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Controlling corruption through IT



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Friends:

Here is an excellent article by Vital on the subject of corruption. =20

Abstract: it is obvious that it is secrecy and delay which are =
responsible for flourishing of corruption in our system. Making the =
information accessible world-wide through a web site helps not only in =
removing the veil of secrecy the moment an item is published on the web =
site, but it also provides for the knowledge itself acting as a =
deterrent by bringing a certain degree of transparency in operations.=20

Ram Narayanan

http://www.naradonline.com/techno/disptech.php3?cat=3D4&id=3D5

Controlling Corruption Through IT
N Vittal, Central Vigilance Commissioner

 One can safely make two general statements about India without being =
seriously challenged. The first is that India is a corrupt country. =
After all we are ranked 72 out of 99 in the Corruption Perception Index =
of Transparency International, an NGO based in Berlin. Every day the =
Indian citizen encounters cases of corruption in practically every walk =
of life.=20

The second general statement one can make is that India seems to be able =
to do well in Information Technology (IT). Earlier it used to be said =
that fools rush where angels feared to tread. Nowadays, angels rush in =
where bankers feared to tread. I am referring to the angel funds that =
are chasing youngsters who have ideas for attractive dotcom companies =
with revenue potential. I am also aware of the fact that the hype for =
dotcom companies in the early months of this year has undergone a =
correction, especially after the action contemplated against Microsoft =
by the US Justice Department and its impact on Nasdaq as well as on our =
own stock exchanges. Nevertheless, it is a fact that IT represents the =
brighter face of what has been called as the new economy. Corruption, of =
course, is the familiar face of the old economy, which in India was also =
dominated for a long time by the permit license raj.=20

Before we proceed further, we have to be clear why corruption should be =
fought. Corruption should be fought for of three reasons. The first =
reason is that corruption is anti-poor. 31% of food grains and 36% of =
sugar in the Public Distribution System (PDS) find their way into black =
market. Secondly, corruption is anti-economic development. According to =
UNDP's Human Development Report 1999 on South Asia, if the corruption =
level in India can be brought down to that of Scandinavian countries, =
GDP will go up by 1.5% and foreign direct investment will go up by 12%. =
Corruption is anti-national. 300 people died in Bombay blast in 1993 =
because RDX could be smuggled by bribing Rs.20 lakh to certain Customs =
Officials. Corruption is, therefore, anti-national.=20

There is another way of looking at the issue of corruption. This is from =
the point of improving the quality of governance. I would suggest that =
it should be the fundamental right of every Indian to have a =
corruption-free service. I have also written to Justice Venkatachalaiah, =
Chairman of the Constitution Review Committee to make the =
corruption-free public service as a fundamental right of the Indian =
citizen. My rationale is as follows:=20

Ever since I became the Central Vigilance Commissioner, I have been =
stuck by the fact that if there is one reason why our country has not =
made the expected progress since Independence and in the 50 years of the =
implementation of the Indian Constitution, it is the increasing and all =
pervading impact of corruption.=20

In these 50 years a number of attempts have been made to set up =
institutions to check corruption. But, what really has happened was, in =
spite of these efforts corruption became very significant first by the =
corrupting of the institutions and then institutionalisation of =
corruption.=20

Looking to the extent of corruption in India and going back to the =
inspiring leadership of Mahatma Gandhi during the freedom struggle, I =
think a stage has now come where we should make getting corruption free =
service from the public offices of the State for the Indian citizen a =
fundamental right. In the days of the Salt Satyagraha during the freedom =
struggle, Gandhiji highlighted the fact that salt was a common man's =
requirement and should not be subject to excise. After 50 years of our =
experience as a republic and after witnessing the systematic spread of =
corruption throughout our system, I think a stage has come when in the =
true Gandhian spirit we should articulate clearly that it is a =
fundamental right of every citizen to get corruption free service not =
only from the Government departments at the Centre and in the states but =
also from public sector enterprises and other organisations controlled =
by the Government.=20

