Themes > Current Issues
6.06.2012
Curbing Conflicts of Interest*
Jayati
Ghosh
Among
the many other forces that have proliferated in the economic boom
of the brash new India is conflict of interest. So widespread, comprehensive
and many-tentacled has this feature become that it is often no longer
even recognized to exist, much less to be a problem. The practice
is now so common that it is even hard to single out just a few cases
or get more outraged about some compared to the overall pattern of
behaviour.
But consider just a few examples, which many of us would have come across directly, and the indirect consequences of which all of us face. Senior bureaucrats promptly take on post-retirement jobs with companies that have been affected by policies and implementation they have directed while in office, with no one batting an eyelid. Those in economic Ministries are the first to be snapped up, as banks and private companies vie to have them on their boards, and others take them on as ''advisers'' who are valued precisely because they are completely informed about the inside workings of government.
Others who have worked in particular line departments unsurprisingly find places in companies (and even lobbying firms) that deal specifically with those and related activities. The ''revolving door'' through which important people move from private to public life and back is a well-known (and global) means through which the corporate sector exercises influence over public policies. None of this is illegal, and none of it is even much remarked upon, so inured have we become to the grey areas in which ''public private partnerships'' are conducted in different ways.
There are other means as well. Committees and Commissions that advise on critical matters like financial regulation or pricing of utilities often contain representatives of banks and companies that would be directly affected by their decisions. Or some of the members join such firms fairly quickly after serving on such bodies. Large agribusinesses and other corporate bodies are regularly represented on officially designated advisory bodies, some of which even have statutory powers. Multinational food giants and pharmaceutical companies host or sponsor activities of professional organisations that can set standards or influence the advisory decisions of health and nutrition professionals.
Sometimes - though these are relatively rare occasions - such practices create a public outcry that causes some change. It is noteworthy that these changes do not happen easily: they require intense and prolonged pressure and often legal action.
For example, in March 2011, the basic regulatory body for food in the country - Food Safety and Standards Authority of India (FSSAI) - was forced to reconstitute its expert panels. But this was only after a Public Interest Litigation by the Alliance Against Conflict of Interests caused the Supreme Court to intervene. The FSSAI had instituted eight scientific panels, of which seven included as many as 18 members who were actually employees of big food businesses.
For example, the panel for sampling and analysis had a member from Coca Cola India Pvt Ltd - even though that was one of the companies named in an independent study of pesticide residues in popular drinks. The panel for food additives and flavouring had representation from both Coca Cola India and Pepsico International - yet it was supposed to provide objective and impartial advice. The scientific panel on labelling and claims/advertisements included employees from the companies Nestle and Hindustan Unilever, both of which had been made to withdraw misleading television commercials the previous year.
The shocking thing is not just that such appointments could be considered in the first place, but that even after alarm bells were raised by the public, they were not withdrawn until the Supreme Court explicitly castigated the FSSAI and forced it to change. In other cases, where legal processes have not forced revision, protests against such conflicts of interest are simply shoved under the carpet or ignored.
But the government and public institutions are not the only ones guilty of such conflicts of interest. The increasingly commercialised and corporatised media are big-time practitioners of this. Some media - both newspapers and TV channels - are directly owned by large corporate houses, and therefore it is surely no surprise if there is some control over editorial policy especially when the interests of that corporate house are involved. Since media are critical in making the public aware of issues and affecting public policies, this type of conflict of interest also has extremely serious and damaging implications.
Indeed, there are also cases in which the media group is not directly owned by some companies but still receives money, in the form of advertising revenues or other sponsorship that may influence its reportage and even editorial positions. For example, the chief sponsor of the Indian Express Group’s 2011 Ramnath Goenka Awards for excellence in journalism, including ethics in journalism, was the Jaypee Group. This group of companies has major interests in building dams, both for the Narmada River and in the Northeast. ''Coincidentally'', a few months previously the Indian Express newspaper had mounted major campaigns against anti-dam campaigners in both places, particularly in the Northeast, and in favour of large hydro projects in the region (which were also to be contracted to the Jaypee Group). Another sponsor of this event was the seed company Mahyco Monsanto which produces GM seeds - and once again it emerges that the Indian Express had produced a number of articles and reports in favour of GM crops before that.
