INTEGRITY PACT

Integrity Pact (IP) is a tool that was developed during the 1990s, by Transparency International (TI) to help governments, businesses and civil societies, to fight corruption in public contracting and procurement. It is a process of signing an agreement between a government/ government departments and all bidders, for a public sector contract. It contains rights and obligations to the effect, that neither side will pay, offer, demand or accept bribes, or collude with competitors to obtain the contract, or while carrying it out. Contd… What is Integrity Pact ?

Likewise, bidders will disclose all commissions and similar expenses, paid by them to anybody in connection with the contract; and that sanctions will apply when violations occur. These sanctions range from loss or denial of contract, forfeiture of the bid or performance bond and liability for damages, blacklisting for future contracts on the side of the bidders, and criminal or disciplinary action against employees of the government. IP also introduces a monitoring system that provides for independent oversight and accountability.

Background on Integrity Pact Integrity Pact was initiated by a former World Bank official, Peter Eigen, in May 1993, with an objective to curb corruption. At that time, the program was launched to create ‘islands of integrity’, through a voluntary contract between the buyer and seller to eliminate corrupt practices.

Why needed in India  India is perceived to be one of the more corrupt nations and ranks 72 among 180 countries in Transparency International's Corruption Perception Index (CPI)  Existing anti-corruption organizations have had limited success in fighting corruption in India.  Most people believe that corruption is rising in India at an alarming rate and Government is not doing anything to check it.  Frequent scandals and delays plague Government contracts and other procurement. Contd…

 Such delays increases costs of procurement,works, and public projects and drains public exchequer.  Corruption hurts the poorest most.  IP program is a way to supplement existing methods and is found to be a more effective tool for ensuring transparency and fighting corruption in public contracting.

 IP is a model for transparency in public procurement and contracts.  It helps enhance public trust in government contracting and hence contributes to improving the credibility of contracting procedures and administration in general.  It enables companies to abstain from bribing by providing assurances to them that (a) their competitors will also refrain from bribing (b) government bidding system and procurement will be absolutely transparent Contd… Why should a company sign IP ?

(C)government will not only prevent corruption but also extortion, by their officials, and follow transparent procedures.  IP helps Government and companies to reduce high cost and maintain quality control.  IP adoption creates confidence and trust in decision making process, and also a more hospitable investment climate and public support in the country.

Different Players of Integrity Pact  The Company – its commitments and obligations  The vendors – their commitments and obligations  The Independent External Monitor (IEM) – their roles and responsibilities Other features include  Implementation Guidelines  Periodic review of effectiveness  Violations and consequences

 Drafts of the MOU and the Integrity Pact are prepared by the Principal and approved by Central Vigilance Commission (CVC) and TII.  Thereafter, an MOU is signed between the Principal and TII.  Commitment is obtained from all senior officials of the Principal to implement the IP program.  In case there are subsidiaries of the Principal, they are advised to follow IP of the Principal.  Selection of IEMs by the Principal in consultation with CVC and TII. Contd… How Integrity Pact works ?

 Displaying the IP and particulars of IEM’s – their contact numbers and ID’s, and MoU signed with TII, on the website of the Principal. Also publicizing them through media.  Modifying the model IP by the Principal in consultation with TII and developing a phased implementation program of IP  Periodic review and evaluation of IP’s implementation and its effectiveness through the following measures:  conducting an annual assessment of IP program effectiveness by the IEMs, senior leadership of organization, CVC and TII and identify areas/ways to improve it.  an annual report on the progress/effectiveness of IP program by IEMs to the Board of Directors of the organization.

Benefits accruing from adopting Integrity Pact  Improves the image of the company as an ethical organization  Speeds up tender and procurement processes  Reduces political, administrative and diplomatic interference  Reduces frivolous lawsuits and complaints  Improves vendors satisfaction and restricts bribes  Reduces the concerns of harassment faced by honest officials  Lowers the cost of procurement

Disputes Redressal mechanism of Integrity Pact In case of disputes, matter is referred to Independent External Monitors, which helps in taking speedy decisions.

CVC’s scanned copy of recommendation on IP

List of PSUs which have signed Integrity Pact PSU/Company Date Oil & Natural Gas Corporation Rashtriya Ispat Nigam Ltd Hindustan Petroleum Corporation Limited Gas Authority India Ltd Coal India Ltd Hindustan Steelworks Construction Ltd MECON MSTC Ltd Contd…

National Mineral Development Corp Ferro Scrap Nigam Ltd Steel Authority of India Ltd Kudremukh Iron Ore Company Ltd Bharat Refctories Ltd Mangnese Ore (India) Ltd Oil India Ltd Container Corp. Of India (CONCOR) Neyveli Lignite Corporation Ltd Bharat Petroleum Corporation Ltd Contd…

Indian Oil Corporation Ltd Airports Authority of India Mahanagar Telephone Nigam Ltd Northern Coalfields L d South Eastern Coalfield L d Mahanadi Coalfields Ltd Till 7 th April 2008, Twenty Four (24) PSUs have signed the Integiry Pact

List of PSUs which are interested in signing the Integrity Pact Bharat Coaking Coal Limited (BCCL) Shipping Corporation of India Western Coalfields Limited (WCL) National Aluminum Company Limited (NALCO) RITES National Fertilizer Corporation