Ethics in Governance

140 Pages·2007·1.69 MB·English

Fourth report
Second AdminiStrAtive reformS commiSSion
“
You must be the change
”
Second Administrative reforms commission you wish to see in the world.
Government of India
Mahatma Gandhi
2nd Floor, Vigyan Bhawan Annexe, Maulana Azad road, New Delhi 110 011
JAnuAry 2007
e-mail : [email protected] website : http://arc.gov.in
GOVERNMENT OF INDIA
SECOND ADMINISTRATIVE REFORMS COMMISSION
FOURTH REPORT
ETHICS IN GOVERNANCE
JANUARY 2007
PREFACE
“As human beings, our greatness lies not so much in being able to remake the world - that is the myth of the
atomic age - as in being able to remake ourselves”
Mahatma Gandhi
The Mahatma’s vision of a strong and prosperous India - Purna Swaraj - can never become a
reality if we do not address the issue of the stranglehold of corruption on our polity, economy and
society in general.
Governance is admittedly the weak link in our quest for prosperity and equity. Elimination of
corruption is not only a moral imperative but an economic necessity for a nation aspiring to catch
up with the rest of the world. Improved governance in the form of non-expropriation, contract
enforcement, and decrease in bureaucratic delays and corruption can raise the GDP growth rate
significantly. The six perceived governance quality measures, each an aggregate of a number of
sub-measures, are: voice and accountability; absence of political instability and violence; government
effectiveness; reasonableness of the regulatory burden; the rule of law; and the absence of graft. Of
these, the last two are the most directly significant in the context of ethical governance. ‘Rule of
law’ measures whether crime is properly punished or not; enforceability of contracts; extent of
black market; enforceable rights of property; extent of tax evasion; judiciary’s independence; ability
of business and people to challenge government action in courts etc. ‘Absence of graft’ measures
relative absence of corruption among government, political and bureaucratic officials; of bribes
related to securing of permits and licences; of corruption in the judiciary; of corruption that scares
off foreign investors.
There is a perception that the public services have remained largely exempt from the imposition
of penalties due to the complicated procedures that have arisen out of the Constitutional guarantee
against arbitrary and vindictive action. Those Constitutional safeguards have in practice shielded the
guilty against the swift and certain punishment for abuse of public office for private gain.
A major corollary has been the erosion of accountability. The huge body of jurisprudential precedents
has crowded out the real intent of Article 311, and created a heap of roadblocks in reducing corruption.
Such a provision is not available in any of the democratic countries including the UK. While the
honest have to be protected, the dishonest seem to corner the full benefit of Article 311. Hence there
is need for a comprehensive examination of the entire corpus of administrative jurisprudence to
“You must be the change you wish to see in the world.”
rationalise and simplify the procedures. One of the indicators of lax enforcement is delay in sanctioning
Mahatma Gandhi prosecution of a delinquent by the competent authority. Reference may be made to the Annual
Report of the Central Vigilance Commission for the year 2004. Out of 153 cases for sanction, 21
cases were pending for more than 3 years, 26 cases between 2-3 years, 25 between 1-2 years. The
departmental enquiries are soft-pedalled either out of patronage or misplaced compassion.
Integrity is much more than financial honesty. Public office should be treated as a Napoleon who said, ‘Law should be so succinct that it can be carried in the pocket of the
trust. There are two facets to corruption: (1) the institution which is highly corrupt; coat and it should be so simple that it can be understood by a peasant’.
(2) individuals who are highly corrupt. There is a need to work on public profiteering and
While it may not always be possible to establish the criminal offence of
also value to be attributed to the services rendered by officers. Interlocking accountability
misappropriation in a court of law, the Government servant can still be removed from
is a process by which evaluation could be done easily and accountability ensured.
service for causing serious monetary loss to the State. An engineer may have deliberately
Building trust and confidence requires an environment where there is a premium on permitted the construction of a defective irrigation dam or building. It may not be possible
transparency, openness, boldness, fairness and justice. We should encourage this. to get him convicted in court on charges of corruption but he could be removed from
service on grounds of incompetence. A tax official may have connived to allow the leakage
Clearly, the absence of rules is not the problem. One cannot mandate honesty. The
of revenue for return favours in the future. Such conduct may not provide the ingredients
rule of law can only defeat the perverse mind. However, it cannot defeat the perversity of
of a criminal offence but can lead to his exit from service.
