10 things that can prevent future scams

The 2G spectrum scam has taken the nation by a storm and is considered to be the mother of all scams.

Many, however, say that this scam could have been prevented had the ruling party acted on various warnings that were given when the scam was brewing.

Member of Parliament and entrepreneur Rajeev Chandrashekhar had, in fact, written a letter to Prime Minister Manmohan Singh warning him about this scam, but no action was taken then.

In a candid interview with rediff.com, Chandrashekhar explains what the government can now do to clean up this mess.

He also reveals how the government is trying to sweep this scam under the carpet. Excerpts:

How do we prevent recurrence of such scams?

Modern scams are sophisticated and not intuitive nor easy for the lay person or indeed large sections of media to understand.

The large amount of money involved create a situation where there is a regular and constant attempt by smart/shrewd entrepreneurs and businessmen with the help of lawyers/lobbyists/crooked politicians and bureaucrats to rig the system and invariably win through contracts and concessions.

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Modern scams are victimless in that the victims are not obvious.

The victims of these crimes are the taxpayers and citizens of the country to whom this money and assets belong.

The only permanent way for us to stop scams is to work on both prevention and deterrence.

5-point plant

1. Increase disclosure requirements by the government on all contracts, PPPs and concessions involving public money or assets.

2. Improve the effectiveness of parliamentary oversight on government and executive by making parliamentary committees stronger as well as more transparent to the public.

3. Create deterrents by creating fast track prosecution for white collar crimes.

4. This may require complete overhaul and changes in our criminal justice system that is still designed around petty crime and criminals and is totally ineffective in dealing with sophisticated financial crimes of the day.

5. Media has played an important role in curving a public opinion, and that is why the nation as a whole is angry and engaged on this issue.

A permanent solution, thus, to such scams and corruption is alert citizen and conscientious media.

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10 things that can ensure prevention of such scams in future:

1. Create a new regime of mandatory disclosures by the government and its agencies for all contracts involving taxpayer money and/or assets

2. The government must have outside legal and advisory help while negotiating contracts and not rely only on bureaucrats.

3. The government must ensure that our Criminal Penal code has amendments to deal with and enable rapid prosecution of white collar crimes and scams.

4. Remove Section 311 that requires prior sanction from the government to prosecute its officers.

5. Make Parliamentary oversight of the government more effective and more institutionalised. Make such oversights transparent and available to media and citizens.

For example, the proceedings of the parliamentary committees should be made available to the media and public as transcripts.

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6. Ensure that government policy is always about the public and not about private and personal interests.

7. Legislation must be initiated to regulate lobbyists and business chambers, to prevent advocacy changing to corruption and to protect against policy capture instead of policy advocacy.

8. Ensure government policies are not always bombastic rhetoric and full of loopholes for exploitation. This will minimise administrative/political discretion.

9. Create a new cadre of independent regulators, backed by parliamentary statutes that oversees most of these sectors.

For example, bureaucrats must be chosen as regulators only in exceptional cases of high integrity and capability. Such Independent Regulators must also have oversight on them to ensure that there is no regulatory capture.

10. Lastly and most importantly both media and the general public must create an awareness that the government is a trustee of public money and assets and the people are the real owners.

If trustees violate the trust, people should not sleep, but must react.

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How is the government trying to push the 2G scam under the carpet?

The government is obligated to act in public interest and in this case its priority must be to identify and punish the wrong doers and recover the money lost due to cheap sale of spectrum.

However, it appears that the government is not serious about recovering the money lost and punishing the guilty.

Instead, it is relying on arguments which indicate that the government is trying to sweep this serious crime under the carpet.

The arguments of the Telecom Minister Kapil Sibal that investors and consumers will be upset are not based on facts and are untenable.

To say investors will be upset is to say that a criminal will be upset for being put behind bars for a crime.

The fact is nothing is going to happen to investors if we take a strong stand on this. They will continue to invest. The simple stand should be if you do anything against the laws of India, you have to pay for it.

In China, such companies would have been kicked out. Tax payers can't be held responsible for bad investment decisions of the corporate world.

The argument that consumer interest will be affected is hardly a concern as each circle had multiple operators which allow consumers to easily switch between operators.

And with mobile number portability, subscribers with dubious operators can simply change their operators and cost of migration will be borne by the licensee.

In such a scenario, it is disturbing to see the Sibal giving a spin to the 2G scam and trying to confuse the media, people and take the focus away from the actual issue.