The most egregious example of such conflict of interest is obviously in the paid news that has come to proliferate in large chunks of both local language and English media. A recent article by P. Sainath in the Hindu ''Reaping gold through cotton, and newsprint'' on April 10, 2012, showed how the Times of India had published a full page feature on the benefits of BT cotton in Vidharbha, Maharashtra, a paid advertisement masquerading as news, which contained supposedly objective but unverified ''reports'' that had already appeared in the paper three years previously, in which clearly false claims were made! As Sainath notes, the full page appeared twice in three years: ''The first time as a story trip ‘arranged by Mahyco-Monsanto.' The second time as an advertisement arranged by Mahyco-Monsanto. The first time as tragedy, the second time as farce.''
All this is why a Private Member’s Bill in the Rajya Sabha(The Prevention and management of Conflict of Interest Bill, 2011) is of such importance. The bill, introduced on 27 April 2012 by E. Sudarshan Nachiappan, seeks to limit the possibilities of conflict of interest among officials, public and quasi-official bodies and the like. The statement of objects and reasons of the Bill makes it clear that conflicts of interest have increased significantly as a result of the economic policies of the past two decades.
''The current market liberalization has ushered in an era of new relationships between the state and the markets, with a potential for creating a new relationship between the state and the citizen. Private sector is increasingly being invited to present their solutions to the nation's ills. Yet many services, such as public goods-health care, nutrition, education, water sanitation, protection of the environment, etc.-cannot be provided by markets. The primary duty of the private sector is to increase its profits for its shareholders, whereas the fundamental and inalienable duty of the State is to provide all its citizens, especially the weakest and poorest, with the minimum requirements to live a life with safety and dignity, regardless of the cost. The Constitution of India makes it incumbent that the State gives primacy to article 21 and its expanded interpretation as the right to live with human dignity.
The differing priorities-that of the State and that of the private sector-present in themselves a serious conflict of interest. The current draft legislation on Conflict of Interest is an attempt to safeguard the duty of the State towards its citizens and to uphold article 21 of the Constitution.''
This is an extremely important step. But even the proposed bill does not go far enough, because there are all sorts of ingenious ways in which such conflict of interest may exist. Further, as has been noted earlier, some of the most worrying examples of conflict of interest are not confined to public bodies but are increasingly entirely within the so-called ''private sector'', so we clearly need to think of ways - through laws, rules or other frameworks - to control that.
And most of all, we need much more public outrage at the prevalence of conflicts of interest, away from the currently somnolent or cynical acceptance of their ubiquity.
* This article was originally printed in the Frontline Volume 29 - Issue 11 :: Jun. 02-15, 2012
But consider just a few examples, which many of us would have come across directly, and the indirect consequences of which all of us face. Senior bureaucrats promptly take on post-retirement jobs with companies that have been affected by policies and implementation they have directed while in office, with no one batting an eyelid. Those in economic Ministries are the first to be snapped up, as banks and private companies vie to have them on their boards, and others take them on as ''advisers'' who are valued precisely because they are completely informed about the inside workings of government.
Others who have worked in particular line departments unsurprisingly find places in companies (and even lobbying firms) that deal specifically with those and related activities. The ''revolving door'' through which important people move from private to public life and back is a well-known (and global) means through which the corporate sector exercises influence over public policies. None of this is illegal, and none of it is even much remarked upon, so inured have we become to the grey areas in which ''public private partnerships'' are conducted in different ways.
There are other means as well. Committees and Commissions that advise on critical matters like financial regulation or pricing of utilities often contain representatives of banks and companies that would be directly affected by their decisions. Or some of the members join such firms fairly quickly after serving on such bodies. Large agribusinesses and other corporate bodies are regularly represented on officially designated advisory bodies, some of which even have statutory powers. Multinational food giants and pharmaceutical companies host or sponsor activities of professional organisations that can set standards or influence the advisory decisions of health and nutrition professionals.
Sometimes - though these are relatively rare occasions - such practices create a public outcry that causes some change. It is noteworthy that these changes do not happen easily: they require intense and prolonged pressure and often legal action.
For example, in March 2011, the basic regulatory body for food in the country - Food Safety and Standards Authority of India (FSSAI) - was forced to reconstitute its expert panels. But this was only after a Public Interest Litigation by the Alliance Against Conflict of Interests caused the Supreme Court to intervene. The FSSAI had instituted eight scientific panels, of which seven included as many as 18 members who were actually employees of big food businesses.