the heart. In to the words of Aleksandr Solzhenitsyn: “The line separating good and evil
passes not between states nor between classes… but through the middle of every human The standard for probity in public life should be not only conviction in a criminal
heart”. We have no destinies other than those we forge ourselves. He who administers court but propriety as determined by suitable independent institutions specifically
government by means of his virtues may be compared to the Pole star which keeps its constituted for the purpose. We have broadly copied the British model of governance.
place and all other stars turn towards it. When the ruler himself is right, the people Ministers in Tony Blair’s government have had to resign on such minor improprieties as
naturally follow him in his right course. If governance is by men who are derelict, the a telephone call to the concerned person to fast track the issue of a visa for the ‘nanny’ of
governed will suffer. We have to keep in mind Plato’s injunction: the Minister’s child or the grant of British citizenship to a generous contributor to a
cause supported by the Government. Such principles were upheld and pronounced by
“The punishment suffered by the wise who refuse to take part in government,
Jawaharlal Nehru in the Mudgal case in which the said Lok Sabha Member was expelled
is to suffer under the government of bad men”
by Parliament on 24th September, 1951 even when the Member volunteered to resign.
The Mudgal case is often cited as the noblest example of the early leadership’s efforts at
Good governance must be founded on moral virtues ensuring stability and harmony.
setting high standards of conduct in parliamentary life.
Confucius described righteousness as the foundation of good governance and peace. The
art of good governance simply lies in making things right and putting them in their
We need to reverse the slide by prescribing stringent standards of probity in public
right place. Confucius’s prescription for good governance is ideally suited for a country
life instead of providing shelter to public figures of suspect integrity behind the argument
like India where many of our present day players in governance do not adhere to any
of their not having been convicted in a court. The standard should be one of not only the
principle and ensure only their own interests.
conduct of Caesar’s wife but of Caesar himself.
Confucius emphasizes the righteousness for life and character building. This is in
The solution to the problem of corruption has to be more systemic than any other
conformity with Dharma or righteousness as taught by all religions in the world and
issue of governance. Merely shrinking the economic role of the state by resorting to
preached in Buddhism very predominantly in its fourth noble truth. He also emphasizes
deregulation, liberalization and privatization is not necessarily the solution to addressing
that man himself must become righteous and then only there shall be righteousness in
the problem. Prevalent institutional arrangements have to be reviewed and changes made
the world. This is comparable with what Gandhiji said, “Be the change you wish to see in
where those vested with power are made accountable, their functioning made more
the world”.
transparent and subjected to social audit with a view to minimize discretionary decisions.
All procedures, laws and regulations that breed corruption and come in the way of efficient
So, in the ultimate analysis, it is a question of ethics. Ethics is a set of standards that
delivery system will have to be eliminated. The perverse system of incentives in public
helps guide conduct. One of the problems is that the present codes of conduct are not
life, which makes corruption a high return low risk activity, need to be addressed. In this
direct and to the point. They are full of vague sermons that rarely indicate prohibitions
context, public example has to be made out of people convicted on corruption charge
directly. For formulating a code of ethics, it would be useful to keep in mind the advice of
and the legal process in such cases has to be expedited. This hopefully, will also address Government of India
the growing permissiveness in the society, in the more recent times, to the phenomenon Ministry of Personnel, Public Grievances & Pensions
of corruption. In addition, with changes in economic policy regime, regulatory bodies Department of Administrative Reforms and Public Grievances
that guide and monitor the functioning of the relevant economic agents, lay down the
rules of conduct in the interest of consumers and devise such practices that help in efficient Resolution
functioning of the system, will have to be established in many sectors of the economy New Delhi, the 31st August, 2005
that are now being opened up. At the same time, social monitoring through empowered
autonomous and credible structures will have to be established even for the highest of No. K-11022/9/2004-RC. — The President is pleased to set up a Commission of Inquiry to
the public offices. Right to information has to be the starting point for some of these be called the second Administrative Reforms Commission (ARC) to prepare a detailed
changes. blueprint for revamping the public administration system.
