Corruption in Transportation by U.S.Jha IRTS M.Phil PGPPM

Corruption in Transportation

Introduction:

There is nothing wrong in corruption except on ethical and economic point of view. Strictly, in individualistic perspective, corruption provides an opportunity to a person to enjoy those benefits, which otherwise society would not have provided him and in some cases, bring about equity, in highly unjust or unequal society. However, ethically corruption is diametrically opposite to the standards of right and wrong that prescribe what human ought to do in terms of right, obligations, benefits to society, fairness, or specific virtues. In almost all societies some ethical values set standards that impose the reasonable obligations to refrain from misuse of official position for private gain, misappropriation, stealing, and fraud. Ethical standards also include those that enjoin virtues of honesty, fairness and equality and these are supported by consistent and well-founded reasons. Corruption has most distortionary economic impact as it distort the allocation of resources by diverting budgetary funds towards activities where bribes and illegal commission can be more easily made. In this scenario corruption has become the most challenging obstacle to the economic development. It is the poor people who are affected more adversely by corruption as the developmental fund of the poor is diverted to some unintended groups. Rajiv Gandhi’s famous statement of poor getting only fifteen percent of the developmental fund and eighty five percent of fund getting diverted to unintended beneficiaries indicate highly distortionary effect of corruption. Several studies (Mauro 1995; Knack and Keefer 1995; Wei 2000; Kaufmann, Kraay and Zoido-Lobaton 1999; Rodrik and Subramanian 2003) have established a strong causal link between corruption and weak private investment and growth. Corruption mostly leads to the feeling of injustice and strengthen the feeling that different institutions, including democracy do not work. In the present state of affairs in India this kind of feeling has already become predominant among the poorest group and gradually more and more number of people are becoming disillusioned. This leads to discouragement of genuine work and people start believing that wrong is right. This is very serious state of affair and this need to be curbed urgently. Policy makers and scholars urgently need to address these issues on public and private socio-economic affairs to ensure the restoration of faith in a just society.

Definition of Corruption

One of the commonly accepted definitions as given in Stanford Encyclopedia of Philosophy is “Corruption is the abuse of power by a public official for private gain”. There are various faces of corruption like bureaucratic corruption, nepotism and patronage, state capture etc. Bureaucratic or administrative corruption refer to the intentional imposition of distortions in the prescribed implementation of existing laws rules and regulations to provide advantage to individuals in and / or outside government through illicit, non-transparent means (Campos, et al. 2007. pp. xvii). Bribe to sales tax collector to reduce sale tax by shopkeeper is one such example. Patronage and nepotism refer to favoritism shown to narrowly targeted interests by those in power in return for political support. State capture refers to the actions of individuals groups or firms both in the public and private sectors to influence the formation of laws, regulations, decrees and other government policies to their own advantage (Campos, et al. 2007. pp. xv). The granting of a monopoly franchise to the highest bidder and the consequent protection of the beneficiary firm from competition is a typical example of this subtler, and possibly most vital form of corruption.

Effects and Types of Corruption

Corruption affects ethically an individual and he has to suffer a lot of mental agony, as getting caught is constant fear. It has been observed that a corrupt person has to suffer from different life style diseases like blood pressure, blood sugar, heart attack and other related diseases. Similar distortion is also noticed in economy and society. Corruption undermines economic development by generating considerable disturbance and inefficiency. The corruption increases the cost of business through the price of illicit payments themselves, the management cost of negotiating with the officials and risk of breached agreement or detection. Bribery, graft, extortion and robbery, patronage, nepotism, kickback etc are major form of corruption. Corruption generates economic distortion in the public sector by diverting public investment in to the capital projects where bribes and kickbacks are plentiful. Official may increase the technical complexity of public sector projects to conceal or pave ways for such dealing, thus further distorting investment. This lowers compliance with construction detail, environmental and other regulations, reduces the quality of infrastructure services and increases pressure on government.

Some early researches (like Rose- Ackerman, 1978. Klitgaard, 1988 etc.) have identified four general characteristics of corruption: monopoly power, wide discretion, the lack of transparency in decision making, and the lack of accountability for decisions. These studies indicated a rational choice approach for understanding the motive for corruption. If the expected benefits of a corrupt transaction exceed its expected costs, an individual has an incentive to engage in these transactions.

