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Scrap sick industries law and BIFR to weed out corruption, says Vittal

Central Vigilance Commissioner N Vittal on Friday insisted that the Sick Industries Companies Act and the Board for Industrial and Financial Reconstruction should be scrapped and abolished as soon as possible in order to eliminate a part of financial sector corruption and exploitation.

Speaking on "Corruption in Financial Sector" at the Indian Merchants' Chamber in Bombay, Vittal said that one of the factors which probably helps unscrupulous industrialists to cheat the banking system was the SICA Act and thereby legitimise corrupt practices.

Explaining various actions taken by the commission in the last 125 days of its formation, Vittal said that the current legal system and the government policy were the main factors encouraging corruption in the country. "We are addressing the system that causes corruption in public life," he said.

Earlier, delivering this year's Bhogilal Leherchand Memorial Lecture organised by the Forum of Free Enterprise, Vittal said that corruption flourishes because it is a low-risk and high-profit business. "If we are able to increase the risk, then it should be possible to reduce the corruption in the system. The Law Commission has drafted a law called the Corrupt Public Servants Act 1999 for the purpose."

Vittal said India must adopt the sunset principle of the United States behind every rule and act so that these rules have a limited specific life time period at the end of which the act must lapse.

On the issue of corruption in banks and financial institutions, Vittal said that a new chapter had been introduced in the Vigilance Manual effective from January 1, taking into account the need for giving suitable assurance to the honest bankers particularly in their decision-making process.

"Honest bank officers find that their career can be ruined by one or two procedural mistakes which may lead to a CBI raid and all the attendant negative consequences," he observed.

In case of political or outside pressure in sanctioning loans, bankers can now directly complain to the vigilance commissioner. Even junior bankers can initiate case against their seniors who indulge in corruption and send complaints to the commissioner, he stated.

While insurance companies, the SEBI and capital markets are yet to be brought under the Vigilance Manual, he suggested that these organisations may first peruse the chapter on the banking sector and "if this would meet their requirements, we can simply extend the applicability of the chapter on banking sector to them also".

Scarcity of goods and services, delay in clearances and permission and lack of information exchange related to frauds are the main reasons for increasing corruption. Simplifying procedures and making procedures with time-limits are methods by which improvements can come, he said.

Vittal set the time-limits of 30 days in ordinary cases and 60 days for the presidential appointees in sanctioning prosecutions against the corrupt or conducting departmental inquiries. The dirty environment of rules and regulations must be removed as early as possible, he added.

In a related development in New Delhi, President K R Narayanan promulgated the Central Vigilance Commission Ordinance to give continued effect to the provisions of the ordinance promulgated on October 27, 1998.

The CVC (Amendment) Ordinance of October 27 had amended the ordinance of August 25.

Under the ordinance, the CVC was re-constituted as a multi-member body, under which the chief vigilance commissioner should be assisted by not more than three vigilance commissioners. A bill in this connection has been introduced in the Lok Sabha.

UNI

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