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BW Businessworld

Discretion Must Die

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Bribe is a simple problem. But the solution to this problem is complex. Prime Minister Manmohan Singh suggested recently that bribe giving should be made a criminal activity.

His argument is that much of the bribe giving activity occurs between big corporations and government representatives. His belief is borne out by the recent scams that show how corporations were in cahoots with people in authority. This nasty proximity between led to rules being bent, flouted and ignored to benefit few at the expense of many.

Some countries like the United Kingdom have passed laws that make bribe givers liable for prosecution too. The Bribery Act that came into force last year makes UK companies liable for prosecution not just in the country but also across the world. The law makes it illegal to receive or offer bribes. It also makes it a crime if a public official fails to prevent bribery.

This stringent act has been lauded and has set a fresh benchmark of anti-corruption law.

But this idea has been largely ignored by India’s political and business leaders. The Prime Minister is seeking to put this idea in public discourse.

The views in the industry are varied. Some industry leaders have welcomed the statement by the Prime Minister. But they are cautious about how a law like this would be enacted. As always the details will make or break such an effort.

Last year, another such debate was triggered by former Chief Economic Advisor Kaushik Basu and Chief Mentor of Infosys Technologies NR Narayan Murthy. They said roughly the opposite of what the Prime Minister has said. Kaushik and Murthy endorsed the idea said that bribes giving should be legalized so that it is easier to track.

Giving legal protection to a bribe giver would ensure that they would be the first to blow the whistle on the bribe taker. Also such a step would ensure that illegal transaction of every size, at every level can be attacked with this.

The issue though is that in many cases the bribe giver wants to keep the transaction in the dark. In most of the scams under investigation these days the bribe giving company actively colluded with government representatives.

The solution to fighting lies somewhere else though. India has many existing laws to tackle corruption and bribery. Much of the cases get stuck in archaic judicial system for so long that very few people are fear action. Swift justice is a bigger deterrent than complex or strict laws.

In fact, more laws are pending that includes the Whistle Blowers Bill that protect government officials and corporate executives who report fraud and corruption.

The real answer though lies not just in fresh laws. The real answer is creating more transparent government processes. Increasing transparency will also mean reducing discretionary powers of officials and ministers.
Most cases of corruption are a result of cronyism where discretion is used to favour the few.

The coal scam is a great example of this. The coal block allotment process was so opaque and discretionary that favoritism was inevitable. If the coal block process was open for all with clear transparent guidelines, the government would have been in a better position today.

The Prime Minister and industry should collaborate to enhance transparent processes. Use of technology can ensure that officials can’t tamper with rules even if they want to.

The current system has so many loopholes that officials and companies are tempted to encash the opportunity.  Higher transparency and lower discretion will attack the roots of bribery far more than increasing liability of participants.


(Pranjal Sharma is a senior business writer. He can be contacted at pranjalx@gmail.com
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