Speech of Sri.N.Vittal, Central Vigilance Commissioner

Verbatim Speech of Sri.N.Vittal, Central Vigilance Commissioner at the Inauguration of Vigilance Heads Conference held at BHEL, Ramachandrapuram on 6th June,2001.

Mr. Ramachandran, Mr. Bhave, Mr. Virendra Kumar, Mr. Sinha, my dear friends from BHEL, Ladies and Gentlemen,

I am very grateful to Mr. KG Ramachandran, CMD of BHEL, Mr. S.C.Sinha, Chief Vigilance Officer, BHEL for inviting me for the third time in succession to be with you for this Vigilance Conference of BHEL. First time, it was in Trichy in 1999, last year in Bhopal and this year in Hyderabad. When I came here, I asked Mr. Ramachandran, this Place Ramachandrapuram is in honour of you being CMD. He says there’s already a Ramachandrapuram and BHEL has got a Ramachandran to head it. But anyhow, we are now meeting at a very appropriate time. The theme chosen is also very challenging. "The emerging challenges for Vigilance" Vigilance for Quality, Competitiveness and Productivity.

To understand this, we have to realise that BHEL is an enterprise which is in business. It is a business enterprise. It is one of the very respected Navaratna Public Sector Enterprises. I think you must have heard the story of Margaret Thatcher. What difference does it make to make a Quality Product and the Company that doesn’t make a quality product. Margaret Thatcher's answer is very simple. She says if the company produces Quality Products the customer will come back . If not, the Product will come back. So, it is very simple.

If you are in business, of course what is business, Peter Drucker says Business is ultimately an exercise to create a customer and retain him. Now this is where the Public Sector enterprise like BHEL having lot of problem. So when Margaret Thatcher says if we do not produce quality products the product will come back, the customer will not come back. Therefore, the first thing we realise is in a competitive environment, unless our product has quality, we cannot compete. But then, if there is is no quality there is no competitiveness. But where does productivity come in. Suppose you produce so much that is not competitive and your productivity is not high then you lose. You may gain in quality and because of quality you may say you can compete but ultimately every enterprise exists it is based on the bottom line. Whether it is able to have market capitalization, whether it is able to meet the demands of the stake holders, because every enterprise there may be share holders, employees, society whatever.

:So we therefore realise that for a business enterprise whatever is the quality of product or services, it is giving quality which is important, otherwise, it cannot have the customer. If we cannot have the customer, it cannot be competitive. But then if you are not able to be productive in the sense you must be able to produce quality goods and services with a price that is affordable to customer then only you can exist as an enterprise. So we can understand that. Now vigilance generally is thought of as something called fault-finding or even Mr. Sinha referred it. A sort of a gap in perception and so on. We are all the time looking at the angle of corruption, malpractices and so on. Actually, I have done 2 years 9 months as CVC. I have started saying, I am becoming more and more like a Duryodhana. Yudhishtara and Duryodhana are asked by Narada to go and find out how many honest persons are there? Yudhishtara goes and says oh.. every person is honest. Duryodhana goes and reports that every person in Hyderabad is corrupt. It is given in Mahabharata. It is a story to show, the world appears to you, the way you are. Having been CVC for the last 2 years 9 months, every file I deal, every complaint I deal it is only corruption. So, I am becoming more and more like Duryodhana. If you ask me how many fellows are honest? I would say we will have to find out. Now this is one perception that Vigilance is there looking at aspects of Corruption, mal-practices etc. Whereas a business enterprise is to look into quality,Productivity and Competitiveness. How can the Vigilance be helpful in this. In fact in my paper which has been circulated to all of you, Mukesh Ambani, the CMD of the most successful Private Sector Reliance Industry, was asked by Department of Personnel, I think on an idea by Arun Shourie , that we should have lectures by sucessful businessmen to come and tell us ideas that have worked. So every one month or two months they organised these lectures at Delhi. So one lecture was that based on Reliance experience, Mr. Mukesh Ambani is asked to come and talk. Mukesh Ambani spoke about the Reliance experience, particularly the fact that Reliance has put up the largest Green Field Refinery in Jam Nagar. And what he said was that in Reliance Petroleum, 40% of the employees are from the Public Sector. And he went on to say that the same human capital is available with the Public Sector. But then the perception is that Public Sector is not efficient.

You know I was Chairman, Public Sector Enterprise Selection Board and I was interviewing for the post of Director (Finance) in Kudremukh. So one candidate came. I asked him, there is a rumour probably Kudremukh has disinvested. So what will you do if we select you as Director (Finance).? Then this candidate said that if this is disinvested and if it becomes Private Company, I will have to become efficient. So, that means he thinks, so long as it is Public Sector, he need not be efficient. It is one perception.

Now go back to what Mukesh Ambani says. Forty percent of my people are from Public Sector. They are now working in Reliance and they are able to do these wonderful things putting up the Green Fields site, cost over-run , time over-run etc. They are making money. Now he has suggested therefore in his speech as reported in the press that according to Ambani, Government should free managements of Public Enterprises capable of creating wealth from the pressure of agencies like CVC, CAG and CBI etc. I always readily agree our Public Sector Enterprises are Super Draupadis. Draupadi has only five husbands to manage. But Public Sector has got 7 husbands to manage. What are the seven? First with Board of Directors ofthe enterprise, Administration, Ministry, Public Accounts Committee, COPU then Sani, Rahu and Kethu called CVC, CAG and CBI. So our Public Sector people Ramachandran, Mittal and all others, they have to be Super Draupadis and merge to be competitive in the market and that too Quality, Competitiveness and Productivity. All this and we have got Vigilance also. So in this sphere, we have got to explore how is that we are to balance all these things to be a competitive enterprise. with Vigilance watching every movement of our’s can we be successful?

