Moving on corruption: Govt's actions deserve credit but require follow-up

Arun Jaitley argued that the 'next step' would require international co-operation to recover assets stashed abroad, though it is far from clear what this mechanism could be

The criticism surrounding the scandal involving Nirav Modi and Punjab National Bank seems to have spurred the Union government into taking certain anti-corruption moves. Last Thursday, the Cabinet approved the Fugitive Economic Offenders (FEO) Bill, which aims to confiscate the property of those who evade police or judicial summons after being accused of fraud worth over Rs 1 billion. The Bill proposes the establishment of a special court that could declare such an alleged fraudster an economic offender, clearing the way to attach, manage and dispose of their assets. Finance Minister Arun Jaitley also argued that the “next step” would require international co-operation to recover assets stashed abroad, though it is far from clear what this mechanism could be. Some important regulatory steps were also cleared, such as the decision to create a National Financial Reporting Authority (NFRA) that would regulate chartered accountants, or CAs. The NFRA was envisioned in the Companies Act that was passed in 2013, so no further legislative changes are needed. Finally, the government has sought to start the process of appointing a Lokpal, an anti-corruption ombudsman, at the central level — a more than five-year-old demand of anti-corruption activists.

The government’s energy over the last 10 days in the matter of setting up a more vigilant anti-corruption and anti-fraud mechanism is to be commended. However, certain gaps still need to be plugged in this planned system. Action now on the FEO Bill is somewhat like locking the stable door after the horse has bolted. What matters for existing cases is following up on extradition requests with proper judicial resources. The extradition case against fugitive liquor baron Vijay Mallya, for example, could have been argued with more vigour. On the NFRA, similarly, it could be asked why the government has waited five years after the passage of the Companies Act by its predecessor to finally notify the new authority. It should, however, be seen as an acceptance that self-regulation by the accounting profession has not been up to the mark. Complicity by accountants has been a feature of many major scams in the last decade, and some form of regulation was overdue. Few other major economies have persisted with self-regulation by the accounting profession for so long.

The movement to finally appoint a Lokpal comes after the Opposition, including the Congress Party, had questioned the government’s failure to do so, and the Supreme Court had asked for a report on the implementation of the Lokpal Act. Last week, the government convened a meeting of the selection committee for the new Lokpal. However, the Congress’ leader in the Lok Sabha, Mallikarjun Kharge, boycotted the meeting, saying he was being called as a “special invitee” and not to fulfil the role of Leader of the Opposition in the committee, as envisaged by the Lokpal Act of 2013. Mr Kharge argued that he had not even been provided with the names of the proposed candidates for the “eminent jurist” slot. It is important for this impasse to end swiftly. The government must act to take the Opposition along, and the Congress, in turn, must be reasonable and co-operative.