While Anna heads in wrong direction, UPA pulls a fast one

The government has moved in the right direction to reduce discretionary power that is the cause of much corruption. But it has quietly left out the real big areas of discretionary power - public sector companies.

R Jagannathan July 29, 2011 11:33:02 IST
While Anna heads in wrong direction, UPA pulls a fast one

So, Anna will go on his fast, crying betrayal. The government's version of the Lokpal Bill does not satisfy him, because it does not include the PM in it, or the judiciary or the whole of the lower bureaucracy.

The Anna group protests too much; it has got a substantial part of what it wants, even if not everything. And where it has not got what it wants, it seems to be barking up the wrong tree.

The problem with the Anna approach to corruption is that it focuses, wrongly, on creating an elaborate policing system to go after the corrupt instead of systemically reducing the ability of people to be corrupt. Policing is important, but will not eliminate corruption. Systemic action calls for focusing on electoral funding reforms, and the steady reduction of discretionary government power. But Anna simply had nothing to offer on this front.

The government, on the other hand, knows this and is making a feeble attempt outside the Lokpal to reduce discretionary power. If Anna looks at this area, he will find lots of ammunition for his fast.

According to a report in The Indian Express, a Group of Ministers will consider abolishing the discretionary powers of 38 ministries - which are potential areas for breeding corruption.

The discretionary powers that are sought to be abolished, for example, include the external affairs minister's power to grant diplomatic passports to ex-MPs and ministers, the railway minister's power to grant concessions to attach additional coaches to trains and dish out complimentary passes, the social justice minister's power to award financial aid to SC/ST students, and the petroleum minister's power to grant petrol pump dealerships to Kargil martyrs, etc.

While Anna heads in wrong direction UPA pulls a fast one

Union Ministers Sharad Pawar, Kamal Nath, Kapil Sibal and Praful Patel leave after a cabinet meeting on Lokpal Bill in New Delhi on Thursday. PTI

This is a very important initiative, but if the Express report is any indicator, it is a washout. It's like going after the pennies while the pounds are disappearing by the bushel into the maw of egregious corruption. It is more than likely that the UPA will scratch the surface of discretionary power without doing anything to dent wholesale corruption.

Three reasons why: One, nothing in the list would have prevented a Raja from perpetrating his 2G scam. Two, the list does not include the most important sources of corruption and discretionary power - overlordship of public sector undertakings. And three, it does nothing to prevent government from being non-transparent in appointing key people in key jobs - the big market and money regulators, for example, where the big scandals regularly occur (Harshad Mehta, Ketan Parekh, Satyam, Global Trust Bank).

Let's see why the UPA's stab at eliminating discretionary power is half-hearted. The powers that will be withdrawn from the telecom ministry are the appointment of telephone advisory committee members, giving out-of-turn telephone connections and out-of-turn release of stamps. Are these the country's big concerns when telecom operators are begging consumers to buy connections? Is the issue of postage stamps such a big corruption issue? Even a Raja would be happy to sacrifice these powers.

The 2G scam happened because Raja did not follow the cabinet decision to give licences on a transparent first-come-first-served basis. Instead, he fiddled with the cutoff dates and norms for new licences. This is how Swan and Unitech got their licences.

Nor would the changes deter a Dayanidhi Maran from gifting his brother's company (Sun TV) a free telephone exchange in Chennai. Bharat Sanchar Nigam put up a 300-and-odd exchange in Chennai for the benefit of Sun TV not because of Maran's discretionary powers, but his control of a public sector enterprise.

The same goes for all other public sector companies. The oil sector has been ruined by successive oil ministers who allowed the government to transfer profits from ONGC to the marketing companies and from the latter to the consumer without adequate compensation. Reason: the government is both policy-maker and owner of companies. This is a conflict of interest, and benefits only private sector companies that are outside the control of government.

Thus Murli Deora's stewardship of the oil ministry benefited Reliance by default because the government was raiding the coffers of the public sector oil companies to keep petro-product prices low. Praful Patel damaged Air India by being its boss, and private airlines gained in the process.

