Thursday, 29 August 2013 11:25




Cause of Corruption

Consequences of Corruption

Corruption Perception Index

Lokpal and Lokayukta

Central Vigilance Commission (CVC)


Whistleblowers Bill

Anti Money Laundering Act


The emergence of political elite, who believes in the interest-oriented rather than nation oriented programmes and policies. A majority of bureaucrats in our country are ritualists and remain concerned more with perks and remain more concerned with perks and privileges than with development oriented policies for the society.

The emergence of the new business leaders who wanted profits which encouraged growth of corrupt practices among the public servants.

  • The economic policy of the government: Most of the scandals have taken place in areas where either   purchase policies or prices are regulated by the government. Unless and until the economy is freed from the clutches of misguided government regulations, the corruption will remain in existence.

  • The Scarcity of Required Things: Corruption is also caused by scarcity of required things. When there is high demand for some commodities and low supply; people in power tend to manipulate things in their interest.

  • Change in the Value System and ethical qualities of men: There is a decrease in the value system and ethical qualities of men. The old ideals of morality, service, honesty and sacrifice are no longer held in high esteem.

  • Ineffective administrative organization: Ineffective administrative organization is also one of the major reasons behind corruption. Unaccountability, lack of vigilance and ineffective information system also encourage corruption.

Besides the above, craze for higher living standards, inflation, inadequate legislation and tedious judicial process also causes corruption.


The effect of corruption has many dimensions related to political, economic, social and environmental effects. In political sphere, corruption impedes democracy and the rule of law. In a democratic system, public institutions and offices may lose their legitimacy when they misuse their power for private interest. Corruption may also result in negative consequences such as encoring cynicism and reducing interest of political participation , political instability, reducing political competition, reducing the transparency of political decision making, distorting political development and sustaining political activity based on patronage, clientelism and money, etc.

In our society, the impact of corruption is often manifested through political intolerance, problems of accountability and transparency to the public, low level of democratic culture, principles of consultation and participation dialogue among others.

The economic effects of corruption can be categorized as minor and major. However, both in one way or the other have serious impact on the individual community and country. First and foremost, corruption leads to the depletion of national wealth. It is often responsible for increased costs of goods and services, the funneling of scarce public resources to uneconomic high profile projects at the expense of the much needed projects such as schools, hospitals and roads, or the supply of potable water, diversion and misallocation of resources, conversion of public wealth to private and personal property, inflation, imbalanced economic development, weakling work ethics and professionalism, hindrance of the development of fair in market structures and unhealthy competition there by deterring competition. Large scale corruption hurts the economy and impoverishes entire population.


The Corruption Perceptions Index (CPI) has been developed since 1995 by Transparency International as a composite indicator that measures perceptions of corruption in the public sector in different countries around the world. India was ranked 94th out of 176 countries in Transparency International’s 2012 Corruption Perception Index (CPI) released on 5 December 2012. In 2011, India was ranked 95 out of 183 countries.

Transparency International is a non-profit, non-governmental organisation dedicated to fighting corruption. It is best known for its Corruption Perceptions Index. Its secretariat is located in Berlin, Germany. The organization is present in more than 100 countries. It came into existence in 1993.


Dr L.M. Singhvi in 196 coined the word lokpal. In 1960s, the then Union Law Minister Ashoke Kumar Sen proposed the concept of a constitutional ombudsman for the first time. Shanti Bhushan proposed the first Jan Lokpal Bill in 1968 and passed in the 4th Lok Sabha in 1969, but did not pass through the Rajya Sabha. Lokpal Bills were introduced in 1971, 1977, 1985, again by Ashoke Kumar Sen, while he served as the Union Law Minister in the Rajiv Gandhi cabinet. Again in 1989, 1996, 1998, 2001, 2005 and 2008, also the bill was presented in the Parliament yet they were never passed. Fifty two years after its first introduction, the Lokpal Bill is still not enacted in India.

