Conflict of interest

Retired civil servants who normally accept cosy sinecures post superannuation, are in for a rude shock. Under the current rules of engagement, government officials can accept private sector jobs a year after retirement, a year of what is known as the `cooling off’ period. Now battling with a series of scams, the government proposes to raise this `cooling-off’ period to three years. The department of personnel and training (DOPT), under its new minister V.Narayanswamy, is currently in the process of finalising the necessary amendments to the rules for approval by the Union cabinet.

According to V Narayansami, MoS (home), who is in charge of the department, ``There is always a possibility of vested interests, which we want to stop. We are thinking of going back to the three-year cooling-off period that was changed seven or eight years ago.” Central to the argument here is this: Should an IAS officer be allowed to take up a private sector job, particularly one that deals with lobbying? Within its own limitations, the Manmohan Singh-led UPA government has done its best to uphold the principles of integrity and a code of conduct for serving government officials.

However, its record in handling requests from civil servants for private sector jobs after retirement has been less than exemplary. If anything, his government has been a little lax about enforcing its rules on the mandatory cooling-off period which all retiring government officers must honour.

Consider the following:
IAS officer Ashok Mohan Chakraborty retired as chief secretary of West Bengal on April 30, 2010. Soon after, he sought permission from the department of personnel and training (DoPT), the cadre controlling authority for the IAS, to join the Essar Group. After seeking the advice of the state government and other agencies concerned, the DoPT gave him the green signal. Chakraborty joined as resident director on October 7, 2010.

Ashok Jha, who retired as finance secretary got the government’s approval to join an automobile company

Three senior retired officials associated themselves with corporate lobbying firms, directly or indirectly after demitting office. What can only be called a coincidence, all these firms have some connection with the ongoing lobbying controversy. These were not ordinary officials either. Pradeep Baijal was disinvestment secretary and later became the chairman of the Telecom Regulatory Authority of India (Trai), Ajay Dua was secretary in the department of industrial policy and promotion while C M Vasudev was economic affairs secretary and an Indian government nominee as executive director on the board of the World Bank.

P.V. Bhide retired as revenue secretary on January 31, 2010. The DoPT has given him permission to join five companies - NOCIL Ltd, Heidelberg Cement India Ltd, Tube Investment India Ltd, L&T Finance Ltd and GlaxoSmithKline Pharmaceuticals Ltd.

Naresh Dayal, who held the post of secretary Union ministry of health and family welfare, retired on September 30, 2009. Soon after he filed an application for permission to join GlaxoSmithKline Consumer Health-care as a non-official director. He got permission on May 21, 2010.

A 1973 batch Uttar Pradesh cadre officer Ajay Shankar who, after superannuating as secretary in the ministry of commerce and industry on December 31, 2009, joined Tata Tea as a director.

Anil Baijal, a 1969 batch Union Territory cadre officer retired as secretary, ministry of urban development on October 31, 2006. He was allowed to join the Infrastructure Development Finance Company as adviser and chairman of its PPP initiative on June 22, 2007.

Brijeshwar Singh, a retired 1975 batch Tamil Nadu cadre officer has recently written to the ministry of road transport and highways seeking permission to join L&T Buildings, created as a separate entity by L&T Group as a part of its exercise of hiving off its various businesses into different verticals. The ministry has agreed to permit Singh to join L&T Buildings as independent director.

While there is nothing to suggest any apparent wrongdoing, eyebrows were certainly raised when such easy clearances were accorded. Except the current rethink, the government has at no point offered a cogent defence of its decision to waive off the cooling period. Government officials preparing the cabinet draft say they are re-examining the logic of the cooling-off periods for retiring government officials before they can take up jobs in the private sector. ``It is a certain kind of job that a retired government official should be barred from taking up in the private sector,’’ said one official on the condition of anonymity.

At the moment though, current government policies do not make such distinctions. For instance, retired army officials can easily take up jobs with companies selling arms to the defence forces, once the cooling-off period is over. Should the government allow this? The government draft will probe whether IAS officers can be barred from joining lobbying firms or any company with which they may have had dealings with in their last three assignments in the government. A blanket cooling-off-period rule may not be deterrent enough to check the misuse of lobbying with unethical means.

Officials also say that changes in the `cooling off’ policy has been prompted in a big way by the Nira Radia episode and the professional engagement of a former Trai chairman in the corporate lobbyist’s firm immediately after retirement. The instances where officers wanted to join companies they had interacted with include a former NHAI chairman who had applied for permission to join a construction company. It was only after clarifications were sought that the DoPT found that the firm had been awarded several contracts while he was posted in a particular zone. The permission was refused.

