Secy as Regulator: conflict of interest,says Plan panel,need 2-yr cool off

More recently,a search committee appointed to select the Chairman and members to the Competition Commission of India....

Written by P Vaidyanathan Iyer | New Delhi | Published:March 26, 2009 2:20 am

•Nripendra Mishra took charge as the telecom regulator (Chairman,Telecom Regulatory Authority of India) in March 2006,less than a year after he retired as Secretary,Department of Telecommunications.

•A K Basu,Secretary,Ministry of Power,was appointed as the regulator for the power sector (Chairman,Central Electricity Regulatory Commission) immediately after superannuation in April 2002.

More recently,a search committee appointed to select the Chairman and members to the Competition Commission of India,the watchdog to regulate mergers and check abuse of market dominance,selected Anurag Goel,Secretary,Ministry of Corporate Affairs,as one of the members. Ironically,Goel was the Member-Secretary of the very search committee that selected him as a member.

After the issue,termed as “very unfortunate” by another Secretary in the Government of India,was brought to the notice of the Appointments Committee of the Cabinet,it’s been put on hold.

Despite the clear and obvious conflict of interest in appointing Secretaries as chiefs of regulatory entities that fall directly under the purview of their administrative ministries,the practice has been common. Not surprising then that a proposal that seeks to bar Secretaries from taking up such positions has been put on the backburner for more than six months now.

The proposal owes its genesis to a discussion paper floated by the Planning Commission late last year. Arguing that letting Secretaries assume the role of a regulator immediately after retirement led to a serious conflict of interest and undermined the independence of the regulatory institution,the paper recommended a two-year cooling off period for Secretaries before such an appointment is made.

For one,it argued that a regulator needs to take an unbiased,critical look at decisions taken by the government and if these decisions were taken by the same person as Secretary,the dividing line could get blurred.

“How can a Secretary who has taken an executive decision affecting businesses in a particular way take a view different from that after becoming a regulator?” said an official in the Planning Commission who did not wish to be named. “What is happening now is Secretaries get a sinecure — a job for the next 3-5 years,accommodation,salary and other benefits — for the ‘good work’ they did.”

The paper was circulated among members of the Committee on Infrastructure (CoI) chaired by none other than the Prime Minister. The CoI comprises ministers of Finance,Telecom,Railways,Roads,Civil Aviation,Power,Petroleum and Tourism besides the Deputy Chairman of the Planning Commission,chairman of the PM’s economic advisory council and three members of the Plan panel.

After deliberating on the proposal,the CoI referred it to a Committee of Secretaries chaired by the Cabinet Secretary. Clearly,a large number of Secretaries had strong reservations since it affected their own fraternity. The proposal was conveniently shelved for lack of consensus.

The Planning Commission is amused. “How can a panel of Secretaries decide on an issue which directly hits them?” said another official in the Plan panel. But,many Secretaries put up a strong defense,and understandably so since such a proposal goes against their post-retirement interests. “I would think there is no harm or prejudice,” said a Secretary who did not want to be identified,adding it happens in Japan and the United Kingdom too.

“At present,the ministry concerned puts in place a search committee to select the chairperson and members to a regulatory body. The names are then approved by the Appointments Committee of the Cabinet; the Prime Minister and the minister concerned have a role to play,” a Secretary said. “Disqualifying a candidate just because he is the incumbent Secretary is a short-sighted view of the issue,” he added. If the government does specify a two-year cooling off period,it could effectively quash the hopes of many an incumbent Secretary such as Goel,or Siddhartha K Behura,Department of Telecommunication who is considered to be in the running for the job of the next telecom regulator.

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