Wade (1985) in his study of some Indian states searching the reasons of underdevelopment noticed a mechanism of patronage pertaining to appointments and promotion within the bureaucracy. His analysis starkly illustrated the importance of transparency and accountability in the public sectors and the ill effects of discretion and monopoly control over appointments and consequently on the incentives of bureaucrats

In the study of Kreuger (1974) Tullock (1971) and Bhagwati (1982) state capture was noticed. Here unproductive profit seeking activities highlighted the centrality of government’s monopoly power and discretion over laws, regulations and policies in engendering rent seeking behavior among narrow interests.

Corruption in India

There is almost no systematic empirical study of corruption in India. Rather we get commentaries based on newspaper reporting. This is probably due to the fact that, till date no substantial case has been proved in the court of the law in a clear-cut manner. For instance Banerjee, (2007) has noticed that different leaders leading anti-corruption movement in the emergency in 1977 became regional leaders in different states and they got deeply involved in different corrupt practices replicating the same model of corruption in governance that different leaders at center had set. Since no body is getting caught, they act with similar skullduggery in their own state. Banerjee, (2003) has also noticed that India has every year since independence one or two major corruption cases. But these have been taken as normal thing and there have been an increase after liberalization of the economy.

A Few Empirical Insights

Kardar (2002) in his study of society and economy of Pakistan has noted that corruption has become the main roadblock of the development. In a survey conducted by the World Bank in1999 it was found that forty percent entrepreneurs felt that corruption has increased the cost of business. In most cases, bribes were paid to the officials for agreeing to refrain from disrupting business operation.

Transparency International’s Ranking

In absence of any systematic empirical research even Transparency International (TI) rely of newspaper reporting. In 2006 India was ranked 70th position in a group of 163 countries. Finland was at the first position. However, as per Paul (2002) this kind of assessment leads to upper end bias as grand corruption dominant media report where as the abuses that affect the ordinary people in their day-to-day transactions with government are ignored.

Ambivalent Approach about Corruption: Lack of Systematic Education

In the land of ‘Adhayatm’ and ethics corruption has got relatively low priority. Paul (2001) has rightly noted that in India citizens are ambivalent about corruption. Different politicians have sensed the mixed signals given by the people in corruption. Hence they loudly demand the scalp of the corrupt while quietly ignoring the systemic reforms essential for controlling corruption. There is abiding faith in the thesis that corruption is basically an individual act and it will be controlled when the individuals involved are trapped and exposed. Hence punishing those caught is all we need to do. There is no system to inform and educate the public on the system wide reforms and strategic actions necessary for corruption control. The basic conditions for holding public officials accountable for performance is absent in many agencies that are meant to perform services are regulatory function for the people. Bureaucrats deliberately delay so that those who are in urgent need to show up and once they pay, their work is done. Lack of transparency in public offices provides the perfect cover for corruption to thrive in the transaction between government and the people. Continued tolerance of this state of affairs for decades has made systematic reforms a truly uphill task.

Casual Approach of CAG

Total apathy of the government on the corruption is also illustrated by the fact that no agency of government has the ringside view of the rottenness of management of government finance (Joseph, 2001). The Comptroller and Auditor General (CAG) is supposed to audit all government finances, treasury and payment voucher. But, more often than not, if is done very casually and carelessly. So we often hear scams like “fodder scam”, “Pension Scam”, “provident fund scam”, “Postal saving scam” but CAG has never been able to check these scams in advance.

Corruption as Continuity of Old Tradition

According to Sen (2001) corruption is continuity of old tradition. During Mogul era all public money was spent on fighting war and leading a life of luxurious excess. During British era Indian money was used for England to spur industrial revolution. After independence in the name of self-government politicians and bureaucrats are swindling the money. This tendency can be checked only with the growth of civil society

