The Indian Constitution and many of India’s laws, rules and customs address conflict of interest among parliamentarians, but it is clear that many are either not used, are underused, or are sidestepped by various means. Law-making bodies in other countries offer examples of how they can be made to work – such as the informal, behind-the-scenes work of the ethics commissioner in Canada and the explicit and vast list of prohibitions in the United States. While India can, and should, develop a system that will best suit its unique needs, it is clear that a more enforceable, practical system for dealing with conflict of interest is needed. Public disclosure of interests – including investments, employment and business ties – for members of both houses would be a constructive and trust-building first step.

Erica Lee Nelson (ericaleenelson@gmail.com) graduated from George Washington University’s Elliott School of International Affairs.

P

Correct handling of conflict of interest is important for serving the public interest, as well as for public perception of l egislative bodies. High-profile conflict of interest problems have arisen frequently in the Indian Parliament in recent years. The most headline-grabbing have been those involving restrictions against MPs holding offices of profit. In 2006, Jaya Bachchan was expelled from the Rajya Sabha because she was also the chairperson of the Uttar Pradesh Film Development Council, and Sonia Gandhi resigned as a Lok Sabha member because she held the position of chairperson at the National Advisory Council (Iype 2006).

While the exact definition of which offices do and do not fit the definition of “office of profit” is subject to much debate (and indeed, a whole parliamentary committee is dedicated to looking at the issue), some other recent cases of conflict of interest are more clear-cut. For example, Rajya Sabha member and head of the prominent United Breweries Group, Vijay Mallya, is a member of the committee on

Parliament do not preclude these activities, but instead, provide a framework for transparency and full declaration of a member’s interests, as well as opportunities for other members to challenge their participation if they see fit. Unfortunately, in the practice of day-to-day business, this framework is largely neglected. This a rticle will examine the current use of the existing framework, as well as evaluate its strengths and weaknesses vis-à-vis the systems used by parliaments abroad.1

Overview

In practice, conflict of interest can be hard to identify, as it is sometimes known only to members themselves. Since parliaments are largely self-regulating bodies, conflict of interest problems are often dealt with informally by leadership, or, if addressed officially at all, are not usually recorded or counted. Some nations – such as Britain and Canada – have dealt with this by creating independent commissions that receive citizen complaints on ethical violations. In addition, experts have noted that extensive regulations and prohibitions on conflict of interest can be impossible to enforce and/or can have a chilling effect on participation in politics (Reed 2010: 2).

Internationally, four distinct types of measures are used to deal with conflict of interest:

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value and source of gifts such as items, sponsored travel, services, etc, that an elected official may receive. Often includes disclosure requirements as well.

• Declarations of Interests and Recusal: Exclusion or self-exclusion from participation in decision-making processes where one is subject to a conflict of interest. For example: the voluntary withdrawal of an MP from a committee deliberation relating to a court case involving a close friend.

A situation in which a conflict of interest exists need not necessarily translate into an act of misconduct. Consider the following situation as described by the Organisation for Economic Cooperation and Development (OECD):

For example, a public official involved in making a decision in which he/she has a private-capacity interest may act fairly and according to the law, and consequently there is no corruption involved. Another public official could take a bribe (corruption) for making a decision he/she would have made anyway, without any conflict of interest being involved in his/her action (Sigma 2007).

A conflict of interest is defined by the Council of Europe (2000) as

... a situation in which the public official has a private interest which is such as to influence, or appear to influence, the impartial and objective performance of his or her official duties.

A private interest is defined as

any advantage to himself or herself, to his or her family, close relatives, friends and persons or organisations with whom he or she has or has had business or political relations. It includes also any liability, whether financial or civil, relating thereto.