The focus should be on e-governance and systemic change. An honest system of 2. The Commission will consist of the following :
governance will displace dishonest persons. As Gladstone so aptly said, “The purpose of
(i) Shri Veerappa Moily - Chairperson
a government is to make it easy for people to do good and difficult to do evil”.
(ii) Shri V. Ramachandran - Member
We always find alibi for our lapses by quoting trespass from other democratic
(iii) Dr. A.P. Mukherjee - Member
institutions, by resorting to a blame game. The executive/civil services blame interference
by the political executive or legislatures and vice versa; legislators blame the judiciary (iv) Dr. A.H. Kalro - Member
and vice versa – the main problem lies in each one leaving space for others to occupy. If (v) Dr. Jayaprakash Narayan - Member
any of the democratic institutions leaves space, the mafia or extra-constitutional authority
(vi) Smt. Vineeta Rai - Member-Secretary
occupies that space. Realization of its own authority and discharging its sphere of
responsibility, developing accountability and responsiveness are the real solutions to the
3. The Commission will suggest measures to achieve a proactive, responsive, accountable,
conflicting situations of eroding democratic polity. I conclude by quoting an ancient
sustainable and efficient administration for the country at all levels of the government.
subhashit (good message) -
The Commission will, inter alia, consider the following :
“Rivers do not drink their waters themselves, nor do trees eat their fruit, nor (i) Organisational structure of the Government of India
do the clouds eat the grains raised by them. The wealth of the noble is used solely
(ii) Ethics in governance
for the benefit of others.”
(iii) Refurbishing of Personnel Administration
(iv) Strengthening of Financial Management Systems
(v) Steps to ensure effective administration at the State level
(vi) Steps to ensure effective District Administration
New Delhi (M. Veerappa Moily)
January 16, 2007 Chairman (vii) Local Self-Government/Panchayati Raj Institutions
(viii) Social Capital, Trust and Participative public service delivery
(ix) Citizen-centric administration
(x) Promoting e-governance
(xi) Issues of Federal Polity Government of India
Ministry of Personnel, Public Grievances & Pensions
(xii) Crisis Management
Department of Administrative Reforms
(xiii) Public Order
and Public Grievances
……
Some of the issues to be examined under each head are given in the Terms of Reference
attached as a Schedule to this Resolution.
RESOLUTION
New Delhi, the 24th July, 2006
4. The Commission may exclude from its purview the detailed examination of
administration of Defence, Railways, External Affairs, Security and Intelligence, as
No. K-11022/9/2004-RC (Vol.II) – The President is pleased to extend the term of the
also subjects such as Centre-State relations, judicial reforms etc. which are already
second Administrative Reforms Commission by one year upto 31.8.2007 for submission of
being examined by other bodies. The Commission will, however, be free to take the
its Reports to the Government.
problems of these sectors into account in recommending re-organisation of the
Sd/-
machinery of the Government or of any of its service agencies.
(Rahul Sarin)
5. The Commission will give due consideration to the need for consultation with the Additional Secretary to the Government of India
State Governments.
6. The Commission will devise its own procedures (including for consultations with the
State Government as may be considered appropriate by the Commission), and may
appoint committees, consultants/advisers to assist it. The Commission may take into
account the existing material and reports available on the subject and consider building
upon the same rather than attempting to address all the issues ab initio.
7. The Ministries and Departments of the Government of India will furnish such
information and documents and provide other assistance as may be required by the
Commission. The Government of India trusts that the State Governments and all
others concerned will extend their fullest cooperation and assistance to the Commission.
8. The Commission will furnish its report(s) to the Ministry of Personnel, Public
Grievances & Pensions, Government of India, within one year of its constitution.