Modern Processes- Mixed Response

Adoption of new technology like computerization may not help in reducing corruption if all stages of a procedure are simultaneously not addressed. As seen in a study of Andhra Pradesh (Casely 2004) computerization of land records has helped in reducing corruption only marginally. It was not possible to eliminate corruption totally as many related departments were not computerized and attitude of staff has not changed at all. However in another study (Aakella and Kidambi 2007) as a part of National Rural Employment Guarantee (NREGA) scheme related muster roll and other documents of a civil work was read aloud in front of the villagers all the corruption in construction and short handing of wages came in light. People came to know about muster roll fudging and false bill claiming. Officials at different levels were suspended and removed from services. Consequently they started recording correctly. This was similar to earlier experience of Rajasthan and Kerala (Mukhopadhyay 2005). In the first public hearing held by MKSS at Kot Kirana, Rajasthan in December 1994 small public works of 1993-1994 were probed, muster rolls were read aloud and were found to be fake. Similarly other construction and wage payment bills were also found to be false. Similar Jan- Sunwai also took place at other locations and these helped in checking corruption. In Kerala participation of people in local self governing institutions since 1997 has helped in reducing corruption in a big way.

Corruption in Transportation

It may be noted that ethics is not related just one aspect of life, rather it spread to all dimension of life and economy. Whatever a man/woman does and whatever his/her activities affect other people or institution has an ethical angle. Since corruption has most distorting affect on human and socio-economic affair it is very important to understand different facets and sectors of corruption. Spector (2005) has also emphasized that instead of looking at all sector at a time we should concentrate on a particular sector. Hence we should divide problems of corruption into different sectors, identifies key vulnerabilities in each sector and recommend corresponding strategies to address these vulnerabilities. In a study conducted in India by Transparency International in 2005, it was noticed that police stands out high on the corruption. Judiciary, land administration, government hospital, electricity, PDS were next in that order. However, worldwide health and education top the list. Transportation comes next. Although several studies have been carried out on the subject of corruption in health, education, tax collection, Judiciary etc. there are few studies in the transportation sector. However transport is a sector which is being used almost all human being and with the pace of increasing modernization and urbanization, the use of transportation becoming more prevalent. Presently Transportation being a part of most common public affairs is also affected by corruption. In this paper we will be specifically looking to the some case of corruption in transportation and will be discussing some of policy measures by which we can check/reduce corruption in a systematic framework.

Although we can study corruption in any sector or any walk of life, for the purpose of specificity we would be concentrating on the transportation sector. As in recent times with the growing GDP serious shortfall in infrastructure is being felt. This has necessitated to increase the investment on transportation (particularly in India) it is probably the right time to study corruption in transportation sector as public policy planner can formulate proper policy by addressing those issues where the possibility of corruption exist high. Ethically it is important to maintain the probity in those areas where large sum of public money is being expanded. Even the public has an ethical right to know, where the taxpayers’ money is being spent and used for rightful purpose.

According to Collier and Hoeffler (2005) infrastructure including transportation is distinctive as an economic activity in two respects. First, it is intensive in ‘idiosyncratic’ capital, meaning that its capital has to be designed specifically for installation. Second, it is a ‘network’ activity, requiring government regulation. Both of these features make the activity unusually prone to corruption. The financial rationale for combating corruption in transport is very powerful. Up to 10-20 % of any country’s national budget is earmarked for this. The roadways and railways sector constitute the majority share. Permit for running interstate buses, trucks, taxies; lorries etc. are obtained by paying hefty sum in corruption. Construction of infrastructure of roadways and railways involving construction of major and minor bridges and flyover, diversion needs heavy expenditure and in all these leakage due to unethical practices and corruption varies between 5 and 20% of transaction cost. Even inefficient and ineffective resource utilization leads to wastage of precious fund. Thus improving governance and better monitoring in the transport sector would potentially save 10-40% of sector expenditures.

Due to corruption frequently our national funds are diverted to projects with lower economic rates of return. Corruption affected construction are often substandard. These cannot last for long and there is higher need of maintenance and rehabilitation. Since transportation infrastructure is fixed its impact on social and economic developments are tremendous. It also affects land use and opportunities for extracting rent potentially high. These economic loses may be larger than the direct financial cost of corruption. Corrupt practices in the transport sector are likely to spill over to other sector and broad economy. Thus there is a broad rational for combating corruption to ensure institutional integrity and sustainability within and across sectors. (Paterson and Chaudhuri. 2007. pp160). Ethically speaking it is right of every citizen to ensure that the revenue collected by the taxpayers’ money are prudently spent for the intended activities and should not be diverted to any personal gain.