Therefore, what I am going to do in the next 20-25 minutes is to take through an exercise to a different perception. Is Vigilance all that bad? Is vigilance an alibi for non-performance. Let us answer Mukesh Ambani’s points go further. Before we do this, I thought we should learn from Bhagavadgita, in the second chapter of Bhagavadgita, well-known Sankhya Yoga, There is a great description about the "Stitapragna". A person who is unruffled. Stitapragna. And various characters of Stitapragna - Lord Krishna goes on saying one of the characteristic of Stitapragna is "Yanisha Sarva Bhoothanam, Tasyaam Jagrithi BhoothanSa nish pashyato mune. Stitapragna, is when others are awake, he is sleeping and when others are sleeping he is awake. Now what does it mean. Is Stitapragna suffering from insomnia or what? No, if you look at it, at least my interpretation of Bhagavadgita is Yanisha sarva Bhuthanam,

Stitapragna is able to take a contrarian view. He is able to take a original view. He is able to take a view that is view things which others are not seeing.Of course, what is genious, what is originality, what is imagination? Your capacity to see things before others could do it. For example, all our Indians eat pan. But pan is always a wet product. But someone said why can’t pan be a dry product? We have got pan masala started. Of course, so many other things have happened. But pan masala became a Rs.100 crore - Rs.200 crore business.

By being with simple concept, something as Kurian says’ everyone looks at Milk as a liquid form. But you can see milk not only in the liquid form, but also in the form of powder etc. Now, we are hearing about space. The people who go in space. Tourism has also started a type of packaging three or five layers of aluminium foil. So that you can produce sambar today and after 6 months adding little water and make sambar. You see! the technologies have been developed. It changes the whole nature. So,when we talk about Stitapragna, what we appreciate is a capacity to think in a different way. So, now we are going to be in the next few minutes looking at Vigilance which we traditinally look at it as a nuisance. As per Mukesh Ambani, if the Public Sector Enterprises are removed from the CVC etc. they will also be doing wonderful things like in Reliance.

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Now the question is Is it so? After all what as a CVC I have done? One of the things I have done as I have mentioned also is first to realise that the decision making in Public Sector Enterprise is different from the Government so, we have a separate chapter in the Vigilance Manual. We have said what is a Vigilance angle and what is not a vigilance angle. Secondly, I have always been saying that somebody else has understood it well and put a banner there .

So basically you have to take many a time decisions. I have myself gone on record and written. If you want to implement a project of time over-run and cost over-run, just as you cannot make omlette without breaking eggs, we cannot complete project without time over run and cost ove run. Without breaking some rule some where or the other. But when you break these rules, you make it a point to record the reason why you had taken that decision. The problem is many of us are busy in doing things but then after one week or so, if you precisely ask him why you took that particular decision, you are not able to recall because human memory is very short. Because, when CAG comes at the end of 2 years and does the review, you have a problem. So this is one of things as I have been facing. You can break the rule with proper reason etc. there should be no malice then you can. Of course, this is the second thing.

Then one of the things I have done is that I would like to mention again that to prevent the culture of blackmail because, in our country, particularly, Government of India, Public Sector Undertakings, Banks etc. the minute you are due for promotion, anonymous, petition will start pouring in. And in the early days before 29th June,99, when I issued the order - the rule that unless the facts are there which could be verified, it should be verified. Otherwise, anonymous petition should not be done. So everybody said Mr. Vittal met Mr. Ramachandran at Hyderabad this day the 6th of June which thereafter we will say Mr. Ramachandran has given so much you see.

Recently MP wrote to the Parliament for every appointmentof CMD and Directors a lot of money is being paid to me. I must be a very rich man. I am very happy. The SCOPE has written a letter to Prime Minister aying it is a total insult to the Public Sector that they are getting vigilance clearance that they are brib.

Stitapragna is able to take a contrarian view. He is able to take a original view. He is able to take a view that is view things which others are not seeing.Of course, what is genious, what is originality, what is imagination? Your capacity to see things before others could do it. For example, all our Indians eat pan. But pan is always a wet product. But someone said why can’t pan be a dry product? We have got pan masala started. Of course, so many other things have happened. But pan masala became a Rs.100 crore - Rs.200 crore business.

By being with simple concept, something as Kurian says’ everyone looks at Milk as a liquid form. But you can see milk not only in the liquid form, but also in the form of powder etc. Now, we are hearing about space. The people who go in space. Tourism has also started a type of packaging three or five layers of aluminium foil. So that you can produce sambar today and after 6 months adding little water and make sambar. You see! the technologies have been developed. It changes the whole nature. So,when we talk about Stitapragna, what we appreciate is a capacity to think in a different way. So, now we are going to be in the next few minutes looking at Vigilance which we traditinally look at it as a nuisance. As per Mukesh Ambani, if the Public Sector Enterprises are removed from the CVC etc. they will also be doing wonderful things like in Reliance.

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Now the question is Is it so? After all what as a CVC I have done? One of the things I have done as I have mentioned also is first to realise that the decision making in Public Sector Enterprise is different from the Government so, we have a separate chapter in the Vigilance Manual. We have said what is a Vigilance angle and what is not a vigilance angle. Secondly, I have always been saying that somebody else has understood it well and put a banner there .

