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April 2011

India today is witnessing one of the strongest

ever public and business sentiment against

corruption. The multi-tude of scams

unearthed over the last 12-18 month viz.

Commonwealth Games, 2G, housing finance,

Adarsh Housing, fake pilot licence etc. has

adversely impacted both international and

domestic confidence in the governance

framework in India. This has led to slowdown

in decision-making in government

organisations, created uncertainty for

domestic and international investors and led

to a strong resentment in public at large.

Majority of the respondent to KPMG’s Survey

on Bribery and Corruption also believe that

Indian can achieve a higher GDP growth if

corruption is controlled.

THE LOKPAL BILL – “DECODED” What is the fight about 

In this context, a strong government resolve to fight corruption and create enablers in the

institutional framework shall go a long way in restoring faith of investors and public in the

administrative machinery. The government move to re-introduce Lokpal Bill, something which

has remained a bill for over 40 years, in the current session of Parliament is a welcome move.

However, Government needs to ensure that Bill not only provides legal sanctity to the

institution of Lokpal but also provides it with sufficient authority, reasonable power and

enough jurisdiction to be able to be effective when it comes to enforcement at the

operational level.

The basic idea of the Lok Pal is borrowed from the office of ombudsman, which has played an

effective role in checking corruption and wrong-doing in Scandinavian and other nations. The

need for an Ombudsman for India was foreseen as early as 1966 when the Administrative

Reforms Commission (ARC) recommended the constitution of a two-tier machinery - of a

Lokpal at the Centre, and Lokayukta(s) in the states. Based on this, the Lokpal Bill was

presented during the fourth Lok Sabha in 1968 but could not go through the Rajya Sabha. It

was attempted to be passed several times subsequently, the recent one being in 2008 but is

yet to be converted into an Act. Some of the states in India have enacted their own versions of

Lok Ayuktas but it has ended up being a scattered effort and ineffective due to lack of support

from the Centre.

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The Preamble to the Bill states that it is a Bill to provide for the establishment of the

institution of Lokpal to inquire into allegations of corruption against public functionaries and for

matters connected therewith.

Objectives of the Lokpal Bill(Source: The Lokpal Bill, 2010)

Some of the key and relevant features of the Lokpal Bill are:

Members: Lokpal is to be a three member body with a

chairperson who is or has been a chief justice or judge ofthe Supreme Court; and its two other members who are or

have been judges or chief justices of high courts around

the country. (Section 3(2))

Appointment: The chairperson and members shall be

appointed by the President on the recommendation of a

committee consisting (a) The Vice-President (Chairman) (b)

The PM (c) The Speaker of LS (d) Home Minister (e) the

Minister in-charge of the Ministry of Law and Justice (f)

Leader of the House, other than the house in which PM isa member of Parliament (g) Leaders of Opposition of both

the houses. (Section 4)

Independence of the Office: In order to ensure the

independence of functioning of the august office, the

following provisions have been incorporated.

The Lokpal is ineligible to hold any office of profit

under Government of India or of any state, or similar

such posts after retirement. (Section 6(2))

Fixed tenure of three years and can be removed only

on the ground of proven misbehaviour or incapacity

after an inquiry made by CJI and two senior most

judges of SC. (Sections 6(1) & 7)

Lokpal will have its own administrative machinery for

conducting investigations. (Section 9)

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A public servant cannot make a complaint. (Section 12(1))

The Lokpal is supposed to complete the inquiry within a period of six months. (Section

14(3))

The Lokpal has the power of a civil court to summon any person or authority. (Section

15(1)(b))

After investigation, the ombudsman can only recommend actions to be taken by the

competent authority. (Section 17)

Lokpal can order search and seizure operations. (Section 16)

Jurisdiction of Lokpal

The central level political

functionaries like the

Council of Ministers

including the Prime

Minister, the Members ofParliament etc. (Preamble)

Lokpal cannot inquire into

any allegation against the

PM in relation to latter's

functions of national

security and public order.

(Section 10(1))

Complaints of offencecommitted within 5 years

from the date of offence

can be taken up for

investigation, not beyond

this period. (Section 11(2))

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Media reports have pointed out various reasons for Anna to reject the Government of India’sversion of the Lokpal bill. The key reasons being debated are:

No civil society representation in drafting the bill

According to articles published in the media the Government of India seems to have

reservations regarding Anna’s request to include representatives from the civil society

in drafting the bill for constitution of the Lokpal. However, the reasons for reservation

have not been revealed by the Government.

Countries like Mexico and the European Union have active participation in the form of

Civil Society Organisations (‘CSOs’) which take part in policy making, implementation

and spreading of awareness. The World Bank has also opined that civil society’s

participation in policy making will help control corruption.

In its present form ‘The Lokpal Bill, 2010’, is

recommended to be reviewed by a Group of

Ministers before being placed in the Parliament for

consideration. Given the history of this bill, there

is a risk that the bill may simply laps with no

conclusion being reached within the life of the Lok

Sabha .

The Lokpal Bill has been in circulation for more

than 40 years and has made rounds of the UpperHouse and Lower house of the Parliament at least

9 times. Anna Hazare’s (‘Anna’) fast-unto-death for

consideration of the JAN LOKPAL BILL, the civil

society’s version of the Lokpal Bill, seems to be

gaining significant heat as per the recent media

reports. Indian citizens from various facets of

society are actively supporting Anna and coming

on to the streets to participate in rallies..

