To stamp out corruption, address root causes

A Delhi court recently convicted former Coal Secretary H C Gupta along with former Rajya Sabha Member of Parliament (MP) Vijay Darda and others in a case related to irregularities in allocation of a coal block in Chhattisgarh. The CBI had filed a closure report in the case on April 15, 2014 but it was rejected by the Court stating that there was an active connivance between the private company and government officials.

In an order pronounced on Thursday, Special CBI judge Sanjay Bansal also convicted IAS officers K S Kropha and K C Samaria, Darda’s son Devender Darda, a company named JLD Yavatmal Energy Pvt Ltd and its Director, Manoj Kumar Jayswal. The Court found all the accused guilty of offences under Sections 120B (criminal conspiracy) read with Section 420 (cheating and dishonestly inducing delivery of property) of the Indian Penal Code and Section 13(1)(d)(iii) of the Prevention of Corruption Act.

This is one of those very few cases where the topmost former bureaucrats have been convicted for their omissions and commissions. We also have yet another example of Chanda Kochhar and her husband who misused their positions and connections for profiteering. In a 2004 report on Corruption in India, one of the world’s largest audit and compliance firms, KPMG, noted several issues that encourage corruption in India. The report suggests high taxes and excessive regulation bureaucracy as a major cause; India has high marginal tax rates and numerous regulatory bodies with the power to stop any citizen or business from going about their daily affairs. This power of Indian authorities to search and question individuals creates opportunities for corrupt public officials to extract bribes – each individual or business decides if the effort required for due process and the cost of delay is worth paying the bribe demanded.

In cases of high taxes, paying off the corrupt official is cheaper than the tax. This, according to the report, is one major cause of corruption in India and 150 other countries across the world. In the real estate industry, the high capital gains tax in India encourages large-scale corruption. The KPMG report claims that the correlation between high real estate taxes and corruption is high in India, as it is in other countries, including the developed economies; this correlation has been true in modern times as well as throughout centuries of human history in various cultures.

In this particular coal scam, it is all about allocation of coal blocks which were advertised in 2006. It was alleged that JLD had concealed various facts in its application form in order to obtain wrongful gain in allocation of the coal block. Vito Tanzi in an International Monetary Fund study suggests that in India, like other countries in the world, corruption is caused by excessive regulations and authorisation requirements, complicated taxes and licensing systems, mandated spending programmes, lack of competitive free markets, monopolisation of certain goods and service providers by government controlled institutions, bureaucracy, lack of penalties for corrupt public officials and lack of transparent laws and processes.

But, we must not forget that all such scams occur with the blessings of the political bosses usually. One could only wish that those who want to fight for the idea of India should worry more about such issues and not their own cases.