For example, the panel for sampling and analysis had a member from Coca Cola India Pvt Ltd - even though that was one of the companies named in an independent study of pesticide residues in popular drinks. The panel for food additives and flavouring had representation from both Coca Cola India and Pepsico International - yet it was supposed to provide objective and impartial advice. The scientific panel on labelling and claims/advertisements included employees from the companies Nestle and Hindustan Unilever, both of which had been made to withdraw misleading television commercials the previous year.
The shocking thing is not just that such appointments could be considered in the first place, but that even after alarm bells were raised by the public, they were not withdrawn until the Supreme Court explicitly castigated the FSSAI and forced it to change. In other cases, where legal processes have not forced revision, protests against such conflicts of interest are simply shoved under the carpet or ignored.
But the government and public institutions are not the only ones guilty of such conflicts of interest. The increasingly commercialised and corporatised media are big-time practitioners of this. Some media - both newspapers and TV channels - are directly owned by large corporate houses, and therefore it is surely no surprise if there is some control over editorial policy especially when the interests of that corporate house are involved. Since media are critical in making the public aware of issues and affecting public policies, this type of conflict of interest also has extremely serious and damaging implications.
Indeed, there are also cases in which the media group is not directly owned by some companies but still receives money, in the form of advertising revenues or other sponsorship that may influence its reportage and even editorial positions. For example, the chief sponsor of the Indian Express Group’s 2011 Ramnath Goenka Awards for excellence in journalism, including ethics in journalism, was the Jaypee Group. This group of companies has major interests in building dams, both for the Narmada River and in the Northeast. ''Coincidentally'', a few months previously the Indian Express newspaper had mounted major campaigns against anti-dam campaigners in both places, particularly in the Northeast, and in favour of large hydro projects in the region (which were also to be contracted to the Jaypee Group). Another sponsor of this event was the seed company Mahyco Monsanto which produces GM seeds - and once again it emerges that the Indian Express had produced a number of articles and reports in favour of GM crops before that.
The most egregious example of such conflict of interest is obviously in the paid news that has come to proliferate in large chunks of both local language and English media. A recent article by P. Sainath in the Hindu ''Reaping gold through cotton, and newsprint'' on April 10, 2012, showed how the Times of India had published a full page feature on the benefits of BT cotton in Vidharbha, Maharashtra, a paid advertisement masquerading as news, which contained supposedly objective but unverified ''reports'' that had already appeared in the paper three years previously, in which clearly false claims were made! As Sainath notes, the full page appeared twice in three years: ''The first time as a story trip ‘arranged by Mahyco-Monsanto.' The second time as an advertisement arranged by Mahyco-Monsanto. The first time as tragedy, the second time as farce.''
All this is why a Private Member’s Bill in the Rajya Sabha(The Prevention and management of Conflict of Interest Bill, 2011) is of such importance. The bill, introduced on 27 April 2012 by E. Sudarshan Nachiappan, seeks to limit the possibilities of conflict of interest among officials, public and quasi-official bodies and the like. The statement of objects and reasons of the Bill makes it clear that conflicts of interest have increased significantly as a result of the economic policies of the past two decades.
''The current market liberalization has ushered in an era of new relationships between the state and the markets, with a potential for creating a new relationship between the state and the citizen. Private sector is increasingly being invited to present their solutions to the nation's ills. Yet many services, such as public goods-health care, nutrition, education, water sanitation, protection of the environment, etc.-cannot be provided by markets. The primary duty of the private sector is to increase its profits for its shareholders, whereas the fundamental and inalienable duty of the State is to provide all its citizens, especially the weakest and poorest, with the minimum requirements to live a life with safety and dignity, regardless of the cost. The Constitution of India makes it incumbent that the State gives primacy to article 21 and its expanded interpretation as the right to live with human dignity.
The differing priorities-that of the State and that of the private sector-present in themselves a serious conflict of interest. The current draft legislation on Conflict of Interest is an attempt to safeguard the duty of the State towards its citizens and to uphold article 21 of the Constitution.''
This is an extremely important step. But even the proposed bill does not go far enough, because there are all sorts of ingenious ways in which such conflict of interest may exist. Further, as has been noted earlier, some of the most worrying examples of conflict of interest are not confined to public bodies but are increasingly entirely within the so-called ''private sector'', so we clearly need to think of ways - through laws, rules or other frameworks - to control that.
And most of all, we need much more public outrage at the prevalence of conflicts of interest, away from the currently somnolent or cynical acceptance of their ubiquity.
* This article was originally printed in the Frontline Volume 29 - Issue 11 :: Jun. 02-15, 2012
© MACROSCAN 2012