Political corruption, the misuse of public office for private gain, is a global phenomenon capable of paralyzing a country's development and diverting its precious resources from the public needs of the entire nation. Corruption creates a black market immune from formal government control; indeed, it generates the "black dollars" that purchase the decision-making power of public officials. The result can be a criminalization of the entire political and bureaucratic system that further restricts the government's ability to enact well-intentioned and much-needed reform. While every nation tolerates a certain amount of corruption, the level of this abuse varies wildly across the globe. In general, the least corrupt nations are almost always the most developed as well.


India, the second most populous nation in the world, is also one of the most corrupt. According to Transparency International's report for 2000, India is the 69th most corrupt country in the world, out of 90 countries surveyed.


Corruption is anti-poor, antinational, and anti-economic development. Out of a population of greater than one billion in India, 26 percent live below the poverty line. Any welfare policies addressing the needs of the poor are greatly limited by the corruption that permeates the bureaucratic apparatus involved with such redistribution. Out of the Rs. 150 million (US$3.75 million) spent in the public distribution system to provide food to the poor, 31 percent of the grains and 36 percent of the sugar were leaked into the black market. This means that nearly Rs. 50 million (US$1 million) worth of subsidies are not reaching their intended beneficiaries; in a sense, food is being snatched away from the mouths of the poor.


Corruption is anti-national. In the fighting over Kashmir, the Kashmiri militants have been financed from outside the national borders of India. To get this money, the militants used the Hawala route--a method of transferring money in and out of the country outside of the official banking system. In the early 1990s, police investigating how Kashmiri militants got their funds stumbled onto the Hawala route and the diaries of Hawala operators. In the expose of the Hawala operation, many members of the power elite in India--namely politicians, bureaucrats, and businessmen--were found to be involved with the redistribution of funds into the Kashmiri revolt.


Finally, corruption is anti-development. According to the UN Development Project Report for South Asia in 1999, if the corruption levels in India came down to that of the Scandinavian countries, India's GDP growth would increase by 1.5 percent, and foreign direct investment would grow by 12 percent. In fact, the black market in India, according to some estimates, constitutes 40 percent of India's economic activity. That means that almost half of the wealth produced in India is unaccountable to the state, and hence untaxable; thus, the population is deprived of the revenue necessary for improvements in infrastructure, health, and education.


Official Response

The process of combating this epidemic in India has been slow in coming. The Central Vigilance Commission (CVC) is the culmination of half a century of momentum to address the issue of corruption.


The Indian government commissioned the CVC to ensure the effective implementation of the Prevention of Corruption Act, which focuses on the leaking of public funds via India's extensive bureaucratic system. The number of public servants in the central government is four million, but the CVC has jurisdiction only over the highest-ranking officials.


The origin of the CVC can be traced to the Mundhra financial scandal in the late 1950s. In response to this scandal, the government-appointed Santhanam Committee recommended setting up a commission that would have jurisdiction over only Indian government officials. However, this administrative order, because of its limited scope, restricted the CVC from effectively combating the roots of corruption within India's basic public services, such as the Indian Administrative Service, which include the Indian Police Service, and the Indian Forest Service.


In order for real progress to take place, the CVC must do more than its statutory position and the law require. But forces within the government have been reluctant to change, and only after four years of debate has the government issued a resolution for the CVC to execute its full authority. As it stands today, the CVC's mandate is to "inquire or cause investigation wherein it is alleged that a non-elected public servant has committed an offense under the Prevention of Corruption Act of 1988." The CVC is the superintendent of all vigilance offices within the federal and state governments.


Over the last 2.5 years, the CVC has tried to adopt effective strategies to tackle the issue of corruption. The first step taken was to define the role of the CVC in a larger context. Consider the story of the three masons building a temple. A visiting saint passing by asked one of the masons what he was doing. The mason replied that he was carrying bricks from one place to another. The saint asked the second mason what he was doing. The reply was that he was working eight hours a day to earn his livelihood. He asked the third mason what he was doing. The mason replied that he was participating in the building of the temple.