So basically you have to take many a time decisions. I have myself gone on record and written. If you want to implement a project of time over-run and cost over-run, just as you cannot make omlette without breaking eggs, we cannot complete project without time over run and cost ove run. Without breaking some rule some where or the other. But when you break these rules, you make it a point to record the reason why you had taken that decision. The problem is many of us are busy in doing things but then after one week or so, if you precisely ask him why you took that particular decision, you are not able to recall because human memory is very short. Because, when CAG comes at the end of 2 years and does the review, you have a problem. So this is one of things as I have been facing. You can break the rule with proper reason etc. there should be no malice then you can. Of course, this is the second thing.

Then one of the things I have done is that I would like to mention again that to prevent the culture of blackmail because, in our country, particularly, Government of India, Public Sector Undertakings, Banks etc. the minute you are due for promotion, anonymous, petition will start pouring in. And in the early days before 29th June,99, when I issued the order - the rule that unless the facts are there which could be verified, it should be verified. Otherwise, anonymous petition should not be done. So everybody said Mr. Vittal met Mr. Ramachandran at Hyderabad this day the 6th of June which thereafter we will say Mr. Ramachandran has given so much you see.

Recently MP wrote to the Parliament for every appointmentof CMD and Directors a lot of money is being paid to me. I must be a very rich man. I am very happy. The SCOPE has written a letter to Prime Minister saying it is a total insult to the Public Sector that they are getting vigilance clearance that they are bribing the CIBs. In this country, people are prepared to believe anything and this is some member who has written to Prime Minister and so I am not bothered at all because, in Tamil , there is a proverb "When you have something in your pocket, you have to worry, otherwise no problem". I can openly talk about it. But now we are on this issue. What is CVC coming in the way of competitiveness of Public Sector. We have to look into quality. We have to look into Productivity. We have to remove from our minds that whether Vigilance comes in the way of competitiveness, it is not because why is it CVC should be there, why not BHEL be free like any other company? Because it is Public Sector Undertaking.

The Moment the Public equity goes below 51%, I will say CVC has no role to play. Because under article 12 of the constitution, it is not a state. It is not a public enterprise. Now there is a debate going on in the banking sector. For example Mr.Yashwant Sinha has said even if they reduce the Government equity to Banks to 30% the Public Sector character will not change. I do not know. Like the smile of the cat in the Wonderland. The cat disappears but the smile of the cat remains. So, the reason why CVC has to exist or CAG has to exist on behalf of the the tax payers of the country for those who have invested in these enterprises to ensure proper things are followed. Financial propriety in the case of CAG, Vigilance in the case of corruption, mal-practices in the case of CVCs, we look into.

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So the reason for CVC being there cannot be avoided so long as the Public Sector character is there. Secondly, within that limitation, we have already said that we made a distinction between Public Sector and rest of the Government. We have a separate chapter in the vigilance manual introduced in July,1999. Then we have gone one step forward and announced that anonymous or pseudonymous petitions will not be entertained to that extent. It is a protection to honest people that they will not be harassed, subjecting them to blackmail. The only way, we can come into picture, suppose a public sector has to bribe by way of engaging a consultant to get a particular order, now various forms are there. Corruption has many forms. There is a Hindi poet who says "Dhanwatu Rishwat Rani - Anginat tere naam. Haq Paani, Bakshis, Bhet, Rishwat, - Ghoos inaam nazar nazaraana - pagadi tere kaaran ao meike income tagdi." So this is the different type of corruption. But CVC will not agree.

So one aspect of when we are doing the exercise of contrarian thinking is that ,don’t look upon vigilanceas it is there, only to prevent you from acting. It is performing a function because it is public sector and it is tax payer’s money that is involved. Somebody has to look after, that is why CVC is existing. But within the limitations, we have to intervene. That is a negative way to look at it. But then after all it is a business enterprise.

The question will be can vigilance contribute to the bottom line of the Company. Can vigilance contribute to the quality of a company. Can vigilance contribute to the competitiveness of the company? Can vigilance contribute to the productivity of the company? So, if these questions are raised, how do we answer them? Is it true? No here I would say, actually, I wrote a piece which I have mentioned in the paper that do you know in my office CVC is charging to Government of India ? We have spent Rs. 4 crores for CVC establishment. But we have one organisation called CTE, Chief Technical Examiner. As a result of the defects pointed out and the money recovered, last year alone was Rs.7.8 crores. So in other words, CVC as a vigilance organisation is not a burden on the cash resources of Government of India. In fact it is a small revenue generator.

Now take that in the context of Public enterprise. If a vigilance administration is effective, the detecting scope for loss of revenue by preventing your bad practices, for ex. in quality let us say suppose there are mal-practices going on in purchase, if as a result of mal-practices or corruption, you end up buying third rate stuff, inputs naturally you are going to lose some quality. The vigilance is alert and we are preventing purchase of this third rate stuff , to that extent, vigilance is directly contributing to the quality of the product and competitiveness. So, this is one aspect.

Similarly, the way we go into productivity aspect, wastage aspects for ex. I’ll talk about the Government. We spent about 15000 crores of rupees subsidy in the public distribution system. Rationing system. And do you know 31% of this for food grains, 36% of this goes into the black market. That means Rs.5000 crores worth of subsidy goes into the black market.

