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Minister upset with ex-babus joining private sector firms

Last updated on: September 30, 2011 13:24 IST

Minister upset with ex-babus joining private sector

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Shyamal Majumdar


V Narayanasamy is an earnest man. The Minister of State looking after the Department of Personnel and Training (DoPT) shot off a note last week asking officials to fast-track a proposal to increase the mandatory 'cooling' period of bureaucrats from the existing one year to three years from the date of retirement.

Apparently, the minister is angry with the sharp increase in the number of ex-bureaucrats joining the private sector -- the entities they 'regulated' while in service -- almost immediately after their retirement.

This, the minister feels, is a blatant violation of the conflict of interest clause. The immediate trigger of Narayanasamy's action was the controversy regarding a former telecom regulator joining a high-flying corporate lobbyist firm that allegedly had a big role to play in the 2G scam controversy.

Narayanasamy's sincerity is not in doubt. But where the minister seems to have faltered is his almost-innocent belief that law can change men's minds.

There is already an elaborate rule that states that no bureaucrat can take up a 'commercial job' for one year from the date of his retirement. But the devil lied in the details -- as with all government rules.

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Photographs: Reuters
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The All India Service rules left ample room for making a mockery of the regulations by saying exceptions can be allowed with the 'previous sanction of the central government'.

The result is quite obvious. There have been countless instances of the government waiving the stipulation.

For example, the former telecom regulator, who is now under the scanner for the 2G scam controversy, joined the corporate lobbyist almost immediately after his retirement. He had duly obtained permission from the government for doing so.

By the DoPT's own admission, 10-12 such applications are received every day from retired bureaucrats. And the government has been more than generous in accepting such requests.

The list is huge: former revenue secretary P V Bhide was allowed by the DoPT to join the boards of five companies soon after retirement and former health secretary Naresh Dayal joined a consumer products giant just a few months after his superannuation.

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Former West Bengal chief secretary Ashok Mohan Chakraborty joined a private sector major within five months of his retirement.

The private sector's keenness to hire retired top bureaucrats is understandable as apart from knowledge, they bring in the invaluable old-buddy connection with the government.

And there was nothing illegal in what all these gentlemen did since all of them sought and obtained the government's permission.

But the fact is that rules become irrelevant if they are followed more as an exception.

In that context, Narayanasamy's latest action in trying to increase the cooling-off period to three years lacks conviction.

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As it is, the service rules till January 1, 2007, had set the mandatory cooling-off period at two years. This was reduced to one year in 2008 under pressure from the powerful IAS lobby.

So, many in the bureaucracy have already started interpreting Narayanasamy's move as nothing but one-upmanship and yet another case of ministerial whim.

To be sure, this is not an Indian phenomenon only. Bureaucrats all over the world seem to have perfected the art of keeping an escape route when it comes to rules governing them.

For example, the United States has what it calls 'revolving door' restrictions -- a term commonly used to describe a potentially corrupting interrelationship between the private sector and public service.

The rules have a mandatory cooling-off period ranging from one year to three years.

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But as in India, the US rules also have provisions for 'waivers'.

For example, waivers can be granted if the employee's self-interest is 'not so substantial' as to affect the integrity of services provided by the employee, or if the need for the employee's services outweighs the potential for a conflict of interest.

This escape clause has been fully exploited by bureaucrats. For example, financial giants in the US recruited hundreds of former regulators in the Federal Reserve, the Securities and Exchange Commission and others, almost immediately after their retirement.

The purpose was to find a way out of the strict rules set by the regulators after the 2008 crisis. And who else are better suited for these roles than ex-regulators themselves who have had long, personal relationships with those in the regulatory agencies?

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Not surprisingly, one NGO referred to them as a 'special-interest army of influence peddlers'.

The same 'army' is super active in Japan as well. The Economist had once reported how Japan has a practice of 'amakudari', or descent from heaven, whereby many senior bureaucrats leave office only to move into cushy post-retirement jobs.

The 'descent' lands these ex-bureaucrats in those very companies they previously regulated -- where they tend to hold back reforms like deregulation and the cutting of subsidies.

It seems retired bureaucrats all over the world are united in making sure that they never fade away. Narayanasamy has a tough, in fact, almost impossible task ahead of him.


Photographs: Reuters
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