There is another angle the DoPT is looking at: increasing the cooling-off period may not always serve its purpose because even with the one-year bar, retired bureaucrats often bypass rules and join companies as consultants rather than as full-time employees. Bingo. Now with the 2G Spectrum scam turning the spotlight on this `cozy’ relationship, the government is working on ways and means to break this association. More specifically, the role of four former bureaucrats has came under scrutiny for their connections to PR consultant and lobbyist Nira Radia, whose firms include Vaishnavi Corporate Communications, Noesis Strategic Consulting Services, Vitcom Consulting and NeUCom Consulting.

The bureaucrats in question are former Trai chairman and disinvestment secretary Pradip Baijal, ex-economic affairs secretary CM Vasudev, former industrial policy and promotion secretary Ajay Dua and an ex-Trai member DPS Seth. Soon after the scam surfaced, the cabinet secretariat examined their connections with Radia’s firm Noesis Consultants. After retiring from Trai, Baijal joined Radia’s firm Vaishnavi Communications and subsequently partnered Radia to set up Noesis Consultants and was its chairman when the 2G scam surfaced.

The DoPT is also expected to take a hard line on the `requests’ it receives from just-retired bureaucrats seeking exemption of the “cooling-off period.” DOPT officials say they receive at least 10 to 12 such requests every month and most of them are — not unsurprisingly — officials who have served in economic ministries. The department has, so far, taken a fairly lenient view but the recent furore has forced them to deal with a little more circumspection with these applications.

Take two fresh examples:
Recently, the DoPT turned down the exemption application of an officer from the Indian Revenue Service (IRS), who retired about seven months ago and had lucrative consultancy offers from two private firms, each paying Rs 30 lakh per month!

In another instance, the DoPT rejected the application of an officer, who had a job offer from a construction firm after he retired from the urban development ministry. Later inquiries revealed that the same firm had been awarded contracts by the ministry during the officer’s tenure, raising serious issues about “conflict of interest.”

Former Bengal chief secretary Chakraborty who is now with Essar, however, rules out any impropriety. “There is no question of any conflict of interest since the government, before giving permission to any officer, looks at all these factors. I had to wait for five months to join Essar,” he says. Similarly with Bhide who believes there is nothing improper about joining the private sector soon after retiring. “Why should there be conflict of interest? There is no conflict unless we share government secrets,” he says, adding, ``I have run a fertiliser company while I was in the public sector. The private sector will now utilise my experience. I can still work but the government does not need my services.

Therefore, I chose to join the private sector.” Likewise Dayal told this magazine ``I have handled every government assignment efficiently. Here in the private sector, I will do the same.” According to DoPT sources, there is a queue of officers who have sought permission to join private companies after retirement without completing the mandatory cooling-off period from the date of retirement. Until January 1, 2007, the mandatory cooling-off period was two years from the date of retirement. It was reduced to a year after hectic lobbying by IAS officers.

There is yet another category of officials – those who join the private sector after taking voluntary retirement.
Ashok Kumar Khurana, a 1976 batch UP cadre officer, took voluntary retirement in November 2007 while serving as additional secretary in the ministry of power. He was granted approval to join JPSK Sports as vice-chairman in April 2008.

O.P. Arya, a 1975 batch officer of Uttarakhand cadre, chose early retirement in May 2008. He joined the JP Ganga Infrastructure Corporation Ltd as its CEO after getting permission from the DoPT in January 2009.
These officers are reportedly getting salaries between Rs 10,000 per sitting as director and Rs 1.70 crore per annum. The list would be longer if it were to include officers who have taken permission only from state governments for post-retirement jobs. Officers below the rank of secretary who have been working continuously for three years in a state government only need to take permission from the state government concerned, not the central government, which makes their efforts even simpler.

While these cases hit the headlines recently, the early nineties had witnessed a slew of similar cases of high-profile officials joining the private sector when Rupert Murdoch picked Doordarshan head Rathikant Basu to lead Star’s India operations along with Urmilla Gupta and Indira Mansingh, both senior officers from the information service. With secretary-level officials into the race, can heads of big PSU’s be behind?

Former chairman of National Highways Authority of India (NHAI) Brijeshwar Singh, who retired in December, 2010, has sought the government’s permission to join construction major L&T Group. The move follows a rising trend among ex-government employees and public sector chiefs wanting to move on to join private sector companies in related areas.

Quite recently, ex-chairman SAIL SK Roongta, has joined as a managing director in Vedanta Aluminum. And the list is unending.