The reinvented CVC could have taken the attitude of the first mason, saying that his function was only to dispose of the complaints that were received. After all, the CVC's traditional role was only advisory. The members of the CVC also could have taken the attitude of the second mason and looked upon their positions as nothing more than a steady source of income (a theme that is sadly prevalent among many public servants in the developing world). But we at the CVC have chosen the third option. We wish to use the CVC as an instrument for organizing all the disparate anti-corruption forces in India to fight corruption in this large country.


Roots of Corruption

Corruption in India follows a vicious cycle, but the root of the problem lies in the corruption of the political system. In a democratic government, every political party needs to raise funds, and the sources of such funds greatly affect the motivations and actions of the politicians who benefit from them. Without transparency in the fundraising process, corrupt money begets corrupt political actions. In the days of Gandhi and the struggle for independence in the 1940s, political parties collected funds openly and fully disclosed their sources. But the restrictions on contributions to political parties imposed in the 1960s probably led to the practice of fundraising without official disclosure. Today, the vast majority of political funds in India comes in the form of "black money," which is not regulated by the state, and most likely gained through earlier corrupt deals at the state's expense.


Political corruption then breeds corruption in all corners of public and private life, because the predominance of corrupt politicians affects the distribution of all government expenditure. Bureaucracy, being the instrument of policy execution, becomes susceptible to those who benefit from certain policy choices. The private sector, in the form of profit-maximizing businesses, then is excused from unsound or uncompetitive practices by procuring legal protection and public expenditures from bureaucrats willing to accept a kickback. The money gained on both sides of this exchange is used to finance the campaigns of the politicians who ensure that such corruption is allowed to continue. Thus, any broad strategy for tackling the problem must focus primarily on breaking the very foundations of this cycle.


Unfortunately, the CVC's direct jurisdiction is restricted to the governmental bureaucracy. Bureaucratic corruption is able to persist because of a scarcity of goods and services, red tape and administrative delay, and a lack of transparency. The continuation of such corruption comes from the cushion of legal safety, which contends that every person is innocent until proven guilty, and a basic notion of tribalism in which corrupt individuals keep each other in power to further their own interests.


Fighting Back

The CVC is following a three-pronged strategy to tackle bureaucratic corruption. First is the simplification of rules and procedures so that the scope of corruption is reduced. The CVC has the power to govern over the vigilance administrations of the central government's various ministries, over corporations established by or under any central act, over government companies, and over societies or local authorities owned or controlled by the central government. This position of superintendence empowers the CVC to give directives on policy matters and procedures. The CVC therefore focuses on procedures that are likely to lead to corruption and then tries to modify them. One example is the corruption in government procurement procedures: in November 1998, the CVC ordered that once tenders have been opened, there must be no post-tender negotiations except with the lowest bidder. This reform has created a lot of transparency, placing a check on corruption in government purchase operations.


Another significant source of corruption comes from the fact that computerization is not fully advanced in the Indian banking sector. The lack of computerization leads to a time delay before accounts are reconciled, which provides significant opportunities for fraud. In order to help verify whether fraud has occurred, part of the procurement-procedures directive required banks to computerize at least 70 percent of their business by January 1, 2001; out of 27 banks, 12 achieved the target in time, while the remaining are moving closer to that objective. Although the CVC's jurisdiction is restricted only to checking frauds and corruption and not improving the quality of service, the extensive use of information technology in the banking sector has ensured that the quality of service will improve. This is particularly so for the Indian banking sector, which is going to face competition following India's commitments in the World Trade Organization.