We all know what Rajiv Gandhi said about the Rural Development Programme. IRDP Integrated Rural Development Programme. It is said, out of every rupee meant for the beneficiary, only 15 paise goes to the beneficiary, remaining 85%, part of it may be 40% for administration, 45% is corruption. So people say, IRDP means not Integrated Rural Development Programme but "Idhar Rishwat Dena Padega"

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So, you can therefore see from a business point of view that having alert vigilance in reducing wastage, in making optimum use of the resources, you have so that you get the better value for money in your inputs, so that your quality does not suffer, your productivity does not suffer, therefore your competitiveness increases. But then competitiveness doesn’t increase only from that. We have now seen what well known successful people in business say. The other day, I was presiding over Ashim Premji’s lecture. I told you aout Mukesh Ambani’s lecture. The same series of lectures a couple of months ago. Hashim Premji of Wipro was asked to talk on lessons learnt in breeding a world class organisation in India for which BHEL is very relevant. BHEL today is essentially an India Enterprise which can become a global enterprise.

Is there any lesson we can learn from Hashim Premji? He says in 5 points his experience in building WIPRO into a global enterprise. He says 5 things are important. First is Vision. There has to be a clear vision. What you want to do. Second is Values. We have certain values. Value for our money. Then it is being exploited. This is possible during the days of the Permit Licence Raj.

And one of my friends in Gujarat used to say who is a Customer? "Kashth se jo mar jaata hai" wo hai customer. Because customer has no choice. But today why are we talking about quality? Competitiveness and productivity - because after 4 decades of the per mit licence raj in 1991, Government of India has adopted a market oriented economy macro economic management policy. Therefore, public sector enterprises also are facing competition. Others are facing competition, for ex. The QA, WTO, The qualitative restrictions have gone. So competition means that you must be able to satisfy the customer. The Customer has got a choice. He has, not only within the country but also anywhere in the world. So, in this revised context, what people like Hashim Premji say, they are saying 5 things. We have to learn (1) Vision (2) Values (3) Leadership - Build leadership within the organisation (4) Leadership for innovation and (5) Social responsibility. Of all things, Wipro has started focusing on primary education in rural areas. This year onwards they are going to contribute on that.

Now take in the context of BHEL. I think what is this value they are talking of. Let us take very successful Manager. Manager of 20^th Century, Jack Welsch of GE. I have read 2 books of him third book I am now reading. One book is Jack Welsch speaks. Third book is to be read. He says excellence and competitiveness are totally compatible with honesty and integrity. Repeat.

So in the context of BHEL, which has already got an excellent track record, so excellence and competitiveness. You know you have got excellence . Now you have to be competitive. Now in your competitiveness, is CVC insistent on honesty and integrity?Is it coming in the way ? It is not? Actually Jack Welsch says in his book that they employ 2,60,000 people and it is like a small town in American context. Now, 2,60,000 in American context will have a police department etc. He says we don’t have a Police Department. We don’t regulate morals to the people. Then how do we ensure? It is only by inculcating the values of integrity, the company’s vision etc. they are able todo. So he says ! Excellence and competitiveness are totally compatible to honesty and integrity.

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The A student, the four minute miler, the high jump record holder, all strong winners - can achieve those results without resorting to cheating. People who cheat are simply weak. If you are corrupt. If you are adopting corrupt practices, what is the corrupt person doing? He is really cheating.

And what is corruption? The world bank says corruption is "using public office work for private profit". You are supposed to do public service but you are using to enrich yourself. In sanskrit those who are knowledgeful, they are called "Sakshara" But if the knowledge is misused then it misused, then it becomes opposite of ‘Sakshara’ in reverse it is ‘Rakshasa’. Every corrupt person is nothing but a Rakshasa. This country is having Rakshasa Raj.

Today, corruption therefore can be seen in a business context. As Jack Welsch points out people who cheat are simply weak. He gives an example A professor gave a hypothetical case to his business school students. He said if you are running a business for a large company and were about to book a 50 million dollar order but do so, you have to deposit a billion dollars in a Swiss Bank account to an agent. Would you do it? Approximately 40% to 50% said they would. The students. I was shocked. Jack Welsch says the Management School is shocked. I told the students some one was teaching them the wrong things. This was not one of those days where you have to interpret the law. This was simply a bribery case. And finally Jack Welsch says in the end, your integrity is all that you have got. Therefore, today, if we have to talk about competitive environment with BHEL as base. We must have competitiveness, quality and productivity policy. Therefore, public sector enterprises also are facing competition.

Vigilance was ensuring that you practice integrity. And people like Jack Welsch concluded in their own way, Hashim Premji talks about excellence and integrity in a different context is successful. If you see successfulness you have to go beyond.

Two references I give. One is the book "In search of Excellence by Peterson and Waterman. There are 8 excellent companies Peterson and Waterman have identified. One of the characterists of the excellent company is - Hands on Value driven. Practice day-after-day. Not merely observing during Vigilance Awarness week, something like that. Some people ask me Sir, after all there are 52 weeks. And only one week that is on Sirdar Patel’s Birthday on 31st October for Vigilance Awareness. That means for the remaining 51 weeks you are free.

I said no. It is only a beginning. The journey of 1000 miles starts with a single step. Now this is what Peterson and Warman told about Excellent Companies in 1982. Somewhere in 90s, there is another book called ‘ Built to lost’ by two people Jeramy Foras from Stanford University and James Collins. Now they identified about a company normally an American Company which is about 15 to 20 years.