Indian rules and procedures which govern Parliament do not define conflict of interest, per se. Both parliamentary rules and the laws governing conduct in the Indian bureaucracy use the phrase, “personal, pecuniary or direct interest”, but do not define these terms. Further insight into a possible definition is found in the Rajya Sabha’s Rule 293 which requires members to file their “interests” upon election. These include: remunerative directorship; regular remunerated activity; shareholding of controlling nature; paid consultancy; and professional engage ment (Rajya Sabha 2005). Court precedents also provide some guidance. Both the verdicts of Manak Lal vs Prem Chand, 1957 and State of Punjab vs V K Khanna, 2001 uphold the standard that reasonable public perception of fairness, regardless of whether any actual bias is present, should be the deciding factor in a judge’s involvement in a particular case.2

Also worth noting are the kinds of personal gain that have not been identified as posing a conflict of interest. The precedent of the United States House of Representatives exempts members from conflict if they are a member of a broad class of people and the matter at hand does not narrowly benefit a specific person, company, etc. For instance, an owner of an export business could vote on a general tariff bill as it would affect not just their company, but many thousands of businesses, and an armed forces veteran may vote on questions of pay and pensions in the military (US House of Representatives 2008). The UK House of Lords has a similar exception. Its code of conduct states that a member “must not seek by parliamentary means to confer exclusive benefit on an outside body or person from which he or she receives payment or reward” (UK House of Lords). The principle of exclusive benefit is interpreted by the following example: a member paid by a pharmaceutical company could not seek to confer benefit upon that particular company by voting, debating, asking questions, etc. However, the same member would not be debarred from speaking or voting on matters relevant to the pharmaceutical sector as a whole or drug licensing and patent policy.

India’s Parliament has its most prominent law regulating conflict of interest in the Indian Constitution. Parliamentarians are prevented from holding an “office of profit” in the Government of India or state governments. The Representation of People (Third Amendment) Act, 2002 also requires MPs to file a declaration of assets and liabilities within 90 days of taking the oath of office.3 Beyond these though, the Parliament is governed by rules of procedure and conduct of both the Lok and Rajya Sabha and customs in the forms of the Rajya Sabha codes of conduct and the Lok Sabha members’ handbook. The following section examines each current law, rule or custom and explains its relevance in practice. As will be shown, many methods for handling conflict of interest are currently not in use or are not fully adhered to.

Office of Profit

Article 102 of the Indian Constitution states,

A person shall be disqualified for being cho

sen as, and for being, a member of either

House of Parliament if he holds any office of

profit under the Government of India or the

Government of any state, other than an

office declared by Parliament by law not to

disqualify its holder.

Mahendra Singh explains that the intent

is to secure independence of the members of Parliament and to ensure that the Parliament does not have Members who receive favours or benefits from the executive and who, consequently, being under an obligation to the executive, might be amenable to its influence (Singh 2008: 428).

The term “office of profit” is not defined in the Constitution or the Representation of the People Act 1951 or the Parliament (Prevention of Disqualification) Act, 1959. However, courts and elections tribunals have established “broad criteria” as to its meaning (Kashyap 2006: 791-93). Chander Nath vs Kunwar Jaswant Singh found that,

Profit... does not necessarily mean any

remuneration in cash but it certainly means

some kind of advantage or gain which can be

perceived, the mere influence which one

gains by virtue of his position as a member

of a Committee which has no remuneration

attached to it is not profit (ibid).

Some out-of-pocket expenses used to perform the duties of the office have been allowed by the courts (Singh 2008: 428).

Further, in Jaya Bachchan vs Union of India, Jaya Bachchan was the chairperson of the Uttar Pradesh Film Development Council but did not receive any of the allowances or perquisites the office was entitled to. The Court held that “where the office carries with it certain emoluments then it will be an office of profit even if the holder chooses not to receive/ draw such emoluments” (ibid 431).

Parliament has so far passed two Acts exempting positions in a list of over 150 state and central government bodies from the definition of “office of profit” as well as exempting other broad categories of offices.4 The review of offices is also an ongoing process. The joint committee on

NOTES

office of profit examines the composition and character of committees appointed by the central and state governments and recommends what government offices should disqualify and what offices should

5

not disqualify a person as an MP.

The 4th Report of the Administrative Reforms Commission (ARC) criticised the way that the “office of profit” issue has been handled in Parliament, stating that the Constitution has been “violated in spirit over the years even when the letter is adhered to” (Second Administrative Reforms Commission 2002: 38). The report goes on to say that the constant expansion of the list of exempted offices does not appear to have a clear rationale, “except perhaps the expediency to protect holders of certain offices from time to time” (ibid).

