INTEGRITY PACT

Integrity Pact (IP) is a tool that was developed during the 1990s,

by Transparency International (TI) to help governments,

businesses and civil societies, to fight corruption in public

contracting and procurement. It is a process of signing an

agreement between a government/ government departments and

all bidders, for a public sector contract. It contains rights and

obligations to the effect, that neither side will pay, offer, demand

or accept bribes, or collude with competitors to obtain the

contract, or while carrying it out.

Contd…

What is Integrity Pact ?

Likewise, bidders will disclose all commissions and similar

expenses, paid by them to anybody in connection with the

contract; and that sanctions will apply when violations occur.

These sanctions range from loss or denial of contract,

forfeiture of the bid or performance bond and liability for

damages, blacklisting for future contracts on the side of the

bidders, and criminal or disciplinary action against employees

of the government. IP also introduces a monitoring system

that provides for independent oversight and accountability.

Background on Integrity Pact

Integrity Pact was initiated by a former World Bank official, Peter Eigen, in May 1993, with an objective to curb corruption. At that time, the program was launched to create ‘islands of integrity’, through a voluntary contract between the buyer and seller to eliminate corrupt practices.

Why needed in India

India is perceived to be one of the more corrupt nations and ranks 72 among 180 countries in Transparency International's Corruption Perception Index (CPI) 2007.

Existing anti-corruption organizations have had limited success in fighting corruption in India.

Most people believe that corruption is rising in India at an alarming rate and Government is not doing anything to check it.

Frequent scandals and delays plague Government contracts and other procurement.

Contd…

Such delays increases costs of procurement,works, and public projects and drains public exchequer.

Corruption hurts the poorest most.

IP program is a way to supplement existing methods and is found to be a more effective tool for ensuring transparency and fighting corruption in public contracting.

IP is a model for transparency in public procurement and contracts.

It helps enhance public trust in government contracting and hence contributes to improving the credibility of contracting procedures and administration in general.

It enables companies to abstain from bribing by providing assurances to them that

(a) their competitors will also refrain from bribing

(b) government bidding system and procurement will be absolutely transparent

Contd…

Why should a company sign IP ?

(C)government will not only prevent corruption but also extortion, by their officials, and follow transparent procedures.

IP helps Government and companies to reduce high cost and maintain quality control.

IP adoption creates confidence and trust in decision making process, and also a more hospitable investment climate and public support in the country.

Different Players of Integrity Pact

The Company – its commitments and obligationsThe vendors – their commitments and obligationsThe Independent External Monitor (IEM) – their roles and responsibilities

Other features includeImplementation GuidelinesPeriodic review of effectivenessViolations and consequences

Drafts of the MOU and the Integrity Pact are prepared by the Principal and approved by Central Vigilance Commission (CVC) and TII.

Thereafter, an MOU is signed between the Principal and TII.

Commitment is obtained from all senior officials of the Principal to implement the IP program.

In case there are subsidiaries of the Principal, they are advised to follow IP of the Principal.

Selection of IEMs by the Principal in consultation with CVC and TII.

Contd…

How Integrity Pact works ?

Displaying the IP and particulars of IEM’s – their contact numbers and Email ID’s, and MoU signed with TII, on the website of the Principal. Also publicizing them through media.

Modifying the model IP by the Principal in consultation with TII and developing a phased implementation program of IP

Periodic review and evaluation of IP’s implementation and its effectiveness through the following measures:

conducting an annual assessment of IP program effectiveness by the IEMs, senior leadership of organization, CVC and TII and identify

areas/ways to improve it.

an annual report on the progress/effectiveness of IP program by IEMs to the Board of Directors of the organization.

Benefits accruing from adopting Integrity Pact Improves the image of the company as an ethical organization

Speeds up tender and procurement processes

Reduces political, administrative and diplomatic interference

Reduces frivolous lawsuits and complaints

Improves vendors satisfaction and restricts bribes

Reduces the concerns of harassment faced by honest officials

Lowers the cost of procurement

Disputes Redressal mechanism of Integrity Pact

In case of disputes, matter is referred to Independent External Monitors, which helps in taking speedy decisions.

CVC’s scanned copy of recommendation on IP

List of PSUs which have signed Integrity Pact

PSU/Company Date

Oil & Natural Gas Corporation 17.04.2006

Rashtriya Ispat Nigam Ltd. 29.03.2007

Hindustan Petroleum Corporation Limited13.07.2007

Gas Authority India Ltd. 23.07.2007

Coal India Ltd. 25.08.2007

Hindustan Steelworks Construction Ltd.24.09.2007

MECON 24.09.2007

MSTC Ltd. 24.09.2007

Contd…

National Mineral Development Corp. 24.09.2007

Ferro Scrap Nigam Ltd. 24.09.2007

Steel Authority of India Ltd. 24.09.2007

Kudremukh Iron Ore Company Ltd. 24.09.2007

Bharat Refctories Ltd. 24.09.2007

Mangnese Ore (India) Ltd. 24.09.2007

Oil India Ltd. 29.11.2007

Container Corp. Of India (CONCOR) 20.12.2007

Neyveli Lignite Corporation Ltd. 29.12.2007

Bharat Petroleum Corporation Ltd. 10.01.2008

Contd…

Indian Oil Corporation Ltd 80.01.2008

Airports Authority of India 15.02.2008

Mahanagar Telephone Nigam Ltd. 05.03.2008

Northern Coalfields L d 14.03.2008

South Eastern Coalfield L d 26.03.2008

Mahanadi Coalfields Ltd. 07.04.2008

Till 7th April 2008, Twenty Four (24) PSUs have signed the Integiry

Pact

List of PSUs which are interested in signing the Integrity Pact

Bharat Coaking Coal Limited (BCCL)

Shipping Corporation of India

Western Coalfields Limited (WCL)

National Aluminum Company Limited (NALCO)

RITES

National Fertilizer Corporation