Some companies like Coca Cola, IBM, 3M . These companies exist. GE already exists from 119 years started with Thomal Alwa Edisons. Now what is the difference between the normal company which dies within 15 to 20 years. And these large companies lasting for over 100 years etc. are normally visionary companies. So they wrote this book called "Built to Lost" What is the secret of this long lasting companies. And one of the secrets they found was these companies have certain core values. For IBM, it may be customer. For 3M, it may be Innovation.

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Everywhere there is integrity. Unless you earn the trust of the customer, you are not going to be in business for a long time. So again you come back to values. What is the visionary company which lasted for 100 years and the one which did not last. Of course, we can say merely, lasting for 100 years is not a qualification. But suppose suddenly there is an atom bomb. Mushraf is coming with an atom bomb. I hope he will not put a bomb here. Suppose an atom bomb is put in Hyderabad, all of us will die. But the Cockroaches of Hyderabad will survive. Because cockroaches aresurviving. It doesn’t mean cockroaches are greater than humanbeings. Because you are surviving with 100 years doesn’t mean that you are better than small companies,. which lived a shorter life like Markandeya. Because, we are in a business environment, professors have taken market capitalisation of these companies. Ordinary companies and big companies 1915 of stock exchange and 1980-85. These visionary companies had 15 times more market captalisation, otherwise you cannot exist. Again that all because of quality, competitiveness and productivity exists.

So you can therefore see there is a corelation between sucess in a market place in a competitive market place by focusing on values. Then we come to the final question How do we survive? Let us assume one day BHEL will also be disinvested and there will be no vigilance. Even in that situation, can BHEL be like GE. BHEL be a visionary company ? Can BHEL be a successful global company? I would draw attention to the basic issue that we must be able to take ethical decision. How do you take ethical decisions when there is no Vigilance Manual? There is no CVC to chase you. How do you take decisions? Now here I would draw attention to a book called a "Power of Ethical Management by Norman Wilson and Kenith Branshaw - and the wellknown book on Power of Positive thinking.

The other book Kenith has brought out is the book on One Minute Manager. Both these people have written a 138 book. I think eery BHEL employee should read that book. This book you can read just in a day. In that it says how do you take business decisions in ethical manner and how do we build ehical organisations. I am only trying to focus on ethical decision part. Individual part and organisational part you can read in that book .

You would like BHEL to be an ethical organisation because then only we can produce quality, competitiveness and productivity. The three things . For example you take Innovation.. You apply a three way test. First thing is the desision legal? If what you are deciding is not legal, then it is not ethical. Then it is finished. So, is it legal? (2) Is it fair? That for ex. suppose you enter into an agreement or contract with any party , think , Is this contract weighed more in favour of your company or against the other fellow? Or is it weighed more than other person than yourself? Because, afterall how do corruption flourishes? Suppose, in a purchase decision, you pay more actually the company is losing and the other person is gaining. It is an unfair decision. Is it fair on both sides. Because after all is it legal? Is it fair?

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And the third one is if tomorrow this decision is publicised, will you feel ashamed. Why Tehelka.com has become so exciting? If tomorrow what you are doing and what ever decision you have taken is made public, you will feel ashamed. In Christianity, there are ten commandments. Thou shall not kill.... I am told there is a 11^th commandment. You can violate all the 10 commandments. Thou shall not be found out. Because once you are found out, then you are gone. So that is the third test. Is the decision whatever taken whether it is business life or personal life is it legal? Is it fair and if it is known outside will you feel ashamed? Ofcourse you will say Sir, I have lost all the sense of shame. I am not ashamed. Then of course what type of a person you are.

Why should we have an ethical life? Because as BHEL becomes a globally competitive company, one problem it is going to face is how to attract and retain talent. If 40% of the Reliance people are from Public Sector, Reliance probably offer better than Public Sector. So they all migrated. Now Public Sector cannot give that sort of a money. In this situation, even if you tied up, why are we talking about integrity. Because if your organisation is an ethical organisation, if you maintain highest standard of integrity, every person in the organisation gets a sense of pride.

I belong to a company where there is certain value. Take private sector. There is a company called "Alacrity" in Madras Chennai. This builds houses. Now this Mr. Karnard is in construction line. You know, in real estate, it is 60% black and 40% white. He said I am going to take only by cheque all the payments and it has got such a reputation today that one youngster went to an Officer and the officer demanded bribe. The youngster has shown his identity. Then the Officer told why did you not tell me before that you are from Alacrity? If you are from Alacrity, I wouldn’t have asked . So even in corrupt India, when Corrupt Officers are demanding money, but if you are from a famous company which has a reputation for integrity and straightforwardness, even a corrupt officer does not demand. Because, after all many a time corruption is two way. It is not one hand clapping.

Imagining the impact in the young man’s mind in terms of morale. Will he not be proud that he belongs to that company that has such a good reputation. Now HRD people in every enterprise has a problem in attracting skill and retaining the talent. The organisation’s strenth is not only its quality and people but the values of its system, built naturally by the people who are working in the organisation will have high morale and naturally they are loyal to the company. And once they are loyal to the company they will also come up with ideas etc.

Because ultimately the competitiveness today in the country comes from imagination. In today’s theme. Emerging Challenges for Vigilance - Vigilance for Quality , Competitiveness and productivity. We realise that terming Vigilance to Duryodhana is looking at all negative side, instead of looking at the positive aspect of doing what in the Bhagwatgita - What the Stitapragna is supposed to do.

Can you find that the Vigilance can help you to take ethical decisions? It can help to improve the morale of the organisation. It can help to attract and retain talent? It can help to improve competitiveness? And contribute also to savings, thereby productivity and profitability of the organisation. So ultimately what is therefore needed is you remember in the last sloka of BNhagaatgita - You need to have a Vision and Action.

