(Article) CSM - September 2013: The Disclosure of Lobbying Activities Bill

The Disclosure of Lobbying Activities Bill

In a society where lobbying is almost synonymous with bribery and where lobbyists often creatively couch themselves as political aides, public relations officers and advocates for policy change, the Disclosure of Lobbying Activities Bill, 2013 (DLA Bill/Bill) recently introduced in the Lok Sabha1 by a Member of Parliament can perhaps be seen as the first ever acknowledgement by a parliamentarian of India’s worstkept secret. This private member’s bill, introduced in the wake of the Nira Radia tapes scandal, and more recently, Walmart’s regulatory disclosure to United States authorities of having engaged in lobbying activities to secure enhanced access to Indian markets, the bill intends to procure transparency in the context of lobbying activity undertaken in India.

The DLA Bill is a significant step, as for the first time in the history of Indian lawmaking, a potential law recognises that lobbying is an integral part of democratic functioning.2 Whilst it remains to be seen whether or not the bill will ever translate into a law, it implicitly indicates lawmakers’ willingness to consider a proposal for a law, which requires them to shrug off years of denial of the omnipresent relationship between lobbying and lawmaking.

This article critically analyses the DLA Bill, identifies provisions thereof which will have an impact on stakeholders and highlights some conceptual and some not-soconceptual errors therein, which arouse suspicions about the genuineness and sincerity underlying its introduction.

Lobbyists Registration Authority

The DLA Bill requires the central government to set up a central authority for registration of lobbyists known as the Lobbyists Registration Authority (LRA). The bill, thus, deals with lobbying activity as an activity to be reported and disclosed from time to time. Interestingly, the bill fights shy of declaring that lobbying activity is legal in India as long as the requirements prescribed under the bill have been complied with. Admittedly, in light of the reporting provisions, a provision which expressly declares lobbying activity to be legal would be redundant. However, given that lobbying has been culturally and politically tabooed in India, it may be worthwhile considering making an express provision to this effect. The absence of such a provision is indicative of the political inhibitions and hesitation involved in making a declaration to this effect.

Prospective Scope

The DLA Bill requires every entity (including individuals, companies and all entities of any form whatsoever) that intends to engage in lobbying activity to register itself with the LRA. The bill, therefore, is not meant to procure disclosure of those cases wherein lobbying has already resulted in or otherwise had an impact on enacted laws, policies or executive orders. Thus, for instance, under the bill as it presently stands, Walmart will not require to report the lobbying activity undertaken by it to the LRA as the law does not apply retrospectively. Presumably, this seems to be a safer approach as a retrospective disclosure of such cases would only irreparably open a Pandora’s box, can have mammoth consequences for past governments and result in a complete breakdown of state machinery. The DLA Bill may, therefore, be interpreted as implicitly sending out a signal that past instances of lobbying are waived.

Covered Persons

The DLA Bill covers lobbying activities intended to be undertaken by any entity, whether by itself or on behalf of others. It, therefore, covers independent lobbying agencies, India Inc, trade unions, non-profit groups as well as trade and business associations such as the Federation of Indian Chambers of Commerce and Industry (FICCI), which presently regularly represent their respective interests before the government.

Further, the DLA Bill, if it does fructify into a law, may translate into a double-edged sword for legal and accountancy professionals who often make representations before legislative and executive committees for the benefit of their clients. As in countries where lobbying is legal and therefore a service sector in itself, such professionals could officially take advantage of this public platform to expand their practice areas. However, at the same time, it would mean being subjected to regulation in a practice area, which was hitherto unregulated. Also, if the bill progresses into a law, it would be interesting to see whether the governing bodies of such professions such as the Bar Council of India and the Institute of Chartered Accountants of India would be amenable to allowing their members to engage in lobbying practice.

Further, it is not clear whether foreign lobbyists engaged by foreign corporates to lobby in India (the typical Walmart scenario) or foreign lobbyists engaged by Indian corporates to lobby in India or abroad would be covered under the potential enactment.

Lobbying Activity

Predictably, the crux of the issue is the definition of “lobbying activity” contained in the DLA Bill. Concisely put, the expression lobbying activity has been defined to mean the act of any communication (oral, written or electronic) with a public servant and payment to a public servant. Such act and payment must be done or made with the aim of influencing a legislative action (such as the introduction, passing or defeat of a central or state bill or any amendment thereto), an executive action (such as a government policy or programme, awarding a licence, contract, grant, permit or funds to any individual or organisation, executive decisions to transfer an asset or business manufacturing public goods to a private individual), or the nomination or promotion of any person for a position in a public office.

Lobbying activity, as envisaged under the bill (as presently worded), includes the act of paying a public servant with the aim of influencing a legislative, executive action, etc. Inclusion of payment to a public servant in the definition of permissible lobbying activity is a gross conceptual error that blurs the very distinguishing line between legitimate lobbying and illegitimate gratification to a public servant. Now, one would imagine that payment to a public servant has been included in the definition of lobbying to ensure disclosure of such payments to the LRA. However, such inclusion may obviously lead to an argument that so long as a payment made to a public servant has been disclosed by a lobbyist to the LRA, it is a legitimate lobbying activity. Needless to add, this would run foul of several Indian laws including the Indian Penal Code and the Prevention of Corruption Act, 1988 (POCA). Moreover, the DLA Bill contains an overriding provision, which means that the potential DLA Act overrides any other law (including POCA) for the time being in force.