While Anna heads in wrong direction UPA pulls a fast one

The only point on which Anna and Co are absolutely right is the exclusion of the PM from the ambit of Lokpal. PTI

The only way to save taxpayer assets (public sector companies are taxpayer and citizen assets) from corruption and official debauchery is by separating them from ministerial control. Perhaps, they need to be brought under a separate holding company and board that will be independent of government. Ministers can then make policy for the whole sector, and not just their favourite private businessmen. The public sector would then rediscover its voice and lobbying power. It would be in control of its own destiny.

This is how it would work. If Hindustan Petroleum was asked to sell diesel below costs, it can refuse to do so without a formal commitment from the government for a subsidy. If ONGC is asked to transfer its profits to Bharat Petroleum, it can refuse to do so, citing Sebi rules on protecting minority shareholders. But when Deora (or now Jaipal Reddy) makes a policy and also wears another hat as boss of ONGC, he can literally steal the latter's money.

The third area of potential corruption is the government's power to appoint major regulators. The RBI, Sebi and Company Law Board are regulators who look at many corporate crimes. By not giving the heads of these statutory bodies long-enough tenures (five years, instead of three), the government retains its leverage over them. This is nothing but an invitation to political pressure and corruption.

Ever wondered why the Satyam scam is still to be sorted out in India when the US has levied its fine and rapped the auditors on the knuckles and moved on? Also ask: why is a Reliance insider trading case relating to 2007 still unsettled when two Sebi chairmen have come and gone?

Corporate scams are never brought to a speedy conclusion in India because politicians sit over the heads of independent regulators.

These are the issues worth going on a fast for, Anna.

The problem is the government has neatly finessed your group by slipping in things that will make prosecution of the high and mighty difficult; one the other hand, it has put out a red herring in the form of the curtailment of discretionary power of ministries. In reality, as we have pointed out, it has left out the most important areas of discretionary power. So one can expect more corruption, not less.

The only point on which Anna and Co are absolutely right is the exclusion of the PM from the ambit of Lokpal. This is completely wrong, for it not only insulates one individual from corruption charges while he is in power, but it also restricts the Lokpal's ability to go after him when he is not.

Let's be clear: the three malafide clauses relate to the exclusion of the PM, the seven-year limitation on prosecutions, and the decision to exclude past wrongdoing from the Lokpal's ambit. This is a patently transparent move to protect Rahul, Sonia and (the late) Rajiv Gandhi from scrutiny.

Why? The exclusion of the PM from Lokpal means Rahul Gandhi, if he makes it to PM in 2014, will be free from scrutiny by the Lokpal. So will Rajiv and Sonia Gandhi's Bofors links, including the quiet letting off of Ottavio Quatrocchi - since that would be time-barred by the seven-year ditch.

The need to bring in the PM is proven by the fact that the Karnataka Lokayukta has brought down a sitting chief minister. The Congress is thus eating its cake and having it too. It wants a Karnataka CM brought down, but will not tolerate a Gandhi scion from being subject to the same laws of equal justice.

Anna, there's one more thing. When NGOs with significant government funding can come under the Lokpal, maybe you should insist that Sonia Gandhi's National Advisory Committee, which is government funded, should also come under the Lokpal.

Updated Date:

Subscribe to Moneycontrol Pro at ₹499 for the first year. Use code PRO499. Limited period offer. *T&C apply

also read

Tamil Nadu polls: BJP seeks campaign ban on Rahul Gandhi for violating Model Code of Conduct
Politics

Tamil Nadu polls: BJP seeks campaign ban on Rahul Gandhi for violating Model Code of Conduct

BJP state in-charge V Balachandran has written to the EC, alleging that the Congress leader violated the MCC by using the premises of a school in Kanyakumari for a political campaign

Four Congress leaders from Wayanad district quit party ahead of Kerala Assembly election
Politics

Four Congress leaders from Wayanad district quit party ahead of Kerala Assembly election

Among the leaders who quit is MS Vishwanathan, a prominent face of the Kuruma community

Tamil Nadu Assembly polls: State should oust K Palaniswami govt and 'keep out BJP', says Rahul Gandhi
India

Tamil Nadu Assembly polls: State should oust K Palaniswami govt and 'keep out BJP', says Rahul Gandhi

The Congress leader, who was on a three-day tour of Tamil Nadu, participated in multiple events in Kanyakumari district ahead of the 6 April Assembly polls