The Member of Parliament Local Area Development Scheme (MPLADS) is also questioned as a case of blurred lines between the legislature and the executive. The ARC report recommends that it be abolished on the grounds that such programmes “seriously erode the notion of separation of powers, as the legislator directly becomes the executive.... Making day-today decisions on expenditure after the legislature has approved the budget, is a key executive function” (ibid 39).

Conflict of Interest

In both houses of Parliament, MPs can challenge the vote of a member on the grounds of personal, pecuniary or direct interest in the matter to be decided. According to the Rules of Procedure and Conduct of Business in the Lok Sabha, Chapter XXVII, and the Rules of Procedure and Conduct of Business in the Council of States, Chapter XXIV, the speaker or chairman will hear the complaint, and if accepted, will make inquiries into the matter. Their decision shall be final and if the decision is for the complainant, the vote will be disallowed.6 In the last five years in both the Lok Sabha and the Rajya Sabha, no member’s vote has been thus challenged.7 A similar provision exists for objections to committee appointments in the Lok Sabha, but not in the Rajya Sabha. No such objection has been made in the last five years.8

In an example of an objection to a member’s personal interest, in 1984, a member was nominated by the speaker as member of the Committee on Privileges (Kashyap 2006: 791-93). An objection was raised by the law minister and some other members about his participation in the committee, as it would be considering a matter on which he was allegedly assaulted by a district magistrate and police officers. The speaker directed that the member should be asked not to participate in the deliberations of committee on that particular matter, and that all such papers and documents related to it should not be given to him. The member in question did not attend the specified sittings of the committee (ibid).

Declarations of Interests

Both houses of Parliament have written practices instructing MPs to voluntarily declare their personal, pecuniary or direct interest when a matter comes before the

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House. In the Rajya Sabha, the Rulings and Observations from the Chair 19522000(469) state that a member “is required, while taking part in the proceedings in that matter, to declare the nature of interest”.

Just two instances of Rajya Sabha members declaring their interest to the house have occurred in the past five years.9 On 6 August 2009, Parimal Nathwani declared his interest in the subject matter of natural gas for power generation in a calling attention discussion. On 20 December 2005 Karan Singh declared he had an interest in the subject matter of a starred question he had submitted regarding t ourist inflows which was taken up for oral answer. No voluntary declarations of interest have been made on a matter considered by committees in the Lok Sabha during the last five years.10

All MPs are required to disclose assets and liabilities within 90 days of taking the oath of office. However, the Rajya Sabha takes it one step further by requiring its members to make a declaration of their “interests”, which includes shareholdings of a controlling nature and regular remunerated activities (Rajya Sabha 2005). Also, unlike the Lok Sabha, Rajya Sabha members are required to notify the Ethics Committee, which maintains both the assets and the interests register, of any changes that may occur in their situations annually (ibid).

The Lok Sabha has no such registry of member’s interests as per rules set by the speaker. The idea was once considered, but the 13th Lok Sabha’s Committee on Ethics observed that, in light of the provisions in the Representation of People (Amendment) Ordinances 2002, from which presiding officers are allowed to frame rules for the disclosure of assets and liabilities, “there was no necessity for any further action regarding [a] ‘Register of Members’ Interests’.”11 In 2008 report from the Committee to Inquire into Misconduct of Members of the Lok Sabha, chairman V Kishore Chandra S Deo included the recommendation for a new code of conduct which would include the registration of a broader range of interests than is currently practised in the Lok Sabha (14th Lok Sabha).

Neither assets and liabilities nor member’s interests are audited. Also, while assets and liabilities have been opened to the public through Right to Information (RTI) requests, the member’s interests register has not. In a response to an RTI request, the committee on ethics decided on 9 September 2009 that the disclosure of interests was not likely to serve a larger public interest, and withheld permission to supply the information.12 Two subsequent requests were made, and were considered by the committee again in April, “wherein it decided to keep them pending till all issues connected with this subject matter were resolved. The issue is still under consideration of the Committee.” As of mid-July 2010, only 197 out of 250 Rajya Sabha members had submitted their interest declarations.