The Lokpal Bill provides for the filing, with the ombudsman, of complaints of corruption against the prime minister, other ministers, and MPs. The Administrative Reforms Commission (ARC) recommended the enacting of the Office of a Lokpal, convinced that such an institution was justified, not only for removing the sense of injustice from the minds of citizens, but also to instill public confidence in the efficiency of the administrative machinery.

The bill was revived several times in subsequent years, including in 2011. Every time on beingintroduced in the Parliament, the bill was referred for improvements, to a joint committee of parliament, or to a departmental standing committee of the Home Ministry. Before the government could take a final stand on the issue, the house was dissolved again. Several conspicuous flaws were found in the 2008 draft of the Lokpal Bill. The basic idea of a lokpal is borrowed from the Office of the Ombudsman, which has the Administrative Reforms Committee of a lokpal at the Centre,[clarification needed] and lokayukta(s) in the states.

Anna Hazare fought to get this bill passed, and it did pass on Dec 27, 2011, with some modifications. These were proposed as the Jan Lokpal Bill.

The Jan Lokpal Bill (Citizen's Ombudsman Bill) is a draft anti-corruption bill drawn up by prominent civil society activists, seeking the appointment of a Jan Lokpal, an independent body that would investigate corruption cases, complete the investigation within one year and conduct trials for the case within the next year.

Drafted by Justice Santosh Hegde (a former Supreme Court Judge and former Lokayukta of Karnataka), Prashant Bhushan (a Supreme Court Lawyer) and Arvind Kejriwal (an RTI activist), the draft Bill envisaged a system in which a corrupt person found guilty would go to jail within two years of the complaint being made and his ill-gotten wealth confiscated. It also sought power for the Jan Lokpal to prosecute politicians and bureaucrats without requiring government permission.

Features of the Jan Lokpal Bill:

1. An institution called Lokpal at the centre and Lokayukta in each state will be set up.

2. Like the Supreme Court and Election Commission, they will be completely independent of governments. No minister or bureaucrat will be able to influence their investigations.

3. Cases against corrupt people will not linger on for years anymore: investigations in any case will have to be completed in one year. Trial should be completed in the next one year, so that the corrupt politician, officer or judge is sent to jail within two years.

4. The loss that a corrupt person caused to the government will be recovered at the time of conviction.

5. How will it help a common citizen? If the work of any citizen is not done in a prescribed time, in any government office, Lokpal will impose a financial penalty on the guilty officers, which will be given as compensation to the complainant.

6. So, you could approach Lokpal if your ration card or passport or voter card had not been made, or if the police are not registering your case, or if any other work is not being done within the prescribed time. Lokpal will have to get it done in a month's time. Youcould also report any case of corruption to Lokpal, like rations being siphoned off, poor quality roads being constructed or panchayat funds being siphoned off.

7. But won't the government appoint corrupt and weak people as Lokpal members? That won't be possible because its members will be selected by judges, citizens and constitutional authorities, not by politicians, through a completely transparent and participatory process.

8. What if some officer in Lokpal becomes corrupt? The entire functioning of Lokpal/ Lokayukta will be completely transparent. Any complaint against any officer of Lokpal will be investigated and the officer dismissed within two months.

9. What will happen to existing anti-corruption agencies? CVC, the departmental vigilance and anti-corruption branch of the CBI, will be merged into Lokpal. Lokpal will have complete powers and machinery to independently investigate and prosecute any officer, judge or politician.

10. It will be the duty of the Lokpal to provide protection to those who are being victimized for raising their voice against corruption.

Fundamental duties

1. To judge the cases and make jurisdictions against corruption cases with the Lokpal.

2. To judge whether a case is genuine or whether a fake complaint has been made.

3. To potentially impose fines on a fake complaint, or even a short span of jail time, if the case is not proved to be legally true.


The Lokayukta (also Lok ayukta) is an anti-corruption ombudsman organization in the Indian states.

The Administrative Reforms Commission (ARC) that was headed by Morarji Desai submitted its special interim report on Problems of Redressal of Citizen's Grievances in 1966. For redressal of the grievances of the citizen the report, from Administrative Reforms Commission recommended setting up of two special authorities designated as Lokpal and Lokayukta.

