INTERESTS IN CONFLICT - The Supreme Court and Mr Srinivasan
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- Published 27.03.14
Earlier this week, the Supreme Court told lawyers representing the Board of Control for Cricket in India that if the Board’s president, N. Srinivasan, didn’t step down from his post voluntarily, the court would pass orders compelling him to step down. The court went further; it declared that it was “nauseating” that Srinivasan was still in office. It didn’t stop there; referring to the earlier inquiry commissioned by the BCCI into the scandal (conducted by two retired judges of the Madras High Court), the court asked rhetorically, “Can we say that the probe report was managed and if we say so, then what will be the consequences?”
The uncompromising ‘go, or else’ tone, the unusually strong language and the startling suggestion of impropriety seemed to spring from the bench’s exasperation with Srinivasan’s refusal to step aside as president for the duration of the investigation. The judges believed that the investigation into the fixing and betting scandal involving Srinivasan’s IPL club franchise, the Chennai Super Kings and his son-in-law, Gurunath Meiyappan, couldn’t be fairly conducted while he remained in office.
The story of the CSK scandal has been the chronicle of a fall foretold. If the Supreme Court had intervened decisively a few years ago, there mightn’t have been a scandal at all. The large reason why matters came to this pass is this: Indians have the greatest difficulty in agreeing upon what constitutes a conflict of interest.
The squalid sequence of events that culminated in the CSK scandal was set in motion, ironically, when the BCCI decided to amend an excellent provision in its constitution expressly intended to insulate Board officials from conflicts of interest. The clause laid down that “No administrator shall have, directly or indirectly, any commercial interest in the matches and events conducted by the Board”. The amended version specifically excluded the IPL, the Champion’s League and Twenty20 cricket.
This amendment was passed retrospectively, eight months after the inaugural bidding for the IPL franchises, to regularize N. Srinivasan’s ownership of the CSK franchise. When A.C. Muthiah, a former president of the BCCI moved the Supreme Court arguing that an administrator of the cricket board shouldn’t be allowed to own an IPL franchise because of the obvious conflict of interest, a two-judge bench of the Supreme Court delivered a split verdict. This meant that till the matter was resolved by a larger bench of the court, Srinivasan was free to simultaneously own CSK and function as president of the BCCI.
Justice J.M. Panchal was one of the judges on the two-judge bench that delivered the split verdict. His reasons for rejecting Muthiah’s petition are instructive. He ruled that no conflict of interest existed because a) no member of the BCCI or franchisee had objected to the amendment, b) the rules were framed long before the IPL was conceived of and therefore didn’t apply and c) the BCCI had suffered no financial loss because of the “so-called conflict of interest”.
To judge the force of Justice Panchal’s arguments, we need a working definition of “conflict of interest”. The standard definition cited by Wikipedia goes like this: “A conflict of interest is a set of circumstances that creates a risk that professional judgement or actions regarding a primary interest will be unduly influenced by a secondary interest.”
By the terms of this definition it seems plain that Srinivasan’s position as the treasurer of the BCCI at the time when franchises were allotted created a clear conflict of interest because as a BCCI official, he would be involved in administering a tournament in which he owned a franchise. The fact that the IPL didn’t exist when the BCCI’s conflict of interest rules were framed should have had no bearing on their applicability to the tournament. The whole point of having written rules is to lay down principles that allow an organization negotiate novel circumstances in an ethical way. You could even argue that the framers of the rule that Srinivasan had amended were prescient because they anticipated an IPL-like circumstance and sought to forestall it.
The absence of objections from other franchisees or members of the BCCI should have made no difference to the application of the principle. A circumstance that creates a conflict of interest exists independently of the opinions or responses of people who might be affected by it. A bunch of franchisees keen to feed at the IPL trough weren’t likely to antagonize a powerful BCCI official determined to own a franchise. Good rules — like the conflict of interest clause — help organizations achieve ethical outcomes without the need for individual heroism.
Justice Panchal’s third reason for dismissing Muthiah’s petition was that Srinivasan’s dual role hadn’t caused the board any financial loss. This conviction that a conflict of interest objection is valid only if that conflict of interest has caused actual material harm is widespread. It is also, I think, misplaced. As the Wikipedia entry on the subject goes on to say, “[t]he presence of a conflict of interest is independent of the occurrence of impropriety. Therefore, a conflict of interest can be discovered and voluntarily defused before any corruption occurs” (emphasis added).
The reason the Supreme Court should have upheld Muthiah’s objection is not because Srinivasan’s double role as administrator and franchisee had caused the BCCI any harm at the time but precisely to ensure that it didn’t harm the BCCI in the future. The risk of wrongdoing, the fact that conflicting interests can potentially corrupt motivation should have been reason enough to force Srinivasan to choose between being a franchisee or a board official. The split verdict saw the case referred to a larger bench and in the interim Srinivasan rose to become president of the board. The rest is history.
The tendency to dismiss conflict of interest charges while indignantly waving the standard of personal integrity, is epidemic in Indian cricket. Thus K. Srikkanth saw no difficulty in simultaneously being the chief of the national team and the brand ambassador of the Chennai Super Kings; Kumble was comfortable with being the chairman of the National Cricket Academy, the president of the KSCA and the director of a player management company and Dhoni, India’s captain in all three formats of the game was briefly a shareholder in a player management firm called Rhiti that counted R.P. Singh and Suresh Raina amongst its clients.
These are intelligent, successful men who seem to view the conflict of interest caution as an allegation of corruption, when it is, in fact, a principle intended to safeguard their reputation and integrity. This isn’t surprising: people take their cues from the men at the top and BCCI’s president isn’t just the supremo of Indian cricket and the owner of Chennai Super Kings, he is about to become the chairman of the International Cricket Council. If Srinivasan’s colossal conflict of interest could be retrospectively legitimized and glossed over by the BCCI without swift corrective action by the courts, why should anyone involved in Indian cricket declare a pecuniary interest for the sake of transparency or recuse himself from situations that create a conflict of interest?
Now that the Supreme Court, spurred on by the Justice Mudgal report, has brusquely declared that Srinivasan’s presidency can’t be reconciled with a fair investigation of the CSK scandal, the scandal begins to seem like a cautionary tale. Instead of talking about the potential for wrong-doing created by Srinivasan’s conflict of interest and trying to forestall it, the courts and the police are now dealing with allegations of actual wrong-doing. The amendment that gelded the conflict-of-interest clause by exempting the IPL was the original sin: it led directly to Srinivasan’s fall and it’s responsible for the collateral damage to cricket’s credibility.
Will the example of the apex court encourage Indian cricket’s many publicists to press for a reinstatement of the original clause? Will it help them speak truth to power? I wouldn’t hold my breath: Lalit Modi’s downfall didn’t reform the BCCI: its publicists and clients switched their loyalties to Srinivasan without missing a beat. Conflicts of interest can be fixed; servility is a permanent condition.