Code of Conduct for Ministers

The ministry of home affairs distributes a code of conduct for both union and state ministers (Government of Puducherry 2009). It is enforced, in the case of union ministers, by the prime minister himself. The code holds ministers to stricter standards than other parliamentarians. They are required to “sever all connections, short of divesting himself of the ownership, with the conduct and management of any business in which he was interested before his appointment as Minister”. If a business that they own or manage is concerned with supplying goods or services to the government or its undertakings, except for certain exceptions, or is concerned primarily with licences, permits, quotas, leases, etc, received from the government, the minister must divest himself of all his interests in the business and also its management. However, the minister will be allowed to transfer management interests and/or ownership over to any adult family member other than a spouse, who was prior to the appointment as minister associated with the conduct, management or ownership of the business in question (ibid).

In addition to their declarations of assets and interests as MPs, ministers must also declare assets, liabilities, cash holdings, shares and debentures and jewellery to the prime minister (or chief minister if in states). These are updated yearly on 31 July. They cannot sell to or buy property from the government while in office, and cannot start or join any new business. Family members should not “start or participate in” businesses that are heavily involved with the government. If a family member starts or becomes involved in any new business, it should be reported to the prime minister. The code also governs and places limitations on: accepting contributions, fundraising activities, accepting foreign gifts, foreign employment of family members, foreign travel and attendance of “ostentatious or lavish” parties.

In a case filed by the Shiv Sena in the Bombay High Court regarding the collection of entertainment taxes from the Indian Premier League, the court questioned whether the government had any rule that barred ministers from holding a position in a sports organisation, and whether holding such a position was a “conflict of interest”. The government clarified that the code of conduct had no such no provision in this respect (Indian Express 2010). The code mentions no bars on membership of any organisations, though some bars are placed on fundraising for certain types of organisations (Government of Puducherry 2009).

North America

As early as the 17th century, Britain’s Parliament had a rule to judge the extent of a member’s pecuniary interest (Atkinson et al 1991: 471-76). Today, many countries have extensive legal and procedural means to handle conflict of interest. In the complex system of the United States, the Senate Ethics Manual reaches 524 pages. All interest disclosures are made public and audited by the comptroller general, and legislators are prohibited from lobbying the government for two years after they leave office.

Even involvement with charities and NGOs, for both the member and his/her spouse and children, are also regulated. The manuals provide real life examples of how to interpret rules. Ethics committees in the House and Senate oversee the reporting requirements. The attorney general is empowered to bring a civil action against anyone who knowingly and wilfully fails to file or files a false report. Limitations are placed on outside employment

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Disclosure requirements are more comprehensive than those in India. MPs are required to submit remunerated directorships; remunerated employment, sponsorship or financial or material support; gifts, benefits and hospitality; overseas visits; overseas benefits and gifts; land and property; registrable shareholdings and miscellaneous and un-remunerated interests.15 Extensive directions and details are required for every category. Interests must be registered if they pass certain thresholds of an MP’s salary, such as 1% for employment, gifts and hospitality; and 10% for rental income. Members must notify changes in their registrable interests within four weeks. This registry is posted on the internet, and monitored by the electoral commission.

In all countries, dealing with ethics and conflict of interest is a work in progress. In 2010, the members of the British House of Lords were required for the first time to sign a new code of conduct upon entering office (UK House of Commons 2010). In 2008, H Res 895 established the first independent commission overseeing ethics in the US House of Representatives, with three members nominated by the majority party and three by the minority.16

Discussion

Correct handling of conflict of interest is crucial for both the ethical functioning of

December 11, 2010

Dissecting the Ayodhya Judgment – Anupam Gupta Secularism and the Indian Judiciary – P A Sebastian Idols in Law – Gautam Patel Issues of Faith – Kumkum Roy Was There a Temple under the Babri Masjid?

Reading the Archaeological ‘Evidence’ – Supriya Varma, Jaya Menon

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Table 1: Comparing Conflict of Interest Measures Abroad Canadian Parliamentary Information and Research

Types of Measures/Parliaments India United States United Kingdom Canada Australia Service, Library of Parliament, 16 February. Fournier, Jean T Senate Ethics Officer (2009): “Emer-

Asset and liability disclosure — — ———

gence of a Distinctive Canadian Model of Parlia-Interest disclosure Only in Rajya Sabha — ——— mentary Ethics”, Journal of Parliamentary and

Assets, liabilities and interests available for	Only assets		Only in
public viewing	and liabilities	—	—	summary	—
Post-employment restrictions		—		—
Enforceable limitations on both foreign and	Only for
domestic gifts	foreign gifts	—	—	—	—
Written practice of declaring interest before a debate or vote	—	—	—	—
Independent watchdog authority	Only in the House	—	—
Code of conduct	—	—	—	—

Political Law, Vol 2, May.

