. Whistleblowers are commonly seen as selfless martyrs for public interest and organizational accountability; others view them as "tattle tales" or "snitches," solely pursuing personal glory and fame. Some academics feel that whistleblowers should at least be entitled to a rebuttable presumption that they are attempting to apply ethical principles in the face of obstacles and that whistleblowing would be more respected in governance systems if it had a firmer academic basis in virtue ethics.

It is probable that many people do not even consider blowing the whistle, not only because of fear of retaliation, but also because of fear of losing their relationships at work and
SATISHCHANDER

166

outside work. Because the majority of cases are very low-profile and receive little or no media attention and because whistleblowers who do report significant misconduct are usually put in some form of danger or persecution, the idea of seeking fame and glory may be less commonly believed.

Persecution of whistleblowers has become a serious issue in many parts of the world. Although whistleblowers are often protected under law from employer retaliation, there have been many cases where punishment for whistleblowing has occurred, such as termination, suspension, demotion, wage garnishment, and/or harsh mistreatment by other employees. For example, in the United States, most whistleblower protection laws provide for limited "make whole" remedies or damages for employment losses if whistleblower retaliation is proven. However, many whistleblowers report there exists. A widespread "shoot the messenger" mentality by corporations or government agencies accused of misconduct and in some cases whistleblowers have been subjected to criminal prosecution in reprisal for reporting wrongdoing.

Legal protection

Legal protection for whistleblowing varies from country to country and may depend on any of the country of the original activity, where and how secrets were revealed, and how they eventually became published or publicized. For purposes of the English Wikipedia, this section emphasizes the English-speaking world and covers other regimes only insofar as they represent exceptionally greater or lesser protections. Whistleblower protection refers to the provisions put in place in order to protect someone who exposes alleged wrongdoing. The wrongdoing might take the form of fraud, corruption or mismanagement. India does not have a law to protect whistleblowers but the Public Interest Disclosure and Protection to Persons Making the Disclosure Bill, 2010 was approved by the government as part of a drive to eliminate corruption in the country's bureaucracy. This decision follows the death of various whistleblowers, including Manjunath Shanmugam and Satyendra Dubey.

India
SATISHCHANDER

167

As of 2009 Govt. of India has introduced the whistle blower law named as "Right to Information act. Still to maintain and increase the stability in law Govt of India is on the path to introduce an Ombudsman law which was demanded by a civil society against corruption.Mr.Anna Hazare a civilian with his committee has demanded the ombudsman law called as "Jan Lokpal bill. A committee of 10 people has been sectioned from Govt who will lead this committee.

Whistleblowers Protection Bill soon, Govt tells RS

Over four years after the Centre passed a resolution designating the Central Vigilance Commission (CVC) as the key agency for receiving complaints of corruption and ensure the protection of complainants' identity, government on Thursday said that a comprehensive Whistleblowers Protection Bill would be brought soon as part of its policy of "zero tolerance" to curb corruption in the bureaucracy.

Minister of state for personnel Prithviraj Chavan said the government had brought the whistleblowers' resolution in 2004 to ensure transparency. Now, it is planning to bring a legislation in this regard soon (incorporating all the guidelines in the resolution), he said in reply to a question in Rajya Sabha.

He, however, did not indicate the timeframe for bringing the Bill. He said the government was "fully committed" to implement the policy of "zero tolerance" to curb corruption.

The whistleblowers' resolution was passed by way of an office order in 2004 in response to the Supreme Court directive in the Bihar-based engineer Satyendra Dubey case. Dubey had complained about irregularities in the execution of contracts awarded by the National Highway Authority of India in the state and paid with his life since there was no mechanism in place to protect those who made complaints against corruption in government departments.

Whistle blowers in India

SATISHCHANDER

168

As of 2009 Govt. of India has introduced the whistle blower law named as "Right to Information act. Still to maintain and increase the stability in law Govt of India is on the path to introduce an Ombudsman law which was demanded by a civil society against corruption.Mr.Anna Hazare a civilian with his committee has demanded the ombudsman law called as "Jan Lokpal bill. A committee of 10 people has been sectioned from Govt who will lead this committee.

Whistleblowers play a major role in the fight against corruption. India currently does not have a law to protect whistleblowers, which was highlighted by the assassination of Satyendra Dubey. Indian courts are regularly ordering probe in cases of murders or so-called suicide of several whistle blowers. One of the latest case of such murder is of V Sasindran Company Secretary of Palakkad based Malabar Cement Limited, a Government company in Kerala and his two minor children, Kerala High Court ordered CBI probe on 18 February 2011. Initially, CBI showed its unwillingness for probing into such cases citing over-burden as a reason. Whistle-blower protection refers to the provisions put in place in order to protect someone who exposes alleged wrongdoing. The wrongdoing might take the form of fraud, corruption or mismanagement. India does not have a law to protect whistle-blowers but the Public Interest Disclosure and Protection to Persons Making the Disclosure Bill, 2010 was approved by the government as part of a drive to eliminate corruption in the country's bureaucracy. This decision follows the death of various whistle-blowers, including Manjunath Shanmugam and Satyendra Dubey.

37. Alertness
Alertness is the state of paying close and continuous attention, being watchful and prompt to meet danger or emergency, or being quick to perceive and act. It is related to psychology as well as to physiology. A lack of alertness is a symptom of a number of conditions, including narcolepsy, attention deficit disorder, and chronic fatigue syndrome, and depression, Addison's disease, or sleep deprivation. The word is formed from "alert", which comes from the Italian "all'erta

Physiological aspects

SATISHCHANDER

169

People who have to be alert during their jobs, such as air traffic controllers or pilots often face challenges maintaining their alertness. Research shows that for people "...engaged in attention-intensive and monotonous tasks, retaining a constant level of alertness is rare if not impossible." If people employed in safety-related or transportation jobs have lapses in alertness, this "may lead to severe consequences in occupations ranging from air traffic control to monitoring of nuclear power plants."

38. Jan Lokpal Bill

In India, the Jan Lokpal Bill (also referred to as the citizens' ombudsman bill) is a proposed anti-corruption law designed to effectively deter corruption, redress grievances and protect whistleblowers. The law would create an ombudsman called the Jan Lokpal; this would be an independent body similar to the Election Commission of India with the power to prosecute politicians and bureaucrats without prior government permission.

The bill was collaboratively drafted by Shanti Bhushan, retired Indian Police Service officer Kiran Bedi, Justice N. Santosh Hegde, advocate Prashant Bhushan, and former chief election commissioner J. M. Lyngdoh, in wide public consultation with the leaders of the India Against Corruption movement and civil society. The original bill was mooted by the National Campaign for Peoples Right to Information (NCPRI) in its delegated committee. The bill proposes the institution of the office of Lokpal (Ombudsman) at the center and local Lokayukta at the state level. For 42 years, the government-drafted bill has failed to pass the Rajya Sabha, the upper house of the Parliament of India. The first Lokpal Bill was passed in the 4th Lok Sabha in 1969 but stalled in the Rajya Sabha. Subsequent Lokpal bills were introduced in 1971, 1977, 1985, 1989, 1996, 1998, 2001, 2005 and 2008 but all failed to pass. Following the four day Anna Hazare fasting struggle. Prime Minister Man Mohan Singh stated that the Lokpal Bill would be introduced in the 2011 monsoon session of parliament.

Background
Renewed calls for a Jan Lokpal Bill arose over resentment of the major differences between the draft 2010 Lokpal Bill prepared by the government and the Jan Lokpal Bill prepared by the members of this movement, N. Santosh Hegde, a former justice of the Supreme Court of
SATISHCHANDER

170

India and Lokayukta of Karnataka, Prashant Bhushan, a senior lawyer in the Supreme Court along with the members of the India Against Corruption movement. This movement has also been joined by many people providing their support in Internet social media such as Twitter and Facebook. In addition to spiritual leaders Sri Ravi Shankar, Swami Ramdev, Swami Agnivesh and former Indian cricketer Kapil Dev., many celebrities showed their public support. The bill's backers consider existing laws too weak and insufficiently enforced to stop corruption.

Key features of proposed bill

1) To establish a central government anti-corruption institution called Lokpal, supported by Lokayukta at the state level. 2) As in the case of the Supreme Court and Cabinet Secretariat, the Lokpal will be supervised by the Cabinet Secretary and the Election Commission. As a result, it will be completely independent of the government and free from ministerial influence in its investigations. 3) Members will be appointed by judges, Indian Administrative Service officers with a clean record, private citizens and constitutional authorities through a transparent and participatory process. 4) A selection committee will invite shortlisted candidates for interviews, video recordings of which will thereafter be made public. 5) Every month on its website, the Lokayukta will publish a list of cases dealt with, brief details of each, their outcome and any action taken or proposed. It will also publish lists of all cases received by the Lokayukta during the previous month, cases dealt with and those which are pending. 6) Investigations of each case must be completed in one year. Any resulting trials should be concluded in the following year, giving a total maximum process time of two years. 7) Losses caused to the government by a corrupt individual will be recovered at the time of conviction. 8) Government office work required by a citizen that is not completed within a prescribed time period will result in Lokpal imposing financial penalties on those responsible, which will then be given as compensation to the complainant. 9) Complaints against any officer of Lokpal will be investigated and completed within a month and, if found to be substantive, will result in the officer being dismissed within two months. 10) The existing anti-corruption agencies (CVC, departmental vigilance and the anticorruption branch of the CBI) will be merged into Lokpal which will have complete

SATISHCHANDER

171

power and authority to independently investigate and prosecute any officer, judge or politician. 11) Whistleblowers who alert the agency to potential corruption cases will also be provided with protection by it.

Drafting Committee

The drafting committee was officially formed on 8 April 2011. It consists of ten members, including five from the government and five drawn from society.

Chairmen

The Government of India accepted that the committee be co-chaired by a politician and an activist, non-politician. It is reported that Pranab Mukherjee, from the political arena, and Shanti Bhushan, from civil society, will fill those roles.

Government representation

Five Cabinet ministers will be a part of the Drafting Committee. They are: Pranab Mukherjee, Finance Minister, Co-Chairman; P. Chidambaram, Minister of Home Affairs; Veerappa Moily, Minister of Law and Justice; Kapil Sibal, Minister for Communications and Information Technology; and Salman Khursid, Minister of Water Resources.

Civil society representation

SATISHCHANDER

172

Five leading social activists will be a part of the Drafting Committee. They are: Shanti Bhushan, Former Minister of Law and Justice, Co-Chairman; Anna Hazare, Social Activist; Prashant Bhushan, Lawyer; N. Santosh Hegde, Lokayukta (Karnataka); Arvind Kejriwal.

39. Civil Society

The Constitution of India guarantees every citizen the fundamental right to form associations. These non-governmental organizations have intervened, in significant ways, on behalf of common citizens to ensure the protection of their rights on the one hand and secure the accountability of those exercising power on the other. Some states are involving NGO in the decision-making process as well as in defining expenditure priorities.

However, a major bottleneck in the Indian democratic (and legal) framework has been the severe restrictions on the free flow of information to citizens on various aspects of the functioning of government, which has been partially remedied by the Right to Information Act in 2002. A by-product of this new legislation is the need for public agencies to create a Citizens Charter and enumerate the rights of stakeholders. However, the Right to Information Act has faced serious problems in Implementation. The bureaucracy entrusted with the responsibility of making the Act operational has delayed the entire process and created more obstacles in the processing the name of ensuring fairness and justice for all. In addition, the media acted as a watchdog by reporting incidents of misuse of power and corruption. Conduct a national public awareness campaign.

