UNcanning the UNCAC 2005
T.R. Raghunandan
From the goings on in the country, it is sure that we will have, sooner than later, a Lokpal. Some issues continue to be un-resolved, we still don’t know how many Lokpals there will be, or whether the Prime Minister or the conduct of MPs in Parliament will be under its scanner. We are not sure whether one single law will suffice for the Centre and the States or whether the law will cover all levels of government servants. It remains to be seen what will happen to the CVC and that part of the CBI that investigates into corruption by government officials; will they be merged into the new Lokpal?
We are all very sure that the Lokpal bill will be a significant and important step forward in India’s battle against corruption. However, will a strong Lokpal be the final solution to India’s corruption problem? Most people who went on the streets in support of the law are convinced it will be, yet, their hopes might be belied for one significant reason. Regardless of how powerful the Lokpal would be, its scope is limited to acts of corruption committed by public servants.
The original sin:
The Prevention of Corruption Act, 1988 describes the punishable offences that amount to acts of corruption. These fall broadly into two categories, namely, the taking of gratification by public servants other than legal remuneration for performance of an official act, and criminal misconduct by public servants, which includes abuse of office to deliver a pecuniary advantage to oneself or any other person. Mark the words – ‘Public servants’, meaning ‘Government officers’. Only their crookery is covered under the law. That is a very narrow definition!
It is obvious then, that unless we enlarge the definition of what constitutes ‘corruption’ under Indian law, many corrupt practices will slip under the radar. That is pretty much the international view too. In 2001, the United Nations began talks on arriving at an international consensus on how to tackle corruption. This also became an urgent concern, because of the international ramification of corruption. In the absence of an international definition, what was considered corruption in one country, was not considered so in another; that led to safe havens being created for the corrupt. A consensus on defining corruption and creating national laws of enforcement in line with such a definition was essential to ensure that ciriminals could be tracked down and punished wherever they were/ The fruits of the labours of the UN, was the Convention against Corruption, 2005, signed by more than ----- countries. Yes, India participated in the negotiations and signed the convention.
But wait a minute, signing the convention is not the end of the story; it is but the beginning. Signing a convention only means that the country agrees that the contents of the convention are an accurate reflection of the negotiations. Then countries have got to ratify the convention; that’s when it becomes necessary for them to do something about implementing the provisions of the Convention, by making changes in the national laws. Once a country ratifies the Convention, then once a year, the UN does a check and publishes a compliance report on whether the provisions of the convention are being reflected in the laws of the country. That can be revealing to the entire world; where a country stands with respect to its legal framework for combating corruption.
India dithered for a long time; an embarrassingly long time, before it ratified the convention, in April this year. We in ipaidabribe.com were delighted; a couple of months before the ratification we had launched the ‘Bribe-bandh’ campaign; aimed at getting the public to back the ratification. That has put India clearly on the path of aligning itself with an internationally accepted and stricter standard of defining corruption.
Widening the net – strengthening the Prevention of Corruption Act:
What next? Obviously the first step is to enlarge the definition of corruption. The UNCAC recognises 12 circumstances that amount to acts of corruption. Some of those, which are not considered crimes in India are (i) Bribery in the private sector, (ii) Bribing a foreign national in another country (iii) concealment of wealth, (iv) exercising undue influence and (v) obstruction of justice. The Prevention of Corruption Act will need to be amended to enlarge the definition of corruption under it. A key step here is to make private sector corruption too an offence. Concentrating on cleansing the public sector alone, without controlling the corruption rampant in the private sector, will have a limited effect, because the private sector will continue to contaminate the private sector. Kickbacks among employees of private companies is intertwined with public sector corruption.
Pay back time – recovering earnings of the corrupt:
Another weakness is that in India we do not have an asset recovery law; therefore earnings of the corrupt are not compulsorily forfeited to the government. We need to enact, and improve upon some existing laws. Two of these stand out, the Benami Act and the Prevention of Money Laundering Act.
The Benami Act:
The Benami Act is not a verbose one – it is all of two pages long. Yet it is a joke, because it is not implemented – the rules required to make the law operational have not been issued for twenty three years! This is all the more galling, because the Act was brought in as an ordinance first - the Benami Transactions (Prohibition of the Right of Recover Property) Ordinance, 1988 - it was considered so expedient that they did not wait for parliament to pass it, it was issued as a Presidential order!
