Rules Versus Deals

      https://www.aeaweb.org/articles.php?doi=10.1257/jep.29.3.121 is an interesting analysis comparing the reality(de facto) versus legally documented(de jure) ease of doing business in developing countries. The article is a research supported argument for confirming the well known fact that in these countries demand side corruption has disabled government departments and regulatory institutions from ensuring fairness and a level playing field. It mentions that the atmosphere of corruption not only tilts the balance strongly in favour of the firms willing to pay under the table but also widens the gap between the the ability of good and bad firms to do business in these countries. It made me think of how important the role of Vigilance departments is in these situations. 

In CIDCO, we use multiple Vigilance tools to improve the state of integrity in the organization and to enhance public trust on the pain points in CIDCO.  One of these tools is ‘mystery shopping‘, which I had seen the UK’s then financial regulator, FSA, use on its regulated entities, during a visit there when I was posted in SEBI. In CIDCO, we got some excellent video footage of good and bad employees by using this technique. Most interestingly, we were not the only ones filming official behaviour, we received such evidence from aggrieved individuals too!! And we took actions from suspension to departmental enquiries and also to appreciating good employees, on the basis of those footages, after forensically confirming that they were not tampered. These discreet but effective vigilance activities naturally ruffled the deep rooted sense of entitlement for making money in certain positions in the organization. And it resulted in a threat by the employees’ union to go on a one day hunger strike against what they felt was the over bearing ‘Vigilance’ in CIDCO. The strike did not materialise due to the firm talks the MD and Jt MD had with the employees’ union. But it was interesting to bring out and see the low tolerance to measures enforcing integrity in service delivery!

Typically, Vigilance departments only focus on punishing deviant employees after enquiries into complaints, but I have found preventive vigilance, which sieves the day to day processes of every department from the point of view of their susceptibility to corruption, to be infinitely more effective for keeping corruption in check. So it makes sense to look at vigilance related complaints as a tool to give specific feedback to the departments on reworking a process to increase integrity and accountability of that point. This way, vigilance against corruption also becomes inbuilt and integral to any function, any policy, any service given by the organization. It may be possible to ‘root’ integrity instead of ‘rooting out’ corruption in institutions by doing this. 

To make vigilance relevant in CIDCO for the future, irrespective of people manning the department, we felt it important to institutionalise these activities through publicly available documentation. So the first ‘Annual Report of the Vigilance Department-2014-2015‘ has been prepared and published on the Vigilance webpage after apprising the Board of the state of vigilance in CIDCO. Hopefully, such reporting will remain an annual exercise. 

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One thought on “Rules Versus Deals

  1. The idea of rooting integrity as against uprooting corruption sounds very Utopian and idealist. But it is an uphill task. How vested interests of various stakeholders in the society, of which corruption is an offspring, are well entrenched, is aptly narrated by D. N. Ghosh (former Deputy Governor of RBI and former Chairman of SBI) in his book Business & Polity. Ghosh tracks it down from Roman empire to Mafia of thirties in USA to scams of modern times. In Indian society in particular, the concept of a “bribe” begins with god. The promises made to god (known as Navas in Marathi) by worshipers if his/her demands pertaining marriage, job, child, success in examinations, etc. are fulfilled is a form of bribe only. Isn’t it? That makes rooting integrity more difficult because the battle is against the DNA and not against habit. Ergo, constant vigilance has no alternative! Fast track courts to hear corruption cases and thereby ensuring certainty of punishment – rather than severity – is one option. The government which has assured that it will not indulge into corruption nor let anyone indulge into it may consider this.

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