In day-to-day life when we come across a few cases of corruption, say a traffic police is asking for a fine for violating a traffic law or some appeasement we feel that it is the end of the ethical violations by committing corruption in transportation. But when we go deeper then only we realize that there are much more systematic and deep-rooted form of corruptions which are being committed in a very ruthless manner. Ethically it is very devastating and it can be seen in the following examples: -

Case Study: Murder of an Engineer

Satyendra Kumar Dubey a civil Engineer of IIT Kanpur, working with National Highway Authority of India (NHAI) on the Bihar stretch of the Golden Quadrangular project was murdered at Gaya as he raised the ethical issue of corruption along the 60 KM stretch where he worked. He had highlighted loot of public money and poor implementation of the project. He had noticed that the procurement had been completely manipulated and hijacked by some contractors and subcontracting work to small contractor had compromised the quality of the work. The work was awarded at high cost and contractors had assured the best quality in the execution of project. But in actual execution most of the works were being sub- letted to small and petty contractors who are not at all capable of executing such big projects. These petty contactors were bringing poor equipment and material, giving big set back to the progress and quality of the work. He also printed out that all from top to bottom knew this phenomenon but every one was maintaining a studied silence. Dubey had to the price by his life and the entire system including police and judiciary is so entrenched in the corruption that no body had been punished, nor there is any remote possibility of the punishment. (Jha, Rajkamal 2005). Thus ethical issues are not only superficial issues, rather conflict with these are so intense that people have to pay heir life as a price.

International Scenario: New York:

The ethical conflict of corruption in transportation is not restricted to India only. Rather this ethical conflict can be seen in any part of the world. For instance in some studies of transit agencies of New York and Los Angles several cases of corruption was noticed (Gordon, Cameron, 2006). In New York it was noticed, that due to corruption, ad rights of over Metropolitan Transportation Authority (MTA) trains rail yards on Manhattan side was given to lowest bid, instead of highest bid, incurring a loss of $ 380 million. Due to misadministration and delay in spending transportation security fund cost overrun of $ 721 million took place. Similarly loss of millions of dollar took place due to months of delay and cost overrun in different subway stations. Due to misadministration a useful life of 50 years was accepted whereas it actually failed in 8 years, which led to $ 125 million replacement cost. Due to corruption improper bid to develop MTA rail yards in Brooklyn was accepted leading to loss of $ 50 million. Similarly due to misadministration the sub way car delivered by Alstom were inferior in quality and behind schedule. In 2005 fourteen MTA officials were fined by the State Ethics Commission for accepting improper gifts from companies that do business with the authority. In another instance, the president of New York Transit, the operator of New City bus was fined for accepting five separate gifts. In yet another set of actions, the President of the Long IslandLower Manhattan due to selection of a wrong contractor. railroad was fined for accepting thousands of dollars and later resigned. In 2003 due to corruption approximately $300 million cost overrun happened in constructing new MTA headquarter in

Los Angeles:

In Los Angeles similar frauds were noticed. For instance in 2002 due to corruption $ 30 million fraud took place in LA MTA workers’ compensation. Due to misadministration LA MTA made unauthorized reallocation of US Federal funds and loss of $ 156 million took place. Due to misadministration, there were major problems with construction of the red line tunnel, which led to $ 123 million in legal settlement to injured workers, millions of dollar in other compensation and damages. In 1997 former MTA Risk Manager was sentenced to 14 months in federal prison for accepting more than $ 140,000 in bribes. According to a report, in 1996, millions of dollar in cost overrun on design of Pasadema Blue Line were improperly approved by MTA staff and paid to Engineering Management consultant in violation of MTA policy leading to $ 22 million loss.

The above three cases indicate that there are various kind of ethical dilemma and forms of corruption prevailing in both developed and developing world in the transport sector. Similar examples can be found anywhere, any city or any project. People not involved in transportation activities never realize that such kind of ethical issues are involved even in transportation, which otherwise is taken for granted. Such ethical conflict and these corruptions can be fought only in a systematic manner. For this we need that the project manager must sensitize their staff on the ethical issue of proper planning, implementation and operation of a project. At the same time we should build practical anti corruption measures in to the design of a program so that those who are not following the calls of ethics are gauged with the anti corruption measures. To do so, one needs a good understanding of the corruption risks that might arise at various points in the program cycle- a detail road map from beginning to end, showing indicators along the way that warn of possible problems.