The Power of the Web

The second element of the CVC's strategy is to bring greater transparency to the entire political system. The center of this initiative has come from the CVC's public face on the Internet (http://cvc.nic.in). Perhaps for the first time in the world, a government agency has published, on the Internet, the names of officers charged with corruption. Officers who were facing departmental inquiries and who have been proven guilty after due inquiry under the Prevention of Corruption Act have been cited on the web site. Each case is available for all Indian citizens (and anyone else in the world) to see. This action by the CVC was motivated by a desire to display the process of justice against allegedly corrupt public servants. The official web site has done much to combat the general public perception that only middle-level or junior officials have been held accountable in the legal system; despite the lack of media coverage, action is taken against senior bureaucrats as well, which should give greater confidence to the Indian public. In a poll conducted by the Hindustan Times, 93 percent of the people responded positively to the information distributed by the web site.


Some of the people whose names appeared on the web site occupied sensitive public positions. In principle, if an official is facing a vigilance inquiry, he should not be placed in sensitive posts; of course, in practice, this is not followed. The continued presence of indicted officials in our public system is an important reason why corruption flourishes, and this fact was highlighted immediately by the web site. In the past, closed departmental operations helped people facing vigilance inquiries retain the position they had abused for personal gain. By publishing the names of the charged officers on the web site, we hoped to introduce an element of transparency into this faulty process. And soon after we posted the names, questions were raised in the public at large about people facing inquiries while still occupying sensitive positions.


As can be expected, the CVC met much resistance in its bold move to publicize the names of the accused. In fact, one newspaper went to the extent of saying that the CVC has started an "Icondemnyou.com" web site. Yet all that the CVC had done was publicize the departmental inquiries already taking place, a practice as old as the Indian Penal Code in criminal cases--but the CVC was doing so with the extraordinary speed of the Internet. In criminal cases, when a person is accused, he is legally innocent until proven guilty, but as far as court proceedings are concerned, the name of the accused is in the public domain. Even in a serious criminal offense like murder or theft, the accused does not protest that his reputation has been damaged; yet the moment CVC published on the web site the names of officers who were facing prosecution cases under the Prevention of Corruption Act, many protested that the CVC was condemning innocent public servants!


While under the law no defamation has been caused by publicizing the names of the charged officers, the CVC web site was generally perceived as a rogues' gallery, which it is not. Despite the fact that Indian society has become very insensitive and cynical with respect to the issue of corruption, the website publication seems to have stirred the public conscience. Some people theorize that the fear of having one's name published on the web site affects the behavior of potentially corrupt public officials. A poll taken by The Economic Times showed that 83 percent of the respondents believe that the publication of the names of the charged officers on the CVC web site can have a deterrent effect.


Virtuous Cycle

The web site has also highlighted the inefficiency of the legal and bureaucratic system. Some of the individuals whose names were published on the web site contended that they had never been notified of the charge. This showcases another dimension of how corruption flourishes in our system: the element of delay in departmental inquiries. If departmental inquires are delayed, the results are unfair whether or not the object of the inquiry is innocent or corrupt. In the case of an honest person, he becomes a victim of bureaucratic red tape without being able to defend his name or reputation. In the case of a corrupt person, delay provides a cover of respectability because he can continue to maintain that he is innocent until proven guilty.


The CVC was able to use the web-site initiative as a device for reminding all the departmental authorities that the disposal of cases could be expedited. The intention of the CVC is to see that all departmental inquiries are completed within six months so that honest persons can get their names cleared and the corrupt can be punished quickly.



Yet another benefit is the apparent launching of a virtuous cycle in other areas of government where transparency can be introduced to improve the quality of governance. If the names of charged officers facing departmental inquiries can be publicized, why not the names of the willful defaulters in the banking system? The Governor of the Reserve Bank of India has announced that the Reserve Bank is examining this issue. Similarly, in the case of the non-banking financial institutions, there were reports that the Department of Company Affairs is thinking of publishing the names of defaulters.