A small effort has been made, especially in the late 90s to make the =
Government departments realise that they have to provide services. Sixty =
departments of the Government of India have come with Citizens' Charter. =
The CVC has written to the departments to say that in addition to the =
services mentioned in the Citizens' Charter, the services will also be =
available corruption free. The CVC was forced to take this initiative =
because otherwise it appeared that all these exercises are exercises in =
institutionalised hypocrisy.=20

Making access to corruption free service a fundamental right would bring =
into sharp focus the importance of better governance through clean =
administration. It will also empower the citizen to agitate right up to =
the Supreme Court his fundamental right to get corruption free service. =
This will cast additional responsibility on the public servants to see =
that they do not exploit their position to get bribe from the people.=20

The issue before us is can corruption, the disease of the old economy, =
be tackled by the technology of the new economy, namely IT? In other =
words, can IT help to fight corruption?=20

My answer is simple and in the affirmative. Yes, IT can be used to check =
corruption, but then I must also add that as Oscar Wilde said "the thief =
is the artist and the policeman is only a critic". Therefore, even =
though we can use IT to check corruption, we should also aware of the =
fact that corrupt people can use IT itself to indulge in their nefarious =
practices.=20

The two main factors in our system which encourage corruption are lack =
of transparency or secrecy and delay. Government operates under a cloud =
of secrecy. There is generally a tendency not to share information. The =
bureaucrats use secrecy as a simple weapon for wielding power. =
Ultimately information is power. Knowledge is power, said Francis Bacon. =
During the permit license raj, a whole lot of middlemen and liaison men =
grew. If you have noticed the function of the liaison man was to =
cultivate the babus in the economic ministries, entertain them, bribe =
them so that his company could know what is on the files. I have seen =
even secret notes in the hands of private companies that were obtained =
by these means. One source of corruption is the prevailing culture of =
secrecy in many government departments.=20

It is good that now, there is a thinking and debate about having a =
Freedom of Information Act. This is necessary to fight corruption. =
Nevertheless, there is a criticism that in the case of Acts passed by =
same State Governments, there are so many exceptions provided that the =
discretion is with the bureaucrat to deny access to information. =
Fortunately, so far as Government of India is concerned, the Central =
Vigilance Commissioner today enjoys the power of superintendence over =
the vigilance administration of Government of India organisations. At =
least, so far as issues relating to corruption are concerned, if facts =
are brought to the notice of the CVC, the CVC can give directive to =
ensure that information which has a bearing on corruption is made =
public.=20

The experience of the CVC in publishing the names of the charged =
officers who are facing departmental action for major penalty or =
prosecution in the courts was highly revealing. When the news broke out =
that the CVC has published the names of charged officers in the web site =
of the CVC, the first reaction was an overwhelming positive welcome by =
the public at large. As many as 93 per cent of the people who were =
polled by the Hindustan Times welcomed it. Seventy per cent of the =
persons who responded to the Pioneer poll said that it is a good =
anti-corruption measure.=20

You can ask how publishing the names on web site can act as an =
anti-corruption measure. This will be obvious from the reaction to the =
names being published in CVC's web site. Some of the persons whose names =
are on the web site complained that they had not even received the =
charge sheets which is a part of the departmental inquiry. This =
immediately highlighted the fact that even though the CVC had =
recommended action against charged officers, the concerned departments =
were not taking follow up action. It is quite possible that a person who =
has been involved in a departmental inquiry is innocent. In such cases, =
if the inquiries are delayed, his career is ruined. On the other hand, =
it is also possible that the person who is charge sheeted is really =
corrupt. If the inquiries are delayed to that extent he gets a benefit =
of doubt and can have a smooth career. I have come across cases where =
the organisations took five years to appoint an IO who in turn took two =
years for the inquiry and by that time the inquiry was over the officer =
had retired.=20

Delay in our system is the great benefactor for the corrupt. Looking at =
this reaction, it was decided by the CVC to update information published =
on the web site and further computerise the information of cases already =
available with the CVC. The departmental inquiries will now be =
systematically pursued by issuing monthly reminders to the disciplinary =
authorities so that delay in the inquiry cases can be brought down to =
the minimum.=20

