Bar & Bench speaks to Mohit Saraf (pictured), Senior Partner, Luthra and Luthra Law Offices on the recent 2G scam which has been making headlines. Saraf has represented the government of India, private companies and various government companies/public sector undertakings in relation to public procurement and bidding advice.
Bar & Bench (B&B): Besides resignation which is a political backlash, how will the law deal with A. Raja in the 2G scam?
Mohit Saraf (MS): The Prevention of Corruption Act (PCA) covers all the public servants, and therefore if any public servant has taken money or used it dishonestly, they are liable for damages under the PCA. There can also be a possible case against them under the Indian Penal Code (IPC) because at some stage, they enjoyed an office of profit.
If Raja has taken money, which is really an exchequer loss, he will be subjected to those criminal prosecutions inclusive of those under the PCA. Resignation is an easy part, which has happened. Prosecution has to take place; because the investors in India will then feel that at least we have an upright system.
B&B: Do you think one of the outcomes of the case, would be reallocation of the spectrums?
MS: Typically if you look at the Indian law, these types of instances do not take place. However, if companies have actually used wrongful means of getting something, then in that situation it will be within the law to take that back. So if one or two companies influenced and corrupted the officials etc., then in that situation taking it back from those people, is possible.
The spectrum was allotted to a number of companies amongst those one or two may have used wrongful methods, but others may not have done so. Cancelling of the entire process, particularly when a number of parties have spent a lot of money in the roll-out, in my view, will not get support of the Government or of anybody else.
What is important is that there are clear cases of violation by certain companies. Yes, there is a possibility of taking it back from them, but generally what the Government will do is to limit it to only those, where there was clear evidence of corruption. Government might not even prefer to do that, and might impose penalties instead.
B&B: Do you think the Government should be held responsible, or only the former Telecom Minister, or both?
MS: Both should be held responsible, because when we are doing a deal we have our own parliamentary system, and there is a collective responsibility of the Cabinet of Ministers of which the Prime Minister is the head. It is not a fair statement to just remove one Minister who is corrupt, as this will not absolve the responsibility of the Cabinet and the Prime Minister.
B&B: In what way can we frame/amend our laws to prevent future mishaps?
MS: Come to think of, these issues are not so much of law. It is more an issue of misuse of the executive powers. In my view they have to change the process itself i.e. the qualification criterion has to be very high. They should fulfill two qualifications i.e. one being a technical qualification and the other being financial.
What the system needs to do is bring a high technical criterion, so that only people who have got a long track record of experienced projects are able to qualify. Once this happens, all these issues which we are facing as of now will be ousted. At the end of the day, there has to be a proper level playing field, a good track record and make it open ended. The requirement should be building transparency in the entire bidding process, as to who is getting allocation and on what basis. This will then have impact on the highway projects, railway projects, metro projects. However, unfortunately what we see in various infrastructure sectors that transparency is still not there.
And in my view wherever you have absolute power, it will corrupt absolutely. At the end of the day these issues are an eye-opener. The Government is an important party which gives certain things i.e., scare and therefore the criterions have to be very transparent and open so as to disable the middlemen to capture the entire project. In a lot of instances the Indian Government tries to promote the Indian business community versus the foreign community, which in my view doesn’t serve any purpose. The level playing field has to be given to both sectors, foreign and Indian which will result in healthy competition which will be in the interest of the country. Both Indian and foreign corporations make money for their respective Indian and foreign shareholders and both are motivated by money. Therefore there should be no unnecessary favoritism towards Indian companies or foreign companies. Allow them to participate equally on a level playing field. Once this process happens along with transparency in the system, these issues will automatically come down.
Also, there are bidding rules set by the World Bank, which need to be followed. In India, there are no rules adhered to, and naturally it will lead to corruption.
Bidding process in India
MS: Whether there is a PCA in India, Foreign Corrupt Practices Act in the US or whether there is a UK Anti Bribery Act, all these laws basically talk about is, that corporations should not use money or influence to get business, because these give unfair advantage to one party, over another. It gives a corrupt company, an advantage over an uncorrupt company.
Most of the infrastructure, which has been developed over the last ten years, where the Government is the entity awarding projects, most have developed bad quality infrastructure inclusive of the recent Commonwealth Games.
The Government should set up an agency which only fixes the bidding rules and they (agency) don’t award contracts, so they won’t have any conflict of interest. They will only fix the right bidding rules, so that different departments do not get into different bidding rules. The rules have to be sound; else instances like Raja will continue to happen. There should be global competition, so that the best suitable person gets the contract. We should not let mediocre companies to participate. This is why we see the quality of infrastructure in India is far, far lower than the quality of infrastructure in China.