PSU market watch

Former technocrats joining private sector companies soon after retirement raises serious legal and ethical concerns

We all know that top bureaucrats and technocrats dislike retiring from government service. So as they reach the age of superannuation, they start planning their post-retirement moves. Catching up with what they might have loved to do but could not, due to busy years of service, most IAS officers try to get plump postings after their retirement.

Earlier, the fancy postings used to be with any of the Government commissions or regulatory or advisory bodies. But the preference has now moved in favour of private sector where the perks and moolah are enormous.

Just look around and you will find a handful of bureaucrats and technocrats in almost every top company. The new generation private sector biggies (those who have made it big in the last 10 years) have had a marked preference for retired bureaucrats and technocrats. This certainly seemed to have helped their business interests.

A former Cabinet Secretary (TSR Subramanian) has been part of the board of a top IT company (HCL). A really well- connected bureaucrat who served as Disinvestment Secretary and later as TRAI Chairman (Pradeep Baijal), is now working for a public relations company which looks after the interests of Tata and Reliance (Mukesh Ambani) companies.

The Jindal group has had a marked preference for retired technocrats. Soon after his retirement as CMD of Steel Autority of India (SAIL), VS Jain joined as Vice-Chairman, Jindal Steel, a rival of SAIL.

The Naveen Jindal-led Jindal Steel and Power Limited (JSPL) and Jindal Power Limited are full of retired bureaucrats. Vikrant Gujral joined Jindal Steel soon after his stint as Managing Director of Bhilai Steel. It may be a mere coincidence that JSPL was planning to enter rail business at the time of Gujral’s joining, being the first private steel company to do so. Till its entry into rail business, Bhilai was the only plant in India manufacturing rail tracks. It’s also not a coincidence that in one of the few public outbursts, Naveen Jindal, when he was an MP, said that the Railways is being reluctant to give orders to a private sector company. Former Railway Minister Lalu Prasad Yadav had publicly spoken against the entry of the private sector into rail business and his sympathies were with SAIL. But due to the political connections of Naveen Jindal, JSPL (insiders say) started getting orders from the Railways.

Jindal Power Limited, which is in the process of raising Rs 12,000 crore from the equity market, has many retired technocrats on its board. Former Power Secretary RV Shahi is one such Director. He joined Jindal Steel and Power Ltd (JSPL) as an Additional Director (independent) on October 15, 2007, soon after his retirement from the Ministry of Power. He was in the ministry for the period 2002-07. He is also Chairman of Energy Infratech Pvt. Ltd. Earlier, he was with Erudite Engineers Pvt. Ltd which provides engineering and project management solutions in power and energy infrastructure in India and abroad. RP Singh, former CMD, Power Grid Corporation of India, is another person on the board of the two.

Government of India rules say a bureaucrat has to have a hiatus of two years before taking up a profitable assignment with the private sector. This rule is being violated as a norm. Also, a Department of Personnel and Training (DoPT) official explains, “The rule is a safeguard against a quid pro quo arrangement that may be struck between bureaucrats and private companies for favours that may go the latter’s way. It is to stop an official from taking employment with a firm with which he may have had dealings within terms of contracts, etc. And, by the way, the term consultancy is just a euphemism for advising firms they have had dealings with.”

Says one of the senior bureaucrats (on condition of anonymity), “It is a serious problem. Everybody knows that under government norms no one is allowed to join a private firm soon after his retirement unless he has prior permission. But no one follows this. It is just a sheer guideline on paper.” According to the Director of Establishment of the Department (DoPT), Subramanyam, the guidelines of the pension welfare department say, “ one who is accepting any commercial employment within one year of retirement without taking permission from the competent authority, has to face serious consequences. His/ her pension can be withheld and can be debarred from all post- retirement benefits.” Similarly, comments MK Miglani, retired Financial Commissioner and Principal Secretary, Haryana, “The system that follows rule is known as bureaucracy. So, initially one should not violate the rule. And if someone is doing so, he should be punished. There are rules in DoPT guidelines which show that bureaucrats have to take prior permission from the authorities before taking such step otherwise they will be restrained from all retirement benefits. Equally, there is a serious ethical issue too with this development. If a PSU head joins a rival private sector company soon after retirement, his integrity and decisions during his tenure can easily come under suspicion.

It is a loss to the government. If someone is not taking prior permission from the competent authority it means that he is not reliable and he can easily transfer official documents from one corner to another. Apart from this, the violation guidelines are clearly mentioned in the website of the Department of Pension & Pensioners' Welfare, under the head, guidelines for pensioners section.”

“Contrary, it exclaims Rakesh Singh of the DoPT, “As far as I know there is no punishments for government officials who violate the service guideline of not opting for private jobs within two years of retirement. There are many who do so, but no one takes it seriously. People are doing it on their own without taking the guidelines seriously. I can’t help you (Bureaucracy Today correspondent) out in telling the reason behind this act.”

The real issue, therefore, is to put in place a system that does not leave any scope for such conflict. For instance, the government should enforce, without exception, a mandatory cooling-off period separating a government official's retirement and the date of his joining a private sector organisation. It is clear that the government has been lax in enforcing this basic requirement and discretion has played a role in a few of the recent clearances at least.