AAP charges: Hidden corporate ties of ministers a grey area

The issue of undisclosed retainerships held by parliamentarians of major national parties, exposed by the Aam Aadmi Party (AAP), has brought to fore the lack of adequacy in enforcing parliamentary rules relating to conflict of interest. While both Houses of Parliament have ethics committees and rules governing the interest of members, these operate on the basis of voluntary disclosures.

On Thursday, AAP members Yogendra Yadav and Prashant Bhushan revealed Union telecom minister Ravi Shankar Prasad and former Union minister and Congress spokesperson Manish Tewari had received lakhs of rupees as retainership and consultancy fees from firms related to Reliance Industries Ltd (RIL). The AAP leaders demanded Prasad's resignation, saying the minister was dealing with cases pertaining to RIL group entities.

"The point raised by them (AAP) is a very valid one," said Sitaram Yechury, member of the Rajya Sabha's ethics committee, adding, "We will take note of these press statements. What will follow, we have to see." The 10-member ethics committee is headed by Karan Singh of the Congress.

Though Yechury said there were strict rules governing the declaration of interests, he conceded their enforcement was an issue. The CPI(M) member recalled an instance when Parimal Nathwani, a Rajya Sabha member, had declared his interest in a matter related to natural gas, before taking part in a discussion in 2009. Nathwani's declaration of interest followed some members pointing to his association with RIL.

"Not everybody is privy to the interests of other members. Some conscionable people follow it; others do not. There should be some mechanism to enforce this," Yechury said.

The Constitution recognises there might be a conflict of interest between the executive and the legislature. As such, it provides for disqualifying legislators if they hold any office of profit in the central or state governments, other than the ones exempted by law. "Conflicts of interest arising out of an MP's private interest are regulated by the code of conduct for ministers; the code of conduct for members of the Rajya Sabha; rules of procedure and conduct of business in the Lok Sabha and the Rajya Sabha; and the handbook for members. Both Houses have ethics committees to oversee the ethical conduct of MPs," says a PRS Legislative Research note on conflict of interest.

While these codes make broad references to interest, there is complexity when it comes to practising lawyers. Several lawyers have donned the hats of lawmakers and legal practitioners; some have gone on to become ministers.

Lawyers cite Supreme Court judgments that say there is no prohibition on an elected representative continuing his/her practice despite the fact that she/he is drawing a salary as an MP or an MLA.

Provisions of the evidence Act require a lawyer to ensure confidentiality of the professional communications between him and his clients.

It has been claimed the Congress's Tewari had received payments from RIL, while little-known group firm FineTech Corporation paid Prasad. This has raised questions pertaining to conflict of interest, as both the leaders were members of a joint parliamentary committee (JPC) that probed the 2G telecom spectrum scam, as well as deals in the telecom sector between 1998 and 2011.

To counter the AAP's allegations, Tewari and Prasad took to social media. Denying wrongdoings, Tewari released documents showing his submissions on interest to the JPC and the termination of his relationship with RIL after taking over as minister in October 2012. Prasad, on the other hand, tweeted his was a professional relationship and that he had never represented Reliance.

In response, the AAP, in a release on Friday, said, "Both Prasad and Tewari have claimed the payments stopped once they became ministers. This might be correct; we have nowhere claimed to the contrary. Prasad does not clearly say he has received no money from FineTech after becoming minister and a clarification regarding that is in order. The main point, however, was about the ethical and political propriety of heading ministries that dealt with companies that retained them till they took up their positions."

In an email response to a query by Business Standard, an RIL spokesperson said, "RIL has large and varied demands for legal assistance. We, therefore, work with various lawyers from time to time for such legal assistance. The details of such engagement are disclosed to the authorities concerned wherever necessary, for example, tax authorities. As any major corporation in India, RIL has engaged lawyers who are also practicing politicians. Details have been disclosed to the authorities. There is no bar against an elected representative continuing his or her practice while being an MP or MLA. Our engagement with lawyers is because of legal assistance required from time to time, not the fact that the lawyer is an MP/MLA. As is the common practice and legal requirement, when such an MP/MLA becomes a minister in the Union Cabinet, the engagement has been discontinued. Communication with lawyers is privileged communication, protected by the law."

Experts feel the onus to declare interests is more on the members than on the corporate entities that hire their services. J N Gupta, managing director of Shareholders Empowerment Services, said, "In normal course, the fees paid is a private issue between a client and a professional and need not be made public. However, a person in public office, such as Caesar's wife, has to be above suspicion. While I believe the fees received must have been for professional services, a doubt has been cast. To avoid any suspicion, the best course would be to declare such payments. However, such disclosures might lead to problems for clients, as groups might pressurise clients for payments to their nominees, too, though the declared transaction might be entirely genuine. The best course would be to declare such payments to their party and, in the case of ministers, to the respective bosses - the prime minister or the chief minister, as the case might be."