Last month, the Confederation of Indian Industry (CII)'s headquarters at Lodhi Road was venue to an unusual meeting of minds. For the first time, about 30 chief vigilance officers (CVOs) from public sector organisations and senior compliance officers from the private sector came together to explore possibilities of fighting corruption jointly.
In a rare display of bonhomie, vigilance officers from either side spoke about the need to create a climate of compliance among corporates, with more focus on preventive vigilance.
Till now, vigilance officers in the public and private sectors largely kept each other at an arm's length. The private sector - perceived to be the supply side of corruption in the government - is considered lax when it comes to compliance of anti-graft measures, both within and outside. On the other hand, a robust vigilance-related administrative structure is said to cast its shadow on the decision-making process in the public sector. But, the overall goal of any vigilance or compliance officer - both in the private or public sector - is same.
"We are on two sides of a river that is full of crocodiles, namely middlemen. It is time to build a bridge to exchange best practices that improve compliance and transparency within the private and the public sectors," said Parvez Hayat, chief vigilance officer, Power Grid Corporation, and president of Vigilance Study Circle, Delhi-NCR, one of the co-organisers of the event.
A key reason driving vigilance officers to join hands in the fight against corruption is the United Nations Convention against Corruption. India was a signatory to the Convention in 2005 - a decision that was ratified by Parliament in 2011. The Convention introduces a comprehensive set of standards, measures and rules that all countries can apply in order to strengthen their legal and regulatory regimes to fight corruption, equally applicable to both public and private sectors. It recommends promoting transparency and accountability in the management of public finances, and in the private sector, with tougher accounting and auditing standards. Over the last three-four years, a host of legislative measures, including provisions in the Companies Act, 2013, amendments in the Prevention of Corruption Bill, 2013, have brought the private sector under the ambit of anti-corruption laws.
"By placing the responsibility of corrupt actions - even those by third parties acting on behalf of the company - on the management, the government has send a strong message to corporate India," said Sumit Makhija, senior director, forensic-financial advisory, Deloitte India.
Compliance officers feel this would encourage the private sector to put in place internal control mechanisms and processes with a view to eliminating ambiguity in decision-making.
Both public sector vigilance officers and compliance heads in private sector companies welcome the move for more interaction within the fraternity.
"Such discussions develop greater acceptance of each other's positions and limitations, and provide the opportunity to begin the journey of sharing best practices between the CVOs in the public sector and the compliance officers of the private sector," said Tejal Patil, general counsel, GE South Asia.
According to Sanjay Singh, principal resident representative, Tata Sons, best practices and the role of ethics in management are equally relevant across all sectors whether private or public. "Corporates need to learn from each other irrespective of the sector to which they belong."
Many vigilance officers feel that like-minded organisations should collaborate to inculcate good values across the universe of business. "A coalition of the upright will send the correct message across the corporate sector, and drive out rogue elements from within," Singh added.
Many feel that the timing of this move is important. "Indian economy is at a point of inflexion when there is a need for greater integrity in public and private sectors. This has to be done by rewarding the honest and punishing the corrupt," said Shailesh Pathak, executive director, Bhartiya group.
Many in the private sector feel the public sector's processes on compliance and vigilance can be the template for the private sector. "The compliance officers in the public sector have a deep domain expertise in their businesses and hence greater understanding of risk. They are process-oriented and invest in training. They rotate into CVO roles from other functions like tax, finance, and this helps to bring unique skills to the function and spread the compliance culture through the organisation. This is an excellent model which the private sector can emulate," said Patil.
Central Vigilance Commissioner K V Chowdary noted the challenges that the private sector faces in enforcing ethical practice due to constraints in budget and resources. A key weakness in the private sector's fight against graft is that in most companies the compliance officer is generally of the level of the company secretary, who is an employee of the company.
Another difficulty that the private sector faces after detection of a corrupt practice is how to deal with it. The system to deal with corruption is not so effective in the private sector, said Chowdary. While it is a common practice for a person caught in a corrupt practice in a private sector to lose his or her job, the action usually is not made public citing implications on the brand image and market standing of the company. "The person concerned may get a job in any other private company, but that is not the case in the government," said a public sector vigilance officer.
In the case of a government servant, a thorough investigation is done followed by prosecution. The whole process is time-consuming also. Many public sector vigilance officers feel that the process needs to be expedited. Public sector compliance officers could do with more simplification of the procedures and increase the pace of action against corruption, said Keshav Rao, chief vigilance officer at Pawan Hans.
Besides, public sector organisations could do more in using the latest techniques and technologies, feels Prabhat Kumar, a former director with Central Vigilance Commission. There is also the need to invest more in capacity development among the vigilance fraternity.
Some like Hayat feel the need for a CVO- like structure for the private sector. However, Tata Son's Singh does not feel that is a workable solution to tackle corruption in the private sector. T he source of funding in the private sector is highly diversified, unlike that in a public sector organisation where the government is the biggest equity promoter. "The government has the right to have a central watchdog," said Singh. Going forward, both CII and Vigilance Study Circle plan to organise more such interactions. "We have just broken the ice," said Hayat.
PROPOSED KEY AMENDMENTS IN THE PREVENTION OF CORRUPTION (AMENDMENT) BILL, 2013
Replaces the term "financial or other advantage" with "undue advantage" throughout the Bill
Undue advantage is defined as any gratification other than legal remuneration
Includes a provision to mandate the central government to prescribe guidelines about adequate procedures that commercial organisations must put in place to prevent persons associated with them from bribing a public servant
Before a police officer can conduct any investigation in relation to an offence said to have been committed by a public official in the performance of his official duty, prior approval of an appropriate authority, as provided for in the Lokpal and Lokayuktas Act, 2013, must be taken
The provisions of the Criminal Law Amendment Ordinance, 1944 would apply to the attachment of property and execution of orders
In place of a district judge (as specified in the Ordinance), cases will be referred to a special judge
Trial by the special judge is to be completed within two years
If a commercial organisation is held guilty of giving a bribe, it must be proved by the prosecuting authorities that it was committed with the consent or connivance of any director, manager, secretary or other officer of the commercial organisation
Removes the offence of attempting to commit offences related to criminal misconduct from the ambit
- Punishment of five to 10 years and a fine for habitual offenders