Further, the DLA Bill excludes from its purview certain types of communications with public servants. These communications have been excluded on the principle that they are either, by their very nature, in the public domain (such as communications made in public media) or are in fulfilment of a legal obligation (such as testimony given before a government constituted committee), or are in response to a request by the government for (a) a tender or (b) public views on proposed laws and policies. Whilst communications of the kind mentioned in item (b) would typically be in the public domain, it may be advisable, by way of abundant caution, to give the benefit of such exception only if the concerned views communicated in response to a government request are freely available on a public forum.

Concept of Public Servant The next contentious definition under the DLA Bill is that of a “public servant”. The DLA Bill imports the definition of a public servant from POCA, a law intended to prevent corruption amongst
public officials. Given the objective  underlying the POCA, the definition of a public servant under POCA is intended to cover public servants of any category whatsoever.

Inclusion of each and every public servant of any category may result in inefficiencies as not every public servant is in a position to influence legislative or executive action. For instance, a public servant under POCA includes any employee of a statutory corporation such as, for example, the Life Insurance Corporation (LIC) of India. Requiring a person to register with the LRA as a lobbyist merely because he/she communicated with an employee of LIC would be meaningless as such employee may not even be in a position to influence any action on behalf of LIC. Such overstatement in the concept of a public servant would not only defeat the legislative intent of regulating genuine lobbying activity, but also increase enforcement costs and reduce the efficiency of the enforcement machinery.

Accordingly, simply importing the definition of a public servant from POCA is a quick-fix solution and the concept of a public servant would require to be revised to include certain categories of public servants who are in a position to influence law or policymaking at any level. Moreover, the laws in India are largely the creation of qualified bureaucrats working within the government machinery and they must also be brought within the purview of the DLA Bill, inasmuch as these bureaucrats may themselves be targeted for lobbying activity.

Reporting and Disclosure

The DLA Bill has fairly extensive disclosure requirements. It requires an independent lobbyist to disclose the names of clients and persons who have a direct interest in the outcome of the lobbying activity or have otherwise funded or controlled the lobbying activity. All lobbyists are also obligated to disclose the area or subject matter of the lobbying activity, the names of employees who will lobby with public servants, the particulars of the public servants who will be lobbied with, the purpose and outcome of lobbying and the details of payments made by the lobbyist to a public servant.

Significantly, a public servant is also required under the DLA Bill to disclose information regarding payments received by him/her in the course of any lobbying activity conducted with him/her. This provision again makes one wonder whether the DLA Bill is intended to legalise such payments, and whether disclosure of such payments absolves the lobbyist or the public servant from any graft allegations. Especially so, since the DLA Bill makes no provision for disgorgement of the payment so received by a pubic servant, and the bill, if it translates into a law in its present form, has an overriding effect on all other extant laws as mentioned above. Ultimately, the broader aim of transparency is realised through the obligation imposed by the DLA Bill legislation on the LRA to make public all information submitted to it on a website to be maintained by the LRA. The LRA is the administrative authority under the DLA Bill which empowers it to conduct investigations against persons it suspects of having engaged in lobbying activity without being registered with it. However, unlike most statutes that empower an investigating authority created under them with powers of interrogation, search and seizure, no such corresponding enabling powers can be found in the DLA Bill.

Penalties

50 lakh, an exceptionally high amount, the likes of which can be rarely found in the Indian legal regime. Further, failure to submit accurate information when asked to do so by the LRA attracts suspension of registration as a lobbyist and is punishable with imprisonment up to five years or a fine which may extend to Rs 75 lakh, or both. A fundamental technical error in the legislation lies in the fact that whilst the DLA Bill penalises submission of inaccurate information, there is no corresponding provision penalising the failure to file the information prescribed under the bill. Finally, the DLA Bill criminalises failure by a person intending to engage in lobbying activity to register itself with the LRA, and imposes a penalty of up to Rs. Notwithstanding the pitfalls of the bill, supporting the bill (not in its original but a much more tightened and improvised form) may be an effective damage control measure for the scam-struck ruling government. Having said that, given its long-term impact on business and political circles in India, the DLA Bill is, itself, surely likely to be the subject matter of much lobbying (both for and against) and whether the bill will ever progress into a law or be put on the back-burner is anybody’s guess.

To conclude, considering the traditional stigma attached to the subject in India, the bill is a laudable though half-hearted step in the right direction. If, however, there is any sincerity involved in pushing the bill through Parliament, it requires substantial polishing and robustness, unless, of course, the elected members simply want to play to the easily appeasable audience of the Indian populace.

Courtesy: Economic & Political Weekly

Bhargavi Zaveri

 

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