In the present state of affair, the policy planners have attached lower priority for combating corruption. For instance in the Engineering Department of the Indian Railways rigorous system of checks and balances exist for testing and certifying quality, measuring and payment for quantities. But due to corruption these are weakly applied. It may be noted that corrupt practices in the transport sector thrive in an environment of weak institutions and low or unconcerned ethical standard of a society. Even administrative inefficiency is a kind of corruption, but that is hardly recognized in that way. For instance, during budget preparation, agencies may inflate their needs, distort priorities or identify and cost program and project inaccurately – all of which leads to inefficiency but not necessarily to corrupt practices. However inefficiency provides opportunities for rent seeking behavior.

Types of Corruption in Transport Sector

Following are the major types of corruption as mentioned by Paterson and Chaudhuri (2007: pp 162) at different levels: -

State Governance failure

• Unclear overlapping transports development roles.
• Large discretionary funding.
• Weak legislative oversight capacity.

• Lack of independent Judiciary
• Lack of national audit capacity
• Absence of independent, effective media

State Capture

• Manipulation of national Budget allocation
• Sector budget allocation rules subverted for political purposes
• Fixing of Major project – in justification or in design and supply
• Revenue diverted and misused

Agency Governance failure

• Weak planning methods and mechanism, undue political influence in project selection
• Weak project mechanism with scope for leakage and gain
• Outdated financial and project monitoring process allowing scope for manipulation
• Lack of information and communication technology, causing uneven work and poor monitoring quality
• Staff appointments for political purposes
• Inadequate compensation of personnel
• Inadequate audit procedures and systems
• Lack of explicit anti corruption plans and awareness

Administrative corruption at the project level

• Padding of design and cost estimation
• Restrictive or deceptive bid specifications
• Interagency collusion and kickbacks
• Contractor collusion
• Falsifying need or quantities in change order
• False certification of compliance
• Bribes for administrative processing (Payment, contracts& the like).

Let us examine the issue in slightly greater detail: -

Corruption in transport at the State level:

Unlike many other sectors corruption in transport starts at the state level. The seeds of corruption are laid when at the topmost level some infrastructure projects are accepted for some political or other petty gains. In such situation vested interest determine the allocation of resources to transport with little regard to objective planning criteria, forecasts of needs or expected some rates of return. The allocation of national resources to and within the transport sector typically involves a combination of fiscal criteria, economic planning, development criteria and political discretion. However, for a particular project, many a time, established methods for planning, evaluating and prioritizing capital investments for integrating socio economic, spatial and environmental consideration at a network level are manipulated, misinterpreted or ignored in order to elevate that particular project. For instance in Indian Railways many decisions for constructing a new line or workshop are done on this pattern. Rigorous planning process and input analysis is either avoided or manipulated to justify the project. Sometime some projects are started to benefit some group of industries or business houses like the privatization of rail networks and services, or of port and airport facilities and services, which would confer a special benefit to the concessionaire. Same time lobby groups such as automobile and road construction industries attempt to bias legislation in their favor such as emission control, fuel economy and safety regulations. And motive of all these remains some personalized gain of some individual or political party. Since these are not done for the benefit of the nation so the entire process becomes unethical. Unlike many other sector effects of these are felt for long time to come and these decisions are not easy to reverse.

Corruption at the Agency Level

Weak Business Processes and Control

From ethical point of view agency level is a field where we find participation of people at the mass level and once we see that most people are engaging in corrupt behavior without any fear or restriction than we start wondering whether there is an iota of ethics left in this country. In transportation this becomes more evident as it is spatially distributed and there are weak internal network controls. Accounting methods and financial management processes which are supposed to be critical to the tracking of funds and transaction are so weak and only in paper form, that there are difficulty of verifying authenticity, tracking individual transactional and retrieving or auditing transaction. In transport sector corrupt agents mostly develop many fraudulent schemes, like petty cash theft, internal transfers or manipulation of book entries. Even audit staffs are connived in this process and the booty shared between many officials. Since in transport people or goods are handled at mass level it becomes much easier to book expenditure to bulk or general tasks that are typically not measured, such as routine repairs. Since in transport man or materials are moved and there is great time cost so it becomes much easier to book false expenditures in the name emergency, such as safety repairs, landslide removal, earth works, etc. Such maintenance is never disputed but is rarely subject to explicit measurement and control. Revenue collection is a notorious point of leakage, especially in remote locations or enforcement situations, such as traffic or vehicle movement, toll or tariff collection, registration and testing. In Railways reservation of passenger trains are such examples where passenger faces the corruption in most prominent manner and it spoil the image of Railways as well. Availability of resources at the lowest level provide easier opportunity to exploit for personal gain of the assets like use of equipment for private interest, renting out equipment in return for receipts that are not documented, billing of multiple repairs to a single vehicle, the retention of scrapped vehicles on the inventory and charging various maintenance and overhaul cost. Thus, unlike police where corruption is performed in the name of uniform, transport sector gives opportunity to be corrupt even to the common citizens.

