disgraceful daylight robbery must be going on all over India.
the governments in India spend only 0.9% of GDP on public
health; 83% of health expenditure is from private sources;
and 90% of this is out-of-pocket, mostly by the poor who
are in need of health interventions. In this appalling situation,
there is nothing more criminal and cruel than looting the
limited public health funds.
apoplectic rage does not get us anywhere. We need to channelize
that anger constructively, and prevent future frauds. It
is not enough to blacklist the swanky private hospitals
which looted the exchequer. The corrupt officials should
be removed, and all those who colluded - in government or
outside - should be prosecuted and jailed and their properties
confiscated. But then we have neither the unambiguous laws,
nor an effective legal system. Rogues often frustrate the
system and escape punishment, and enjoy the loot.
public purchases, contracts for government projects, and
payments for services rendered or welfare and subsidy claims
account for nearly half of the total public expenditure.
It is well-known that there is rampant corruption and fraud
in government procurement of such goods, public works and
services; or subsidies and direct transfer of resources
to the poor.
countries like India, where corruption is systemic, the
cost escalation in public procurement may be at least 25%
or more. In some cases like the false claims from CGHS,
fraud probably accounts for 80 - 90% of the cost!
global efforts are being made to improve procurement procedures.
The adoption of a model law on public procurement of goods
and construction by the UN Commission on International Trade
Law, and the WTO procurement rules which came into force
in 1996 are two such examples. But good laws and rules are
not enough. We need innovative approaches, sensible and
simple mechanisms for easy enforcement, and effective justice
system for speedy redressal.
For instance, in the US, many public agencies adopt a simple
rule in procurement: the contractor must supply goods and
services at the most favourable terms to the government
- i.e. the price cannot be higher than that charged to any
private customer. Admittedly such a regulation can be enforced
only in respect of standard goods and services, and cannot
apply to customized goods and services, or sophisticated
items for which the government is the sole buyer. In any
case, rules still do not preclude corruption or fraud.
False Claims Act in the US is an excellent example of innovation
to prevent and detect fraud and corruption. In 1986, successful
amendments were brought in to strengthen the Act by Senator
Chuck Grassley, the current chairman of the Committee on
Finance. Under this law, any person can unearth fraud or
false claims, and file suit on behalf of the US against
those who have falsely claimed federal funds for any procurement
of goods, works or services. Such a whistleblower is called
a 'relator', and the False Claims Act litigation is called
Qui Tam litigation. Persons who file successful Qui Tam
suits can recover 15 - 25% of any settlement or judgment
reached in a case if the government intervenes in the action,
or up to 30% if they pursue it on their own. Private citizens
thus have an enormous incentive to detect false claims and
corruption and file suits. Consequently, a huge industry
of unearthing false claims has sprung up, and hundreds of
Qui Tam suits are filed every year.
1986 amendments to False Claims Act enhanced Qui Tam provisions,
increasing the financial incentives and reducing the jurisdictional
hurdles to filing such suits. Since then, 4000 Qui Tam suits
have been filed, resulting in $6 billion recovered. In addition,
$4 billion was recovered in government-initiated claims.
In all such cases, a person making false claim is liable
to 3 times the amount of damages sustained by the government,
plus a civil penalty.
is high time we enacted similar laws providing incentive
to citizens to unearth fraud and corruption. There are practical,
simple, effective methods to set things right. Sensible
laws and effective legal system to enforce them are crucial
to prevent public fraud which has become endemic in our