1) 2) 3) 4) 5)

Conduct a media campaign against corruption Conduct a public awareness campaign in secondary schools Conduct further research, monitoring and evaluation (e.g. annual integrity surveys) Introduce Code of Conduct for teachers Co-ordinate the corruption campaign with the media and educational and religious organizations

Criticisms of the Jan Lokpal Bill

SATISHCHANDER

173

Some people have opined that the Jan Lokpal Bill is 'Nave' in its approach to combating corruption. According to Prataps Bhanu Mehta, President, Center for Policy Research, Delhi, the bill "is premised on an institutional imagination that is at best nave; at worst subversive of representative democracy".

The claim that the Lokpal will be an extra-constitutional body has been derided by Hazares closest lieutenant, Arvind Kejriwal. He states the Jan Lokpal Bill drafted by civil society will only investigate corruption offences and submit a charge sheet which would then tried and prosecuted, through trial courts and higher courts. Kejriwal further states that the proposed bill also lists clear provisions in which the Supreme Court can abolish the Lokpal.

40. Prevention of Corruption Act 1988

To deal with corruption amongst public servants India enacted Prevention of Corruption Act 1988, replacing Prevention of Corruption Act 1947. PCA 1988 incorporates provisions of chapter IX of the Indian Penal Code to deal with Public servants and those who abet them by way of criminal misconduct and provides to enable attachment of their ill-gotten wealth obtained through corrupt means. This act also widens the scope of definition of Public servants. Public servant means any person in the service, pay of the government, or remunerated by the government by fees or commission for the performance of any public duty. Public duty means a duty in the discharge of which the state, the public, or the community at large has an interest. The State includes a corporation established by or under a central, provincial or state act or an authority or a body owned or controlled or aided by the government or a government company defined in section 617 of the Companys Act1956. In India in addition to a large number of health and educational institutions, the government also aids many other kinds of organizations. Hence, the employees of such bodies are also covered by this act. Normally corruption is defined as using public office for private gains. In PCA 1988 Public Servant and Public duty have very wide definitions covering every person who is in the actual possession of the situation of a public servant and discharging public duty which the state, public or the community at large has an interest. It extends to the whole of India except the State of Jammu and Kashmir and it applies also to all citizens of India outside India. Persons holding various public offices are public servants, whether appointed by the government or notes. Definitions
SATISHCHANDER

174

In this Act, unless the context otherwise requires,a) "Election" means any election, by whatever means held under any law for the purpose of selecting members of Parliament or of any Legislature, local authority or other public authority; b) "Public duty" means a duty in the discharge of which the State, the public or the community at large has an interest; c) Explanation.-In this clause "State" includes a corporation established by or under a Central, Provincial or State Act, or an authority or a body owned or controlled or aided by the Government or a Government company as defined in section 617 of the Companies Act, 1956.

"Public servant" means1) Any person in the service or pay of the Government or remunerated by the Government by fees or commission for the performance of any public duty; 2) Any person in the service or pay of a local authority; 3) any person in the service or pay of a corporation established by or under a Central, Provincial or State Act, or an authority or a body owned or controlled or aided by the Government or a Government company as defined in section 617 of the Companies Act, 1956; 4) Any Judge, including any person empowered by law to discharge, whether by himself or as a member of any body of persons, any adjudicatory functions; 5) Any person authorised by a court of justice to perform any duty, in connection with the administration of justice, including a liquidator, receiver or commissioner appointed by such court; 6) Any arbitrator or other person to whom any cause or matter has been referred for decision or report by a court of justice or by a competent public authority; 7) Any person who holds an office by virtue of which he is empowered to prepare, publish, maintain or revise an electoral roll or to conduct an election or part of an election;

SATISHCHANDER

175

8) any person who holds an office by virtue of which he is authorised or required to perform any public duty; 9) any person who is the president, secretary or other office-bearer of a registered cooperative society engaged in agriculture, industry, trade or banking, receiving or having received any financial aid from the Central Government or a State Government or from any corporation established by or under a Central, Provincial or State Act, or any authority or body owned or controlled or aided by the Government or a Government company as defined in section 617 of the Companies Act, 1956; 10) any person who is a chairman, member or employee of any Service Commission or Board, by whatever name called, or a member of any selection committee appointed by such Commission or Board for the conduct of any examination or making any selection on behalf of such Commission or Board; 11) any person who is a Vice-Chancellor or member of any governing body, professor, reader, lecturer or any other teacher or employee, by whatever designation called, of any University and any person whose services have been availed of by a University or any other public authority in connection with holding or conducting examinations; 12) Any person who is an office-bearer or an employee of an educational, scientific, social, cultural or other institution, in whatever manner established, receiving or having received any financial assistance from the Central Government or any State Government, or local or other public authority. Explanation 1.-Persons falling under any of the above sub-clauses are public servants, whether appointed by the Government or not. Explanation 2.-Wherever the words "public servant" occur, they shall be understood of every person who is in actual possession of the situation of a public servant, whatever legal defect there may be in his right to hold that situation.

41.

Money-Laundering Act, 2002

The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005. Section 12 (1) prescribes the obligations on banks, financial institutions and intermediaries (a) to maintain records detailing the nature and value of transactions which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month; (b) to furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed and t records of the identity of all its clients. Section 12 (2) prescribes that the records referred to in sub-section (1) as mentioned
SATISHCHANDER

176

above, must be maintained for ten years after the transactions finished. The provisions of the Act are frequently reviewed and various amendments have been passed from time to time. The recent activity in money laundering in India is through political partys corporate companies and share market.

42. Vohra Report

The Vohra (Committee) Report was submitted by the former Indian Union Home Secretary, N.N. Vohra, in October 1993. It studied the problem of the criminalization of politics and of the nexus among criminals, politicians and bureaucrats in India. The report contained several observations made by official agencies on the criminal network which was virtually running a parallel government. It also discussed criminal gangs who enjoyed the patronage of politicians, of all parties, and the protection of government functionaries. It revealed that political leaders had become the leaders of gangs. They were connected to the military. Over the years criminals had been elected to local bodies, State Assemblies and Parliament. The unpublished annexures to the Vohra Report were believed to contain highly explosive material. In 1997 the Supreme Court recommended the appointment of a high level committee to ensure in-depth investigation into the findings of the N.N. Vohra Committee and to secure prosecution of those involved. Government had (through its order No. S/7937/SS (ISP)/93 dated 9 th July 93 established Committee, comprised as below, to take stock of all available information about the activities of Crime Syndicates/Mafia organisations which had developed links with and were being protected by Government functionaries and political personalities. Based on the recommendations of the Committee, Government shall determine the need, if any to establish a special organisation/agency to regularly collect information and pursue cases against such elements:
1) 2) 3) 4) 5)

Home Secretary Chairman Secretary Member DIB Member Director CBI Member JS (PP) MHA Member Secretary

The Committee was authorised to invite senior officers of various concerned Departments to gather the required information. Special Secretary (Internal Security & Police), MHA, was subsequently added as member of the Committee. The Committee was desired to submit its report within 3 months.

SATISHCHANDER

177

1)

In the first meeting of the Committee (held on 15 th July93), I had explained to the members that the Government had established the Committee after seeing the report of our intelligence and Investigation agencies on the activities/linkages of the Dawood Ibrahim gang, consequently to the Bomb blasts in Bombay in March 1993. From these various reports, it was apparent that the activities of Memon Brothers and Dawood Ibrahim had progressed over the years, leading to the establishment of a powerful network. This could not have happened without these elements having been protected by the functionaries of the concerned Government departments specially Customs, Income Tax, Police and others. It was, therefore, necessary to identify the linkage and to also determine how such information could be timely collected and acted upon in future.

2)

In the course of the discussions, I perceived that some of the Members appeared to have some hesitation in openly expressing their views and also seemed unconvinced that Government actually intended to pursue such matters. Accordingly, I addressed separate personal letters to each of the Members of the Committee seeking their well-considered suggestions and recommendations. The responses are briefly brought out below.

Secretary (R&AW)

3)

The various offices abroad of this Agency have limited strength and are largely geared to the collection of military, economic, scientific and political intelligence. R&AW monitor the activities of certain organisations abroad only insofar as they relate to their involvement with narco-terrorist elements and smuggling arms, ammunition, explosives, etc. into the country. It does not monitor the activities of criminal elements abroad which are mainly confined to "normal smuggling without any links to terrorist elements". The present strength of the Agencys office abroad would not permit it to enlarge its field of activities. If, however, there is evidence to suggest that these organisations have links with intelligence agencies of other countries, particularly Pakistan, and they are being used or are likely to be used by such countries for destabilising our economy, it would become R&AWs responsibility to monitor their activities, as is being done by this Agency to collect vital information in regard to the investigations in the Bombay bomb blasts case. The creation of a nodal agency to collect information regarding the activities of Mafia organisations is very essential. All the existing information/data available with R&AW, IB, and CBI could be made available to this nodal agency. R&AW will nominate an officer of suitable rank to liaise with nodal agency on a regular basis to enable expeditious follow-up action.

4)

Director CBI
SATISHCHANDER

178

1.

2.

A report on the nexus between the Bombay City Police and the Bombay under-world was prepared by CBI in 1986. It would be useful institute a fresh study by CBI, on the basis of which appropriate administrative/legal measures could be initiated. An organised crime Syndicate/Mafia generally commences its activities by indulging in petty crimes at the local level, mostly related to illicit distillation/gambling/organised seta and prostitution in the larger towns, in port towns, their activities involve smuggling and sale of imported goods and progressively graduate to narcotics and drug trafficking. In the bigger cities, the main source of income relates to real estate- forcibly occupying lands/buildings, procuring such properties at cheap rates by forcing out the existing occupants/tenants etc. Over time, the money power thus acquired is used for building up contacts with bureaucrats and politicians and expansion of activities with impunity. The money power is used to develop a network of muscle-power which is also used by politicians during elections.

3.

CBI has reported that all over India crime Syndicates have become a law unto themselves. Even in the smaller towns and rural areas, muscle-men have become the order of the day. Hired assassins have become a part of these organisations. The nexus between the criminal gangs, police, bureaucracy and politicians has come out clearly in various parts of the country. The existing criminal justice system, which was essentially designed to deal with the individual offences/crimes, is unable to deal with the activities of the mafia; the provisions of law in regards to economic offences are weak; there are insurmountable legal difficulties in attaching/confiscation of the property acquired through Mafia activities.

4.

It has been suggested that the menace has first to be tackled at the local level where the agencies of the State and the concerned Central Enforcement Agencies like Customs and Excise, Income-Tax etc. would be required to take effective action. In cases where a crime Syndicate has graduated to big business, it would be necessary to conduct detailed investigations into its assets, both movable and immovable. It has been stressed that when such action is not timely and effectively taken, the lower functionaries of the concerned State and Central Departments/organisations start overlooking the activities of the crime Syndicates. To elucidate this point, the Director CBI has given example of IQBAL MIRCHI of Bombay who till the late 80s, was merely a visitor to passenger and carrier ships to obtain liquor and cigarettes for selling the same at a profit. In the last 3-4 years, Mirchi acquired real estate valuing crore of rupees; he has many bank accounts and has been paying lakhs of rupees to his carriers. The growth of MIRCHI is due to the fact that the concerned Enforcement agencies did not timely taken action against him and, later, this perhaps became difficult on account of the enormous patronage that he had developed. If MIRCHI is investigated, the entire patronage enjoyed by him and his linkages will come to light. Director CBI has observed that there are many such cases, as that of MIRCHI where the initial failure has led to the emergence of Mafia giants who have become too big to be tackled.

SATISHCHANDER

179

5)

Director CBI has stated that the main mode of communications/contacts of the Mafias operating at the international level is through telephonic communications. Referring to the useful leads emerging from the investigations into the activities of Dawood Ibrahim, a Mafia leader, the director CBI has stated that the effective monitoring of the telephonic calls made from India/received from abroad would yield useful information and, for this being done, Government may grant sanction to monitor certain telephonic connections.

