Matter of interest

The Lalit Modi-Sushma Swaraj imbroglio has turned the spotlight on the need for a law to tackle conflict of interest, says Sonia Sarkar

  • Published 1.07.15
Question of favour: Sushma Swaraj and Lalit Modi during an IPL match in New Delhi in 2010

As the latest controversy related to the minister of external affairs, Sushma Swaraj, and former Indian Premier League boss, Lalit Modi, unfolds, there is a growing demand for a law on conflict of interest. 

The question of conflict of interest in the latest case is pertinent. Swaraj’s husband Swaraj Kaushal and daughter Bansuri were till last year at least lawyers for Lalit Modi and yet Swaraj helped him obtain British travel papers to attend to his “ailing” wife in Portugal. Questions have been raised by Opposition leaders and legal experts on how Swaraj could use her office to grant a favour to “fugitive” Modi as her family members had professional links with him.

“It’s time to nail those who use their public office for private gains,” Supreme Court advocate Prashant Bhushan says.
Experts say that conflict of interest is common in almost every sector — the judiciary, politics, health and medicine, media and even non-government organisations.

In 2011, the Supreme Court forced the Food Safety and Standards Authority of India to reconstitute seven of the eight scientific panels it had set up. A public interest petition had revealed that as many as 18 members on these panels were employees of big food businesses.

Again, in January this year, in the Board of Control for Cricket in India versus Cricket Association of Bihar and others case, popularly known as the “IPL spot-fixing” case, the apex court talked at length about the conflict of interest that arose in N. Srinivasan’s duty as president of the BCCI and his interest as father-in-law of match-fixing accused Gurunath Meiyappan, who is also the  owner of Chennai Super Kings.

Some cases of conflict of interest have been dealt with under the Prevention of Corruption Act but that is, clearly, not enough.

“For example, an official dealing with the files of any company or person is prohibited from receiving any favour in cash or kind from that company or person. However, there is no bar on such an official taking up a job with the particular company or person, after he or she retires. This needs to be addressed in a new law on conflict of interest,” Bhushan says.

In April this year, Congress MP E.M. Sudarsana Natchiappan  floated a private member’s bill in Parliament 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.

“The bill suggests that there should be an institution for the prevention and management of conflict of interest. Conflict of interest means the existence of conflict between the public duty of a public official and the private interest of that official, in which the latter could improperly influence the performance of official duties and responsibilities by the person. Also, if the private interest results in a breach of public trust, it would be called a conflict of interest,” Natchiappan says.
The bill also specifies that private interest means an interest that is of personal, financial, commercial or other benefit to a public official or the organisation to which he or she belongs.

Efforts to root out cases of conflict of interest in key areas have been made from time to time. The Ethics Committee of the Lok Sabha in 2012 had advocated the maintenance of a register where members would have to declare their interests, to enhance openness and maintain propriety. The members were also asked to declare if he or she had any pecuniary interest in an issue being considered by the Lok Sabha or any of its committees. But that too has not been followed.

Though experts agree that a conflict of interest law is needed, critics of the private member’s bill say that it is inadequate in its scope. For example, the bill talks about a gift or personal benefit that is received as an incidence of the protocol or social obligations that normally accompany the responsibilities of office. Critics say that the term “protocol” should be preceded by the words, “officially declared”.

Former Union power secretary E.A.S. Sarma, who is part of an independent group called Alliance Against Conflict of Interest, says, “Also, the term ‘social obligations’ should be erased as it would provide a loophole. And the following clause may be added, ‘If the market value of the gift exceeds Rs 1,000, the person receiving it shall surrender it to the public authority concerned.’”

A conflict of interest law should also lay down penalties, points out Bhushan. “There should be proper provisions for penalty and imprisonment in such cases. Also, if found guilty after retirement, retirement benefits should be withdrawn,” Bhushan says.

Experts say that politicians should be covered by the conflict of interest law. “The definition of conflict of interest should be clear. Each sector has different visible conflicts of interest. Any action taken by an individual holding public office that affects public policy should be the first and foremost parameter of conflict of interest,” says Delhi-based independent researcher Radha Holla Bhar.

It’s not just politicians. Judges too should be covered by the law. Most judges take up the job of arbitration (usually for settling commercial disputes) after retirement. Since arbitration is mostly done by law firms owned by multinational companies, there could be a conflict of interest if the judges deal with the cases of these MNCs.

“If a judge knows a lawyer, who has the potential to get him a job of arbitration later, he might go soft on these cases related to the clients of those lawyers,” Bhushan says. “Arbitration is a lucrative job where they can earn around Rs 2 lakh a day, a sum that they earn in a month as a judge,” he says.

“The most glaring instance of conflict of interest in government is that regulatory powers are vested in the hands of the political executive. It is necessary to entrust regulation to independent quasi-judicial authorities whose selection should be through a transparent, objective procedure,” Sarma says.

He adds that there should be an independent commission to deal with these cases, where the members would need to disclose if they have any conflict of interest. And they should be barred from accepting favours from the executive after retirement.

Countries such as the US, Canada and Romania have conflict of interest laws. Plus, the UN Convention Against Corruption states that conflict of interest can lead to corruption and urges nations to “endeavour to adopt, maintain and strengthen systems that promote transparency and prevent conflicts of interest”.

India ought to heed that advice and undertake serious steps to bring in a conflict of interest law. Otherwise cases of conflict of interest will  continue to lead to corruption and generate furious controversy.