Source: http://lawwithoutborders.typepad.com/legaloutsourcing/2010/11/checking-corruption-through-public-participation-india-needs-legislation-against-false-claims.html
Timestamp: 2017-06-24 05:13:03
Document Index: 302087499

Matched Legal Cases: ['§ 3729', '§ 3729', '§ 3729', '§ 3730', '§ 3730', '§ 3730', '§ 3730', '§ 3730']

CHECKING CORRUPTION THROUGH PUBLIC PARTICIPATION: India Needs Legislation Against False Claims - Law Without Borders
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CHECKING CORRUPTION THROUGH PUBLIC PARTICIPATION: India Needs Legislation Against False Claims
By Sanjay Bhatia*
I normally write on topics related to legal outsourcing ("LPO"), but like most Indians right now, I am thinking about corruption. The events leading to the recently concluded Commonwealth Games hogged headlines for all the wrong reasons. Almost every newspaper and Indian television news channel vied with each other to air “breaking news” that invariably related to the corruption involved in organizing the Games. Some of the controversies that shocked the collective conscience of the Indian public were:
Allegations that Mr. Sanjay Mahendroo, a member of the Sports Ministry, sent an e-mail dictating taxi rates to a vendor in London who was hired to provide cars and other services during the Queen's Baton Relay function in London last year. Mahendroo is said to have instructed the vendor to charge 450 pounds a day for each taxi, an exorbitant rate even when compared to hiring a BMW or Mercedes with a driver in London. (Incidentally, the same company was hiring out a Mercedes S Class for 150 pounds a day.)
Allegations that Australian based Sports Marketing and Management (“SMAM”), which was engaged for roping in sponsors for the Games, was paid 23 percent commission on all sponsorship deals that were signed, irrespective of SMAM's involvement in roping in the sponsors.
Allegations that the Organizing Committee paid Rs. 1,20,000 ($2,666) for each lamp post, which were not worth more than a few thousand rupees.
Allegations that the Organizing Committee paid Rs. 975,000 ($21,666) to rent a treadmill for 45 days, when the cost of the treadmill itself is less than Rs. 100,000 ($2,200).
Allegations that the Organizing Committee paid Rs. 8,378 ($186) for hiring each chair for 45 days; hiring 100-litre refrigerators for Rs. 45,000 ($1,000) each; hiring two-tonne air-conditioners for over Rs. 100,000 ($2200) each; hiring corporate umbrellas for Rs. 6,300 ($140) each; and purchasing each tissue roll for over Rs. 4,000($133)! Allegations that the government spent Rs. 971 crores (Rs. 9,710 million) on renovating the Jawaharlal Nehru stadium, when the cost of cost of construction of one stadium itself is about Rs. 81 crores (Rs. 810 million).
Allegations that the cost of the Games is close to £4.2 billion pounds, which is 100 times more than the initial estimate of £42 million.
Reading the above stories made the average Indian sick in the stomach. Are we so helpless that nothing can be done, other than rant about how corrupt our politicians are? Should the common man continue to be a mute spectator to the brazen corrupt practices by our “honorable” politicians and civil servants?
In India, the Prevention of Corruption Act, 1988 (“PCA”) is enforced by the Central Bureau of Investigation, the Central Vigilance Commission, state anti-corruption bureaus, and state vigilance commissions. The PCA is a penal legislation and does not provide for any form of public participation in the process of curbing corruption. Certain states also have the LokAyukta, an institution that helps expose corruption, mainly among the politicians and officers in the government service. Sadly, the LokAyuktas do not have binding powers to punish anyone. They can only recommend punishment, and their recommendations are rarely acted upon. Described as “watchdog[s] without teeth,” the Lokayuktas have so far not proved effective in checking corrupt practices.[1]
Given the present state of affairs, sadly, there is nothing much than an average citizen can do. While media houses expose corrupt practices and public-minded citizens file the occasional public interest litigation, invariably all such attempts die a natural death and are soon forgotten, or are overshadowed by newer instances of corruption of even more alarming proportions.
All this can change, and drastically too, if India chooses to pass a law on the lines of the [Federal] False Claims Act (“FCA” also known as the Qui Tam law)[2] prevalent in the United States.