Personal Appointments:

Many times corrupt officers use staff appointments and promotions as rewards or incentive for cooperation with corrupt practices. Such employees are placed in critical nodal points to facilitate corrupt transactions, particularly those posts that are critical for rent-seeking opportunities. Many times they act as collection agents for bribes and kickbacks. In the case of technical management position entry rules such as technical qualification may be relaxed or waived in order to place a favorable ally.

Inefficient Institutional Watchdog

It has been observed that even the institutional watchdog, such as the auditors, vigilance or a departmental inspector, compromise and provide clearances in return for a share in kickbacks. In many cases even external groups that have been brought in to the process to enhance transparency such as NGO etc become party of the corruption.

The above analysis of corruption gives us an insight how corruption is being practiced in on going transportation activities. However, there is another dimension of corruption, which takes place at the time of making and implementation of the project itself: -

Preparation of Project

The corruption starts at the preparation phases of project itself. If fee is based on a percentage of a project cost then consultants may over design a facility. Political or vested interests, which may benefit financially from specific option, may also press for the same. To influence the feasibility or cost estimates of the project, adverse impacts on environmental stability may be deliberately understated or traffic demand and similar benefits overstated. Many time the project cost estimates are inflated so that margin is available for distribution as kickbacks. To favor a particular product or supplier the specification of goods, equipment or materials are modified often in return for kickbacks. Information asymmetry is also deliberately created to conceal corruption. Favored contractors are given some tip, which help them in submitting a winning a low bid.

Bidding Phase

This is more critical phase of the transport sector. For participating in a bid, local politicians, officials or influential party may impose informal conditions to pay a certain portion of the contract value in return for being allowed to sign the contract or gain access to the site and to continue operations unimpeded. As it mostly happens in states like Bihar, UP MP, Rajasthan etc, the margins to cover these kickbacks are generated by firms bidding substantially above the cost estimate, by generating large variation or change orders and cost overruns during implementation or by compromising the quality of construction in ways that are not apparent. Frequently these margins are well established and are distributed according to an established hierarchy. These payments are often regarded as supplemental income where the remuneration of government officials is particularly low. In most cases, this amount may be up to 10 percent of the contract price. In some cases kickback share exist even without overt signs of collusion and these may not be apparent in an examination of bid prices.

Collusion is another form of corruption in which different contractor share work among firms by taking turn as the favored contractor. Here every one ‘wins’ over the long period of time. It involves the outright rigging of bid prices, ‘losing’ contractors do not submit bids even though they are asked for expression of interest, submit intentionally high bids, or withdraw their bids before the final stage of bidding process when the lowest evaluated bidder is determined. The winner is supposed to set aside three percent of the contract to be shared by other pre qualified and losing bidders. Somebody coordinate and fix who is interested in a particular project. At a follow up meeting, the anointed winner, who also develops local political support in exchange for corrupt payments, arranges the price mark up and negotiates the payments for the politicians (two third of their share on winning the contract and one third on implementation). Contractor adds 20-30% to the estimates depending on the circumstances of each project.

Since transportation related work involve large-scale construction, in India contractor collude to form a consortium or as sub-contactor. Splitting large construction contracts in to smaller contracts with weak regulation offer more maneuverability to influence the award. It permits the same firm to do the work and submit bills under phony company names. Some time, publishing bid announcement in a journal with limited circulation under false claims of urgency is used to eliminate rivals. During bid evaluation a large arithmetic correction may be contrived to favors desired firm or to penalize a disfavored firm. After the winning bidder has been selected the bid price or condition may be changed by corrupt official on a variety of grounds like alleged change in prices, inflation, unavailability of certain materials or equipment and the need to substitute more expensive alternatives (Paterson and Chaudhuri. 2007. pp164-170).