Sd/-
(P.I. Suvrathan)
Additional Secretary to Government of India
CONTENTS 5.3 Role of Media 132
5.4 Social Audit 133
Chapter 1 Introduction 1
5.5 Building Societal Consensus 134
Chapter 2 Ethical Framework 8
Chapter 6 Systemic Reforms 135
2.1 Ethics in Politics 8
6.1 Importance of Systemic Reforms 135
2.2 Ethics in Public Life 18
6.2 Promoting Competition 137
2.3 International Approach 21
6.3 Simplifying Transactions 138
2.4 Ethical Framework for Ministers 22
6.4 Using Information Technology 140
2.5 Ethical Framework for Legislators 28
6.5 Promoting Transparency 142
2.6 Office of Profit 37
6.6 Integrity Pacts 143
2.7 Code of Ethics for Civil Servants 41
6.7 Reducing Discretion 144
2.8 Code of Ethics for Regulators 45
6.8 Supervision 145
2.9 Ethical Framework for the Judiciary 47
6.9 Ensuring Accessibility and Responsiveness 147
Chapter 3 Legal Framework for Fighting Corruption 58 6.10 Monitoring Complaints 149
3.1 Evolution of the Anti-Corruption Laws in India 58 6.11 Reforming the Civil Services 149
3.2 The Prevention of Corruption Act, 1988 60 6.12 Risk Management for Preventive Vigilance 150
3.3 Corruption Involving the Private Sector 71 6.13 Audit 152
3.4 Confiscation of Properties Illegally Acquired by Corrupt Means 74 6.14 Proactive Vigilance on Corruption 153
3.5 Prohibition of ‘Benami’ Transactions 77 6.15 Intelligence Gathering 155
3.6 Protection to Whistleblowers 77 6.16 Vigilance Network 156
3.7 Serious Economic Offences 79 6.17 Sector Specific Recommendations 157
3.8 Prior Concurrence for Registration of Case: Section 6A of 86
Chapter 7 Protecting the Honest Civil Servant 158
the Delhi Special Police Establishment Act, 1946
3.9 Immunity Enjoyed by Legislators 87 Chapter 8 International Cooperation 163
3.10 Constitutional Protection to Civil Servants - Article 311 89 Chapter 9 Relationship between the Political Executive and 166
3.11 Disciplinary Proceedings 98 the Permanent Civil Service
3.12 Statutory Reporting Obligations 105 Conclusion 172
Chapter 4 Institutional Framework 106 Summary of Recommendations 173
4.1 Existing Institutions/Agencies 106
LIST OF BOXES
4.2 Evaluation of the Anti-Corruption Machinery in India 108
Box No. Title
4.3 The Lok Pal 111
2.1 Ethics in the UK 9
4.4 The Lokayukta 116
2.2 Corruption and Hypocrisy 17
4.5 Ombudsman at the Local Level 120
2.3 Need for Ethical Code 18
4.6 Strengthening Investigation and Prosecution 122
2.4 An Extract from the Code of Good Governance of Spain 20
Chapter 5 Social Infrastructure 125
2.5 The Constitution of Belize and Code of Conduct 22
5.1 Citizens’ Initiatives 125
2.6 Edmund Burke on Parliament 38
5.2 False Claims Act 130
2.7 Evolution of Morality 44
2.8 The Seven Social Sins 44 LIST OF ABBREVIATIONS
2.9 The Credibility of a Profession 45 Abbreviation Full Form
2.10 Independence of Judiciary 49 ADB Asian Development Bank
3.1 The Whistleblowers 78 AIR All India Reporter
3.2 The Need for a Serious Frauds Office 79 APS Australian Public Service
5.1 The ICAC of Hong Kong 125 CAT Central Administrative Tribunal
5.2 Recoveries under the US False Claims Act 130 CBI Central Bureau of Investigation
5.3 Purpose of the False Claims Act 130 CJI Chief Justice of India
CLB Company Law Board
LIST OF TABLES
CrPC Code of Criminal Procedure
Table No. Title
CVC Central Vigilance Commission
2.1 International Comparison of Appointments to the Supreme Court 51
CVO Chief Vigilance Officer
4.1 International Comparison of Persons Convicted for Bribery 110
DDA Delhi Development Authority
LIST OF FIGURES
DySP Deputy Superintendent of Police
Figure No. Title
IPC Indian Penal Code
3.1 Stages in a Disciplinary Proceeding 101
MCOCA Maharashtra Control of Organised Crime Act
4.1 Analysis of Cases Prosecuted by CBI under the 108
MLA Member of Legislative Assembly
Prevention of Corruption Act
MLALADS Member of Legislative Assembly Local Area Development Scheme
4.2 Analysis of Cases Investigated and Prosecuted by 108
MP Member of Parliament
State Anti Corruption Wings
MPLADS Member of Parliament Local Area Development Scheme
4.3 Comparison of Conviction Rates of CBI and State Anti Corruption 109
Organisations NCRWC National Commission to Review the Working of the Constitution
4.4 Pendency of Cases in Courts 109 NGO Non Governmental Organisation
LIST OF ANNEXURES NJC National Judicial Council
Annexure I (1) Speech of Mr. Justice Y K Sabharwal, Chief Justice of India, 195 OECD Organization for Economic Cooperation and Development
at the National Colloquium
PIL Public Interest Litigation