WHAT ISTHE FIGHT ABOUT?

Exclusion of Foreign affairs, Security and Defense divisions as well as Bureaucrats

and Judges

Although it is understandable that the above divisions deal with a significant amount

of confidential information, giving blanket exclusion may be detrimental. In the event

of an allegation with respect to corruption, it is important for the country and

Government to confirm the integrity in such critical areas.

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Bureaucrats’ role in the alleged scams has been underplayed and their significance in

conducting transactions has not been clear to the common man. Bureaucrats form the

executive wing of the Constitution apart from the legislative and judiciary wing. They are

provided with full powers to execute the decisions taken by the legislative wing. In the

absence of their inclusion, it may be difficult to investigate allegations in their entirety and

may lead to ineffectiveness.

Recoverability

Another unprecedented inclusion requested by the JAN LOKPAL BILL is to be able to

recover the loss faced by the Government and in effect, the Republic of India due to the

corruption. In the event of an allegation being proved right, it is of utmost importance thatthe loss be recovered.

Protection to whistleblowers

The JAN LOKPAL BILL provides powers to the Lokpal to protect the whistleblowers. There

are concerns raised in the media about the Lokpal being flooded with frivolous complaints.

In this regard, reference may be drawn from the past where similar concerns were raised

when Public Interest Litigation was allowed to be filed. In the heydays, there were a

significant number of such frivolous complaints raised for various reasons including publicity

but we are now at a much more mature stage where it is helpful in bringing out the real

issues. Also, if the JAN LOKPAL BILL were adopted, there would be no need for aseparate Whistle Blower Protection Bill to be enacted.

The Government’s version of the Lokpal Bill intends to provide for strong punishment with

respect to frivolous complaints. Lokpal may send the complainant to jail if the complaint is

found to be false and frivolous. If the Government’s version were to be adopted, it may act

as a strong deterrent to complainants.

Appointment and constitution of Lokpal

The selection committee has suggested to include Vice President, Prime Minister, Leadersand Leaders of opposition of both houses, Law Minister and Home minister. This may lead

to conflicts of interest as a number of the members in the committee may be prone to

investigation by the Lokpal.

It is recommended by the Government that the Lokpal would constitute three members

from among retired judges. The JAN LOKPAL BILL recommends a 10 member

committee, not necessarily from among retired judges. It is opined that creating such

options for post retirement may make the judges vulnerable to political influence as has

been noted in the case of retiring bureaucrats.

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Enhancement of powers

The Government’s version of the Lokpal Bill does not give certain requisite powers to

the Lokpal viz. right to take suo moto action, right to receive complaints from the public

and right to register FIR. It even makes any findings by the Lokpal as preliminary

inquiries to be looked into by someone else. Hence, Lokpal is intended to be only an

advisory body. The JAN LOKPAL BILL intends to provide all these powers to the

Lokpal. Although, there will be significant power concentrated in the hands of the

Lokpal, the suggestion to have 10 members to be part of the committee and a

minimum consensus requirement among the committee members to exercise the

proposed rights, is being looked upon as a control.

Stronger punishment

Apart from the monetary implications discussed above, it is also proposed by the JAN

LOKPAL BILL to enhance the punishment to a minimum of five years up to life

imprisonment. The belief is that this will be a strong deterrent for corrupt individuals.

Drawing reference, the general crime rates in the United Arab Emirates are low asagainst the rest of the world. This may be owing to the strong corporal punishments

awarded for even the simplest of crimes committed even though there is no data to

support it.

Time limits to be prescribed

The JAN LOKPAL BILL has suggested for time lines to complete the investigation

within a year of the complaint. It also prescribes that the trial should also be completed

within a year so that the corrupt politician, officer or judge is sent to jail within 2 years.

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Majority of the respondents to KPMG’s Survey on Bribery and Corruption termed political

interference as a key reason for poor enforcement of anti-bribery and corruption laws in

the country. Hence, having a strong civil participation in the matter can help bring

enhanced governance.

Conclusion

Therefore, there is a need for a mechanism that would adopt a simple, independent,

speedy and cheaper means of delivering justice by redressing the grievances of the

people. There is a strong need to centralize the efforts against. Government is readying a

law to meet the conditions of the United Nations Convention Against Corruption

(UNCAC) with respect to bribery in the private sector.

The Lokpal Bill, if enacted after discussing the suggestions by the civil society, will be a

momentous step towards controlling corruption. We believe that India will bear the fruits

of its efforts only if there is an equally effective enforcement supported by the civil

society.

The Government of India has

taken various initiatives in the

recent past to curb corruption.

The Finance Minister included

steps to control bribery,

corruption and money

laundering in his budget

speech which portrays that the

Government has been taking

the issue seriously. However,

all the efforts have tried to

address various facets leading

to corruption and have notbeen able to take a

comprehensive view on the

subject.

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The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual

or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information

is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information

without appropriate professional advice after a thorough examination of the particular situation.

Contact us:

Rohit Mahajan

Executive Director

Forensic

T: + 91 22 3090 2626

E: rohitmahajan@kpmg.com