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Mere vision will not do. Actually, I read one of the internet jokes. I always like work. I go to office and keep on looking at my work. I am not working but just looking at my work. So it is not what is needed.

The last sloka says. Yatra Yogeshwara Krishna Yatra Partho Dhanurdharaha. Yatra Yogeshwara means (poorna purush) Divine Vision. That alone cannot save our country. But Yatra Partho Dhanurdhara means Arjuna. He is a great Archer. Man of Action. When Vision and Action are combined then three things happen. Thathra Sri Vijayo Bhutir Sri means ‘Wealth’ and Vijay means success. Dhruva neethir mathirova. Neethi is Justice. Because you combine Vision with Action, you get wealth. You get success and you get Justice. Naturally whatever you do, you will be able to succeed in every activity that you will undertake.

NOTICE

DO NOT PAY BRIBES. IF ANYBODY OF THIS ORGANISATION ASKS FOR BRIBE OR IF YOU HAVE ANY INFORMATION ON CORRUPTION IN THIS ORGANISATION OR IF YOU ARE A VICTIM OF CORRUPTION IN THIS ORGANISATION, YOU CAN COMPLAIN TO THE HEAD OF THIS UNIT OR THE CHIEF VIGILANCE OFFICER AND THE CENTRAL VIGILANCE COMMISSION.

(Issued as per the Directives of CVC)

OBJECTIVES OF VIGILANCE

• Raising storm signals regarding complexities in neglect of procedures.
• Placing sign posts on the path to purposeful and effective achievement of objectives.
• Devising corrective steps and generally acting as a prophylactic.
• Eliminating the corrupt and the crooked- maintaining purity in public life.

WHAT IS A VIGILANCE ANGLE ?

• Commission of criminal offences like demand and acceptance of gratification, possession of disproportionate assets, forgery, cheating, abuse of official position with a view to obtaining pecuniary advantage for self or for any other person; or

• Irregularities reflecting adversely on the integrity of the public servant; or

• Lapses involving any of the following;

• Gross or willful negligence;

• Recklessness;

• Failure to report to competent authorities, exercise of discretion without or in excess of powers/jurisdiction; and

• Cause of undue loss or a concomitant gain to an individual or a set of individuals/ a parties; and
• Flagrant violation of systems and procedures.

SIX ASPECTS OF VIGILANCE

• PREVENTIVE- proactive and plug loopholes.

• EDUCATIVE- awareness & transparency

• DETECTIVE/INVESTIGATIVE-inculcate supervision, identifying, focusing, advising & reporting.

• REFORMATIVE-imbibe a culture of morality.

• PUNITIVE-punishment of the guilty.

• PROTECTIVE-create honest environment and prevent harassment.

MATERIALS MANAGEMENT DO’s and DON’Ts

DO's

* While issuing an indent, it is the responsibility of the indentor to take into account stock position in the production floor as also in the stores, work in progress, consumption rate, correct specification of the material, existence of budget provision, lead times etc.

* If the quantity ordered is much more than L-1 alone can supply, the quantity may be distributed in such a way that the purchase is done in a fair, transparent and equitable manner.

* Deliveries of all high cost and high volume items should be staggered wherever possible to ensure that inventories are within the specified norm.

* Indents, which are complete in all respects, should only be accepted for processing. Incomplete indents should be returned to the concerned user department with a request to provide complete information.

* It should be ensured that enquiries issued to vendors give technical specifications of the goods clearly and also indicate relevant commercial terms and conditions.

* The new vendors/subcontractors dealing with the Company must be approved by a designated committee as per the Purchase Procedures of the Company.

* Quotations should be invited from the registered/approved vendors.

* List of approved vendors should be appraised periodically by the designated committee so as to update the same in accordance with the vendor appraisal procedure.

* Vendors should be given adequate time, to submit quotes. This time limit may be reduced, if the reasons for the same are strong, which should be recorded clearly in the file.

* For materials of limited shelf life, efforts should be made to get the vendors ship these materials from their latest manufacturing lots and deliveries of such materials should be phased in such a way that these materials are normally consumed before their expiry dates.

 

DON'Ts

* Don'tmisstoevaluatetheconsumption pattern of an item before placing indent for its procurement.

* Quotes received in a format other than as specified in the tender/request for quotation should not be considered.

* Don't follow post tender negotiation because CVC has banned all post tender negotiations except in the case of negotiations with Lowest Tender.

* Don't forget to seek the approval of the purchase proposals from the Competent Authority before issuing the Purchase Order.

* Don't forget to put serial number on pages of purchase file before sending it to other Department.

* Don't call quotations on the ground of created urgency.

* Don't keep a file pending after the recommendations of the tender committee have been received.

* Don't forget to keep the concerned Departments informed of the delivery schedules so that they may plan their work-schedule accordingly.

* For any recurring type of consumable items, it is not proper to procure the same in piecemeal manner from whatever source. Better go for rate contracts.

* Don't give any advance intimation of the indent requirements to friendly parties.

* Never include dummy firms to increase the number of  parties.

* Don't accept material, which is not strictly as per the specifications, and wherever the material supplied is of any inferior specifications but acceptable on technical grounds, the same too should not be accepted till financial implications thereof are sorted out and prior concurrence of Competent Authority is taken.

* Don't miss to undertake periodic review of the systems and procedures and suggest improvement/change, wherever needed.