Implementation Phase

Corrupt people in transport sector cross all limits of ethics for personal gain. At this stage they use change orders, variation orders, or amendments, which may collectively increase a contract price by 10-50 percent above the original contract price and extend the delivery period, to generate additional kickback. Though substantial excess quantities or unnecessary services would be demanded, these would be billed but not delivered. Certification by Quality Assurance Inspector may be used to extract rent from the contractor. Materials or quality that does not comply with the specifications may be permitted with the complicity of officials. Field or laboratory test results are made to reflect compliance with specification even when they failed, or the tests was not actually conducted. Since testing staffs are very junior so they may be very easily lured by the contractor they are monitoring. So, it is difficult for them to act independently or to reject work On the other hand, corrupt officials may fabricate deficiencies in materials or construction to exert pressure on the contractor for a bribe. Even an independent quality assurance team can be susceptible to bribe or capture in such instances.

Payment to Firms

In transportation sector, bribes is being sought for, many times, processing claims for payments after certification of quantities and qualities of works, goods or services in compliance with stipulated standards. This is often evident from long payment delays, which is caused by negotiations for bribes or for a particular result. It has been observed that the multiple layers of approvals, as it happen in any government department, required may provide more opportunity to extract rents to expedite payments.

All the above processes explained in different paragraphs are being seen or being felt at different places all over India. However, in absence of any empirical study, we have not quoted any specific case. Since corruption flow as an under current so it cannot be seen overtly rather it can be felt. One gets a feel whenever one visit for a personal work in any government department and then only one realizes how corruption has become cancerous in the society.

Remedial framework

In the above situation, to establish an ethical system in the transport sector we need to increase the resilience of transport sector against corruption and reduce the incidence of corrupt activity. We may adopt preventive paradigm in which the objective is to prevent, monitor and deter corruption as well as to educate all stakeholders on its cause and approaches to prevention. Control paradigm is second alternative in which one confronts, prosecute and punish corrupt acts. Investigations are conducted against the suspected corrupt – either while in progress or once they have been alleged, investigated and proven. Paterson & Chaudhuri (2007:173) have suggested the following measures: -

Checking corruption at state captured level:

• Reduce discrepancy spending of revenues
• Adopt improved, objective and transparent national budgetary allocation rules
• Reduce areas of discretion with good rule making
• Adopt appropriate legal reforms
• Improve public access to information
• Increase judicial independence, reform and accountability
• Mount educational campaign on anti corruption.

Agency Process and Capacity failure: -

• Modernize business planning and fiduciary tools.
• Improve human resources development and management
• Reform procurement system including the improved automated process.
• Upgrade information technology
• Plan and implement institutional anti corruption.
• Set up complain hotline at agency
• Monitor performance
• Establish integrity indicators, collect baseline data, monitor
• Prosecute all parties involved

Transactional Integrity Compromise: -

• Install effective internal fiduciary, audit control
• Implement project management and supervision controls
• Set up project audits by ombudsman or auditor general
• Establish project monitoring in- house and by a third party
• Solicit civil society oversight
• Forge integrity pacts with private firms
• Train staff in basic investigative frame work
• Train staff to detect suspicious activities
• Conduct rigorous investigation to collect evidence
• Follow up with due process and trials
• Apply criminal and professional sanction aggressively.

How to see the Corruption:

In transport sector, we can locate some local agents who are there to provide generic ill-defined services. They have boilerplate contracts with no clear definition of services to be delivered. His compensation is calculated as a percentage of the contract rather than on a time or service based. Presence of such agent indicates suspicion and requires proper monitoring.

To prove frauds, in the transport sector, investigators often test price of inputs for reasonableness and compare the actual quantity and quality of goods received with those claimed in official invoice. Some time lifestyle check of suspected officials are also conducted to see how they are living beyond their legitimate means or have unexplained financial resources.

