04-Feb-2012

Fighting Corruption On The Demand Side

The founder of Lok Satta party has a spectrum of solutions for corruption, all of which pertain to the corporate world.  Competitive bidding for national resources and the following three: 
What other steps should we take to curb collusive corruption and to protect public revenues? Three specific steps are needed now. First, a law should be enacted by Parliament making all contracts involving corruption, or a loss to the Exchequer, void and unenforceable. This will remove all incentives for corporates to bribe any public official to get a favour. A company that loses the bribe amount as well as the business or benefit or favour received through corruption is unlikely to resort to bribery. Only then can we demand corporate integrity and create a level playing field.
Second, a windfall profit tax should be imposed on all those who secured a license or mining lease or other natural resource, and made huge profit without value addition. This will ensure that excess profits made out of a vital public resource are retained with the Exchequer, and aren't appropriated by private interests. Mere private monopoly of public assets shouldn't be a source of unusual profits, even if there is no corruption in the transfer of asset. Such a windfall profit tax was imposed in the UK in 1997, in respect of North Sea Oil, and the monopolies in electricity, telecom, airports, gas, water, and railway sectors.
Third, a law similar to the False Claims Act in the US should be enacted in India. This law allows imposition of a civil penalty five times the loss sustained by the Exchequer in any public procurement or transfer of natural resource.
Makes sense.

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