Government of Canada (2006): “Conflict of Interest and Post-Employment Code for Public Office Holders”, viewed on 22 July 2010. http://pm.gc. ca/grfx/docs/code_e.pdf

Government of Puducherry (2009): La Gazette de La’Etat, November, 10 edition, viewed on 26 July 2010. http://styandptg.pondicherry.gov.in/gazette/ 2009/November/ORDINARY/45/45%20Notifica-

Sources: Constitution of India; The Foreign Contribution (Regulation) Act 1976, Amended 1984; Rajya Sabha and Lok Sabha Rules of Procedure and Member’s Handbooks, Fournier 2009; McKeown 2009; US House of Representatives, 2008; US House of

Representatives Resolution 895; UK House of Commons 2005.

a law-making body, as well as the public perception of it. Considering the many forms conflict of interest can take, regulation and enforcement can only go so far – there must also be a personal commitment by lawmakers to be as transparent in their personal and business dealings as possible.

Public confidence in Parliament as an institution has been widely observed as declining over the last two decades (Kapur et al 2006: 16). While the Indian Constitution itself and many laws, rules and customs address conflict of interest among parliamentarians, it is clear that many of them are not used, or underused, or sidestepped by various means. Also, India lacks any sort of independent commissioner or auditing body to ensure that the measures in place are being followed. Law-making bodies abroad offer a variety of examples: from the informal, behindthe-scenes work of the ethics commissioner in Canada to the explicit and vast list of prohibitions in the United States. While India can, and should, develop a system that will best suit its unique needs, it is clear that a more enforceable, practical system for dealing with conflict of interest is needed. Public disclosure of interests – including investments, employment and business ties – for both houses would be a constructive and trust-building first step.

Notes

1 Considering its amorphous and personal nature, resources on conflict of interest are often lacking in metrics and data. Still, documenting the presence and enforcement of laws, rules, procedures and customs can be instructive into the prominence given to the issue by the legislating body.

2 Manak Lal vs Prem Chand, 1957; State of Punjab vs V K Khanna, 2001. Viewed on 10 June 2010. http://www.indiankanoon.org/doc/80596/

3 Representation of People (Third Amendment) Act, 2002.

4 The Parliament (Prevention of Disqualification) Act, 1959; The Parliament (Prevention of Disqualification) Amendment Act, 2006.

5 Lok Sabha. Joint Committee on Offices of Profit. Viewed on 13 July 2010. http://164.100.47.134/ committee/Comm_Details.aspx?comcode=36

The Election Commission makes the final decision as to whether a sitting MP or a candidate should be disqualified.

6 In light of the Anti-Defection Law, if a party member’s whip calls for a vote, and their vote is then discounted because of their interests, the consequences as to whether this could be considered a case of defection are unclear.

7 Response to Right to Information Request, Rajya Sabha and Lok Sabha Secretariats, 7 July 2010. 8 Response to Right to Information Request, Lok Sabha Secretariat, 28 July 2010. 9 Response to Right to Information Request, Rajya Sabha Secretariat, 28 June 2010. 10 Response to Right to Information Request, Lok Sabha Secretariat, 7 July 2010. 11 Response to Right to Information Request, Lok Sabha Secretariat, 7 July 2010. 12 Response to Right to Information Request, Rajya Sabha Secretariat, 12 July 2010. 13 This applies only to compensation for services, and not to investment income. 14 The Senate, which is the appointed Parliamentary body, has its own Ethics Officer.

15 British House of Commons. Resolution of the House of 22 May 1974, amended on 9 February 2009.

16 US House of Representatives, Resolution 895.

http://oce.house.gov/pdf/H.Res.895.pdf

References

Atkinson, Michael M and Maureen Mancuso (1991): “Conflict of Interest in Britain and the United States: An Institutional Argument”, Legislative Studies Quarterly, Vol 16, No 4, November.