Information Power:

Information on assets, cost and performance provide critical evidence, which enables and facilitate accountability and transparency. In transport sector, the information on what was intended and what was actually delivered, whether costs are reasonable, whether qualifications are fraudulent etc. reduce the space for discretion, subjectivity and ambiguity in the decision on which corruption thrives. Keeping sensitive information secure and making access to general information available to stakeholders in an appropriate way helps in enhancing transparency and reducing discretion and ambiguity. The power of information technology for managing and processing large amount of data and providing access to information is huge and plays a large role in making transport operation transparent. For this the basic element includes guidelines, Internet based tools, computerized application for procurement and monitoring and independent procurement agents.

The use of Internet or web based communication technology such as e-procurement; to address the transparency issue is powerful and gaining gradually more importance. In this a major advantage is that the same information is available to all participants. The adoption of this method has helped Indian Railways in improving transparency and reducing corruption. Here, typical Internet based communications include advertisement of bid opportunities and information, announcement of contract awards and prices, announcement of bid prices and evaluation results, availability of bid documents online for downloading, and direct submission of expression of interest, eligibility or bid documents. Computer application has enhanced transparency in the evaluation process. It also helps in generating evaluation reports. For instance, a computerized registry of civil works contractors has proved successful in improving the integrity pre-qualification processes and legal, commercial and financial data of firms in the data base and compare with the qualification profile of the project. A list of eligible firms also generated together with the list of those firms not qualifying and the reasons for disqualification.

External Accountability Mechanism

In this some outside agency evaluate the entire range of transactions to ensure the integrity. The major tools are: -

Financial Audit- It is a periodic inspection of account to determine whether all funds and assets have been used for the legitimate and intended purpose and are fully accounted for.

Technical Audit - It is a periodic inspection to determine that the assets and services provided with the funds were appropriate to their intended and were delivered in quantity, quality and location of disposition is specified. Appropriateness of the specification and standards applied in the projects are also evaluated

Fiduciary Review-It is comprehensive review of an implementing agency’s procurement, financial management and project management processes, including their internal control oversights. Its output assess the level of corruption in each process, identify the points of weakness and required remedial action and review and authorization threshold.

Third party monitoring;- In this independent private sector agencies are hired to undertake all aspects of procurement on behalf of the agency from the beginning to end. The agency would conduct part of the process in public involving main officials and public meetings and make appropriate recommendations for official authorization.

Incentive

To break a cycle of corrupt behavior, in transport sector, it is must that the good behavior should be incentives and it should out weigh the rewards for engaging corrupt behavior. In the similar way, the risk and cost of corrupt behavior out weigh its reward. At the state level any personal gain, which a politician may be trying by arguing for an inappropriate transportation proposal in budget can be counter balanced if strong civil society highlight benefit of alternative transport allocation or reveal shoddy project sponsored by politician, which would cost him votes and loss of reputation. At the transport agency level, this requires strengthening of internal controls, enforcing penalty for violation of control, selecting staff of integrity at critical position, rotating them to avoid the formation of collusive alliances and providing whistle blower protection. Such measures can also be implemented at individual level by rewarding good behaviors.

Judiciary

In India, unfortunately strong legal and judicial environment is missing to be effective. The contact provisions need to be upheld and frauds and other infraction to be prosecuted if any legal frameworks have to be effective (Paterson and Chaudhuri. 2007).

Conclusion

We may conclude that the transport sector is highly prone to corruption. The political value, high value of some contracts, numerous small contracts and project distributed locally with weak or of obsolete business processes are all points of vulnerability in this sector. When a family or elite faction dominate a corrupt culture, all players, whether government or private may be beholden to the power of elite for survival, patronage, of compliance with the one establishing the informal rule of the game. However, with the method suggested above, we may help in reducing the corruption. It may take some time as corruption are deep rooted and only a systematic process can establish non corrupt practices. The anticipated dividend is worth trying for this. It is also important in ethical point of view, as it will help in establishing more ethical and just society where greatest good for all would be possible. In this perspective every individual and every organization, whether private or public, can make contribution. This contribution could be either submitting to the pressure of corruption or resisting corruption. Even private organization can set an ethical standard of not bowing to the tactics of corruption. If all private organizations collectively decide not to yield to the pressure or temptation of corruption then the corruption cannot sustain. Definitely the present development of globalization, information technology, etc. has made it possible to move in that direction. Hence we should keep our hope and we should have firm belief that despite some initial failure we will be able to establish a better ethical world.

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