This past week, the financial pages of local newspapers were awash with news about the parliamentary Finance Committee finally removing restrictions on the tenure of the chairperson of banks and financial institutions (BFIs). It also struck down proposed restrictions on taking bank loans by directors of BFIs for their business ventures. Not only that, some of the legislators who are also bank chairpersons became successful in exempting themselves from the restriction on becoming bank chairpersons by inserting a proviso clause.

The parliamentary Finance Committee discussed the bill for amending the Bank and Financial Institution Act (Bafia) for quite some time. Against a backdrop of numerous cases of misuse by chairpersons and board members of BFIs of their position, the central bank had initiated the amendments with the aim of curbing wrongdoing and meet international standards under the Basel regulatory framework. Since the proposed amendments went against the personal interests of some legislators who hold top positions in BFIs, they lobbied to have the changes blocked and were successful in their mission. They not only unduly pressurised and lobbied their fellow legislators openly towards this end, but also voted against the proposed amendments. This action has brought to the fore the issue of conflict of interest in the functioning of Parliament and the propriety of the activities of lawmakers. It has eroded the image of Parliament and put a question mark on the ethics of our legislators.

Code of ethics

The elected representatives in a democracy derive their authority from the electorate. They have the authority to exercise discretion in Parliament as they please. However, this authority should be exercised in the best interest of the people or in the ‘public interest’. In their private capacity, Members of Parliament (MP) may have other occupations such as business owners, lawyers, farmers or educationists. They can use their diverse experience to enhance their oversight capabilities and make more informed decisions. However, there is a possibility of personal interest improperly influencing the exercise of their public duties. The abuse of public office for personal gain is termed as corruption. Conflict of interest and corruption are linked to each other—the former is the mode and the latter is the outcome.

Various methods are used to avoid a conflict of interest and maintain the integrity of legislators. They may be required to declare their interests and engagements right at the outset when taking the oath of office. They may be barred for taking part in discussions in which they have a personal interest. There may be restrictions on carrying out certain activities and accepting certain assignments. Restrictions may be put on travel and receiving gifts or other favours. The US, Australia, Canada, the UK and other countries have a Code of Ethics for legislators in which a potential conflict of interest is laid down and legislators are required to observe such rules.

There is no ethical code of conduct for our legislators. Excepting a feeble provision in Rule 133 of the Rules of Parliament which states that “any subject which is connected to the personal advantage of any member, the concerned member shall not participate in the discussion and decision on such subject”, there is nothing substantial or a direct provision to prevent lawmakers from acting when there is a conflict of interest.

Action and benefit

However, legislators being in a public position should follow Good Governance (Management and Operation) Act, 2007 and refrain from any act which has a potential conflict of interest. In this case, one might draw the concerned provision of the United Nations Convention Against Corruption in regard to avoidance of a conflict of interest. Since Nepal has ratified the convention, the obligation emanating from this is obvious. Even though the position of a legislator falls under the definition of Public Office under Prevention of Corruption Act, 2002 and hence attracts the jurisdiction of the Commission for the Investigation of Abuse of Authority (CIAA), the shield of autonomy of the legislative process may prevent taking any action against such activities. However, this has yet to be tested before a court of law. In this regard, one would be reminded of Indian prime minister PV Narsingh Rao vs State—a case related to paying bribes to legislators in exchange for their votes. The veil of legislative autonomy could not save Rao’s criminality on the ground of the Constitution of India.

This action of legislators may further be defined as Policy Corruption or Grand Corruption. In this situation, one needs to probe clearly the nexus between the action and the benefit to the legislator. One would easily imagine that the legislator must have knowingly and by persuading their fellow lawmakers managed to garner support for their proposal on the floor of Parliament. This, in essence, shows how the state machinery is captured by corrupt people in this country. It is surprising to see civil society members and anti-corruption organisations like Transparency Nepal keeping mum on this blatant case of corruption.    

Upadhyay, former chief commissioner of the Commission for the Investigation of Abuse of Authority (CIAA), is member of the Eminent Persons Group from Nepal