6)

The assistance of Banks in an essential input. The Bank Managers can be placed under obligations to render reports on all heavy transactions and suspicious accounts to the Enforcement agencies. Such a practice obtains in U. K.

7)

Concluding his analysis, Director CBI has made the following suggestions to bring under control the activities of the criminal Syndicates:

i.

ii. iii.

iv. v. vi.

vii.

Identification of offences and awards of deterrent punishments including preventive detention. Trial procedures should be simplified and hastened. Surveillance should be carried out through finger printing, photographs and dossiers. Monitoring mechanisms should be established at the State and Central levels. Establishment of Special Cells in the States CIDs and CBI. Suitable amendments should be introduced in the existing laws to more effectively deal with the activities of Mafia organisations, etc.; this could also include review of the existing laws. A detailed case study of10-15 case would provide useful information regarding the administrative/legal measures which would be required to be taken to effectively tackle the functioning of Mafia organisations. The CBI can do this within a short period.

Director IB
1.

DIB has reported that due to the progressive decline in the values of public life in the country "warning signals of sinister linkage between the underworld politicians and the bureaucracy have been evident with disturbing regularity, as exemplified by the exposures of the networks of the Bombay Bomb Blast case". He has recommended immediate attention to: i.

Identification of the nexus between the criminals/mafias and antinational elements on the one hand and bureaucrats, politicians and other sensitively located individuals on the other.

SATISHCHANDER

180

ii.

iii.

iv. v.

vi.

Identification of the nature and dimensions of these linkages and the modus operandi of their operations. Assessment of the impact of these linkages on the various institutions viz., the electoral, political, economic, law and order and the administrative apparatus. Nexus, if any, between the domestic linkages with foreign intelligence. Necessary action to show effective action to counteract/neutralise the Mafia activities. Political and legal constrains in dealing with the covert/illegal functioning of the linkages. Like the Director CBI, the DIB has also stated that there has been a rapid spread and growth of criminal gangs, armed senas, drug mafias, smuggling gangs, drug peddlers and economic lobbies in the country which have, over the years, developed an extensive network of contacts with bureaucrats/Governments functionaries at the local levels, politicians, media persons and strategically located individuals in the non-State sector. Some of these syndicates also have international linkages, including the foreign intelligence agencies. In this context, the DIB has given the following examples: -

1.

i.

ii.

iii.

iv.

In certain States, like Bihar, Haryana and UP, these gangs enjoy the patronage of local level politicians, cutting across party lines and the protection of Government functionaries. Some political leaders become the leaders of these gangs/armed senas and, over the years, get themselves elected to local bodies, State Assemblies and the National parliament. Resultantly, such elements have acquired considerable political clout seriously jeopardising the smooth functioning of the administration and the safety of life and property of the common man, causing a sense of despair and alienation among the people. The big smuggling Syndicates, having international linkages, have spread into and infected the various economic and financial activities, including Hawala transactions, circulation of black money and operations of a vicious parallel economy causing serious damage to the economic fibre of the country. These Syndicates have acquired substantial financial and muscle power and social respectability and have successfully corrupted the Government machinery at all levels and yield enough influence to make the task of investigating and prosecuting agencies extremely difficult; even the members of the judicial system have not escaped the embrace of the mafia. Certain elements of the mafia have shifted to narcotics, drugs and weapon smuggling and established narco-terrorist networks, especially in the States of J&K, Punjab, Gujarat and Maharashtra. The cost of contesting elections has thrown the politicians into the lap of these elements and led to a grave compromise by officials of the preventive/detective system. The virus has spread to almost all the centres in the country; the coastal and the Border States have been particularly affected. The Bombay bomb blast case and the communal riots in Surat and Ahmedabad have demonstrated how the Indian underworld has been exploited by the Pak ISI and the latters network in UAE to cause sabotage, subversion and communal tension in various parts of the country. The investigations into the Bombay bomb blast cases have revealed extensive linkages of the underworld in the various governmental agencies, political circles, business sector and the film world.

SATISHCHANDER

181

1.

DBI has stated that the network of the Mafia is virtually running a parallel Government, pushing the State apparatus into irrelevance. It is thus most immediately necessary that an institution is established to effectively deal with the menace. In this connection, DIB has stated: i.

Presently, there is no system/mechanism which is specially designated to collect and collate intelligence pertaining to the linkages developed by crime Syndicates/Mafia with the governmental set up. Nonetheless, the various intelligence/investigation/enforcement agencies collect, in the normal course of their functioning, information about the nexus between the bureaucracy and politicians with Mafia gangs, smugglers and the underworld. These agencies use such available inputs "only within the narrow confines of their work charter and choose not to take undue cognisance and follow-up action, leave alone sharing with any other agencies". Thus, all these agencies "function within their own cocoons, with the result that a plethora of information fails to get specific and purposeful attention needed for the exposure of the linkages". It is, therefore, necessary to immediately have an institutionalised system which "while giving total freedom to the various agencies to pursue their charter of work, would simultaneously cast on them the onus of sharing such inputs to a nodal outfit whose job will be to process this information for attention of a single designated authority". This will enable the Nodal Group to provide useful leads to the various agencies and, over time, a progressive data will get generated "to facilitate periodic reviews and analysis which could then be passed to a designated body". As would be seen from the afore-stated brief discussions, especially the views expressed by Director CBI and DIB, it is evident that the muscle power of the crime Syndicates is sustained by their enormous financial power which, in turn, is secured by the Mafia elements by committing economic offences with impunity. In this context, I held detailed personal discussions with Secretary (Revenue) under whose control operate the various economic intelligence/investigative/enforcement agencies. The Department of Revenue functions through the following major agencies: i.

1.

2.

Central Board of Excise & Customs (CBEC) Interalia, CBEC is responsible for the prevention of smuggling. In this and other tasks, it is assisted by the Director General of Revenue Intelligence (DGR) and Directorate General of Anti-Evasion (DGAE). The DGRI deals with the evasion of customs duties; and the DGAE with Excise duty evasion.

ii.

Central Board of Direct Taxes (CBDT) Income Tax Department administers the Income Tax Act, Wealth Tax Act, etc.

iii.

Central Economic Intelligence Bureau (CEIB)

The CEIB is responsible for coordinating and strengthening the intelligence gathering activities and the investigative and enforcement actions of the various agencies responsible for investigation into economic offences and the enforcement of economic laws. The CEIB is
SATISHCHANDER

182

responsible for maintaining liaison with the concerned Departments/Directorates both at the Centre and at the State levels and is expected to provide overall direction to the investigative agencies under the Department of Revenue. The CEIB is expected, Interalia, to attend to the following tasks: a.

b.

c.

Identification of major sources generating black money; directing and developing intelligence about such sources; planning and coordinating action and operations against such sources. Assisting the various enforcement agencies in strengthening the intelligence gathering infrastructure and building up their capability for storage and retrieval of intelligence. Conducting investigative and analytical studies in difficult areas of black money operations and monitoring indicators thereof. Enforcement Directorate This Directorate is concerned with the enforcement of the investigation and penal provision of the Foreign Exchange Regulation Act; collection of intelligence relating to foreign exchange offences; enquiries into suspected violations of the provisions of FERRA, etc.

i.

ii.

Narcotics Control Bureau (NCB)

The NCB is responsible for the administration of the Narcotics Drugs and Psychotropic Act. It is responsible for coordination with different Central and State Government Departments/Ministries and the various Central and State law enforcement agencies for the implementation of NDPS Act.
1.

I explained a Secretary (Revenue) the broad considerations on account of which the government had set up a Committee to look into the linkages developed by the Mafia elements. He informed me that he had recently held a meeting with senior representatives of the RBI, the Chairman CBEC, Chairman CBDT and the Economic Intelligence Council in the Department of Revenue, and readily agreed with my request to attend a meeting of the Committee along with his concerned officers for a full discussion on the issues before the Committee. Accordingly, I arranged a meeting of the Committee (30th Aug 93) to hear the view of Secretary (Revenue), who was accompanied by Chairman CBDT, DGRI, Member (Customs) and Director (Enforcement). During the course of the discussions with Secretary (Revenue) and his aforesaid principal officers, the following significant observations were made: i.

In the normal course of his work, to detect violations of Customs & Excise laws, DGRI comes across information of linkages between crime Syndicates and Governmental functionaries etc. As following up of such information is not within the charter of duties of DGRI, his officers focus primarily on the information relating to the violation of the laws relating to their charter.

SATISHCHANDER

183

ii.

iii.

iv.

v.

vi.

vii.

viii.

ix.

As in the case of DGRI, Indirect information also becomes available to the CBDT about linkages. Here again, not being directly relating to their charter of responsibilities, the CBDT do not follow up such leads. While the NCB is specifically responsible for booking drug traffickers, with the increasing importance being given to Narco-terrorism, the NCB have been asked to gather further information so that the real king-pins in the narcotics trade can be apprehended. The Directorate of Enforcement comes across information on linkages and passes it on to the CBI and IB. Of late, currency amounting crore of rupees in being seized, invariably packed in suitcases and gunny bags. The Banks are reluctant to pass on information about account holders to CBDT and do not allow their officers to hold exploratory enquiries. While a certain amount of information is shared between the various organisations under the Department of Revenue, and those under the MHA and Cabinet Secretariat, the exchanges are sporadic and limited. This is perhaps due to the fact that each concerned organisation/agency is anxious to protect its sources and is apprehensive that a full sharing of all information might jeopardise its operations, on account of premature leakage of information. While DGRI, Director (Enforcement) and DG NCB authorised to undertake phone tapping of suspected offenders, the DGRI has not been allowed to enforce surveillance on the telephonic communications of political personalities. Senior Police officers, even in the Border States, are not trained or adequately informed of the work done by the directorate of Enforcement, especially in regard to money laundering operations. Information about the activities of drug traffickers is passed on by DG NCB to the concerned State Governments and their agencies. However, a niggardly response by the latter and prolonged delays in the disposal of cases before Courts seriously hampers the effective functioning of the NCB. While the NDPS act prescribes the award of deterrent punishments of offences, the results are to the contrary. It is necessary that the directorates of prosecution in the State Governments are urgently brought under the control of the State Police. Secretary (Revenue) stated that he field officers of his various Departments were faced with various problems, amongst which are:

1.

i.

ii.

The utter inadequacy of the criminal system; cases are not heard timely; functioning of the Government lawyers is grossly inadequate; all this results in a low percentage of convictions and mild punishments. Under the criminal justice system is geared up, the work of the enforcement agencies cannot be effective. The field officers of the various agencies of the Revenue Departments are often pressurised by senior government functionaries/political leaders apparently at the behest of crime Syndicates/Mafia elements. Unless the field level officers are offered effective protection, they cannot be expected to maintain interest in vigorously pursuing action against the activities of such elements. Chairman CBDT stated that insofar as the functioning of his officers is concerned, whenever they come into possession of any information regarding the violation of any

1.

SATISHCHANDER

184

other law, they pass it on to the concerned agency. He suggested that if the information available with other agencies is passed on to him, his officers could pursue the same.
1.

As a result of the discussions held by the Committee with Secretary (Revenue) and his principal officers, it is evident that:
i.

ii. iii.

While, in the course of their normal activities, information on the linkages of the crime Syndicates sometimes become available, such information is not pursued on the score that it is not directly related to offences falling within the laws administered by these agencies; Such information is occasionally passed on by these agencies to the CBI and or IB; The various agencies under the Department of Revenue do not specifically search on the linkages of crime Syndicates. Consequent to the Committees discussions with the Secretary (Revenue) and his principal officers, I held a series of further personal discussions with the Secretary (Revenue). At my request Secretary (Revenue) gave me a personal note indicating his views, which are briefly as below:-

1.

i.

ii.

iii.

iv.

