'Corruption in construction sector is larger'

Integrity Pact or IP -- aimed at ensuring that no bribes are given or taken -- is the new buzzword in the corridors of government-owned companies.

The companies that have signed these pacts with the India chapter of the Berlin-based Transparency International include PSU majors such as GAIL (India), Coal India, Oil and Natural Gas Corporation, Steel, Hindustan Petroleum Corporation, Steel Authority of India, National Mineral Development Corporation and Rashtriya Ispat Nigam.  In fact, 12 of the 14 companies that signed the pact, did so in the last six months.

And standing in queue are Oil India, Engineers India, Container Corporation, NTPC, Indian Oil Corporation, Bharat Heavy Electricals, Bharat Sanchar Nigam and Neyveli Liginite Corporation. However, Admiral (Retd) R H Tahiliani, chairman of Transparency International India, tells Business Standard that a lot of corruption still remains to be uncovered. Excerpts:

What is the reason for the sudden rush of companies signing the Integrity Pact?

I have been trying to push the Integrity Pact for the last six years. The tide changed after I briefed the Central Vigilance Commission. They became fully supportive. My first target was the Ministry of Defence, which has adopted IP for deals greater than Rs 100 crore in value.

From the corporate sector, ONGC was the first to come on board in April 2006. Their experience has been very healthy, with Rs 34,000 crore (Rs 340 billion) worth of contracts signed since then, and no one has gone to court or asked for arbitration.

All ministerial intervention is reported to have stopped. Then there was a rush of pacts in 2007, as companies realised that it was a good way to end political interference. Bidders were also happy to abide by the pact since it reduces their costs.

Is there a quantitative estimate of what has been the saved by curbing corruption?

The experience of companies worldwide is that there is a 10-15 per cent improvement in the bottomline.

So should private companies adopt it?

So far, we have not targeted the private companies. TISCO has, however, shown interest and approached us.

How are you tackling the opposition to such pacts by the beneficiaries of these payoffs?

I have seen that if the top management, the chief executive, is committed to cleaning up the system, it works.

Many of the companies that have signed on are energy companies. Does this reflect the high corruption in the sector?

No. We also have steel companies and iron ore companies who have signed these pacts. Actually, corruption in the construction sector is larger. That sector has to be tackled with a much more elaborate IP, which we are working on.

We have tried to make inroads into aviation too. In Berlin, the new international airport is being built under an Integrity Pact. I tried to push it with civil aviation ministry, but it has not worked yet.

What happens if bribes are given and taken despite the Integrity Pact?

First the case will go to CVC, and the next step is to go to the public. We have not had to do that so far. If a supplier company is implicated, it could end up paying penalties and being blacklisted from future contracts for a certain period.

How are you funded?

We are a 100 per cent politically-neutral body, supported by the Servants of the People Society. We rely on donations from other non-governmental organisations (like the Irish Concern Worldwide) as well as the companies we work with such as Coal India and ONGC. These donations also fund our studies on corruption -- from grand larceny to petty corruption.