CONTRACT MANAGEMENT DO's AND DON'Ts

DO's

·         Always remember that customer is the profit, everything else is overhead.

·         Therefore, any successful organization has the customer as its focus.

·         Remember that selling is an art -seller's enthusiasm, innovative ideas are some of the essential ingredients.

·         Profit is the driving force that spurs us on. It is the material yardstick of success in business. But putting profit before better quality and service is like putting the carriage before the horse -business does not move.

·         Take profits into account as late as you can; take expenses into account as early as you can.

·         Remember that customers forget very quickly; therefore, give fast service.

·         Remember when you do hear complaints; you have a second chance to make things right, to improve conditions, not only for a specific customer, but for all those other customers who follow.

·         Despatch-cum-Billing Instruction (DBI) should be made exactly as per Purchase Order received from the customer.

·         Packing and mode of transport should be as per Purchase Order or as agreed to by the customer.

·         Always be polite with the customer

·         Remember that the cause of failure usually lies within the salesman himself but he often seeks it in the customers.

·         Always bear in mind that every letter that goes out on the Company's letterhead should be a sales letter. Either it should sell goods or it should sell good will.

DON'Ts

* Don't forget that the image of your business can never be stolen. Marketing establishes and enhances that image.

* Don't lose temper with the customer, whatever provocation may be.

* Don't ever forget that a satisfied customer is the best advertisement for the product.

* Never give up a campaign just because you have grown tired of it; customers don't see your advertisements as often as you do.

* Don't be afraid of competition because without competition, there is less incentive to innovate.

* Don't forget that customer's satisfaction is affordable and profitable because a satisfied customer becomes your salesman forever.

* Don't forget that if you are not hearing customers' complaint, that doesn't mean that everything is okay. It may only mean that uncomplaining customers are quietly accepting conditions they dislike and planning never to return.

* Unless you watch out, your staff may resort to under-service your customers.

* Hence, don't miss checking with your key customers discreetly about your employees every now and then.

* Don't miss to make periodic and surprise check of the 'Customer Complaint' and 'After Sales Service' registers in order-to find out as to how the customers are being looked after by your subordinate staff.

* Don't commit delivery of products/services without consent of Production/ Design Department.

FEEDBACK ON COMMON IRREGULARITIES IN PURCHASE/CONTRACTING/STORES/QUALITY

1. Estimates prepared are too high despite recent finalisation of a similar tender at low rate.
2. Estimates prepared after opening of price bid.
3. Specifications differ radically from what is mentioned in estimates.
4. Credentials of vendors not checked properly.
5. Vendor development process is not pro-active as envisaged by purchase policy.
6. Criteria for vendor registration are not pre-decided. In case decided, relaxed for a particular party without giving equal opportunity to others.
7. Information / details supplied by parties are not verified or cross - checked.
8. Calibration certificates for equipments are not insisted.
9. Financial capability of the party is not verified.
10. Change in critical specifications / tender conditions without giving equal opportunity to all the parties.
11. Verification of antecedents of vendors after opening of price bids & knowing the lowest offer.
12. Relaxing delivery clause after rigidly considering the same before finalisation of the tender.
13. L2 party counter offered L1 price. Later on L1 party given very insignificant order.
14. Placing fresh orders ignoring past rejections, quality deficiencies, shortages in deliveries etc.
15. New PO placed at a higher price despite ongoing old PO of lower price. No efforts made to increase quantity of old PO.
16. Repeat order placed at old price. However, price increase allowed subsequently though no such provision existed in original P.O.
17. Inventory lying with user department ignored while raising indent. Shelf life also is not considered.
18. POs on supplier not deferred / revised despite deferment / revision by our customer.
19. Rejecting bids on the grounds of technical unsuitability, lack of earlier dealings etc. after issue of enquiry.
20. Technical specifications are changed after opening of commercial bids.
21. Pick and choose in limited tender without recording reasons.
22. Despite poor response to enquiry no efforts made to check whether enquiry reached the addressee or not. Tenders sent with incomplete address.
23. Assurances relating to manpower reduction, removal of old equipment etc. not fulfilled even after commissioning of new equipment.
24. Equipments purchased without capability to operate and without tying up procurement of related facilities such as tooling.
25. Different prices being paid by different divisions and even different departments within same division.
26. Sales Tax paid without checking registration.
27. Comparative statement not made judiciously. Like to like comparison not done.
28. "As discussed" mentioned in approval / concurrence without elaborating the contents.
29. Advance payment to contractors made without taking due approval or immediately after moving a proposal. Same is the case with many other deviations.
30. Basis of comparison between bids changed from contract to contract. Some times whole contract compared, sometimes componentwise comparison done to justify calling party for negotiations.
31. Inadequate Bank Guarantee / security deposit. Allowing Bank guarantee to lapse without invoking it or getting it renewed.
32. Recoveries not made from contractors for materials, electricity, hire charges etc. Advice issued by custodian not received in finance.
33. Repair of construction equipment at BHEL's cost though it was in contractor's scope.
34. Photo copies of 'Test Reports" being accepted.
35. Issue of certifications without due seriousness relating to monopoly, price trend, non existence of party (for recovery of rejection) etc.
36. Waiving penalty without checking loss suffered by BHEL.
37. Not taking adequate steps for replacement of rejected items, making good of shortages etc.
38. Legal case not filed for recovery in time.
39. Recovery not made from transporters for breakages and non-delivery of excise gate pass.
40. Payment made for larger truck / trailor though transporter could manage with a smaller truck / trailor.
41. Charges for full truck paid but goods transshipped enroute and brought by a different truck.
42. Rough entries in MBs are recorded.
43. In case of change in specifications / extension in time etc. all parties not intimated, thus denying equal opportunity.
44. No proper record of 'tender opening' maintained.
45. No attention paid to cuttings, over-writings, interapolations, hand-written statement having financial implications.
46. Materials after receipt are not properly checked / counted / measured.
47. Bills are passed without getting proper receipts or confirmation or quality / inspection certificate.
48. Materials are moved out of the premises without preparing the gate pass or insufficient data / identification etc.
49. Quotations obtained from a single source but on different letter heads, some of which may be pertaining to non-existent firms.
50. Sub-standard materials are accepted with a price cut, instead of straight way rejecting it.
51. Rock / Soil classification ignored / manipulated in civil works.
52. Terms of payment changed after approval in LOI and final order.
53. Acceptance of unsolicited discounts / rebates and offers from firms other than honest tenderer, without giving equal opportunity to others.
54. Inclusion of non-existent / incompetent / bogus firms to meet the requirement of minimum number of firms in LTEs.
55. Floating of tender for jobs already covered under rate contract.
56. Placement of orders at higher rates on the basis of requirement of shorter completion period / delivery schedule but the period is extended subsequently.
57. Allotment of contract to a firm whose manufacturing premises 'power' connection not available / lock out / sealed by financial institutions.
58. Waiving of inspection or changing of inspecting authority.
59. Payment of bills without actually executing the job or doing part of job.
60. Passing of exaggerated bills.
61. Claiming false bills for repair & maintenance of vehicles, T&P etc. which are not under use.
62. Engaging lesser manpower than the stipulated minimum in the work order / estimate.