The information gathered by the various agencies under the Revenue Department, while gathering intelligence on offences relating to the laws administered by them, is generally not put to any use unless it is required to the passed on to the passed on to the other intelligence agencies outside the Department of Revenue. The linkages developed by crime syndicated get generally confirmed when pressure is mounted on the concerned agencies not to take action against the offenders or to go slow in the cases against them. Such pressures are mounted either immediately after a raid is conducted or at the time when prosecution is about to be initiated. Pressures are also exerted whenever corrupt and undesirable officers are shifted from sensitive assignments (Preventive Customs Divisions at the Airports, sensitive Collect orates in the Central Excise etc.) In the narcotics arena, which includes cultivation of opium, manufacture of alkaloids, prevention of narcotics, smuggling etc. the financial stakes are astronomically high, Consequently, the level of corruption is of a very high order in this area of functioning and enormous pressures are brought to bear even when subordinate officials are posted away, especially when the shift of an officer adversely affects the interests of those who are making easy money. Narcotics trade has a world-wide network of smugglers who also have close links with terrorists. Terrorists indulge in narcotics trade to amass huge funds, in various foreign currencies, from which they source their procurement of weapons etc. While the Department of Revenue has initiated a number of steps to deal with the activities of smugglers and to plug loopholes in the system, Secretary (Revenue) has stated that a possible approach to effectively liquidating the linkages developed by the crime Syndicates would be to mercilessly prosecute the offenders without succumbing to any pressure whatsoever. He is of the view that once the offenders are deterrent punished under the law, their influence and strength will start declining, as also of all those who support them, wherever located. He has emphasised that for this objective

1.

SATISHCHANDER

185

being achieved it will be extremely necessary that: the entire government machinery involved in taking action against the crime Syndicate is allowed to perform its duties with total freedom; officers with impeccable integrity should be posted to head the various organisations which are responsible for taking action against tax offenders, smugglers etc.; such officers should be selected with utmost care and provided sufficiently long tenures, giving them the clear mandate to ruthlessly punish the offenders; action must be taken to ensure the objective functioning of Courts which deal with the trial of economic offences; all cases before the Courts should be speedily concluded without the judicial officers coming under any pressure or succumbing to temptations; inefficient and corrupt elements in the various organisations must be weeded out and Government should take stringent action against officers who seek to exert political pressure for securing postings and appointments of their choice.
1.

From the above narrated analysis, the following conclusions can be drawn: i.

ii.

iii.

On the basis of the extensive experience gained by our various concerned intelligence, investigative and enforcement agencies, it is apparent that crime Syndicate and Mafia organisations have established themselves in various parts of the country. The various crime Syndicates/Mafia organisations have developed significant muscle and money power and established linkages with governmental functionaries, political leaders and others to be able to operate with impunity (as recently exemplified by the activities of the Memon Brothers and Dawood Ibrahim). While the CBI and IB and the various agencies under the Department of Revenue, in their normal course of functioning, come across information relating to the linkages of crime Syndicates/Mafia organisations, there is presently no system under which they are expected to pass on such information to an identical nodal agency. Sharing of such information is presently of an occasional nature no evidence is available of the same having been put to any operational use (the only mentionable exception perhaps related to the recent investigations into the activities of Memon Brothers and the Dawood gang on which several of our agencies were put to work collectively. Even where an agency comes across certain information about the linkages of crime Syndicates, it has no mandate to immediately pass it on to one or more agencies. Any agency which comes across information regarding linkages is also apprehensive that the sharing of such information may jeopardize its own functioning through premature leakage. In slum, the various agencies presently in the field take care to essentially focus on their respective character of duties, dealing with the infringement of laws relating to their organisations and consciously putting aside any information on linkages which they may come across. In the discussions in the Committee, I asked each of the Members as well as the Secretary (Revenue) and his principal officers about their views regarding the establishment of a Nodal Agency for the collection, collation and operationalisation of all information relating to the activities of crime Syndicates. Broadly, the following approaches have been mooted:

1.

1.

SATISHCHANDER

186

i.

The DIB has stated that while considering the establishment of any nodal mechanism "It must be appreciated that the problems has enormous impact on national security and is indeed highly political in nature". In this context, he has suggested that the nodal set up should be under the IB, which is even otherwise engaged in monitoring various political activities having a bearing on national security. He has recommended that "an exclusive Top Secret Cell be established in the IB to function as Nodal Group for receipt of inputs from various security/revenue agencies which reveal political-bureaucrat-underworld nexus. Such sharing will be through personal communication in writing, while operating difficulties could be sorted out through periodic meetings among the heads of these organisations to be chaired by the Home Secretary". The Top secret Cell will share all tactical and operational information with other concerned agencies on "need to know and act basis".

ii.

The other approach recommended is to set up a system under which the Head of the Various Intelligence and Revenue Agencies shall meet on a regular basis and exchange vital information, without there being any leakage.

1.

2.

In the background of the discussions so far, there does not appear to be need for any further debate on the vital importance of setting up a nodal point to which all existing Intelligence and Enforcement agencies (irrespective of the Department under which they are located) shall promptly pass on any information which they may come across, which relates to the activities of crime Syndicates. If the proposition in the preceding Para is sustained, a decision will need to be taken regarding the Department/Ministry under which the nodal set-up should be located.
1.

2.

Under the existing arrangements for the transaction of Government business, the Ministry of Home Affairs is responsible for all matters relating to internal security. It is for this reason that the Intelligence Bureau is a part and parcel of this Ministry (It is only by tradition that the DIB reports directly to authorities outside MHA). R&AW functions under the Cabinet Secretariat and deals with external intelligence. The various Intelligence, Investigation and Enforcement agencies dealing with the implementation of economic laws report to the Revenue Department under the Ministry of Finance. The CBI, which is the principal criminal investigation agency of the Centre, is under the department of Personnel. In my view, considerable care would have to be taken to ensure that the information which becomes available to the Nodal Cell is handled by a very senior and trust-worthy officer. Any leakage of such information would not only jeopardize potential action against the powerful criminal Syndicate, but may also be susceptible to political exploitation. Under all circumstances, it will have been ensured that the information available with the nodal set-up is used strictly and entirely for stringent action against the crime Syndicates, without allowing any scope whatever of its being exploited for political gain.

SATISHCHANDER

187

3.

In the preceding context, it would be logical it the nodal set-up is under the MHA, directly handed by the Home Secretary who can be assisted by one or more selected officers of the Ministry for the collation and compilation of all information received from IB, CBI, R&AW and the various agencies under the Department of Revenue. The manner in which such information is operationalised would need to be confidentially discussed with the concerned Head of Organisations and, as necessary, with Secretary (Revenue). It will also need to be ensured that the nodal set-up functions with extreme secrecy. Needless to say, and leakage whatever about the linkages of crime Syndicate with senior Government functionaries or political leaders in the States or at the Centre could have a destabilising effect on the functioning of Government. As such, it would not appear prudent to entrust the functioning of the Nodal Cell to any level below that of the Home Secretary. Further, the Government would also have to carefully consider and prescribe the authorities to whom the Home Secretary will report in regard to the sensitive information received by the nodal set-up as well as regarding the operations to be launched by one or more of the concerned agencies to apprehend, investigate and prosecute the offenders. 1. In the normal course, this Report would have been drafted by the Member Secretary and finalised by the Committee. Considering the nature of the issues involved, I did not consider it desirable to burden the Members of the Committee with any further involvement beyond the views expressed by them. Accordingly, I decided to personally dictate this Report. 2. I have prepared only three copies of this report. One copy each is being submitted to MOS (IS) and HM, the third copy being retained by me. After HM has pursued this Report, I request him to consider discussing further action with finance Minister, MOS (IS) and myself. The emerging approach could therefore be got approved from Prime Minister before being implemented. At that stage other concerned senior officer would be taken into confidence. 3. After an initial discussion at the level of MOS (IS) and HM I could send a copy of this Report to FM, before the issues are discussed with him.

43. 2011 Indian anti-corruption movement

The 2011 Indian anti-corruption movement refers to a series of protests against the Government of India intended to seek strong legislation against graft, otherwise known as corruption. The protests have centred on a proposed bill, called the Jan Lokpal Bill, which the protestors believe could address the issue if it was suitably worded and enforced. The movement has gained momentum in particular since 5 April 2011, when Anna Hazare, a prominent activist, first went on a hunger strike which he called a "fast unto death".

SATISHCHANDER

188

The protesters are of the opinion that the government desires to dilute proposals contained in the original draft of the Jan Lokpal bill. They believe that the changes would make the body intended to oversee the issue, the Lokayukta, no more than a powerless advisory body in the Indian bureaucracy. Hazare, who is a Gandhi an, went on his initial hunger strike when talks designed to consider the issues broke down. He had demanded the creation of a joint drafting committee for the bill, comprised of both members from "civil society" and government representatives. Following Hazare's initial, much publicized protest action, a second major protest saw controversial events take place at the Ram Lila Maidan, New Delhi on 4 June 2011. The figurehead for these protests was Swami Ramdev and their aim was to highlight the need for strong legislation to bring back to the country what has been called "black money" deposited abroad. Ramdev demanded that untaxed money invested abroad should be declared to be the wealth of the nation. Further, that the act of caching money, which is alleged to have been obtained illegally, in foreign banks should be declared a crime against the state. He also demanded that the nation's wealth held in foreign banks should be brought back and that India should sign the United Nations Convention against Corruption. He held a hunger strike on 4 June when his demands were not met. According to Ramdev, 10 million Indians would participate in the Satyagraha on 4 June 2011 throughout India. It is estimated that around US$ 350 billion to US$ 1400 billion worth of illegal money is in foreign banks. The protests led to the creation of a movement that saw protests being organized in various cities and towns of India. Protests included fasts, candlelight vigils and rallies. The protests are unusual in India as they have no political affiliation and the protesters have been very hostile to any political party trying to grab the initiative to meet its own political goals from the activists. The protests to some extent have similarities in methodologies to Jayaprakash Narayan's Bihar Movement (commonly called the JP Movement) of 1974 Mahatma Gandhi fought for our freedom but we are yet to achieve real independence. The second struggle of independence has started. We are ready to sacrifice our lives but will not buckle under pressure -Anna Hazare

Background

SATISHCHANDER

189

Issues regarding corruption in India have become more prominent in recent years. The country was subject to socialist-inspired economic policies between the 1950s and the late 1980s. Extensive regulation, protectionism, and public ownership led to slow growth. Forbes commented in 2007 that the system of bureaucratic controls called License Raj was often at the core of corruption.

The Vohra Report of 1993, submitted by the former Indian Union Home Secretary N.N. Vohra, studied the problem of the criminalization of politics and of the nexus among criminals, politicians and bureaucrats in India. The report contained several observations made by official agencies on the criminal network which was virtually running a parallel government. It also discussed criminal gangs who enjoyed the patronage of politicians of all political parties and the protection of government functionaries. It revealed that political leaders had become the leaders of gangs. They were also connected to the military. Over the years criminals had been elected to local bodies, State Assemblies, and even the Parliament.

The Right to Information Act of 2005 has helped civilians work effectively towards tackling corruption. It allows Indian citizens (except those living in Jammu and Kashmir) to request information, for a fixed fee of Rs 10, from a "public authority" (a body of Government or "instrumentality of State") which is required to reply expeditiously or within thirty days. Activists have used this to uncover graft cases against various politicians and bureaucrats, one consequence being that some of those activists have been attacked and even killed.

Various scandals were discovered in the period 2010-2011, including the 2G spectrum scam, Adarsh Housing Society Scam, and the Commonwealth Games scam. These involved various Ministers and also members of the Armed Forces, and they demonstrated how entrenched corruption had become in India. They led also to popular, non-political movements campaigning to fight graft via new legislation.

The Jan Lokpal Bill is a proposal to establish an independent body to investigate cases of corruption within a year and to ensure a speedy prosecution within two years of an investigation being started.

