Corruption cannot just be legislated away

Chanda Kochhar’s exit from ICICI Bank is yet another reminder of the high levels of corruption that now pervade our society. The annual cost of this, according to CK Prahalad, is $50 billion or about 2 per cent of GDP. But by focussing almost exclusively on legislative solutions to this problem, is the government barking up the wrong tree?

The recent amendments to the Prevention of Corruption Act are a case in point. They remove some of the lacunae in the earlier law and will perhaps expedite decision-making at a transactional level; but beyond that, they hardly go to the root of the problem.

The amended law enhances the maximum punishment for bribery from three years to seven years; and the minimum punishment for such an offence from six months to three years.

Bribe giving has been equated with bribe taking, unless the giver can prove that he was acting under duress and reports the bribe given by him to the authorities within seven days. Corporates involved in bribery cases are now punishable with fine; and superiors make themselves culpable if it can be established that their juniors took part in the act with their approval. They can, however, defend themselves by framing policies that regulate the conduct of their employees.

By amending the definition of “undue advantage”, the new law criminalises all receipts other than legal remuneration. Legally, then, an official accepting gifts makes himself liable for prosecution. Another amendment mandates immediate forfeiture of property unless the official can show that he is covered by the exceptions laid down under the Prevention of Money Laundering Act.

Delays in trials are sought to be tackled by mandating that they should be concluded within two years; and if that is not possible, a judge can for reasons to be recorded in writing, extend this limit for six months at a time, but in no case beyond four years. In a much-needed relief for innocent officials, “criminal misconduct” has been redefined to include only cases where the official concerned has misappropriated property or possesses assets disproportionate to his known sources of income. The term excludes conferring a benefit to a third party. This is because such an advantage can accrue in almost every decision a public servant takes while dealing with the public.

These amendments will impact administration positively: the amended law for the first time lays down time limits for completion of a trial. This is bound to lead to swifter punishments which in turn will improve deterrence. Honest officials will now be able to take decisions fearlessly without continuously worrying about facing criminal charges for benefiting private parties. By making bribe giving an offence and by making corporates too liable under the Act, the new law attempts to deal with the supply side of corruption. It thus accords with the UN convention on the subject. Trials must be conducted within a time frame, a judicial reform which could be extended to other areas as well, because swift and certain punishments are a sine qua non for deterrence against crime.

A cultural phenomenon

These amendments, however, hardly go to the root of the problem: In the face of entrenched vested interests, corruption cannot just be legislated away. Anthropologists and political scientists have for long been pointing out that it is also a cultural phenomenon. Kaushik Basu in his latest book, the Republic of Beliefs, argues that in many contemporary societies a belief exists that corruption is acceptable as a way of life.

Apart from legislative measures, it would make sense for any government to focus much more sharply on reducing discretionary controls and other opportunities for abuse of power, simplifying processes, promoting transparency, and improving the ease of doing business. Also, most importantly, organisations, both public as well as private, must demand much greater accountability from their boards, audit committees and auditors.

In the long run, however, economic development remains India’s best bet. Half the variation in levels of corruption across the globe, points out the World Development Report 2017, is explained by levels of development: as a country progresses economically, the demand for honesty, both as a factor of production as well as a consumer good, rises and over a period of time creates its own supply. Any person who breaks the chain of trust suffers stigmatisation and isolation. Secondly, development also creates a new aspiring middle class which has historically provided an impetus to demands for meritocracy and clean government in many countries.

Some evidence of both these trends can be seen currently in our country. As a result, India’s ranking in Transparency International’s Corruption Perception Index has, between 2012 and 2017, slowly improved from 94 to 81. The country should now aim to break into the top fifty of these rankings.

The writer was Chief Commissioner of Income-tax and Additional Secretary to the Central Vigilance Commission.

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