In an earlier piece, the standing committee on ethics and its functioning was discussed at length. In this piece, the specific instances of conflict of interest of Indian MPs and how the existing framework is grossly inadequate to deal with such cases is discussed. The global standards of disclosure of conflict of interest are also discussed.
In May this year, Shyam Charan Gupta, the Member of Parliament from Allahabad in the Lok Sabha, made a rather dubious proposition that there was no causal relationship between tobacco consumption and cancer. As specious as the argument itself is, equally disconcerting is the fact that Gupta was speaking as a member of the Parliamentary committee on subordinate legislation, which was examining a proposal to allocate 85% of the surface area of tobacco products to graphic pictorial warnings. The panel eventually mandated that the proposal should be dropped, never mind that EU and other countries strictly follow that norm. What is perhaps most discomforting is the fact that Gupta is a Bidi baron, with family interests in the tobacco industry, which makes it amply clear as to why he was opposed to a move such as this- a clear case of business interests trumping public health concerns or what in governance parlance would be termed ‘Conflict of Interest’.
Elected representatives (or indeed any public servants) have an important public role to perform in legislating policy. Hence mature democracies have a clear separation of private and public interests of public servants, such that they don’t influence MPs role as public servants. It is precisely for the reasons, as the instance above suggests that MPs are required to disclose all their financial and non-financial interests that may have a bearing on discharging their functions as public servants.
Unfortunately, in India’s case, both the disclosure of ‘conflict of interests’ as well as the strict demarcation being laid out in a strong law are both inadequate and dysfunctional
What is wrong with India’s conflict of interest disclosure regime?
The Indian disclosures fail on the following three different counts
- Nonexistent or incomplete disclosures
- Timely disclosures
- No Conflict of Interest Law
Nonexistent or incomplete disclosures
For starters, it simply does not exist. Where it exists, it is inadequate disclosures and poor implementation.
As we wrote about in an earlier piece, a proper disclosure regime, judging by global standards, requires the Houses of Parliament to maintain a ‘Register of Interests’ under different categories, that mandates MPs to disclose their financial and non financial interests in a timely manner.
In India’s case, MPs of Lok Sabha are not mandated to disclose their interests except declaring their assets and liabilities. This explains how MPs such as Shyam Charan Gupta can become members of Standing Committees that have a direct influence on key legislations and policies without disclosing that they have direct business or financial interests to be gained from such policies.
While the rules of the Lok Sabha’s ethics panel suggest that ‘An MP may object to another MP joining a Parliamentary Committee on grounds that he has personal, pecuniary or direct interest’, in the absence of disclosure of such interests, it is difficult to object and bring to the notice of the Speaker, who can withhold the MPs vote. This is a key reason why strong procedures of registering MPs interest are followed in most mature democracies.
MPs of Rajya Sabha are mandated to disclose their interests under the Rule 293 of the Rules of Procedure and Conduct of Business of Rajya Sabha. These interests are categorized under 5 heads:
- Remunerative directorship
- Remunerated activity
- Majority shareholding
- Paid consultancy
- Professional engagement
Again, in most mature democracies, the categories of disclosure are much more detailed and minutely categorized ranging from financial interests to gifts, landholding and even lobbying activities. The table below suggests that such categories number from 12-14.
|Country||No of Category of Interests||Categories|
|United Kingdom House of Lords and House of Commons||12||Directorships, Remunerated employment , Clients, Sponsorships, Gifts, benefits and hospitality (UK) ,Overseas visits, Overseas benefits and gifts, Land and property, Shareholdings, ,Family members employed and remunerated through parliamentary allowances, Controlled transactions within the meaning of Schedule 7A PPERA, not otherwise recorded in the Register, Miscellaneous: Not included in the above categories but comes under ‘financial interests’ that has the potential to influence MPs public function|
|Australia||14||Shareholding, Family and business trusts including holding companies, real estate, registered directorships, partnerships indicating nature and activities, liabilities, bonds, debentures, investments, savings/investment accounts, nature of any other assets over $7,500, any other substantial sources of income, gifts valued over $750, sponsored travel, membership of any organisation with conflict of interest as an MP, any other interests with conflict of interests|
|Canada||12||private interests, gifts, sponsored travel, government contracts, shares in public corporations, shares in private corporations, Trusts, interests acquired by inheritance, assets above $10,000, sources of income|
|United States||4 broad heads||Financial disclosures, Gift/travel, Lobby disclosure, Post employment|
In the US senate, there is a very detailed e-disclosure process for registering senators’ interests.