At the macro level, the scheme of the FCA Act is simple. The FCA is aimed at fighting fraud against the United States government. The FCA creates civil liability for any person who “knowingly presents, or causes to be presented . . . a false or fraudulent claim for payment or approval” by the United States.[3] The defendant can be made liable for treble damages and a civil penalty of up to $10,000 per claim.[4] A private person (referred to as a “relator”) may bring a FCA claim (also known as a “qui tam complaint”) “for the person and for the United States Government . . . in the name of the Government.”[5] A qui tam complaint is filed in camera and remains under seal for at least sixty days.[6] During this period, the relator must present all material evidence to the government, and the government investigates and decides whether to intervene and proceed with the action itself.[7] If the government takes over the case, the relator may receive between 15 and 25 per cent of the government’s recovery, depending on the extent to which the relator contributed to the prosecution of the action, plus reasonable expenses.[8] If the government declines to intervene, the relator may proceed with the action on his or her own.[9] If successful after the government has declined, the relator can receive between 25 and 30 per cent of any recovery obtained, plus reasonable expenses.[10]
Additionally, certain states too have their own qui tam laws to check fraud upon the state government. States with False Claims Acts include: California, Delaware, the District of Columbia, Florida, Hawaii, Illinois, Louisiana, Massachusetts, Nevada, New Mexico, Tennessee, Texas, and Virginia.[11]
To the author's knowledge, there is no analogous law in India. This however has not deterred private initiatives to curb corruption. Tata Tea's “Jagore” campaign is well-publicized and immediately springs to mind. There are also instances of public-spirited citizens who relentlessly fight lone battles in seemingly David v. Goliath situations.[12] In fact, one entrepreneur lawyer, Mr. Shaffi Mather, has also advocated a “for profit” initiative to fight corruption.[13] Under this model, Mr. Mather envisages a business model where entities can be set up to fight corruption on payment of a fee (which, Mr. Mather asserts, will be lower than the bribe demanded). While Mr. Mather supports his idea with 42 success stories, it is still unfair for the victim to pay a third party to fight corruption. Also, Mr. Mather's idea does not address situations where the corruption results in both the sides benefiting at the cost of the taxpayer (for example, the scams pertaining to the recently concluded Commonwealth Games, where substandard equipment was supplied at inflated costs, and there were no “victims” other than India at large, because seemingly both the supplier and the decision maker on behalf of the government benefitted). All said and done, none of the private initiatives mentioned above have statutory backing. This is where passing a Qui Tam law can provide a major impetus to private efforts to curb corruption. Statutorily empowering the common man to initiate claims on behalf of the government, and incentivising him in case of a successful claim will go a long way in providing checks and balances to ensure that those involved in corrupt practices actually pay for it. An effective qui tam law would help check fraud, not just upon the government, but also curb corrupt practices by government officials. It is unlikely that fraud upon the government can be committed without the active participation or connivance of someone within the government itself. Making government officers civilly liable for the frauds committed on the government is likely to curb kickbacks and procurement fraud, of the nature that have been alleged against the Organizing Committee of the recently concluded Commonwealth Games. Some of the more common types of fraud against the government that can be curbed by passing a potent qui tam statute in India are:
Billing for goods and services that were never delivered or rendered. Presenting broken or untested equipment as operational and tested. Billing for premium equipment but actually providing inferior equipment. Double billing - Charging more than once for the same goods or service. Phantom employees and doctored time slips: Charging for employees that were not actually on the job, or billing for made-up hours in order to maximize reimbursements. Pumping, mining or harvesting more natural resources from public lands than is actually reported to the government. Being over-paid by the government for sale of a good or service, and then not reporting that overpayment. Misrepresenting the value of imported goods or their country of origin for tariff purposes. False certification that a contract falls within certain guidelines. Billing in order to increase revenue instead of billing to reflect actual work performed. Failing to report known product defects in order to be able to continue to sell or bill the government for the product. Winning a contract through kickbacks or bribes. Encouraging and empowering public participation is the key here. The sustenance and success of efforts to combat corruption are directly related to the extent of participation of civil society. The average citizen is indeed a stakeholder and the ultimate victim of corruption. Passing a civil anti-fraud statute and providing incentives to whistle blowers to initiate private actions (on behalf of the government) should go a long way in curtailing corruption at the governmental level. The strongest prerequisite for passing such a law in India is political will.
* Sanjay Bhatia is Head of Operations at SDD Global Solutions, India's leading high-end provider of legal outsourcing services, and the only Indian legal outsourcing company managed by a U.S. law firm. He is also a regular contributor to the Law Without Borders blog on the topic of legal outsourcing, and he is a graduate of India's top-ranked National Law School. SDD Global has offices in Mysore, Bangalore, New York, and London. SDD Global recently ranked as the #1 outsourcing company in India, and #2 in the world, out of over 2,700 companies evaluated, according to the 2010 survey of 6,547 clients by the Black Book of Outsourcing.
[1] See Krishnadas Rajagopal, “A Watchdog Without Teeth,” Indian Express, June 29, 2010, online at http://www.indianexpress.com/news/a-watchdog-without-teeth/639851/0 accessed on October 19, 2010.
[2] See 31 U.S.C. §§ 3729–33,
[3] 31 U.S.C. § 3729(a)(1)
[4] 31 U.S.C. § 3729(a)(7).
[5] 31 U.S.C. § 3730(b)(1).
[6] 31 U.S.C. § 3730(b)(2).
[8] 31 U.S.C. § 3730(d)(1).
[9] 31 U.S.C. § 3730(b)(4)(B).
[10] 31 U.S.C. § 3730(d)(2).
[11] http://www.taf.org/whyfca.htm accessed on October 19, 2010.
[12] E.g., see shttp://www.legallyindia.com/20100121412/The-Bar-and-Bench/pil-vs-mining-giants-to-make-karnataka-rich, for story about Mr. Arun Agrawal's public interest petition presently pending before the Karnataka High court, where Mr. Agrawal alleges that mining companies like Arcelor Mittal and Posco will benefit unfairly from state concessions, causing a loss of $50 billion to the Karnataka Government.
[13] See http://www.ted.com/talks/shaffi_mather_a_new_way_to_fight_corruption.html , accessed on Oct. 21, 2010.