(2) Speech of Shri M Veerappa Moily, at the National Colloquium 214
PSU Public Sector Undertaking
(3) Speech of Minister of State for Personnel, Public Grievances 227
RBI Reserve Bank of India
& Pensions and Parliamentary Affairs, Shri Suresh Pachouri,
at the National Colloquium SEBI Securities and Exchange Board of India
(4) List of Participants at the National Colloquium 231 SFIO Serious Frauds Investigation Office
(5) Recommendations of the National Colloquium 233 SFO Serious Frauds Office
(6) Questionnaire 240 SPE Special Police Establishment
Annexure VII Systemic Reforms in a Few Sectors 244 UK United Kingdom
Annexure VIII Honesty in Finland 261 UN United Nations
UPSC Union Public Service Commission
US United States
1
INTRODUCTION
1.1 Ethics is a set of standards that society places on itself and which helps guide behaviour,
choices and actions. The Commission is painfully aware that standards do not, by themselves,
ensure ethical behaviour; that requires a robust culture of integrity. The crux of ethical
behaviour does not lie in bold words and expressions enshrined as standards, but in their
adoption in action, in sanctions against their violations, in putting in place competent
disciplinary bodies to investigate allegations of violations and impose sanctions quickly and
in promoting a culture of integrity.
1.2 Corruption is an important manifestation of the failure of ethics. The word ‘corrupt’ is
derived from the Latin word ‘corruptus’, meaning ‘to break or destroy’. The word ‘ethics’ is
from the original Greek term ethikos, meaning ‘arising from habit’. It is unfortunate that
corruption has, for many, become a matter of habit, ranging from grand corruption involving
persons in high places to retail corruption touching the everyday life of common people.
1.3 Anti-corruption interventions so far made are seen to be ineffectual and there is widespread
public cynicism about them. The interventions are seen as mere posturing without any real
intention to bring the corrupt to book. They are also seen as handy weapons for partisan,
political use to harass opponents. Corruption is so deeply entrenched in the system that
most people regard corruption as inevitable and any effort to fight it as futile. This cynicism
is spreading so fast that it bodes ill for our democratic system itself.
1.4 There are two, somewhat contrary, approaches in dealing with corruption and abuse of
office. The first is overemphasis on values and character. Many people lament the decline in
values and the consequent rise in corruption. The implicit assumption is that until values
are restored, nothing much can be done to improve the conduct of human beings. The
second approach is based on the belief that most human beings are fundamentally decent
and socially conscious, but there is always a small proportion of people, which cannot reconcile
individual goals with the good of society. Such deviant people tend to pursue personal gain
at the cost of public good and the purpose of organized government is to punish such
deviant behaviour. If good behaviour is consistently rewarded and bad behaviour consistently
punished, the bulk of the people follow the straight and narrow path. However, if good
1
Ethics in Governance Introduction
behaviour is not only not rewarded, but is actually fraught with difficulties and bad behaviour 1.8 The experience of the past six decades in our country and elsewhere offers us valuable
is not only not punished, but is often extravagantly rewarded, then the bulk of the people lessons in curbing corruption. It is generally recognized that monopoly and discretion increase
tend to stray from the honourable path. the propensity to corruption while competition and transparency reduce corruption. This
has been dramatically witnessed in India in the wake of economic liberalization. As
1.5 In the real world, both values and institutions matter. Values are needed to serve as
competition came in and choice expanded, corruption plummeted. Telephones, steel, cement,
guiding stars, and they exist in abundance in our society. A sense of right and wrong is
sugar and even two-wheelers are among the many sectors, which have seen enhanced supply
intrinsic to our culture and civilization. But values need to be sustained by institutions to be
and choice, reducing or even eliminating corruption. Similarly, wherever technology and
durable and to serve as an example to others. Values without institutional support will soon
transparency have been introduced, corruption has been significantly contained.