India against corruption

SATISHCHANDER

190

India against Corruption (IAC) is a citizen's movement to demand strong anti-corruption laws. Lokpal bills were introduced several times since 1968, yet they were never passed by the Indian Parliament. After a fast by veteran social activist Anna Hazare and widespread protests by citizens across India the Government of India constituted a 10-member Joint Committee of ministers and civil society activists to draft an effective Jan Local Bill. The primary focus of IAC movement is to ensure a strong Local bill. The IAC is a strictly voluntary organization and its participants are bound by the IAC code of conduct.

Anti-corruption organizations

A variety of organizations have been created in India to actively fight against corrupt government and business practices. Notable organizations include: 5th Pillar is most known for the creation of the zero rupee notes, a valueless note designed to be given to corrupt officials when they request bribes. India against Corruption is a movement created by citizens from a variety of professions and statuses to work against corruption in India. It is currently headed by Anna Hazare. Jaago Re! One Billion Votes is an organization originally founded by Tata Tea and Janaagraha to increase youth voter registration. They have since expanded their work to include other social issues, including corruption.

Association for Social Transparency, Rights and Action (ASTRA) is an NGO focused on grassroots work to fight corruption in Karnataka.

One organization, the Lok Satta Movement, has transformed itself from a civil organization to a full-fledged political party, the Lok Satta Party. The party has fielded candidates in Andhra Pradesh, Tamil Nadu, and Bangalore. In 2008, it obtained its first elected post, when Jayaprakash Narayan won the election for the Kukatpally Assembly Constituency in Andhra Pradesh.

SATISHCHANDER

191

44. Present anti-corruption systems & watch dog agencies

Central Government level

There are various bodies in place for implementing anticorruption policies and raising awareness on corruption issues. At the federal level, key institutions include the Supreme Court, the Central Vigilance Commission (CVC), the Central Bureau of Investigation (CBI), the Office of the Controller & Auditor General (C&AG), and the Chief Information Commission (CIC).

The Supreme Court

The Supreme Court has taken a stronger stance against corruption in recent years, as confirmed by the Bertelsmann Foundation Report 2008. It has challenged the powers of states in several instances. For example, in 2007 in Uttar Pradesh, it challenged the state governors powers to pardon politically connected individuals based on arbitrary considerations. In other instances, judges have taken on a stronger role in responding to public interest litigation over official corruption and environmental issues. In December 2006, in a landmark ruling, the Supreme Court ruled that prosecutors do not need prior permission to begin proceedings against politicians facing corruption charges5. It has also started addressing corruption in the police by mandating the establishment of a police commission to look into these matters and has ruled that corrupt officers can be prosecuted without government consent.

Central Vigilance Commission (CVC)

Central Vigilance Commission (CVC) is an apex Indian governmental body created in 1964 to address governmental corruption. It has the status of an autonomous body, free of control from any executive authority, charged with monitoring all vigilance activity under the Central Government of India, and advising various authorities in central Government organizations in planning, executing, reviewing and reforming their vigilance work. It was set up by the Government of India in February, 1964 on the recommendations of the
SATISHCHANDER

192

Committee on Prevention of Corruption, headed by Shri K. Santhanam, to advise and guide Central Government agencies in the field of vigilance. Nittoor Srinivasa Rau was selected as the first Chief Vigilance Commissioner of India. The Annual Report of the CVC not only gives the details of the work done by it but also brings out the system failures which lead to corruption in various Departments/Organizations, system improvements; various preventive measures and cases in which the Commission's advises were ignored etc.

The CVC has the power to undertake inquiries or investigations of transactions involving certain categories of public servants. It also has supervisory powers over the Central Bureau of Investigations. The CVC can investigate complaints against high level public officials at the central level, in cases where they are suspected of having committed an offence under the Prevention of Corruption Act. The CVC is mandated to investigate public sector corruption at the federal level and not at the state level. The CVC has an online whistle-blower complaint mechanism available on its website. More recently, the CVC is working in collaboration with Transparency International India on introducing Integrity pacts in all state-owned public sector companies, industries and banks. In December 2007, the Commissioner issued a directive to this effect which has resulted in 32 public sector undertakings having adopted an integrity pact. The CVC is not an investigating agency, and it either gets the investigation done through the CBI or through the Departmental Chief Vigilance Officers. The only investigation carried out by the CVC is that of examining Civil Works of the Government which is done through the Chief Technical Officer. Central Vigilance Commission: CVC is the apex body for all vigilance cases in Government of India.

However, it does not have adequate resources commensurate with the large number of complaints that it receives. CVC is a very small set up with staff strength less than 200. It is supposed to check corruption in more than 1500 central government departments and ministries, some of them being as big as Central Excise, Railways, and Income Tax etc. Therefore, it has to depend on the vigilance wings of respective departments and forwards most of the complaints for inquiry and report to them. While it monitors the progress of these complaints, there is delay and the complainants are often disturbed by this. It directly enquires into a few complaints on its own, especially when it suspects motivated delays or where senior officials could be implicated. But given the constraints of manpower, such number is really small.

CVC is merely an advisory body. Central Government Departments seek CVCs advice on various corruption cases. However, they are free to accept or reject CVCs advice. Even in
SATISHCHANDER

193

those cases, which are directly enquired into by the CVC, it can only advise government. CVC mentions these cases of non-acceptance in its monthly reports and the Annual Report to Parliament. But these are not much in focus in Parliamentary debates or by the media.

Experience shows that CVCs advice to initiate prosecution is rarely accepted and whenever CVC advised major penalty, it was reduced to minor penalty. Therefore, CVC can hardly be treated as an effective deterrent against corruption.

CVC cannot direct CBI to initiate enquiries against any officer of the level of Joint Secretary and above on its own. The CBI has to seek the permission of that department, which obviously would not be granted if the senior officers of that department are involved and they could delay the case or see to it that permission would not be granted.

CVC does not have powers to register criminal case. It deals only with vigilance or disciplinary matters. It does not have powers over politicians. If there is an involvement of a politician in any case, CVC could at best bring it to the notice of the Government. There are several cases of serious corruption in which officials and political executive are involved together.

It does not have any direct powers over departmental vigilance wings. Often it is seen that CVC forwards a complaint to a department and then keeps sending reminders to them to enquire and send report. Many a times, the departments just do not comply. CVC does not have any really effective powers over them to seek compliance of its orders.

CVC does not have administrative control over officials in vigilance wings of various central government departments to which it forwards corruption complaints. Though the government does consult CVC before appointing the Chief Vigilance Officers of various departments, however, the final decision lies with the government. Also, the officials below CVO are appointed /transferred by that department only. Only in exceptional cases, if the CVO chooses to bring it to the notice of CVC, CVC could bring pressure on the Department to revoke orders but again such recommendations are not binding.

SATISHCHANDER

194

Appointments to CVC are directly under the control of ruling political party, though the leader of the Opposition is a member of the Committee to select CVC and VCs. But the Committee only considers names put up before it and that is decided by the Government. The appointments are opaque.

CVC Act gives supervisory powers to CVC over CBI. However, these supervisory powers have remained ineffective. CVC does not have the power to call for any file from CBI or to direct them to do any case in a particular manner. Besides, CBI is under administrative control of DOPT rather than CVC.

Therefore, though CVC is relatively independent in its functioning, it neither has resources nor powers to enquire and take action on complaints of corruption in a manner that meets the expectations of people or act as an effective deterrence against corruption.

Departmental Vigilance Wings: Each Department has a vigilance wing, which is manned by officials from the same department (barring a few which have an outsider as Chief Vigilance Officer. However, all the officers under him belong to the same department).

The Central Vigilance Commission (CVC) is conceived to be the apex vigilance institution, free of control from any executive authority, monitoring all vigilance activity under the Central Government and advising various authorities in Central Government organizations in planning, executing, reviewing and reforming their vigilance work. The Commission consists of: (i) a Central Vigilance Commissioner -Chairperson; and (ii) not more than two Vigilance Commissioners Members.

The present status of the CVC is that came into force the CVC Bill that was passed by both houses of Parliament in 2003 and the President gave its assent and the Central Vigilance Commission Act 2003 (No45 0f 2003). In addition, the resolution on Public Interest Disclosure and protection of Informer dated April 2004, the Government of India has authorized the Central Vigilance Commission as the "Designated Agency to receive written complaints for disclosure on any allegation of corruption or misuse of office and recommend appropriate action.

SATISHCHANDER

195

The power and functions of the Central Vigilance Commission are to: (i) exercise superintendence over the functioning of the Delhi Special Police Establishment(DSPE) with respect to investigation under the Prevention of Corruption Act, 1988; or offence under CRPC for certain categories of public servants and to give directions to the DSPE for purpose of discharging this responsibility; (ii) review the progress of investigations conducted by the DSPE into offences alleged to have been committed under the PC Act; (iii) undertake an inquiry or cause an inquiry or investigation to be made into any transaction in which a public servant working in any organization, to which the executive control of the Government of India extends, is suspected or alleged to have acted for an improper purpose or in a corrupt manner; (iv) tender independent and impartial advice to the disciplinary and other authorities in disciplinary cases, involving vigilance angle at different stages i.e. investigation, inquiry, appeal, review etc.; (v) exercise a general check and supervision over vigilance and anti-corruption work in Ministries or Departments of the Govt. of India and other organizations to which the executive power of the Union extends; (vi)chair the Committee for selection of Director (CBI), Director (Enforcement Directorate) and officers of the level of SP and above in DSPE; and (vii) undertake or cause an inquiry into complaints received under the Public Interest Disclosure and Protection of Informer and recommend appropriate action.

Since the officers in the vigilance wing of a department are from the same department and they can be posted to any position in that department anytime, it is practically impossible for them to be independent and objective while inquiring into complaints against their colleagues and seniors. If a complaint is received against a senior officer, it is impossible to enquire into that complaint because an officer who is in vigilance today might get posted under that senior officer some time in future.

In some departments, especially in the Ministries, some officials double up as vigilance officials. It means that an existing official is given additional duty of vigilance also. So, if some citizen complaints against that officer, the complaint are expected to be enquired into by the same officer. Even if someone complaints against that officer to the CVC or to the Head of that Department or to any other authority, the complaint is forwarded by all these agencies and it finally lands up in his own lap to enquire against himself. Even if he recuses himself from such inquiries, still they have to be handled by those who otherwise report to him. There are indeed examples of such absurdity.

There have been instances of the officials posted in vigilance wing by that department having had a very corrupt past. While in vigilance, they try to scuttle all cases against themselves. They also turn vigilance wing into a hub of corruption, where cases are closed
SATISHCHANDER

196

for consideration. Departmental vigilance does not investigate into criminal aspect of any case. It does not have the powers to register an FIR. They also do not have any powers against politicians.

Since the vigilance wing is directly under the control of the Head of that Department, it is practically impossible for them to enquire against senior officials of that department.

Therefore, the vigilance wing of any department is seen to soft-pedal on genuine complaints or used to enquire against inconvenient" officers.

Public Accounts Committee

The Public Accounts Committee (PAC) is a committee of selected members of Parliament, constituted by the Parliament of India, for the auditing of the expenditure of the Government of India.

The PAC is formed every year with a strength of not more than 22 members of which 15 are from Lok Sabha, the lower house of the Parliament, and 7 from Rajya Sabha, the upper house of the Parliament. None of the 22 members shall be a minister in the government.

The Comptroller and Auditor General

The Office of the Comptroller and Auditor General (C & AG) are praised by the 2007 Global Integrity Report for being independent and well-staffed, with offices of Accountant Generals (AG) in all states. The C & AG has produced several reports on state departments such as railways, telecommunications, public sector enterprise, and tax administration. These reports have revealed many financial irregularities, suggesting a lack of monitoring of public expenses, poor targeting and corrupt practices in many branches of government. However, since the C & AG has no authority to ensure compliance with its recommendations, the government often fails to implement the reports proposals.