The Lokayukta, along with the Income Tax Department and the Anti-Corruption Bureau, mainly helps people bring corruption amongst the politicians and officers in the government service to public attention. Many acts of the Lokayukta have not resulted in criminal or other consequences for those charged.

Maharashtra was the first state to introduce the institution of Lokayukta through The Maharashtra Lokayukta and Upa-Lokayuktas Act in 1971. This was followed by similar actsbeing enacted by states of Rajasthan, Bihar, Uttar Pradesh, Karnataka, Madhya Pradesh, Andhra Pradesh, Gujarat and Delhi.


Central Vigilance Commission (CVC) is an apex Indian Governmental Body created in 1964 to address governmental corruption. It has the status of an autonomous body, free of control from any executive authority, charged with monitoring all vigilance activity under the Central Government of India, and advising various authorities in central Government organizations in planning, executing, reviewing and reforming their vigilance work.

It was set up by the Government of India in February, 1964 on the recommendations of the Committee on Prevention of Corruption, headed by Shri K. Santhanam, to advise and guide Central Government agencies in the field of vigilance. Nittoor Srinivasa Rau was selected as the first Chief Vigilance Commissioner of India.

The Annual Report of the CVC not only gives the details of the work done by it but also brings out the system failures which lead to corruption in various Departments/Organisations, system improvements; various preventive measures and cases in which the Commission's advises were ignored etc.

The CVC is not an investigating agency, and works through either the CBI or through the Departmental Chief Vigilance Officers.

The only investigation carried out by the CVC is that of examining Civil Works of the Government which is done through the Chief Technical Officer.

Corruption investigations against government officials can proceed only after the government permits them. The CVC publishes a list of cases where permissions are pending, some of which may be more than a year old.

The CVC has also been publishing a list of corrupt government officials against which it has recommended punitive action.

The CVC is headed by a Central Vigilance Commissioner who is assisted by two Vigilance Commissioners.

The Central Vigilance Commissioner and the Vigilance Commissioners are appointed by the President after obtaining the recommendation of a Committee consisting of:

  • The Prime Minister — Chairperson


  • The Home Minister — Member.


  • The Leader of the Opposition in the Lok Sabha — Member.

The Central Vigilance Commissioner or any Vigilance Commissioner can be removed from his office only by order of the President on the ground of proved misbehaviour or incapacity after the Supreme Court, on a reference made to it by the President, has, on inquiry, reported that the Central Vigilance Commissioner or any Vigilance Commissioner, as the case may be, ought to be removed. The President may suspend from office, and if deem necessary prohibit also from attending the office during inquiry, the Central Vigilance Commissioner or any Vigilance Commissioner in respect of whom a reference has been made to the Supreme Court until the President has passed orders on receipt of the report of the Supreme Court on such reference. The President may, by order, remove from office the Central Vigilance Commissioner or any Vigilance Commissioner if the Central Vigilance Commissioner or such Vigilance Commissioner, as the case may be:

  • Is adjudged an insolvent; or


  • Has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude; or


  • Engages during his term of office in any paid employment outside the duties of his office; or


  • Is, in the opinion of the President, unfit to continue in office by reason of infirmity of mind or body; or


  • Has acquired such financial or other interest as is likely to affect prejudicially his functions as a Central Vigilance Commissioner or a Vigilance Commissioner.


The Central Bureau of Investigation (CBI) is a governmental agency belonging to Government of India that jointly serves as a criminal investigation body. The CBI is a premier investigating police agency in India. It is an elite force playing a major role in preservation of values in public life and in ensuring the health of the national economy. It is also the nodal police agency in India which coordinates investigation on behalf of Interpol Member countries. The services of its investigating officers are sought for all major investigations in the country. The CBI is headquartered at the Rs 186 crore (37.2 Million US$) new state-of-the-art building in New Delhi. The CBI is controlled by the Department of Personnel and Training in the Ministry of Personnel, Public Grievances and Pension of the Union Government usually headed by a Union Minister who reports directly to the Prime Minister.