Australian House of Representatives (2008): House of Representatives Standing and Sessional Orders, December) viewed on 20 July 2010, http://www. aph.gov.au/house/pubs/standos/chapter11.htm

Committee on Standards and Official Conduct (2008): US House of Representatives, “House Ethics Manual”, US Government Printing Office, Washingon DC.

Committee on Rules (1999): Floor Procedure in the US House of Representatives, US House of Representatives Website, viewed on 1 July 2010. http://rules. house.gov/archives/floor_man.htm

Council of Europe (2000): “Recommendation (2000) 10 of the Committee of Ministers to Member States on Codes of Conducts for Public Officials”, Europa. http://www.coe.int/t/dghl/monitoring/ greco/documents/Rec%282000% 2910_EN.pdf

Douglas, Kristin (2006): “The Ethics Commissioner”

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tions%20No.%2045%20dt.%2010-11-2009.pdf

Indian Express (2010): “Ministers Not Barred from Posts in Sport Bodies: Govt”, Indian Express, 22 June, viewed on 23 July 2010. http://www. indianexpress.com/news/ministers-not-barredfrom-posts-in-sport-bod/637054/

Iype, George (2006): “Just What Is an Office of Profit?”, Rediff.com. March 23, viewed on 24 October 2010. http://www.rediff.com/news/ 2006/mar/23faq.htm

Kapur, Devesh and Pratap Bhanu Mehta (2006): “The Indian Parliament as an Institution of Accountability”, Democracy, Governance and Human Rights Programme Paper Number 23, United Nations Research Institute for Social Development, January, viewed on 26 October, 2010. http://www. unrisd.org/80256B3C005BCCF9/%28httpAuxPa ges%29/8E6FC72D6B546696C1257123002FCCE B/$file/KapMeht.pdf

Kashyap, Subhash (2006): Parliamentary Procedure, 2nd edition (Delhi: Universal Law Publishing).

Lok Sabha Secretariat (2004): “Rules of Procedure and Conduct of Business in the Lok Sabha”, viewed on 8 June 2010, http://parliamentofindia. nic.in/ls/rules/rules.html

– (2009): “Lok Sabha Members’ Handbook”, viewed on 27 October 2010, http:// 164.100.47.132/ LssNew/Members/handbook.aspx

McKeown, Deirdre (2009): “A Survey of Codes of Conduct in Australian and Selected Overseas Parliaments”, Australian Parliamentary Library, December.

“Parliamentary Commissioner for Standards” UK Parliament, viewed on 25 October 2010. http:// www.parliament.uk/mps-lords-and-offices/ standards-and-interests/pcfs/

Parliamentary Commissioner for Standards (2009): Annual Report 2008-09, UK House of Commons, 29 June, http://www.publications.parliament. uk/pa/cm200809/cmselect/cmcomstan/608/ 608.pdf

Rajya Sabha Secretariat (2005): “Code of Conduct for Members of the Rajya Sabha” , viewed on 9 June 2010, http://www.rajyasabha.nic.in/rsnew/ members/code_conduct.pdf

Reed, Quentin (2010): “Regulating Conflicts of Interest in Challenging Environments: The Case of Azerbaijan”, Anti-Corruption Resource Center, U4, Issue 2010/2. Germany. http://www.cmi.no/ publications/file/3622-regulating-conflicts-ofinterest-in-challenging.pdf

Rajya Sabha Secretariat (2005): “Rules of Procedure and Conduct of Business in the Council of States”, March, viewed on 9 June 2010, http://rajyasabha. nic.in/rsnew/rs_rule/rulescontent.asp

Second Administrative Reforms Commission (2002): “Fourth Report: Ethics in Governance”, Government of India.

Sigma (2007): “Comparison of Conflict of Interest Policies in 9 EU Member States”, OECD, http://www. sigmaweb.org/document/32/0,3343,en_ 33638100_34612958_38073440_1_1_1_1,00.html

Singh, P Mahendra (2008): V N Shukla’s Constitution of India, 11th edition (Lucknow: Eastern Book Company).

UK House of Commons (2005): “The Code of Conduct”, as amended to 13 July 2005, Government of the United Kingdom, London.