SATISHCHANDER

197

The Chief Information Commission

The Chief Information Commission (CIC) was established in 2005 and came into operation in 2006. It has delivered decisions instructing government, courts, universities, police, and ministries on how to share information of public interest. State information commissions have also been opened, thus giving practical shape to the 2005 Right to Information (RTI) Act. The commissions have not been immune to criticism, however. Of India's 28 states, 26 have officially constituted information commissions to implement the RTI Act. Nine pioneered access to information laws before the RTI Act was passed. A state report card one year on complimented the quality of the law, but criticised the apathy and lack of awareness of many citizens.

The Central Bureau of Investigation

Introduction

The Central Bureau of Investigation traces its origin to the Special Police Establishment (SPE), which was set up in 1941 by the Government of India. The functions of the SPE were to investigate cases of bribery and corruption in transactions with the War & Supply Department of India during World War II. The superintendent of the SPE was vested with the War Department. Even after the end of the War, the need for a Central Government agency to investigate cases of bribery and corruption by Central Government employees was felt. The Delhi Special Police Establishment Act was therefore brought into force in 1946. This Act transferred the superintendence of the SPE to the Home Department and its functions were enlarged to cover all departments of the Govt. of India. The jurisdiction of the SPE extended to all the Union Territories and could be extended also to the States with the consent of the State Government concerned.

The Central Bureau of Investigation (CBI) is a government agency of India that serves as a criminal investigation body, national security agency and intelligence agency. It was established on 1 April 1963 and evolved from the Special Police Establishment founded in 1941. Its motto is "Industry, Impartiality, and Integrity".

SATISHCHANDER

198

The CBI is controlled by the Department of Personnel and Training in the Ministry of Personnel, Public Grievances and Pension of the Union Government usually headed by a Union Minister who reports directly to the Prime Minister. While analogous in structure to the FBI, the CBI's powers and function are severely limited to specific crimes based on Acts (mainly the Delhi Special Police Establishment Act, 1946). The CBI is the official Interpol unit for India. CBI has powers of a police station to investigate and register FIR. It can investigate any case related to a Central Government department on its own or any case referred to it by any state government or any court. CBI is overburdened and does not accept cases even where amount of defalcation is alleged to be around Rs 1 crore. CBI is directly under the administrative control of Central Government.

So, if a complaint pertains to any minister or politician who is part of a ruling coalition or a bureaucrat who is close to them, CBI's credibility has suffered and there is increasing public perception that it cannot do a fair investigation and that it is influenced to scuttle these cases.

Again, because CBI is directly under the control of Central Government, CBI is perceived to have been often used to settle scores against inconvenient politicians. The Anti-Corruption Division of the Central Bureau of Investigation (CBI) under the Ministry of Personnel, public grievance and pensions, has handled cases against Chief Ministers, Ministers, Secretaries to Government, Officers of the All India Services, CMDs of Banks, Financial Institutions, Public Sector Undertakings, etc. CBI investigations have a major impact on the political and economic life of the nation. The following broad categories of criminal cases are handled by the CBI: (i)Cases of corruption and fraud committed by public servants of all Central Govt. Departments, Central Public Sector Undertakings and Central Financial Institutions;(ii) Economic crimes, including bank frauds, financial frauds, Import Export & Foreign Exchange violations, large-scale smuggling of narcotics, antiques, cultural property and smuggling of other contraband items etc.; and (iii) Special Crimes, such as cases of terrorism, bomb blasts, sensational homicides, kidnapping for ransom and crimes committed by the mafia/the underworld.

Therefore, if a citizen wants to make a complaint about corruption by a politician or an official in the Central Government, there isnt a single anti-corruption agency which is effective and independent of the government, whose wrongdoings are sought to be investigated. CBI has powers but it is not independent. CVC is independent but it does not have sufficient powers or resources.

SATISHCHANDER

199

CBI takes shape

As the CBI, over the years, established a reputation of being India's premier investigative agency with adequate resources to deal with complicated cases, demands were made on it to take up investigation of more cases of conventional crime such as murder, kidnapping, terrorism, etc. Apart from this, the Supreme Court and even the various High Courts of the country also started entrusting such cases for investigation to the CBI on petitions filed by aggrieved parties. Taking into account the fact that several cases falling under this category were being taken up for investigation by the CBI, it was found expedient to entrust such cases to the Branches having local jurisdiction. It was therefore decided in 1987 to constitute two investigation divisions in the CBI, namely, Anti-Corruption Division and Special Crimes Division, the latter dealing with cases of conventional crime, besides economic offences. The CBI is a central subject under the Constitution of India, meaning that it reports to the Indian Government and not to the individual states.

Role and functions

The CBI is the premier investigating police agency in India. It is an elite force playing a major role in preservation of values in public life and in ensuring the health of the national economy. It is also the nodal police agency in India which coordinates investigation on behalf of Interpol Member countries. The services of its investigating officers are sought for all major investigations in the country. CBI as an organization is held in high esteem by the Supreme Court, the High Courts, the Parliament and the public. The CBI has to investigate major crimes in the country having interstate and international ramifications. It is also involved in collection of criminal intelligence pertaining to three of its main areas of operation, viz., Anti-Corruption, Economic Crimes and Special Crimes.

CBI investigations have a major impact on the political and economic life of the nation. The following broad categories of criminal cases are handled by the CBI:-

Anti-Corruption Division: Cases of corruption and fraud committed by public servants of all Central Govt. Departments, Central Public Sector Undertakings and Central Financial Institutions.
SATISHCHANDER

200

Economic Crimes Division: Deals with cases including bank frauds, financial frauds, Import Export & Foreign Exchange violations, large-scale smuggling of narcotics, antiques, cultural property and smuggling of other contraband items etc.

Special Crimes Division: Deals with cases such as cases of terrorism, bomb blasts, sensational homicides, kidnapping for ransom and crimes committed by the mafia/the underworld.

Jurisdiction powers, privileges and liabilities

The legal powers of investigation of CBI are derived from the DSPE Act 1946. This Act confers concurrent and coextensive powers, duties, privileges and liabilities on the members of Delhi Special Police Establishment (CBI) with Police Officers of the Union Territories. The Central Government may extend to any area, besides Union Territories, the powers and jurisdiction of members of the CBI for investigation subject to the consent of the Government of the concerned State. While exercising such powers, members of the CBI of or above the rank of Sub Inspector shall be deemed to be officers in charge of Police Stations of respective jurisdictions. The CBI can investigate only such of the offences as are notified by the Central Government under the DSPE Act.

Jurisdiction of CBI V/S State

Law and Order is a State subject and the basic jurisdiction to investigate crime lies with State Police. Besides, due to limited resources, CBI would not be able to investigate crimes of all kind. CBI may investigate. Cases which is essentially against Central Govt. employees or concerning affairs of the Central Govt. and the employees of the Central Public Sector Undertakings and Public Sector Banks. Cases in which the financial interests of the Central Government are involve. Cases relating to the breaches of Central Laws with the enforcement of which the Government of India is mainly concerned.

SATISHCHANDER

201

Big cases of fraud, cheating, embezzlement and the like relating to companies in which large funds are involved and similar other cases when committed by organized gangs or professional criminals having ramifications in several States. Cases having interstate and international ramifications and involving several official agencies where, from all angles, it is considered necessary that a single investigating agency should be in charge of the investigation.

Corruption in CBI

Because of its intensely political overtones, it has been exposed by its former bigwigs like Joginder Singh and BR Lal who were Director and Joint Director respectively, to be engaging in nepotism, mal-prosecution and outright corruption. In his book, Who Owns CBI, BR Lal, an honest and upright officer details the modus operandi of manipulating and derailing investigation this organization has become synonymous with corruption as information obtained under the RTI Act has revealed. Even the Top Bosses are known for stooping to illegal fund diversions. RTI activist Krishnan and Tripathi has alleged harassment from CBI in order to save itself from exposure through RTI. CBI has now been exempted from RTI act.

Controversies

Normally, cases assigned to the CBI are sensitive and of national importance. It is a usual practice for the respective state police departments, to initially register any case coming under its jurisdiction, and if necessary, through mediation by the central government, the cases may be transferred to the CBI. The CBI handles many high profile cases, and is never far from controversy.

Bofors scandal

SATISHCHANDER

202

In January 2006, it was found that CBI had quietly unfrozen bank accounts of Italian businessman Octavio Quattro chi, one of the prime accused in the Bofors scandal of 1986 which had tainted the Rajiv Gandhi government. The CBI was responsible for the inquiry into the Bofors Case. Associates of then Prime Minister Rajiv Gandhi were linked to alleged payoffs made in the mid-1980s by the Swedish arms firm AB Bofors, with $40 million in kickbacks moved from Britain and Panama to secret Swiss banks. The 410 howitzer field guns purchased in the $1,300 million arms sale were reported to be inferior to those offered by a French competitor.

The CBI, which unfroze Rs 21 crore in a London bank in accounts held by Bofors scam accused Quattro chi and his wife Maria in 2006, has facilitated his travel across the globe by asking Interpol to take him off the wanted list on 29 Apr 2009. Following a communication from the CBI, Interpol withdrew the Red Corner Notice against Quattro chi. the development that came barely three weeks before the end of the Man Mohan Singh governments tenure, brought the issue of the Bofors scandal back to centre stage. It is often suspected that ruling governments interfere with the work of the CBI, and the handling of the Bofors investigation by CBI under Congress governments has created a new synonym for CBI. After letting off the Bofors accused, Oppositions have never tried to call it the 'Congress Bureau of Investigation.

ISRO spy ring case

In 1994 two scientists with the Indian Space Research Organization (ISRO) and two Indian businessmen were arrested for allegedly conspiring to sell space secrets to two Maldivian women, who were originally described by newspapers as agents of Pakistani intelligence, for money and sex. The CBI investigation did not reveal the existence of a spy ring, and by early 1995 it was clear that the case was more a product of inexperience and over exoneration on the part of the police and Intelligence Bureau. It was a well-planned scheme to remove the then DGP Ramon S by concocted links to Maldivian lady. The scheme was plotted by some officers of Kerala police, the media and Muslim League as DGP was made of sterner stuff.

Hawala scandal
SATISHCHANDER

203

In 1991 an arrest linked to militants in Kashmir led to a raid on Hawala brokers, revealing evidence of large-scale payments to national politicians. The prosecution that followed was partly prompted by a public interest petition (Vineet Narayan), and yet the court cases of the Hawala scandal eventually all collapsed without convictions. The CBI's role was again criticized. In concluding the Vineet Narayan case, the Supreme Court of India directed that the Central Vigilance Commission should be given a supervisory role over the CBI.

Priyadarshini Mattoo murder case

The CBI has been under a cloud owing to its handling of the Priyadarshini Mattoo case, in which Santosh Kumar Singh, the alleged murderer of a 22-year old law student was acquitted for what the case judge called "deliberate inaction" by the investigating team. The accused was the son of a high ranking officer in the Indian Police Service, due to which the case had been shifted from the regular police force to the CBI. However, the 1999 judgment commented on how "the influence of the father of the accused has been there".

Embarrassed by the judgment, the-then CBI Director, R K Raghavan, requested two Special Directors, P C Sharma and G H Achari, to study the judgment. Subsequently the CBI appealed the verdict in Delhi High court in 2000, after which the High Court issued a bail able warrant against the accused. The case was again prominent in 2006 after much media coverage and public bashing (this was mainly due to a similar acquittal in another high profile case, though not handled by the CBI). The CBI filed an application for early hearing in July 2006. The High Court subsequently found Santosh Kumar Singh guilty of rape and murder and awarded a death sentence for the same in October 2006.

Nithari Killings

The CBI was given the responsibility of investigating the murders of dozens of children in the Nithari village near Noida, UP. This was after the local police was found to be incompetent and lethargic in their investigations. The serial killings were in the Indian and international media for weeks since decomposing bodies were found outside the house of the accused Moninder Singh Pandher.