The CBI is headed by a Director, an IPS Officer of the rank of Director General of Police or Commissioner of Police (State). Director is selected based on the procedure laid down by CVC Act 2003 and has a tenure of 2 years.

Director is selected based on the procedure laid down by CVC Act 2003 and has a tenure of minimum of 2 years. It is worth noting that CVC Act 2003 was established on the similar lines of the directions of Supreme Court of India in the infamous Hawala scam.

Selection committee

The committee is empowered to recommend a panel of officers for the post of the Director of CBI.

The committee consists of:

  • Chief Vigilance Commissioner—Chairperson


  • Vigilance Commissioners—Members


  • Secretary, Home Ministry—Member


  • Secretary (Coordination and Public Grievances) in the Cabinet Secretariat—Member


  • While making any recommendation, the committee takes into consideration the views of the outgoing Director.

The final selection is made by the Appointments Committee of the Cabinet from the panel recommended by selection committee. Jurisdiction of CBI vis-a-vis State Police

Law and Order is a State subject and the basic jurisdiction to investigate crime lies with State Police. Besides, due to limited resources, CBI would not be able to investigate crimes of all kind.

CBI may investigate:

  • Cases which are essentially against Central Govt. employees or concerning affairs of the Central Govt. and the employees of the Central Public Sector Undertakings and Public Sector Banks.


  • Cases in which the financial interests of the Central Government are involved.


  • Cases relating to the breaches of Central Laws with the enforcement of which the Government of India is mainly concerned.


  • Big cases of fraud, cheating, embezzlement and the like relating to companies in which large funds are involved and similar other cases when committed by organised gangs or professional criminals having ramifications in several States.


  • Cases having interstate and international ramifications and involving several official agencies where, from all angles, it is considered necessary that a single investigating agency should be in charge of the investigation.

Power and jurisdiction of High Courts and Supreme Court

Notwithstanding above limitations, the High Courts and the Supreme Court of India have the power and jurisdiction to order a CBI investigation into a cognisable offence alleged to have been committed within the territory of a State without the consent of that State. This matter was settled by a five judge constitutional bench of Supreme Court of India (in Civil Appeal 6249, 6250 of 2001) on 17 Feb 2010.


Union Cabinet of India approved Public Interest Disclosure and Protection to Persons Making the Disclosure Bill, 2010, also known as Whistleblowers act to provide protection to Whistleblowers and punishing those who expose identity of Whistleblowers.

Under the Whistleblow0065rs act anybody who reveals the identity of Whistleblowers would be punished with 3 years imprisonment or fine up to 50000 rupees. In case of any information leakage regarding the Whistleblower’s identity the head of the department is to be held liable by (Central Vigilance Commission) CVC. At the same time there is also the provision that if anyone makes a false charge, he would be equally punishable with equal amount of imprisonment and fine.

At present, India has no legislation about Whistle blowing. The Law Commission of India, in 2001 had recommended that in order to eliminate corruption, a law to protect whistleblowers was essential. In 2004, in response to a petition filed after the murder of Satyendra Dubey, the Supreme Court directed that some machinery be put in place for acting on complaints from whistleblowers till a law is enacted. Whistleblowers Bill is also known as the Public Interest Disclosure and Protection of Person Making the Disclosure Bill, 2010.

The Whistle-blower Bill will protect the whistle blower from any consequences that may arise due to his/her act. The Bill seeks to strike a balance between protecting persons making a public interest disclosure and preventing undue harassment of public officials. Corporate Whistle blowing is not included in this Bill as it will be taken care of by Companies Bill, 2009. The disclosures can be made to the Central or the State Vigilance Commission. Every complaint has to include the name and address of the complainant. The Commission will not accept or act upon anonymous complaints. This is to make sure that only genuine complaints are reported.

It is the duty of the Vigilance Commission to protect the identity of the complainant and related documents, unless it decides against doing so, or is required by a court to do so. The complainant may also be given protection for this purpose. The Central Government and the Vigilance Commission have to take care that no private individual is harmed in any way. If a public servant is harmed then they have to see to it that he/she is restored back to his old position.

