Integrity Pact

Context:

Recently, the Central Vigilance Commission (CVC) has modified the criteria for the nomination of Independent External Monitors (IEM) in government bodies.

Integrity pact meaning

• The Integrity Pact establishes mutual contractual rights and obligations to reduce the high cost and effects of corruption.
• According to 2^nd ARC, Integrity pacts are agreement between public agencies involved in procurement of goods and services and the bidder for a public contract to the effect that the bidder will not pay any illegal gratification to secure the contract.

Integrity pacts in India

• In India, Integrity Pact (IP) was adopted for the first time in 2006.
• The Second Administrative Reforms Commission (ARC) in its IV Report on Ethics in Governance made the recommendation for IP’s adoption in order to make contracting process more transparent.
• IP implementation got a real boost after the Central Vigilance Commission (CVC) issued its first circular in 2007 recommending the adoption of Integrity Pact in all major procurements of central Public Sector Undertakings.
• CVC is the nodal agency for implementation of Integrity Pact in the country.
• Once a Public Sector Undertaking adopts Integrity Pact, it is mandatory to include IP in all the contracts above the threshold value.

Independent External Monitors:

• The IEMs independently and objectively review the documents to determine if the parties have complied with their obligations under the pact.
• They give recommendations to the authorities concerned after examining the complaints related to any contract.
• They may submit a report to the chief executive of the organisation concerned or directly to the Chief Vigilance Officer (CVO) and the CVC, if they find serious irregularities attracting the Prevention of Corruption Act, 1988 provisions.

IEM Rules Modificiation: 

The zone of consideration for empanelment as IEMs has been revised. It now includes:

• Officers who have held the post of Additional Secretary to the Government of India;
  • Those who were Chairman-cum-Managing Directors (CMD) of Schedule ‘A’ public sector enterprises.
  • Persons equivalent/higher to Additional Secretary to the Central government at the time of retirement.
  • CMDs/MDs and Chief Executive Officers (CEOs) of public sector banks, insurance companies and other financial institutions at the time of retirement;
  • Officers of the armed forces who were in a pay scale equivalent to or higher than that of Additional Secretary at the time of retirement, are also eligible.

Integrity Pact advantages

• IPs establishes a level playing field: The IP enables companies to abstain from bribing by providing them with assurances that their competitors will also refrain from bribing.
• In addition, they can feel confident that government procurement, privatisation or licensing agencies also commit to preventing corruption (including extortion) by their officials and to following transparent procedures.
• Enables governments to gather and mobilise public support for the government’s own procurement, privatisation and licensing programmes and to avoid the high cost in trust and reputation attached to occurrences of corruption in highly sensitive projects.
• Creates confidence and trust in public decision making, beyond the individual impact on the contracting process in question, and fosters a more hospitable investment climate.
• Empowers public officials determined to fight corruption and protects their good work in complicated projects.
• Empowers civil society in its contribution to the integrity of public procurement processes.
• Increases the impact and effectiveness of resources when central or state funds are involved in local projects or when aid resources are used.

Central Vigilance Commission

• CVC is the apex vigilance institution, free of control from any executive authority, monitoring all vigilance activity under the Central Government and advising various authorities in Central Government organizations in planning, executing, reviewing and reforming their vigilance work.
• It is an independent body and is only responsible to the Parliament.
• It was set up by the Government in February, 1964 on the recommendations of the Committee on Prevention of Corruption, headed by K. Santhanam.
• The Parliament enacted Central Vigilance Commission Act, 2003 (CVC Act) conferring statutory status on the CVC.

Source: The Hindu

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