ARECENT media report stated that the Central Vigilance Commission (CVC) had started encouraging all government agencies to adopt an Integrity Pact (IP) to ensure transparency and eliminate corruption. Now, there appears to be a misconception that IP is a vigilance tool and a panacea to eradicate sleaze in government purchases. A close look will reveal it is nothing more than a statement of assurance to refrain from malpractices. Therefore, its significance is dependent on the integrity of the people implementing it. The current euphoria over its effectiveness is misplaced.
To increase transparency in the public sector and curb corruption, Transparency International introduced the concept of IP in the mid-1990s. After initial diffidence, a few countries have since adopted it as part of policy on government purchases. Although it is doubtful that mere incorporation of IP can reduce dishonesty in official deals, it undoubtedly helps focus on the anti-corruption campaign. It attempts to “bind all the bidders and the government together in a contract to reduce the possibility of corruption occurring both during and after the tendering”. In other words, IP applies moral pressure on both government functionaries and vendors to refrain from corrupt practices. In countries where existing laws are not strong enough to be a deterrent, IP tends to supplement them.
India adopted IP for all defence procurements exceeding Rs 100 crore in 2006. A binding pre-contract IP has to be signed between the government procurement agency and the bidder. Whereas the government promises that its functionaries will not demand bribes, the bidder promises not to offer any bribe, commission or inducement to any official. Additionally, each bidder undertakes to disclose all payments made in connection with the contract, including those to agents, middlemen and others.
Violation by a bidder of its commitments or undertakings may result in denial/loss of contract; forfeiture of the security deposit and performance bond; liability for damages to the principal and the competing bidders; and even debarment of the violator for an appropriate period of time. In case it is found to the satisfaction of the government that a violation has taken place, the seller, on a specific request of the government, has to provide necessary information and facilitate inspection of the relevant financial documents.
Many feel that the efficacy of the Indian policy is suspect. India already has a number of stringent anti-corruption laws and service rules for deterrence. Pledges and undertakings mean little to the corrupt. If the fear of penal/disciplinary punishments fails to dissuade the dishonest, moral pressure can hardly be expected to succeed. Additionally, applicability of IP has been restricted to cases where the contract value is above Rs 100 crore. As most defence procurements are of lesser value, IP would apply only to a few big-ticket procurements. The policy, strangely, tends to give an impression that probity is required only when the contract value is high, and that corruption in lesser-value deals does not warrant any countermeasures.
The Indian policy is loaded
against the vendors. A vendor
has to give numerous under
takings and also agree to
accept sanctions as imposed by
the government. Although it is
a bilateral agreement, the gov
ernment has arrogated the
right to itself to determine a
breach has been committed by
the vendor and initiate action
According to knowledgeable observers, the Indian policy is loaded against the vendors. A vendor has to give numerous ndertakings and also agree to accept sanctions as imposed by the government. Although it is a bilateral agreement between the government and a vendor, it is the government which has arrogated the right to itself to determine that a breach has been committed by the vendor and initiate action accordingly. On the other hand, an aggrieved vendor is required to submit his grievance to the government “with full and verifiable facts”. Thereafter, it is for the government to initiate further action. Thus, the government is a litigant as well as a judge. Its decision is “final and binding” and the vendor has no right to appeal. The policy is totally silent as regards dispensation of justice to the aggrieved/wronged vendor.
The policy provides for appointment of independent monitors by the government to oversee the whole process. Although their appointment is to be made in consultation with the CVC,It is unlikely to generate confidence in their credibility. As has been the experience in the past, a few well-connected retired bureaucrats would get rehabilitated in the process. They cannot be expected to be independent as their continued employment depends on their pro-government deportment. Additionally, their role is limited to informing the Acquisition Wing if they “notice, or believe to notice, a violation of the agreement”. It defies logic as to how bureaucrats who are totally ignorant of the complexities and intricacies of defence procurement mechanism can be expected to spot irregularities. That is the reason most people view monitors as being of little consequence and their role as superficial and perfunctory.
