It is high time corruption in the private sector is criminalised if the war on corruption has to be effective, says a former head of the Directorate of Revenue Intelligence (DRI)
"Unfortunately, many countries do not penalise corruption in the private sector," B.V. Kumar, who is a former Director General of DRI, says in his 392-page book "Underground Economy: An Insight into the World of Tax Havens and Money Laundering" (Konark Publishers).
"With growing liberalisation and privatisation, a stage has now come that corruption in the private sector should be criminalised.
"Legislation should be introduced to punish corruption in the private sector, including corporate corruption," says Kumar, who was also the Director General of the Narcotics Control Bureau and the Economic Intelligence Bureau, the federal agency that protects India's economic security from smugglers and financial offenders.
"This is particularly necessary because of the corrupt practices indulged by multinational companies. In fact, the trade wars between multinationals result in competitive corruption. We should remember that private corruption usually involves fraud."
Kumar underlined that a corrupt government and a clean private sector cannot co-exist -- and vice-versa.
"In the government, we expect accountability, which is not just a regime of punishments, but a system of governance.
"Similarly, the private sector should have a code of corporate governance and a corporate philosophy of social commitment."
He said that when a public servant accepts illegal gratification, he is charged with corruption and conduct unbecoming of a government servant.
But "when a businessman or a corporation indulges in corruption, it is termed as business acumen resulting in profit... A time has now come to evolve a proper definition of 'corruption' so that these distinctions are removed".
According to Kumar, some of the changes in economic policy that can reduce opportunities for corruption include lowering tariffs and non-tariff barriers in global trade, unifying market-determined exchange and interest rates, ending enterprise subsidies, minimising regulations and licensing requirements, demonopolising and privatising government and national assets through e-auction and transparently enforcing prudential banking regulations.
The book says that corruption makes the exploiter rich -- at the cost of the poor. "It is inimical to public welfare. It becomes a facilitator for organised crime to take over legitimate business, leading to organised corruption."
On the demonetization of November 2016, which did away with the existing 1,000 and 500 rupee notes, Kumar predicted it was likely to hit the economy hard and was expected to grind the consumption activity to a virtual halt.
"The service sector, which dominates economic activity and involves a sizeable quantum of cash transactions, is likely to be hit the hardest," he said in the book which was written earlier this year.
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