SATISHCHANDER

204

Dawood Ibrahim case

In August 2007, the CBI asked its Pakistani counterpart, the Federal Investigation Agency, for its comments on recent media reports about the detention of Dawood Ibrahim by authorities in Karachi.

Sister Abhaya murder case

Sister Abhaya murder case concerns a nun, who was found dead in water well in Saint Pius X convent hostel in Kottayam, Kerala on7 March 1992. Altogether there were five CBI inquiries into the murder case so far without any tangible results. The powerful Catholic Lobby had exerted their undue influence to subdue the case as a Priest and a nun were involved. Abhaya had caught them in a compromising position.

Sohrabuddin case

CBI has been accused of acting for the ruling party Congress (UPA) to trap its opposition party mainly BJP. CBI, which is dealing with the Sohrabuddin case in Gujarat, questioned Geeta Johri an IPS officer, who claims the CBI is pressuring her to falsely implicate former Gujarat Minister Amit Shah in the Sohrabuddin fake encounter case, Rajkot Police Commissioner Geeta Johri has alleged in the Supreme Court.

Sant Singh Chatwal case

Sant Singh Chatwal was an accused in the CBIs records for 14 years. CBI had filed two charge sheets naming him as accused; sent Letters Rogatory abroad; even sent a probe team to the US and put Chatwal and his wife behind bars from February 2 to February 5, 1997. On May 30, 2007 and August 10, 2008, former CBI Director Vijay Shankar and the agencys present Director Ashwani Kumar respectively signed orders saying there was no need to challenge the discharge of Sant Singh Chatwal and his co-accused. This was done in
SATISHCHANDER

205

spite of advice of a string of investigators including a Special Director and Joint Director and it was decided not to appeal his discharge. This, in effect, closed the principal case of bank fraud in which Chatwal had been embroiled for over a decade. Along with four others, Chatwal was charged with being part of a criminal conspiracy to defraud the Bank of Indias New York branch to the tune of US $8,992,815 (Rs 28.32 crore). In all, four charge sheets were filed by the CBI, with Chatwal named as accused in two. The trials in the other two cases are still in progress. RTI applicant Krishnan and Tripathi was denied access to public information concerning the closed cases. CIC later ordered the CBI to disclose the information. But CBI has recently been exempted from RTI act and it is unclear if this information will be disclosed. Sant Singh Chatwal has been awarded with Padma Bhushan despite these cases.

Malan Kara Varghese murder case

The Malan Kara Varghese murder case concerns the death of T.M.Varghese also known as Malan Kara Varghese, a member of Malan Kara Orthodox Church's managing committee and a timber merchant in 5 December 2002.On 9 May 2010 charged Father Varghese Thekkekara, a priest and manager of the Angamali diocese in the rival Jacobite Syrian Christian Church (a part of the Syriac Orthodox Church) with conspiracy in the murder of Malan Kara Varghese and named him as the prime accused. Till date, the prime accused has not been arrested; CBI is highly being criticized for this by Kerala High Court and Media.

Bhopal gas tragedy

The public perceived that the CBI was very ineffective in trying the Bhopal gas tragedy case, the former CBI director has now confessed that he asked to remain soft on extraditing the Union Carbide CEO Warren Anderson, and dropped charges, including culpable homicide, against those accused in this case, who received two year sentences.

SATISHCHANDER

206

Anti-corruption police and courts

The income tax department of India, Central Vigilance Commission and Central Bureau of Investigation all deal with anti-corruption initiatives. There have been calls for the Indian government to create an anti-theft law enforcement agency that investigates and prosecutes corruption in government at national, state and local levels Special courts that are more efficient than the traditional Indian courts with traveling judges and law enforcement agents are being proposed. The proposal has not yet been acted upon by the Indian government. Certain states such as Andhra Pradesh (Andhra Pradesh Anti-corruption Bureau) and Karnataka (Lokayukta) have similar agencies and courts.

Directorate General of Economic Enforcement

The Directorate General of Economic Enforcement is a law enforcement agency and economic intelligence agency responsible for enforcing economic laws and fighting economic crime in India. It is part of the Department of Revenue, Ministry of Finance. It comprises of officers of the Indian Revenue Service.

Objective

The prime objective of the Enforcement Directorate is the enforcement of two key Acts of the Government of India namely, the Foreign Exchange Management Act 1999(FEMA) and the Prevention of Money Laundering Act 2002.

45. E-Government
SATISHCHANDER

207

Defining e-Government
E-Government' (or Digital Government) is defined as The utilization of the Internet and the world-wide-web for delivering government information and services to the citizens. (United Nations, 2006; AOEMA, 2005)

'Electronic Government' essentially refers to the approach How government utilized IT, ICT, and other web-based telecommunication technologies to improve and/or enhance on the efficiency and effectiveness of service delivery in the public sector.

E-government describes the use of technologies to facilitate the operation of government and the disbursement of government information and services. E-government, short for electronic government, deals heavily with Internet and non-internet applications to aid in governments. E-government includes the use of electronics in government as large-scale as the use of telephones and fax machines, as well as surveillance systems, tracking systems such as RFID tags, and even the use of television and radios to provide government-related information and services to the citizens.

Examples of e-Government and e-Governance

E-Government should enable anyone visiting a city website to communicate and interact with city employees via the Internet with graphical user interfaces (GUI), instant-messaging (IM), audio/video presentations, and in any way more sophisticated than a simple email letter to the address provided at the site and the use of technology to enhance the access to and delivery of government services to benefit citizens, business partners and employees. The focus should be on:

The use of Information and communication technologies, and particularly the Internet, as a tool to achieve better government. The use of information and communication technologies in all facets of the operations of a government organization. The continuous optimization of service delivery, constituency participation and governance by transforming internal and external relationships through technology, the Internet and new media.

SATISHCHANDER

208

Whilst e-Government has traditionally been understood as being centered on the operations of government, e-Governance is understood to extend the scope by including citizen engagement and participation in governance. As such, following in line with the OECD definition of e-Government, e-Governance can be defined as the use of ICTs as a tool to achieve better governance.

Delivery models and activities of e-Government

The primary delivery models of e-Government can be divided into: Government-to-Citizen or Government-to-Consumer (G2C) **In this model, the G2C models apply the strategy of Customer Relationship Management (CRM) with business concept. **By managing their customer (citizen) relationship, the business (government) can provide the needed products and services fulfill the needs from customer (citizen). **In United States, the NPR ([National Partnership for Reinventing Government National Partnership for Reinventing Government]) has been implemented from 1993. Government-to-Business (G2B) Government-to-Government (G2G) Government-to-Employees (G2E) Government-to-Religious Movements/Hindu temple (G2R) Government-to-Households (G2H) Within each of these interaction domains, four kinds of activities take place: Pushing information over the Internet, e.g.: regulatory services, general holidays, public hearing schedules, issue briefs, notifications, etc. Two-way communications between the agency and the citizen, a business, or another government agency. In this model, users can engage in dialogue with agencies and post problems, comments, or requests to the agency. Conducting transactions, e.g.: lodging tax returns, applying for services and grants. Governance, e.g.: To enable the citizen transition from passive information access to active citizen participation by: Informing the citizen Representing the citizen Encouraging the citizen to vote Consulting the citizen Involving the citizen

1) 2) 3) 4) 5)

SATISHCHANDER

209

Non-internet e-Government

While e-government is often thought of as "online government" or "Internet-based government," many non-Internet "electronic government" technologies can be used in this context. Some non-Internet forms include telephone, fax, PDA, SMS text messaging, MMS, wireless networks and services, Bluetooth, CCTV, tracking systems, RFID, biometric identification, road traffic management and regulatory enforcement, identity cards, smart cards and other Near Field Communication applications; polling station technology (where non-online e-voting is being considered), TV and radio-based delivery of government services (e.g., CSMW), email, online community facilities, newsgroups and electronic mailing lists, online chat, and instant messaging technologies.

Laws/Acts

E-Government Act of 2002 Controversies of e-Government

Disadvantages

The main disadvantages concerning e-government is the lack of equality in public access to the internet, reliability of information on the web, and hidden agendas of government groups that could influence and bias public opinions.

There are many considerations and potential implications of implementing and designing egovernment, including disintermediation of the government and its citizens, impacts on economic, social, and political factors, vulnerability to cyber-attacks, and disturbances to the status quo in these areas.

Hyper-surveillance

SATISHCHANDER

210

Increased contact between government and its citizens goes both ways. Once e-government begins to develop and become more sophisticated, citizens will be forced to interact electronically with the government on a larger scale. This could potentially lead to a lack of privacy for civilians as their government obtains more and more information on them. In a worst case scenario, with so much information being passed electronically between government and civilians, a totalitarian-like system could develop. When the government has easy access to countless information on its citizens, personal privacy is lost.

Cost

Although a prodigious amount of money has been spent on the development and implementation of e-government, some say it has yielded only a mediocre product. The outcomes and effects of trial Internet-based governments are often difficult to gauge or unsatisfactory. According to Gartner, Worldwide IT spending is estimated to total $3.6 trillion in 2011 which is 5.1% increase from the year 2010($3.4 trillion).

Inaccessibility

An e-government site that provides web access and support often does not offer the potential to reach many users including those who live in remote areas, are homebound, have low literacy levels, exist on poverty line incomes.

False sense of transparency and accountability

Opponents of e-government argue that online governmental transparency is dubious because it is maintained by the governments themselves. Information can be added or removed from the public eye. To this day, very few organizations monitor and provide accountability for these modifications. Those that do so, like the United States OMB Watch
SATISHCHANDER

211

and Government Accountability Project, are often nonprofit volunteers. Even the governments themselves do not always keep track of the information they insert and delete.

Advantages

E-government allows for government transparency. Government transparency is important because it allows the public to be informed about what the government is working on as well as the policies they are trying to implement. Simple tasks may be easier to perform through electronic government access. Many changes, such as marital status or address changes can be a long process and take a lot of paper work for citizens. E-government allows these tasks to be performed efficiently with more convenience to individuals. Egovernment is an easy way for the public to be more involved in political campaigns. It could increase voter awareness, which could lead to an increase in citizen participation in elections. It is convenient and cost-effective for businesses, and the public benefits by getting easy access to the most current information available without having to spend time, energy and money to get it. E-government helps simplify processes and makes access to government information more easily accessible for public sector agencies and citizens.

Democratization

One goal of e-government will be greater citizen participation. Through the internet, people from all over the country can interact with politicians or public servants and make their voices heard. Blogging and interactive surveys will allow politicians or public servants to see the views of the people they represent on any given issue. Chat rooms can place citizens in real-time contact with elected officials, their offices or provide them with the means to replace them by interacting directly with public servants, allowing voters to have a direct impact and influence in their government. These technologies can create a more transparent government, allowing voters to immediately see how and why their representation in the capital is voting the way they are. This helps voters better decide who to vote for in the future or how to help the public servants become more productive. A government could theoretically move more towards a true democracy with the proper application of e-government. Government transparency will give insight to the public on how decisions are made and hold elected officials or public servants accountable for their actions. The public could become a direct and prominent influence in government legislature to some degree.
SATISHCHANDER

212

Environmental bonuses

Proponents of e-government argue that online government services would lessen the need for hard copy forms. Due to recent pressures from environmentalist groups, the media, and the public, some governments and organizations have turned to the Internet to reduce this paper use. The Indian government utilizes the website http://www.india.gov.in/ to provide internal government forms for employees and thus produce significant savings in paper.

