By CKG Nair

Mark Carney, a high-profile technocrat who straddled corporate and central bank corner offices with aplomb, is now the Prime Minister of Canada. He has been a citizen of three countries (Canada, UK and Ireland, he surrendered the latter two on becoming PM), worked at Goldman Sachs for 13 years, and served as central bank governor in Canada and the UK. He returned to the corporate world to chair an asset management company and the multi-tasking Bloomberg, in addition to being climate envoy of Canada to the United Nations. Such examples of seamless movement across top corporate and important public positions are not isolated in many jurisdictions. In 2004, James Newsome, then chairman of the US Commodity Futures Trading Commission, agreed to meet with an Indian delegation. However, we were met by an acting chairperson; Newsome had resigned from office just a few days before.

Two days later, our delegation was received at the New York Mercantile Exchange by its chairman, Mr. Newsome! Answering my curious question about such a sudden shift from a regulator to its regulated entity, he replied that “senior people should know how to manage conflicts of interest”. These are classic examples of not just the “revolving door”, but also of competence, maturity, and integrity deciding such appointments, unobstructed by the “class” and other conflicts pervading public appointments in many countries. Though India too has had a few shining examples of “outside” appointments, they have come mainly from academics and only a few have moved from corporate to government. Fewer still went back to the corporate world in full-time roles.

The ladder of top appointments in India is slippery for several reasons. Appointments to regular positions earmarked for civil servants go through a regular process. Promotions within each cadre or deputations of empanelled officers belonging to organised services take place through the Central Staffing Scheme. These processes are time-tested. Still, when top positions in coveted departments almost always go to the Indian Administrative Service (IAS) officer, that leads to frustration for others in the same class. However, those incidents produce only a few raised eyebrows and some “whispers in corridors”.

However, for a few highly visible open positions like (mainly) heads of regulatory authorities, top public sector banks, or Navratna public sector enterprises, class conflicts come out in the open. Similar to the approximately 200 times the applications received for entry-level competitive exams, top-level open appointments also get a few hundred applications for each post. In short, for every one selected person, there are about 200 rejected candidates. One appointment is a disappointment for several others! This uncomfortable position unleashes hard emotions like jealousy, making a few disappointed turn against the one appointed. Allegations and conflict of interest charges are levelled thick and fast against some of the potential candidates, and can recur after appointment too, tarnishing the incumbents’ image and making them ineligible for extension or re-appointment.

Opinions and media reports abound on whether private sector experts, public sector honchos, civil servants, or IAS officers are suitable for holding such open public positions. The recent run-up to fill the position of the Securities and Exchange Board of India chairperson saw a heightened interest in such debates, piggy-backing on the allegations of conflicts against its former incumbent. The ensuing selection for the positions of Insurance Regulatory and Development Authority and Pension Fund Regulatory and Development Authority chairs could unleash similar allegations, particularly if non-IAS/outside experts are considered. Even the recent appointment of the Reserve Bank of India governor raised a few eyebrows, despite the appointee being from within the IAS on grounds of him being the junior-most and holding the senior-most regulatory position, arguably the most important one for public servants in India.

Applicants’ past professional associations are often used against them, citing conflict of interest. If that argument has merit, direct appointment of advocates as judges to constitutional courts are the most conflicted. They represent(ed) private clients charged with all types of crimes under various laws. Moreover, lawyers’ networks are quite strong. Advocates elevated to high courts are generally those practising within the same court. Despite all of this, it is well-accepted and demonstrated that judges are fully capable of managing their conflicts, if any, by “distancing” themselves from members of the Bar and recusing from hearing certain matters at their discretion.

Selecting people with ability, integrity, and standing, as invariably stated in the relevant guidelines on basic eligibility, irrespective of whether they are civil servants, academics, or industry experts, is the way to go for appointing top open public positions. Such personnel are available within all classes. Search committees are capable of rising above class and other interests whenever they want to. It may be a tall order, particularly where low-level governance traps still persist. But, then, are we not aspiring to be a developed country in two decades? If so, it is time to start behaving like one. Changing our approach to institutions, including top appointments, by erasing the many biases plaguing our system for long, can be the first, positive step.

The writer is former member, Securities Appellate Tribunal, and former director, National Institute of Securities Markets.

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