(Talk delivered to the Senior Executives Karnataka Antibiotics & Pharmaceuticals Limited (KAPL), Bangalore on 3rd November 2011 during the Vigilance Awareness Week)
I am delighted to be here today to address the Senior Executives of the Karnataka Antibiotics & Pharmaceuticals Lmited, Bangalore on the occasion of Vigilance Awareness Week. I must thank Mr. Deshmukh, DVO, KAPL for this opportunity to share my thoughts and interact with the executives. Incidentally, I happened to be the Founder of SIV-G, which is now recognised as a movement to involve and integrate the youngsters in our efforts to achieve good governance in our country. SIV-G stands for Self Imposed Vigilance for Good Governance and the details are available at www.siv-g.org. I, therefore, believe that I stand before you today not only because of my professional stature but also because of SIV-G.
I am also happy to be here on the occasion of Vigilance Awareness Week for another reason. In the year 2000, I was in Central Vigilance Commission, when CVC decided to declare the week starting with 31st October every year as the Vigilance Awareness Week and was very much involved in that exercise. Also, I am interacting through this talk with the senior executives of yet another public sector organisation.
In retrospect, when I look back the manner in which the Vigilance Awareness Week is being observed, there is a sense of satisfaction. In 2007, I was heading a delegation in the 10th Commonwealth Study Conference held in India and Malaysia. I had a delegate from Singapore by name Mr. Chua, who works for the education department, Singapore. He mentioned to me that in Singapore, they have a system of the policy makers after making the policy are deputed to the field to implement their policy, perhaps to ensure that the policies made are implementable. In the same sense, I feel quite satisfied that I am able to contribute from the other side, as far as observance of Vigilance Awareness Week is concerned.
Vigilance Awareness Week
The Central Vigilance Commission, being the apex anti-corruption body in India, has the mandate of exercising superintendence over Vigilance Administration of organisation under its jurisdiction. Keeping in view this assigned function declared on 23rd June 2000 that the week beginning from October 31 every year should be observed as the Vigilance Awareness Week. The significance of 31st October, as per this directive, is that it is the birthday of the Bismarck of India, Sardar Vallabh Bhai Patel, who represents the best values in the Indian tradition so far as governance is concerned. Sardar Patel not only integrated the country and also was a shinning example of probity in public life.
The idea behind the Vigilance Awareness Week, therefore, was that 31st October should automatically and subconsciously send a message to every public servant and the citizen about how this country has the potential to become a great country, not only in economic terms, but also in terms of ethical values of integrity.
CVC envisaged this Week to begin with a Pledge administered by the Head of the Organisation/ Department followed by a variety of activities through out the week. The messages of dignitaries, starting from the President of India, Vice President, Prime Minister, Home Minister, Leader of Opposition and the Central Vigilance Commission are released by the CVC and they are passed on up to the grass root level in the organisations/departments as well as the general public during this occasion. Various activities such as release of special journal, organising seminars, lectures, debates and so on take place during this Week. The organisations are also expected to organise competitions and programs for participation of students in this campaign. In addition, as visualised by CVC, Civil Society through the Non Government Organisations, Institutions, Service Associations have also become part of this vigilance awareness campaign over the period of time.
Why Corruption is an issue today?
We are at the cross roads as far as tackling the issue of corruption is concerned. The drawing room discussions on corruption no longer remain the same. The discussions and debate on corruption have come to open, in fact, brought to the streets, thanks to the series of scams coming to light and their reaction through public anger, activists’ pressure and judicial activism. There is an enormous expectation from the institutions like Central Vigilance Commission and other anti-corruption agencies from all corners. This is a great challenge not only to the CVC, but also to the entire vigilance fraternity to come up to the expectation.
The fact that corruption has become omnipresent and ever mounting only indicate that there is a greater need to augment the efforts and explore various innovative ways and means to fight it out. Needless to mention that the efforts have to come from every corner of the society.
We are very much aware on the spate of scams getting surfaced in recent times covering every aspect of governance and almost every sector. Nevertheless, it is important to understand the historic perspective as well. As long as the world was divided between the two ideologies of East and West, corruption was not a major issue. The two camps were not bothered about corruption. “Corruption is fine, as long as you are in my camp” was the attitude of the two super powers. But after the end of the cold war the countries have become interdependent. As a result, the resources started moving across the borders and today we are witnessing the Flat World phenomenon; again to borrow the words of Thomas L. Friedman. In this process, the liberalization and the economic reforms thereof paved way for entry of private players in economic development. This has slowly pushed the private players to the reality of competition and at the same time being self reliant. The outburst of financial irregularities and scams were the result of this situation to cope up with the competition and at the same time profit making.