Speed, efficiency, and convenience

E-government allows citizens to interact with computers to achieve objectives at any time and any location, and eliminates the necessity for physical travel to government agents sitting behind desks and windows. Improved accounting and record keeping can be noted through computerization, and information and forms can be easily accessed, equaling quicker processing time. On the administrative side, access to help find or retrieve files and linked information can now be stored in databases versus hardcopies stored in various locations. Individuals with disabilities or conditions no longer have to be mobile to be active in government and can be in the comfort of their own homes.

Public approval

Recent trials of e-government have been met with acceptance and eagerness from the public. Citizens participate in online discussions of political issues with increasing frequency, and young people, who traditionally display minimal interest in government affairs, are drawn to e-voting procedures.

Although internet-based governmental programs have been criticized for lack of reliable privacy policies, studies have shown that people value prosecution of offenders over personal confidentiality. Ninety percent of United States adults approve of Internet tracking systems of criminals, and fifty-seven percent are willing to forgo some of their personal internet privacy if it leads to the prosecution of criminals or terrorists.
SATISHCHANDER

213

Technology-specific e-Government

There are also some technology-specific sub-categories of e-government, such as mgovernment (mobile government), u-government (ubiquitous government), and ggovernment (GIS/GPS applications for e-government.

E-government portals and platforms the primary delivery models of e-Government are classified depending on who benefits. In the development of public sector or private sector portals and platforms, a system is created that benefits all constituents. Citizens needing to renew their vehicle registration have a convenient way to accomplish it while already engaged in meeting the regulatory inspection requirement. On behalf of a government partner, business provides what has traditionally, and solely, managed by government and can use this service to generate profit or attract new customers. Government agencies are relieved of the cost and complexity of having to process the transactions.

To develop these public sector portals or platforms, governments have the choice to internally develop and manage, outsource, or sign a self-funding contract. The self-funding model creates portals that pay for themselves through convenience fees for certain egovernment transactions, known as self-funding portals.

Social networking is an emerging area for e-democracy. The social networking entry point is within the citizens environment and the engagement is on the citizens terms. Proponents of e-government perceive government use of social networks as a medium to help government act more like the public it serves. Examples can be found at almost every state government portal through Facebook, Twitter, and YouTube widgets.

Government and its agents also have the opportunity to follow citizens to monitor satisfaction with services they receive. Through List Serves, RSS feeds, mobile messaging, micro-blogging services and blogs, government and its agencies can share information to citizens who share common interests and concerns. Government is also beginning to Twitter. In the state of Rhode Island, Treasurer Frank T. Caprio is offering daily tweets of the states cash flow. Interested people can sign up at here. For a full list of state agencies with Twitter feeds, visit Real Life Live document. For more information, visit transparent govt.
SATISHCHANDER

214

NeGP

NeGP (National e-Governance Plan) is a plan of the Government of India to make all Government services available to the citizens of India via the electronic media. This plan was an outcome of the recommendations of the Second Administrative Reforms Commission". It is under the administration of the Department of Information Technology of Ministry of Communications and Information Technology, Government of India.

Background

With the widespread usage of IT, computers, mobile phones, Internet and other components of the ICT technologies in India over the last couple of decades, the need for eGovernment in India was finally articulated in the form of the 11th report of Second Administrative Reforms Commission titled "Promoting e-Governance - The Smart way Forward". According to the Paragraph 83, Report of the Working Group on Convergence and E-Governance for The Tenth Five Year Plan (20022007), Planning Commission, November, 2001, SMART government is defined as Simple, Moral, Accountable, Responsive and Transparent government. The ARC report was submitted to the GOI on 20 December 2008.The report cited several prior initiatives as source of its inspiration including reference to the Singapore ONE programme. The ARC report defined the need for eGovernance to bring the government closer to its citizens (G2C) and businesses (G2B) while promoting inter-government agency cooperation in a friendly, convenient, transparent and inexpensive fashion. According to this report the goals of e-Governance were defined as follows:

1) 2) 3) 4) 5)

Better service delivery to citizens Ushering in transparency and accountability Empowering people through information Improved efficiency within Governments Improve interface with business and industry.

The report recognized the existence of ongoing eGovernment initiatives in India at that time and recommended them to be consolidated under NeGP for coordinated implementation.

SATISHCHANDER

215

Introduction

With the Last mile service delivery, as its core objective, the National e-Governance Plan (NeGP) has been formulated by the Department of Information Technology (DIT) and Department of Administrative Reforms & Public Grievances (DAR&PG). This would involve several focus areas including development and delivery of citizen-centric services through Common Services Centers. This requires application development of government services in transparent, service oriented and citizen centric format. Additionally, development of ICT infrastructure, digitization of current records, establishing connectivity and setting up delivery outlets would be the other aspect of project implementation. Besides improved governance and improvement in quality of life for Indian citizens, the project also aims to deliver substantial cost savings in governance. Given that NeGP aims to provide a whole host of Union & State Government services to the common man, it is planned as a centralized initiative with decentralized implementation.

For this purpose, other than the citizen-centric application development, interoperability of applications and a common and robust nationwide infrastructure is also required.

Vision

The NeGP has the following vision: Make all Government services accessible to the common man in his locality, through common service delivery outlets and ensure efficiency, transparency & reliability of such services at affordable costs to realise the basic needs of the common man. This vision articulates the priorities of the Indian government for improved governance through use of technology leading to the improvement in quality of life for the average Indian citizen.

Programme Governance

NeGP is monitored and coordinated at the highest level by the National e-Governance Advisory Group. The latest appointments to the Group were done in First week of November, 2010 with its first scheduled meeting on 12th Nov 2010. It is headed by the Minister of Communications & Information Technology, Government of India. It is the apex
SATISHCHANDER

216

advisory body to the government on policy issues and strategic interventions necessary for coordinated progress across the various Union/State government departments/ministries for timely implementation of eGovernance across the country. Currently it includes various eminent personalities of India including Nandan Nilekani Chairman, Unique Identification Authority of India (UIDAI); Shashi Kant Sharma, Secretary, Department of Information Technology; R. Chandrasekhar, Secretary, Department of Telecommunication; Dr. Mrutyunjay Sarangi, Additional. Secretary, Cabinet Secretariat; D.V. Singh, Special Secretary, Department of Administrative Reforms & Public Grievances; Dr. B.K. Gairola, Director General National Informatics Centre among other Central Government, State Government, industry and academia representatives. Appropriate authorities have been identified and assigned the duties of laying down standards, providing technical support, developing policy guidelines, undertaking capacity building, R&D work, etc. Department of Information Technology (DIT), National Informatics Centre (NIC), Standardization Testing and Quality Certification (STQC), Centre for Development of Advanced Computing (C-DAC) and National Institute for Smart Government (NISG) are just some of the organizations at the national level working on this project.

Implementation

Infrastructure

This would include development of National/State Service Delivery Gateway (NSDG/SSDG), State Wide Area Networks (SWAN), State Data Centres (SDC), Common Services Centres (CSC) and development of eForms for service delivery. This infrastructure is supposed to be common for all projects under the NeGP umbrella. It is being created in every State and Union Territory to ensure seamless and single-window delivery of public services to the common man. The infrastructure requirements of NeGP are broken down into core & support infrastructure requirements.

The core infrastructure consists of National eGovernment Intranet(NICNET, ERNET and other service providers), State wide Intranets, National eGovernment Data Centres, State Data Centres, Security Infrastructure(PKI etc.), Resource Centre for eGovernance, GIS National Spatial Data Infrastructure and Language Resource Centre.

SATISHCHANDER

217

The support infrastructure includes Service delivery infrastructure at State, District, Block and Village levels including Wireless infrastructure for last mile connectivity. Further E-post and Integrated Service Delivery Front ends like the proposed Common Services Centers (CSC) are required as part of the support infrastructure.

The three primary pillars of NeGP infrastructure are SWAN (State Wide Area Networks) (SWAN), SDC (State Data Centers), and CSC for web-enabled anytime-anywhere services & information.

Web enabled delivery of public services

Mission Mode Projects (MMPs)

NeGP comprises 27 Mission Mode Projects (MMPs) encompassing 10 Central MMPs, 10 State MMPs and 7 Integrated MMPs spanning multiple Ministries/ Departments. It was approved on 18 May 2006 by the Government of India. "Mission Mode" implies that the objective and the scope of the project are clearly defined, that the project has measurable outcomes and service-levels, and the project has well-defined milestones and time-lines for implementation. These MMPs include the following:-

SATISHCHANDER

218

Central MMPs Banking Central Excise Customs Income Tax (IT) Insurance

State MMPs Agriculture & Commercial Taxes eDistrict Employment Exchange Land Records

Integrated MMPs CSC e-Biz e-Courts eProcurement EDI For eTrade NSDG India Portal

MCA21

National Citizen Database Passport, Immigration & Visa Pension e-Office Foreigners Registration & Tracking

Municipalities Gram Panchayats Police Road Transport Treasuries

Capacity Building, Awareness, Communication

The stakeholders of NeGP include at least 20 central departments, 360 departments across 35 states/UTs and nearly 500 implementation agencies. Given the complexity of this mammoth task estimated at more than 70,000 man-years of effort, proper estimation and implementation of capacity gaps are required. The three specific capacity gaps in the states envisaged to be filled are:-

Lack of personnel with appropriate background and aptitude, Inadequate skill sets of personnel already deployed Lack of appropriate institutional framework to handle the specific program To address these, the following steps have been planned: Support for creation of State e-governance Mission Teams (SeMTs) Support to Central Project e-Mission Teams (CPeMTs) Support to State Administrative Training Institutes Human resource management - This component addresses several areas including training for: o E-Governance policy makers like Chief Information Officers, etc. o Project specific training
SATISHCHANDER

219

o General IT Skills and Competencies along with Special training programs for specialists o Security, use of local language solutions, advanced courses architecture, language technologies o Equipping National/State Institutions of Public Administration for eGovernance Training etc. Creating awareness about NeGP - Various strategies for change management and raising awareness are planned including:o E-Readiness assessment of various States/ Departments o Setting up of Virtual eGovernance Forums o Assessment of e-Projects o Best practices for eGovernance o EGovernance National Resource Database o Newsletters on eGovernance, workshops/ seminars/ Conferences o Competitions and Awards o EGovernance forum for NGOs, Pvt. Sector, Academic Training Institutions o Publicity and Awareness (media, films etc.)

Standards, quality & security

These would require implementation of the following: National Policy on Open Standards Localization and Language Technology Standards Biometrics, Digital Signature, Interoperability etc. Quality Assurance & Conformance Network and Information Security

E-Gov. Knowledge exchange

In order to assist the government in ensuring the high quality of implementation of the NeGP initiatives, the NISG (a non-profit organisation) started a portal project called E-Gov. Knowledge exchange. It is a collaborative effort to collect, develop and share knowledge and material on eGovernance initiatives across the different government agencies, stat government, union government and private institutions of India. The objective is collective learning from each others projects and learning lessons. Just like other collaborative portals, content development is a community effort shared by the different stakeholders of
SATISHCHANDER

220

eGovernance namely the Department of Information Technology (Government of India), Central Ministries & State Governments in India, Academics, and Industry working in the domain of e-Government. This portal aims to develop conceptual knowledge about eGovernance domain from public, private and government levels.

E-Government an alternative approach

Recent government policy updates have seen a shift away from e-Government towards a much more radical focus on transforming the whole relationship between the public sector and users of public services. This new approach is referred to as Transformational Government. Transformation programs differ from traditional e-Government programs in four major ways:

They take a whole-of-government view of the relationship between the public sector and the citizen or business user. They include initiatives to e-enable the frontline public services: that is, staff involved in direct personal delivery of services such as education and healthcare rather than just looking at transactional services which can be e-enabled on an endto-end basis. They take a whole-of-government view of the most efficient way managing the cost base of government. They focus on the citizen not the customer. That is, they seek to engage with the citizens as owners of and participants in the creation of public services, not as passive recipients of services.

SATISHCHANDER

221

1/1/2012

SATISHCHANDER