There was another revealing experience from the web site. The Economic =
Times conducted a poll which showed that 83per cent of those who =
responded felt that publishing of names will have a deterrent effect. =
Publishing of names does not amount to condemning or defaming the =
persons concerned. Nevertheless, the society at large cares to know the =
names of the people who are facing vigilance charge. The NewsWeek, =
therefore, called it as e-shame. It is also found that some of the =
persons who are facing departmental action were in sensitive posts. =
Normally, it is a healthy principle that people who are facing =
departmental action in vigilance matters should not be placed in =
sensitive posts. This is one method of ensuring that there is check on =
corruption. By publishing the names on the web site, automatically a =
situation was created by which such persons could be weeded out under =
public pressure or pressure of the authorities themselves who might not =
be aware earlier about how such persons were being posted in sensitive =
posts.=20

>From what has been said above, it is obvious that it is secrecy and =
delay which are responsible for flourishing of corruption in our system. =
Making the information accessible world-wide through a web site helps =
not only in removing the veil of secrecy the moment an item is published =
on the web site, but it also provides for the knowledge itself acting as =
a deterrent by bringing a certain degree of transparency in operations.=20

The web site of the CVC is just a simple example though an accidental =
example of how IT can be helpful to fight corruption. Corruption =
flourishes in our system due to the following factors:=20

(i) Scarcity of goods and services;=20
(ii) Lack of transparency;=20
(iii) Delay and red tape;=20
(iv) Legal cushions of safety, which have been created under the very =
healthy principle that a person is innocent till, proved guilty. Corrupt =
people, therefore, take advantage of the legal system so that they can =
use their ill-gotten wealth to engage the best legal brains to quibble =
all the way to the highest court of the land and laugh all the way to =
the bank; and=20
(v) The spirit of tribalism or biradiri between the corrupt. After all =
we talk about people being thick as thieves not thick as honest men.=20

If these are five reasons why generally corruption flourishes under our =
system, we can now see how IT can be used to tackle each of those =
factors and thereby fight corruption. The first factor is scarcity of =
goods and services. We are all aware of the fact that if there is =
shortage of essential commodities like sugar or cement, there is =
black-market and corruption. There is even today a lot of corruption in =
the PDS of the country. 31% of food grains and 36% of sugar in the =
Public Distribution System (PDS) find their way into black market. Rs =
15000 crore is the subsidy of the GOI in the PDS, it means Rs 5000 crore =
is pocketed by corrupt people involved in the PDS which will mean the =
officials concerned as well as the shop keepers who run the Fair Price =
shops. How can IT help in bringing down corruption in PDS?=20

Everybody is aware of the fact subsidised commodities and are not meant =
for everybody but only for those who are below the poverty line and who =
are eligible to get a ration card. Even in the distribution of ration =
cards we hear complaints about bogus cards. If we are able to =
computerise the whole system, then it should be possible to keep the =
information up to date and ensure that in the issue of ration cards =
there is no corruption. In fact, the cause of corruption in the normal =
paper oriented manual system in government is the enormous delay in the =
system. Computers are characterised by speed and their capacity to =
process masses of data. Equally important is the fast information =
retrieval system which computers provide. For an activity like issuing =
of ration cards in PDS, IT is ideally suitable because we can ensure =
that information is not only up to date but is processed fast. And the =
ration cards can be given well in time with the minimum of delay.=20

The system also can be made transparent by publicising the quantities to =
which individuals or shops or districts are entitled and how much has =
actually been delivered. Once this information is in the public domain =
through the web site of the civil supplies department, it is possible =
for any member of the public to go and find out whether the quantity as =
reported has actually reached the particular shop and whether the shop =
keeper is indulging in black marketing.=20

It is obvious that we will be able to use IT to check corruption in the =
PDS, only, if firstly, we are able use the IT fully for performing the =
activities of the departments concerned and secondly the public at large =
also have access to the web site etc. In this context, the initiative =
taken by people like Sam Pitroda for Cyber-Dhabas or Community Internet =
Centres is a very welcome measure. So we can visualise a situation =
where, particularly every activity of the government which impinges on =
the public can be in the public domain with easy access to information =
and which can also be verified. The greater the transparency, the =
greater the fairness of the system. After all when there is a scarcity =
situation and corruption arises because of this, a fair PDS or rationing =
system is the best method to fight corruption. IT can play a very =
significant role in this context.=20