In Rajya Sabha, the disclosures of interests are to be maintained and updated with changes on a yearly basis. However, in the absence of such disclosure data being absent in public domain by default, it can only be accessed by filing an RTI application. The data from an RTI filed by Association for Democratic Reforms shows of the 242 Rajya Sabha MPs, only 232 have declared their financial interests as part of the Register. This suggests that the Ethics Panel in the Rajya Sabha is not stringent about every member’s financial interest be mandatorily disclosed. Further, the data is available for the current (and some ex-members) for the years 2011, 2012 and 2014. Either the Rajya Sabha registry has not updated, maintained or disclosed the register for the year 2013, suggesting shoddy maintenance of a register that is the key for transparency.
Contrast this with other countries such as United Kingdom, USA, Australia, Canada and New Zealand, where interests are disclosed and maintained on a periodic basis. In the UK, MPs are supposed to register their financial interests within a month of their election to the House Standards Committee and notify any changes to their interests that may occur during the term within a four week time frame of the change occurring. In Australia, MPs are obliged to notify changes to the ethics panel within 28 days of change occurring.
A look at the register of interests from Rajya Sabha suggests that MPs disclosures have remained unchanged since 2011. This might either be that no changes have taken place or Rajya Sabha ethics panel has poor oversight over the process, the latter being the most likely scenario.
Consider the case of Union minister Ravi Shankar Prasad, who was alleged by lawyer activist Prashant Bhushan to have been on the retainership of Fintech Corporation, an RIL company between April 2013 and March 2014, while also looking into the gas pricing issue. Prasad denied having any conflict of interest as he surrendered the retainership two months before he became a minister. As a member of Rajya Sabha, he was obliged to declare his interest either under ‘regular remunerated activity’ or ‘paid consultancy. However, in all the yearly registers since 2011, there is no mention of such an activity. Moreover, his ‘professional engagement’ disclosure shows an amount for 3,24,04,511 (3 crore+) for years 2011, 2012 and 2014. Since there is no change in his professional engagement earnings in the year 2014, when he became the minister, then either his claim of surrendering the retainership is not true or he has been insincere in his disclosures.
This again proves the point about not just maintaining registers but maintaining them well with granular details. It would seem at the moment that the Rajya Sabha ethics panel accepts information given to it in any format without stressing on the need for proper disclosures. Information such as Ravi Shankar Prasad’s, which is incomplete and does not give granular detail, is not very useful.
Even where MPs disclose their registered financial interests, the ethics panel in Rajya Sabha is quite lax in acting on apparent conflict of interests. Else, how could Vijay Mallya, who owned Kingfisher Airlines, sit on the parliamentary panel on civil aviation? The ethics panel in Rajya Sabha has the power to examine cases suo moto and the fact that neither Mr. Mallya recused himself or was objected to by other MPs shows that the overall functioning of the ethics panel is questionable.
As we wrote earlier, most democracies have an independent commissioner whose job it is to maintain the register of interests as well as launch investigations into an irregularity that has been reported on this issue.
No Conflict of Interest Law
Inadequate disclosures apart, India does not have a stringent Conflict of Interest law that could examine, investigate and punish cases of violating conflict of interests which allows the guilty to go scot free. Mizoram minister Lathanzara is a good example, whose son held shares in a food company that provides mid day meal services to the Government. When it appeared in the public domain, he merely resigned to recontest the seat again in the forthcoming by election. Not only does the law exclude family members from participating in Government contracts (at the moment only MPs/MLAs are excluded from bidding for government contracts), investigations into such breaches fall under the Prevention of Corruption Act, under which a probe can be ordered by the government of the day.
What India needs is a stringent system of public disclosures followed by a fool proof conflict of interest law. Earlier this year, a Congress MP EM Sudersana Natchiappan floated a Private Members Bill called ‘The Prevention and Management of Conflict of Interest Bill, 2015’, which covers the duty of an authority or a body and an individual holding public office. It also deals with restrictions on gifts, services and benefits accepted by a person in public office.
In the absence of these disclosure and regulatory mechanisms, the so called new era of transparency will only be a partial exercise.
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