ACTION PLAN / THRUST AREAS FOR 2001-2002

·         To act as a catalyst for identification and implementation of 'transparency measures' in more and more areas to achieve business excellence.

·         To carry out meaningful surprise checks and routine inspections particularly in the following areas:

1. Purchases of capital equipment
2. Imports
3. Purchase / subcontracting above Rs.25 lacs
4. Emergency, proprietary, single tender purchases
5. Vendor registration & evaluation
6. Indenting, costing / estimation, specifications
7. Material accountal recoveries
8. Advances & their recoveries
9. Bank Guarantees, their validity'
10. Quality plan & quality reports
11. Ancillary units / subcontractors who are quoting for BHEL designed products in competition with BHEL.
12. Extra works
13. Terms & conditions of payment with customer (particularly Pvt. Parties

·         To organize joint surprise checks in association with CBI, Corp. Vigilance and / or other unit vigilance functionaries at least twice a year.

·         To further activate vigilance committees and organize at least 3 to 4 meetings of the Committee during the year for greater involvement of each member in the work of the Committee.

·         To organise interface meetings with other functionaries particularly with Finance, Personnel and Material Management

·         To develop and implement computerised programme for monthly and quarterly performance reports.

·         To organise at least 3 / 4 training programmes in each unit to educate the employees about the various BHEL policies, systems, procedures, CDA Rules and about moral values, positive Discipline & Disciplinary.

·         To organise various activities during vigilance awareness week in October, November, 2001.

·         To finalise Agreed List / List of Officials of doubtful integrity for the year 2002 in Jan., 2002.

·         To follow up disciplinary cases initiated on the basis of vigilance advice

·         To ensure computerisation of property returns and carry out scrutiny of 20 % of such returns.

·         Creation of vigilance web page on BHEL intranet and BHEL Web site.

·         To carry out system studies (at least one by each unit / region)

To all concerned

 Sub: Improvement in Vigilance Administration in Tenders

The Unit Vigilance Committee under the Chairmanship of our Executive Director at the meeting held on 5-10-2000 reviewed the practices prevalent at other BHEL Units in respect of improving Vigilance Administration in Tenders.

The under mentioned practices were discussed, deliberated and agreed to be implemented at R.C.Puram unit.

1. Tender enquiries shall specify the validity desired for tender finalisation and bidders shall quote with the specified validity only.
2. When the tender enquiry specifies Penalty Clause, all bidders shall accept the same. If any bidder’s offer is silent on the acceptance of Penalty Clause, specific confirmation of the same shall be sought by the MM dept. In the event, the bidder refuses to accept the penalty clause; this fact shall be clearly brought out in the Purchase proposal and competent authority's approval sought for it.
3. As per RBI guidelines, Indian Agent's commission shall be paid only in Indian rupees, and bidders shall have to necessarily indicate the percentage of Agency Commission in their offers. Clauses like, "Quoted prices are inclusive of agency commission", should not be accepted. In the event, the bidder refuses to indicate the Agency Commission of his Indian agent, then, the Indian Agent should not be entertained and MM dept. should insist for all tender correspondence should be received from the original manufacturer only.
4. Offers from foreign or indigenous trading firms should not be accepted, unless they are backed / confirmed by the original equipment manufacturers and their relationship with the trading firm is clearly spelt out. Further not more than one trading firm or Agent for a manufacture should be allowed/entertained.
5. When negotiations are held with bidders, minutes of meeting/ record notes of discussions have necessarily to be maintained/ filed.

It is requested that all concerned in Materials Management, Engineering, PPC, MPC, Stores, Factory and Township Civil Depts. may adhere to the above guidelines and ensure its strict implementation with effect from 5th April 2001 in all tenders.

This has the approval of Competent Authority.

(P.Narasimhan)

AGM(Vigilance) & Convenor, Unit Vigilance Committee.