Qui tam enforcement: A legal remedy for corruption

India needs a package of reforms to check corruption. But one useful enforcement option has been ignored
Comment E-mail Print Share
First Published: Thu, Oct 03 2013. 06 42 PM IST
To become a reality, qui tam enforcement would require not only new legislation or a major reinterpretation of doctrine by the Supreme Court, but also a reworking of how lawyers are paid for these cases. Photo: Mint
To become a reality, qui tam enforcement would require not only new legislation or a major reinterpretation of doctrine by the Supreme Court, but also a reworking of how lawyers are paid for these cases. Photo: Mint
With elections looming, the government has passed a raft of legislation in recent weeks, including laws on food security, land acquisition, hawkers’ rights, and the new Companies Act. Yet despite high-profile scandals throughout its term, efforts to tackle corruption have not seen similar political movement. No version of the Lok Pal Bill has been passed, Supreme Court scolding has not led to a more independent Central Bureau of Investigation, and the Whistleblower’s Bill is still stuck in Parliament.
Whoever forms the next government will have their work cut out for them. Successfully fighting corruption will require a package of reforms and significant political will: passing legislation, undertaking the slow process of building strong public-minded institutions, and changing a government culture in which graft thrives. While much of what should be included in an anti-corruption agenda may be well-understood, if difficult to achieve, one potentially useful tool to fight corruption known as qui tam enforcement has largely been overlooked.
Qui tam enforcement, which has a long history in the US and the UK, was originally designed to fight corruption in contexts where prosecutors have limited resources or are distrusted. Despite its confusing latin name, the idea behind qui tam enforcement is simple, if somewhat counter-intuitive—allow those who know about corruption to profit from exposing and prosecuting it.
An example helps show how it works. Suppose that I am an accountant for a construction company. While going through the books I find proof that my company has been bribing a politician to win contracts to build roads in the state. As a result, the company has been overcharging the government crores of rupees for its work. Under qui tam enforcement, I can bring a claim in court on behalf of the government against the company for corruption. If I win, and the judge orders the company to repay their ill-gotten gains, then I receive 25% of the judgement as a reward for my efforts while the other 75% is returned to the state.
Qui tam enforcement helps overcome two problems that presently hamper the prosecution of corruption in India. First, it allows whistleblowers or other informed citizens to prosecute corruption themselves, bypassing investigators and public prosecutors, who may be hamstrung by political considerations when deciding when to bring cases. Second, it encourages whistleblowers to come forward. Currently, if I discover that my company is stealing money from the state I have little incentive to report it as exposing it provides me with few gains, but major risks, including losing my job, threats, or possibly worse. The potential of a large monetary reward changes this calculus. It is difficult to overstate how important the information whistleblowers provide is to fighting corruption. Even governments with lots of resources to spend on investigations frequently find it difficult to bring winning corruption cases without insider information.
Although qui tam enforcement may be a helpful tool, it is nothing close to a comprehensive anti-corruption legal strategy. Importantly, it does not involve criminal prosecution. These are civil cases for monetary compensation. They are also not cases directed at politicians or government employees, but companies or private individuals that have cheated money from the state.
There are potential pitfalls to allowing qui tam enforcement. Notably, unscrupulous litigants could use qui tam enforcement to harass companies with frivolous corruption charges. However, this seems unlikely to develop into a major problem, as judges would throw out unmeritorious cases and could penalize parties that abused the tool.
To become a reality, qui tam enforcement would require not only new legislation or a major reinterpretation of doctrine by the Supreme Court, but also a reworking of how lawyers are paid for these cases. Currently, contingency fees, in which lawyers are paid only if they win a case, are banned in India. Most whistleblowers though could not afford the expensive legal fees to bring what would likely be a multi-year corruption case and instead would have to rely on lawyers to provide their services on a contingency fee basis. The lawyers would have a share in the award if the case was successful, but earn nothing if it was not. Some might find it crass to allow whistleblowers (or their lawyers) to profit from the return of money cheated from the state for simply doing the right thing. Yet these whistleblowers will be providing a vital and expensive service to the public. We do not know how much corruption there really is in India, but we can safely assume most of it never ends up being prosecuted. If qui tam enforcement ensures the successful prosecution of even a small sliver of the corruption out there it would send a powerful message that incentives have changed and it is now worth more to help enforce the law than watch it be broken.

Nicholas Robinson is a research fellow at the programme on the legal profession at Harvard Law School. Comments are welcome at theirview@livemint.com
Comment E-mail Print Share
First Published: Thu, Oct 03 2013. 06 42 PM IST
blog comments powered by Disqus
  • Thu, Dec 18 2014. 01 13 AM
  • Wed, Dec 10 2014. 05 37 PM
Subscribe |  Contact Us  |  mint Code  |  Privacy policy  |  Terms of Use  |  Advertising  |  Mint Apps  |  About HT Media  |  Jobs
Contact Us
Copyright © 2014 HT Media All Rights Reserved