United States of America was one of the first countries to pass legislation about whistleblowing. It was called the United States False Claims Act in 1863.

Disclosure has been defined as: Any complaint made in writing or electronic mail against a public servant on matters related to (a) attempt to or commission of an offence under the Prevention of Corruption Act, 1988; (b) wilful misuse of power which leads to demonstrable loss to the government or gain to the public servant; or (c) attempt or commission of a criminal offence by a public servant.

The definition recommended by the Law Commission was wider and included actions which are unjust, cause undue delay or negligent, leading to waste of public funds.

Public Servant is defined as: Any person who is an employee of the central government or the state government or any company or society owned or controlled by the central or state government. However, no public interest disclosure shall be accepted against defence, police and intelligence personnel.

There are a few exceptions when the complaint cannot be made. They are:

  • When the subject matter of the complaint is already decided by a court.


  • When a public inquiry has been ordered in that matter.


  • When the complaint is registered after 5 years of the commission of the wrong.


  • Disclosure of proceeding of the Cabinet is barred if it is likely to affect the sovereignty of India, security of the state, friendly relations with foreign states, public order, decency or morality.

The Bill has laid down penalties for various offences. If the reports are not submitted to the Vigilance Commission then a fine of 250 rupees per day is imposed till the day the report is submitted. A total of 50000 rupees is the highest fine anyone can be made to pay. If the identity of the complainant is revealed due to any negligent or mala fide reasons then penalty will be imprisonment of up to 3 years and a fine of up to 50000 rupees. If a person knowingly makes a false or misleading disclosure then he/she will be sentenced to up to 2 years imprisonment and a fine of up to 30000 rupees


Parliament adopted the Prevention of Money Laundering (Amendment) Bill, 2009. This bill aims at combating money laundering, terror financing and cross-border economic offenses.

Money laundering is the process by which large amounts of illegally obtained money like from drug trafficking, terrorist activity or other serious crimes, is given the appearance of having originated from a legitimate source. But in the real sense it is the conversion of black money into white money.

As per IMF estimates, the turnover of this industry could well over around $1.5 trillion.

The new law seeks to check use of black money for financing terror activities. This also enables India’s entry into the Financial Action Task Force, an intergovernmental body that has the mandate to combat money laundering and terrorist financing. The bill will address India’s international obligation and empower the Enforcement Directorate to search the premises immediately after the offenses are committed and police have filed report. The period of provisional attachment of property will be increased from 90 to 120 days but the investigating agency can attach property and search a person only after completing the probe.

The Prevention of Money-Laundering Act, 2002 came into effect on 1 July 2005. It seeks to prevent money laundering and to provide for attachment, seizure and confiscation of proceeds of crime obtained or derived, directly or indirectly from money laundering and for matters connected therewith or incidental thereto.

Section 12 (1) of the act prescribes the obligations on banks, financial institutions and intermediaries (a) to maintain records detailing the nature and value of transactions which may be prescribed, whether such transactions comprise of a single transaction or a series of transactions integrally connected to each other, and where such series of transactions take place within a month; (b) to furnish information of transactions referred to in clause (a) to the Director within such time as may be prescribed and t records of the identity of all its clients. Section 12 (2) prescribes that the records referred to in sub-section (1) as mentioned above, must be maintained for ten years after the transactions finished. It is handled by the Indian Income Tax Department.

The provisions of the Act are frequently reviewed and various amendments have been passed from time to time. The recent activity in money laundering in India is through political parties, corporate companies and the shares market. It is investigated by the Indian Income Tax Department.

Bank accountants must record all the transactions whose amount will be more than Rs. 10 Lakhs. Bank accountants must maintain these records for 10 years. Banks will also make Cash Transaction Reports (CTRs) and suspicious transaction reports whose amounts are more than 10 Lakhs rupees within 7 days of doubt. This report will be submitted to enforcement directorate and income tax department.