Yet while people are willing to complain, they are not willing to take serious action. A December 2000 study made in six cities by the Centre for Media Studies came to the following conclusions:


Nearly half of those who avail services of most often visited public departments of Government in the country had the first-hand experience of giving bribes at one time or another. In fact, as many as two-thirds of people think that corruption in these offices is real. However, one-third think corruption is more often exaggerated. And yet, 80 percent of people are passive and hardly 20 percent had ever complained about such corruption to any.


While 50 percent of the people reported that they had been bribed, only 20 percent of these people took the trouble of complaining. This also highlights the need for sensitizing the public about the dangers of corruption.


Since the National Committee is reviewing the federal constitution, the CVC has also filed a claim that a clause should be entered in the constitution stating the right of every citizen to have corruption-free service. Some members of parliament are starting to support just such an amendment. The Fundamental Rights chapter in the constitution also identifies social evils like prejudice against the untouchable class (Article 17) and outlaws them. In today's context, corruption in public office is as much a social evil as class conflict.


Delivering Justice

The third element of the CVC's strategy is implementing effective punishment. The corrupt public servant can be prosecuted only if the evidence against him is strong enough and can be proven in a court of law. While the standard of proof required is "beyond a reasonable doubt," such cases take a long time with remarkably low conviction rates: as low as 6 percent in criminal cases. The other option is to take departmental action. In a departmental inquiry the proof needed is "preponderance of possibility," a much lower standard.


Even if legal justice is slow to be delivered, steps can be taken to eliminate the corruption that plagues government agencies. It is in this area that the CVC has been expediting action. Government departments contact the CVC in two stages. In the first stage, the department sends the CVC all the data it has on the case and seeks advice on whether there should be prosecution or departmental action. At this point, the case is entered in the CVC's database. If departmental action is to be taken, the CVC further gives advice on whether there should be a major penalty or a minor penalty. Then the CVC or the department conducts an inquiry. Finally, the department contacts the CVC for the second stage: advice on the type of punishment to be given.


As the CVC began implementing this two-stage process, one glaring problem emerged through an analysis of the newly computerized case data: the follow-up action to an inquiry was very slow. The CVC now pursues systematic follow-up with the various authorities so that prompt action is taken. As with the CVC's attempts to promote transparency, the results have been encouraging.


Steps for the Future

Bureaucratic corruption in India is only one part of the vicious cycle that includes political corruption, business corruption, and the criminalization of politics. The CVC has taken the initiative to check corruption in these areas also. The CVC has detailed a plan for the prime minister to consider under the basic premise that "black money"--which is at the root of corruption in politics, business, and bureaucracy--should be effectively eliminated. To do so, the prime minister must strengthen existing anti-corruption laws by eliminating loopholes and introduce an amnesty period of three months during which all those who have black money can claim it legally by paying an income tax of 21 percent. The prime minister should also amend the Representation of People's Act so that the candidates against whom serious criminal charges have been brought are prohibited from contesting the elections until their names are cleared in a court of law. Finally, he should appoint a neutral committee of experts that can replace officials who are expelled due to a serious charge of corruption.



As far as business corruption is concerned, the CVC has suggested that the three leading chambers of commerce and industry--namely CII (Confederation of Indian Industry), ASSOCHAM (Associated Chamber of Commerce), and FICCI (Federation of Indian Chambers for Commerce and Industry)--initiate a move for an anti-bribery convention. The CII and ASSOCHAM have responded positively. The main problem with business corruption, however, will be the implementation of rules and regulations. The initiative taken by the CVC to simplify government rules may indirectly help to check the scope of business corruption.


In short, the CVC has adopted a holistic approach to tackling corruption. The vicious cycle of corruption involves political, business, and bureaucratic corruption, as well as the criminalization of politics. As far as bureaucratic corruption is concerned, because this is under the CVC's jurisdiction, the CVC has implemented a well-thought-out plan. For the other links in the vicious cycle, the CVC has made suggestions in the hopes of a better and corruption-free India.