be weakened and dissipated. Institutions provide the container, which gives shape and content
Computerization and access to information have made many services from railway reservation
to values. This is the basis of all statecraft and laws and institutions. While incentives and
to issuing of driving licenses increasingly free from corruption.
institutions matter for all people, they are critical in dealing with the army of public servants
– elected or appointed – endowed with authority to make decisions and impact on human 1.9 A factor which increases corruption is over-centralization. The more remotely power is
lives and exercising the power to determine allocation of resources. Public office and control exercised from the people, the greater is the distance between authority and accountability.
over public purse offer enormous temptation and opportunity to promote private gain at The large number of functionaries between the citizen and final decision-makers makes
public cost. Therefore, creation of institutions and designing of incentives are of utmost accountability diffused and the temptation to abuse authority strong. For a large democracy,
importance in promoting ethical conduct of public servants. India probably has the smallest number of final decision makers. Local Government is not
allowed to take root and power has been concentrated both horizontally and vertically in a
1.6 In our society, corruption and abuse of office has been aggravated by three factors. First,
few hands. The net results are weakened citizenry and mounting corruption.
there is a colonial legacy of unchallenged authority and propensity to exercise power arbitrarily.
In a society which worships power, it is easy for public officials to deviate from ethical 1.10 It is well recognized that every democracy requires the empowerment of citizens in
conduct. Second, there is enormous asymmetry of power in our society. Nearly 90% of our order to hold those in authority to account. Right to Information, effective citizens’ charters,
people are in the unorganized sector. Quite a number of them lead a precarious existence, opportunity and incentives to promote proactive approach of citizens, stake-holders’
depending on subsistence wages with no job security. And nearly 70% of the organized involvement in delivery of public services, public consultation in decision making and social
workers with job security and regular monthly wage are employed by the state directly or auditing are some of the instruments of accountability that dramatically curbed corruption
through public sector undertakings. Almost all these employees are ‘educated’ in a largely and promoted integrity and quality of decision making.
illiterate and semiliterate society and economically even the lowliest of public servants are
1.11 In the ultimate analysis, the state and a system of laws exist in order to enforce
better off than most people in the country. What is more, their employment in government
compliance and promote desirable behaviour. Therefore, enforcement of rule of law and
comes with all the trappings of power. Such asymmetry of power reduces societal pressure
deterrent punishment against corruption are critical to build an ethically sound society. A
to conform to ethical behaviour and makes it easy to indulge in corruption.
detailed analysis of our anti-corruption mechanisms and the causes of their failure is necessary
1.7 Third, as a conscious choice, the Indian state in the early decades after Independence in order to strengthen the forces of law and deter the corrupt public servants.
chose a set of policies whose unintended consequence was to put the citizen at the mercy of
1.12 Perhaps the most important determinant of the integrity of a society or the prevalence
the State. Over regulation, severe restrictions on economic activity, excessive state control,
of corruption is the quality of politics. If politics attracts and rewards men and women of
near-monopoly of the government in many sectors and an economy of scarcity all created
integrity, competence and passion for public good, then the society is safe and integrity is
conditions conducive to unbridled corruption. In addition, many state subsidies and
maintained. But if honesty is incompatible with survival in politics, and if public life attracts
beneficiary-oriented programmes in a situation of asymmetry of power converted the public
undesirable and corrupt elements seeking private gain, then abuse of authority and corruption
servant into patron and master and reduced most citizens into mendicants. This at once
become the norm. In such a political culture and climate, desirable initiatives will not yield
enhanced opportunities to indulge in corruption and reduced the citizens’ capacity to resist
extortionary demands.
2 3