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Important provisions of the Benami Transactions (Prohibition) Act, 1988
Definition of Benami transaction:any transaction in which property is transferred to one person for a consideration paid or provided by another person (Sec 2(a))
All Benami transactions prohibited (Sec 3(1)), except the purchase of property by any person in the name of his wife or unmarried daughter
Punishment for entering into Benami transaction:Three years in jail or with fine or with both. (Sec 3(3)); the offence is a non-cognizable and bailable one (Sec 3(4)).
Real owner is prohibited from the right to recover property held benami (Sec 4(1))
Benami property is subject to acquisition by such authority (Sec 5(1)) without compensation (Sec 5(2)), by following a prescribed procedure.
Government can make rules to provide for creating the authority competent to acquire properties under section 5 and to prescribe the manner in which, and the procedure to be followed for, the acquisition of properties under section 5. |
The government has now moved on enacting a new Benami bill altogether. According to reports, the new bill prescribes contains elaborate provisions dealing with the definition of benami transactions and property, prohibited benami transactions and lays down the consequences of entering into a prohibited benami transaction. Under the proposed new law, there is a minimum punishment of six months, going up to two years, for violators. A powerful provision is that a benami property shall also be liable for confiscation by the adjudicating authority after the person concerned has been given due opportunity of being heard. Obviously, the first thing we need to do is to enact the law and issue the rules for implementing it. This single step, much more low profile than the Lokpal bill, could be a single most significant step to show that we are serious about tackling corruption. A corrupt senior officer, when she sees her benami palatial house occupied and used as an old age home by the government, is bound to feel a little upset! Ditto for the politician who owns that prime block of flats with a beach view, in the name of his driver!
The Prevention of Money Laundering Act 2002:
The Prevention of Money Laundering Act 2002 has not been treated in as cavalier a fashion as the Benami Act. All the rules have been issued and the authorities required to implement the act are in place. There are three provisions under the PMLA, which has an impact on the possibility of confiscation of the property of corrupt individuals.
First, there can be preventive action undertaken by the Financial Intelligence Unit (FIU) established under the act, which monitors bank and FI transactions and ensures that the provisions of the act are not violated.
Second, investigation and prosecution of cases of money laundering can snag corrupt officials in the net.
Third, is the provision that enables the attachment and confiscation of ill-gotten property. This provision enables the confiscation of disproportionate assets of government officials.
The key to making the PMLA more effective is to empower more authorities with the powers to undertake investigation of the act. A really interesting feature of the government’s strategy is that at present, the Ministry of finance has only notified the Enforcement Directorate (ED) with these powers. No police investigative agency, even the CBI, is empowered to proceed under the PMLA! This could be because the Finance Ministry is more intent on catching money launderers in general, and there is no particular focus on government employed rupee dhobis. However, this narrowing of the law, hampers investigations against the corrupt.
Consider this scenario; the CBI while investigating the assets of a corrupt official might stumble upon instances of money laundering; it cannot move under the PMLA for attachment and confiscation of such property. It has to apply to the ED to do so. The ED is stretched, and so, many such cases are delayed. Apparently, in the 9 years since the PMLA was enacted, the ED has obtained only 80 attachment orders and confiscated property of worth Rs. 550 crore only. There is a need to empower the CBI and State police departments under the PMLA to make the PMLA count as an effective anti-corruption instrument. Again, no new law is required, only a notification!
One tweak might be required, though. Section 50 of the PMLA provides for admissibility of a statement made by an accused to an ED officer as evidence. However, section 25 of the Indian Evidence Act disallows any statement given to a police officer to be admitted as evidence. Therefore, an amendment might be required to give Police and CBI officers the same powers to record evidence that ED officers have, under Section 50 of the PMLA.
To finally shut the door on money laundering by corrupt officials, it will help if PMLA is amended to enable courts that convict a corrupt official of money laundering to automatically confiscate property. To do this, the India does not need to look any further than Bihar. Under the Bihar Special Courts Act 2009, the property of a corrupt official can be confiscated by a summary process, even without linking it to the trial of the official under the Prevention of Corruption Act!
We often lose sight of the details when we are focused on the big solution. The civil society focus on the Lokpal bill has been high profile and sharply focused on one solution. Yet, tackling corruption is often a question of nibbling away at the issue, plugging away at closing the loopholes. The small steps add up to huge gains, without the political debate and the acrimony that has marked the debate so far.
India’s ratification of the UNCAC 2005 will draw much more attention than before to the multi-pronged solutions required to the problem of rampant corruption.