We then come to the second cause of corruption, namely, lack of =
transparency. We have seen in the earlier example how the very =
availability of information can make for better control over corruption. =
If the government also passes the Freedom of Information Act, then =
people will have, as a matter of right, the access to information. Even =
if they do not have information as a matter of right, if there are =
institutions like the CVC that can direct the concerned department to =
make certain information public, transparency can be brought into the =
system.=20

The third important cause for corruption is red tape rules and =
procedures. It is here that IT can play an important role. Rules =
themselves need to be simplified. There is need for constant weeding out =
of obsolete rules. If all rules are made public as, for example, the =
Andhra government apparently has done in the case of government orders, =
then it is open for any interested citizen or consumer activist group or =
members of the civil society or organisations in the civil society =
concerned with fighting the corruption to make studies and see how these =
rules can be simplified. In fact, many a time, when the rules are made =
the bureaucrats may not be aware of the consequences they will have and =
the trouble they may cause to the consumer. If the information is in the =
public domain, thanks to IT, then it is possible for suggestions to be =
made for modification of the rules and in modifying the rules it may be =
possible to also eliminate the scope for corruption. The experience of =
Andhra Pradesh Government, in its Registration Department, has =
dramatically highlighted the fact that how this department which like =
other departments is also liable for corruption, has been able to =
transform its operations so that instead of a couple of weeks the entire =
operations involving transfer of property and registration of property =
can be done within the period of an hour or so. This speed itself has =
brought greater transparency and has significantly eliminated the scope =
for corruption.=20

At this stage an important point has to be taken note of. Government =
organisations are today based on paper. The entire operations are =
manual. If from operating on paper, we have to go to the use of IT, we =
have to create the appropriate legal framework. For example, the GOI has =
to set up the Stock Holding Corporation of India because the financial =
institutions of the GOI which are interested in various shares found =
they had to tackle the paper demon. Under the Companies Act, only a =
share which is on paper was recognised as a share. Only recently the =
government has been able to modify the law and begin the concept of =
de-materialisation. Once appropriate amendments are made in the various =
acts like the Companies Act, Evidence Act, IPC, Criminal Procedure Act =
and so on, we will find that many of the manual system delays can be =
eliminated by increasingly using IT.=20

In the area of banking, IT can be of immense value not only in improving =
the customer services but also in fighting frauds and corruption. It is =
the Bank of Baroda which had in a communication to me brought out the =
following benefits about how computerisation can help check frauds.=20

As regards the question whether computerisation would help Banks in =
prevention and early detection of frauds, frauds can be broadly =
classified as (a) frauds in non-credit areas and (b) frauds in credit =
areas. In non credit areas mainly frauds relate to fraudulent encashment =
of cheques, withdrawal slips, refund orders, demand drafts, bankers =
cheques, misappropriation as also fraudulent transactions in the books =
of branches put through by the bank's own staff. Existing computerised =
system and upgradation thereof will help in prevention as also early =
detection of frauds which will save bank's precious funds as also will =
protect the long term interest of Bank employees who unwittingly become =
prey to the design of unscrupulous elements.=20

Following are the areas where full-fledged computerisation will have =
salutary effect in prevention and early detection of frauds.=20

=B7 Fraudulent encashment of cheques bearing forged signatures occur =
because the passing officials do not find it convenient to verify the =
signature stored in signature card cabinets requiring manual location of =
the signature. If specimen signatures are captured in the computer, it =
will facilitate easy verification and provide security against =
tampering.=20

=B7 Stop payment instructions received from account holders with regard =
to lost cheques can be put in computer so that a caution signal would be =
available whenever a lost cheque is presented for payment.=20

=B7 Manipulation of books by unscrupulous staff inter alia casting of =
wrong balance and making wrong credit entries can be either prevented or =
detected promptly because the computerisation would enable tallying / =
balancing of books on daily basis.=20

=B7 The reconciliation of transactions relating to drafts issued and =
paid through computerised system would help early detection of =
fraudulent payments.=20

=B7 Frauds relating to local clearing operations may be minimised =
through prompt reconciliation of number and amount of cheques through =
computerised system.=20