Added to this factor, there is another interesting development. The tax payers of the donor countries who provide aids are now very vigilant and are particular that their money is spent properly by the receiving countries. They are very keen that the countries receiving aids are well governed as well. So the buzz words, governance and corporate governance have become very prominent in the present scenario. There is a paradigm shift in the thinking from ‘business of business is business’ to ‘business of business is ethical business’. The recent scams including the Satyam scam are the reminders in this direction.
Public Sector Enterprise
Having adopted the socialist model of democracy, the makers of our Constitution visualised the three pillars, namely, the Legislature, the Judiciary and the Executive for effective functioning of the democracy. The Legislature makes the law within the ambit of the Constitution. The Judiciary interprets the law and also ensures that the basic structure of the Constitution is not tampered with. The Executives, both political executives and the permanent bureaucracy execute the law.
It is very interesting to see how the Public Sector Enterprises having to contribute to the mandate of their administrative ministries become part of the third pillar of democracy namely, the Executive.
It is worthwhile to recall the three bricklayers in the famous story of Sir Christopher Wren. After the Great Fire of London in 1666, when the reconstruction work was going on, three bricklayers were asked, while on work, as to what they were doing. The first one replied, ‘I am carrying the bricks from here to the other side’. The second one replied, ‘I work here from morning to evening carrying the bricks and by doing this I get money at the end of the day to support my family’. The third bricklayer replied, ‘You know, the London city was destroyed by fire and we are rebuilding the Cathedral’. Well, while all the three bricklayers were carrying out exactly the same job, their approach and understanding towards their job was different.
Similar to the bricklayers’ story, the public sector enterprises are not only contributing in creation of employment, making profit, but in a larger sense, they are designed and mandated to contribute to one of the Pillars of democracy, the Executive.
Having said that the Public Sector contributes in its own way to the democratic process of the nation, it becomes all the more important to ensure that they are well governed and run effectively to achieve their objective and become a purposeful tool in the democratic process. It is in this context, we widely talk about corporate governance and the FAT comes into picture now.
Essentially, governance or corporate governance has three basic elements FAT : Fairness, Accountability and Transparency, which make it meaningful. Let us discuss briefly on these FAT substance.
The first element of FAT - Fairness can be defined as the ability to make judgements free from discrimination, bias and dishonesty. For instance, when it comes to the public sectors, the executives / employees are expected to be fair in their dealings, meaning thereby that all their actions and decisions are free from discrimination, bias and dishonesty. In fact, such fair deals will also pave a way for win-win situations, which automatically enhances the credibility of the parties involved. Therefore, being fair is essential for ensuring good corporate governance. Thus the decisions should not only be taken in a fair manner but should also appear to be fair. After all, it is said, fairness is not an attitude but it is a professional skill that must be developed and exercised.
The next element of FAT is Accountability. Accountability is responsibility and answerability to the shareholders and stakeholders on how the company is run in a fair manner while achieving its objectives. It is in this process, the powers vested with the authorities are delegated appropriately so that the execution becomes easy and effective. Thus, we see in our day-to-day decision-making process and in the execution of work that for every decision taken, there are authorities made accountable for those decisions. In case of any adverse fallout of those decisions, the said authority, which took that decision, is answerable and held accountable. We must also remember that in the ultimate analysis, accountability to the shareholders and stakeholders is not only for what we do but also for what we do not do in exercise of our duties.
The third element of FAT is Transparency. Sunshine is the best antidote for darkness, it is said. We cannot ensure Accountability without Transparency. It is very important to understand that the only way to ensure transparency is through the documents and records which are generated while taking any decision. One has to borne in mind that the records, which are generated during the day to day affairs of a public sector company are intended to serve in future for others to view/audit/inspect and examine when necessity arises. Such records are not meant for the use of creator alone. In fact, the creator of records knows quite well about what is happening while processing a case and decision maker also knows about what is being done. Therefore, the transparency element comes in to picture when the records / documents generated provide complete picture on the facts, figures and circumstances under which a particular decision was taken.
During one of the training programs conducted by the author for the executives of oil industry, some years ago, a question was asked by an officer working in a refinery. He asked, ‘Sir, if there is a fire in our refinery, would you expect us to put up a note and seek approval for putting off the fire, for the sake of transparency?’ The answer given to him was simple and with a big ‘No’. What was required in such situations is to swiftly act and put off the fire with whatever manner possible with all available and mobilised resources. Once the crisis is over, a self contained note need to be put up explaining the details of the crisis and the way in which it was handled and post facto approval, wherever necessary has to be taken and thus transparency is ensured. Of course, the same will not apply to a normal tender process or in a pseudo crisis! Therefore, the very purpose of generating records, physically or digitally (in the present context), is to instil the element of transparency through which accountability could be ensured.
Now let us see how a corporate is structured. Every corporation has a vision and mission. To achieve the vision through mission, the Board delineate policy framework, which are translated by the top management in to systems and procedure. The system and procedures are implemented to get the desired results. However, sometimes, the desired results are not achieved because of the impediments including corruption. This is where the vigilance intervention comes.
Now, let us look at the importance of Systems from a different perspective. As per the McKinsey’s 6S framework, Systems are as important as the strategy, structure, and so on. Systems, in other words, internal controls, which consist of the Rules, Regulations and Procedures.
Corporate Governance vis-à-vis Systems
Having seen the components of good corporate governance, namely, Fairness, Accountability and Transparency (FAT), it is important to know how these elements converge. Fairness otherwise implies the manner in which the transactions are conducted which ultimately amounts to the ethical standards followed in the business transactions. In fact, a closer look into this aspect will reveal that the convergence takes place through the ‘internal controls’ which are in built at every level of decision making and implementation covering every aspect of operation of the organization.
It is not out of place to mention here that there is a three-point test, which is being advocated by the stalwarts who had seen great success amidst adversities, which will conform whether our acts are ethical or otherwise. It is a three-point test prescribed by Norman Vincent Peale and Kenneth Blanchard in their book, ‘The power of ethical management’. Any decision taken or any act performed has to be subjected to this test. The first test is, is it legal? The second test is, is it fair? Whether the decision or act is fair enough to all the parties involved in the process. In other words, a win-win situation. Then the third test is, if the decision taken or the act performed is made public subsequently, will it bring shame or embarrassment to the individual or organization. If the answer to these tests is affirmative then the decision is ethical.
Existence of system is an important factor for exercising internal controls and achieving good corporate governance. However, if the systems are not followed mere existence of such system has no meaning. Therefore, equally important is the fact that such systems in place are followed in spirit. It is in this context, vigilance comes in to the picture to ensure effectiveness of the systems. Vigilance, therefore, implies the vigilance function which everyone connected with the organization exercises.
It is in this context, the participative vigilance as envisaged by CVC comes into picture. Whose job is it now to ensure that the systems and procedures are effective and yielding the desired results? Isn’t it the job of every stakeholder in an organisation? Every stakeholder has a responsibility to ensure the systems are not exploited for personal gains. The stakeholder can either participate through corrective action or by blowing the whistle.
If we look back and see the journey the Vigilance Awareness Week had undergone with the conceptualisation and promotion by CVC and observance by the organisations / departments with active participation of Civil Society organisations, no wonder, this year’s theme is aptly pronounced as ‘Participative Vigilance’. Perhaps, it is just a reminder and reiteration of the real spirit behind the observance of Vigilance Awareness Week, visualised by CVC a decade ago, which is participation of everyone to ensure probity in public life.
After all, it is said, war is too dangerous to be left to the Generals and ensuring good governance is too important an activity to be left along to the CVC and the Vigilance fraternity.
Wake up the vigilance officer within!
Nevertheless, there is an easy way of adopting these practices. The story of lamb and tiger is the best example to understand it. Moving amidst the lambs, the lone tiger behaved like a lamb, until one day another tiger made it realize the fact that it was a tiger and not a lamb. The same way, everyone in the organization should realize that they are vigilance officers in themselves to watch their own acts and deeds, at the first place and then the others.
In the ultimate analysis, the best course of action to adopt is the direction set by Swami Vivekananda: ‘Teach yourselves, teach every one, his (or her) real nature, call upon the sleeping soul and see how it awakes. Power will come, glory will come, goodness will come, purity will come, and everything that is excellent will come, when this sleeping soul is roused to self-conscious activity’. Let us wake up the vigilance officer within and participate. This is the very essence of participative vigilance.
Let us act and not wait for any Act to make the participative vigilance a reality.