=B7 Attempts of unscrupulous staff to perpetrate frauds by raising fake =
credits through inter branch accounts may be thwarted through =
computerised system for reconciliation of entries between originating =
branches and responding branches.=20

=B7 By introduction of passbook writing machines frauds relating to =
misappropriation of cash receipts by cash department staff can be =
prevented or detected early.=20

=B7 There is increasing trend in payment of lost/fake DDs presented by =
fraudulent means. Computerisation and continuous updating of data =
related to stolen/lost drafts on the system can help in reducing this. =
Officer's signatures captured in the computer can be used to verify =
whether the DDs are signed by the concerned officer.=20

=B7 As per the guidelines of RBI, MICR clearing and Electronic Clearance =
System has been introduced at Metro centres to take care of corporate =
clients. The Service Branch or the main branch does the work of =
intermediary between the local branches of the bank and clearinghouse. =
Lack of proper reconciliation of number and amount of cheques sent by =
branches to the service branch / main branch and vice versa on a daily =
basis has facilitated perpetration of massive fraud. A software system =
for daily reconciliation, if introduced, can be used to avert or detect =
such frauds.=20

=B7 As regards advances, in credit related frauds, it would help banks =
if computerised data base of parties enjoying credit facilities from =
different banks in the same centre is available to avoid double =
financing, to know the state of affairs of the existing account, and to =
ensure that the same persons do not enjoy facilities under different =
names or firm.=20

=B7 Database of information of fraudsters, wilful defaulters with =
photographs of the proprietors / partners / directors etc will help the =
banking system.=20

=B7 Quick exchange of information relating to transactions in corporate =
accounts, remittances, clearance of instruments, payment of dividend =
warrants, interest warrants, refund orders and reconciliation thereof, =
etc. will enhance customer service and help prevent frauds.=20

The fourth reason why corruption flourishes are the legal cushions of =
safety which have been created. The legal procedures had to be =
expedited. The 154th Report of the Law Commission on CrPC has made a =
number of suggestions, many of which may be incorporated in the =
Prevention of Corruption Act 1988 to eliminate judicial delays.=20

When Justice Venkatachalaiah was the Chief Justice of the Supreme Court, =
he showed how by applying IT in the SC, greater transparency can be =
brought and also more important a substantially large number of cases =
can be disposed of. From a figure like 160000 cases when he took over, =
pendency was brought down to 20000 cases by systematically applying the =
IT in SC. This could perhaps done in all the courts, not only at the =
High Court level but also down to the smallest court. IT can help to =
speed up the judicial process and combined with this if the =
recommendations of the 153rd Report of the Law Commission are =
implemented there will be substantial progress. So far as the =
departmental action is concerned, if retired people could be employed =
and enquiries are completed within six months, there will be a greater =
check on corruption.=20

The fifth cause for corruption, of course is the brotherhood or =
tribalism among the corrupt people. This, of course, relates to not IT =
but organisational behaviour. But we can see so far as system is =
concerned, how IT can be helpful in bringing in greater transparency, =
greater speed, greater form of an objectivity in operation and thereby =
act as a check on the corruption in the systems.=20

The Andhra Pradesh Chief Minister, Mr Chandrababu Naidu has come up with =
a nice concept for responsible government. He calls it the SMART =
government. Generally, wherever we apply IT, we talk about that =
particular item becoming smart. During Vietnam War, we heard about the =
Smart Bombs. We can, today, have smart washing machines and so on =
because of the application of technology. SMART stands for simple, =
moral, accountable, responsible and transparent government. You can see =
how by eliminating corruption, the IT can really help in building smart =
government.=20

The 21st century is going to be the century of IT. Fortunately, India is =
considered to be a country where it has a strength in IT. With its =
billion strong population, Indian can not only be attractive market for =
others but with its strength in technology and the proven experience of =
a vigorous democracy running multi-ethnic, multi-lingual, multi-cultural =
country, it has a potential to emerge as an economic super power. One =
factor that comes in the way of India emerging as an economic super =
power is the disease of corruption. IT can be useful in overcoming that =
disease of corruption and ensure that this century becomes an Indian =
century.=20



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