final assessment hindustan aeronautics...

HINDUSTAN AERONAUTICS LIMITED 23/12/14 HTTP://WWW.HAL-INDIA.COM/

FINAL ASSESSMENT

HINDUSTAN AERONAUTICS LIMITED

The following pages contain the detailed scoring for your company based on

public information.

The following table represents a summary of your scores:

Topic Number of

questions

% score based

on public

information

Leadership, Governance and Organisation 10 55%

Risk Management 7 50%

Company Policy and Codes 12 45.8%

Training 5 30%

Personnel and Helplines 7 57.1%

Total 41 48.8%


A1:

Does the company publish a statement from the Chief Executive Officer or the Chair of the Board supporting the ethics and anti-corruption agenda of the company?

Score:

2

Comments:

Based on public information, there is evidence that the company publishes statements from the Chairman supporting the ethics and anti-corruption agenda of the company. Statements in regard to anti-corruption and integrity can be found in the Annual Report 2012-2013 and several editions of the company magazine Marg Darshan.

References:

Public:

Annual Report 2012 – 2013, p.13:

‘Chairman’s Statement’

‘“Integrity” is one of the seven values that your company continues to achieve in all its business transactions. Keeping in line with the highest standards of corporate governance that the company has set for itself, the Company has signed a Memorandum of Understanding (MoU) with Transparency International India (TII) for bringing more transparency in procurements as well as better compliance with the CVC guidelines on Integrity Pact (IP). It became the first Defence PSU to sign such a MoU with TII.’

http://hal-india.com/Annual-Report-2012-13-English.pdf

Marg Darshan Vigilance Magazine – Promoting Good Governance in HAL, Vol XI Issue No. 1 (April 2014), p.1:

‘Chairman’s Message’

‘Ingenious ideas to promote good governance are extremely important. I am happy to note that Vigilance Department under the leadership of Anurag Sahay, C O, continues its preventive vigilance initiatives by laying emphasis on CVC 's theme of the year “Promoting Good Governance in public institutions." This edition of Marg Darshan contains articles from officers of diverse functional background. The contributions focus on micro issues and suggest measures to promote good governance in the critical functional areas. This is a worthwhile initiative complimenting last edition of Marg Darshan, on same theme but



focusing on macro strategies in promoting good governance. Good governance not only needs procedural reforms but also demands commitment and ownership of all stake holders in understanding, implementing of policy guidelines and promoting good practices. I am confident that this edition will definitely enhance confidence among all stakeholders by implementing good practices in various functional areas like HR, Outsourcing, Procurement, Facility Management, Medical & Health unit etc, which have clear vigilance sensitivity. The article on "The Lokpal And Lokayuktas Act, 2013 ", is an important and timely contribution for creating awareness of the Act amongst all of us. HAL is facing new challenges in disinvestment, re-structuring and increased competition in Defence Aerospace Sector. I have no doubt that this edition of Marg Darshan enhances our confidence in facing such challenges through promoting diligent and transparent decision making process.’

http://www.hal-india.com/vigilance/Marg-Darshan/Marg_Darshan%20_April-2014.pdf

Marg Darshan Vigilance Magazine – Promoting Good Governance in HAL, Vol X Issue No. 2 (October 2013), p.3:


‘It gives me great pleasure to note that the Vigilance Department has devoted this edition of Marg Darshan to “Promoting Good Governance in HAL". The Central Vigilance Commission has been promoting Transparency , Fairness, Equity and encouraging competitiveness as well as Leveraging of Technology in all areas of functioning of the Government and its organisations. Technology brings in efficiency as well as transparency and therefore needs to be assimilated and integrated into all aspects of our decision making. By making all activities (especially those related to procurement, payments, outsourcing and recruitment etc. that are vulnerable to unethical practices) available on an open platform to all the stakeholders, the likelihood of abuse is greatly reduced. Decision makers will be empowered to take quick decisions, as good governance measures through technology abled solution would aid prudence and clarity of purpose.

We have an obligation towards our stakeholders to provide them the necessary information regarding tender notification, status of tenders, placement of orders, status of products delivered and payments etc., all these are possible when we fully embrace technology .ERP and IFS system will need to be implemented fully. Recruitment, Hiring of Consultants, Allotment of Accommodation, Deployment of assets of the company is required to be done in a transparent manner which technology can ensure. This will reduce complaints and raise the morale for higher production and performance.’

http://www.hal-india.com/vigilance/Marg-Darshan/Marg_darshan_Oct-13.pdf

Marg Darshan Vigilance Magazine – Vol X Issue No. 1, (April 2013), p.3:


‘This edition is focused on a subject of interest and the theme of this edition is “Strengthening of Internal Controls”. The theme is thought provoking which has relevance across all the Departments. I am convinced that unless our internal procedures and systems are proven to be effective in terms of quality, time and costs, our final product cannot meet the expectations of our customer. We need to be 'Customer Centric', with due concern to ethical benchmarks. As a Defence PSU, we need to be diligent in our dealings. Through this




edition of the Marg Darshan, I reach out to all HALites to dedicate ourselves to enhance our performance, and fulfil the objective of excellence and customer delight. I compliment the Vigilance Department for involving officers from diverse Departments to suggest ways and measures for strengthening internal controls in HAL in the true spirit of participative Vigilance.’

http://www.hal-india.com/vigilance/Marg-Darshan/MARG-DARSHAN_APR_2013.pdf

Marg Darshan Vigilance Magazine – Facets of Vigilance, Vol IX Issue No. 2 (October 2012), p.3:


‘It gives me great pleasure to acknowledge the consistent efforts being made by the Vigilance Department towards spreading the message of anti-corruption through preventive measures. The regularity of publication of Marg Darshan, is an indication of their commitment. The Vigilance Department has also been taking innovative steps to create greater awareness of rules and procedures so that decisions are not taken out of ignorance or incomplete knowledge. Fiscal prudence in our decisions will go a long way in sustaining our Company. Integrity, Credibility and Quality should be the Mantra for our professional domain. Consistent performance with high standards of quality, delivery in time as per the agreed terms will see that the Company is held in high esteem in the Indian PSEs. Through this medium, I urge all employees to strive towards taking the Company forward to become a Maharatna in the near future.’

http://www.hal-india.com/vigilance/Marg-Darshan/Marg%20Darshan-Oct.2012.pdf

Marg Darshan Vigilance Magazine – HAL’s Anti-Corruption Strategy, Vol IX Issue No. 1 (April 2012), p.3:


‘At the same time we also need to be vigilant in the way public funds are utilised. Rules and procedures are already in place. Competent authorities need to exercise due diligence while taking a decision. Whenever situations arise that are not covered in the rulebook, the sanctioning authority would take decision based on the circumstances in an explained and rational manner. We cannot be fearful/slow in decision making or blame rules & regulations as obstructive.

I am happy to note that the Vigilance Department is in the forefront of creating awareness of our policies, guidelines, and Dos & Don’t through their various publications likeV2, Marg Darshan etc. and programs like Sampark etc. Let us create an atmosphere which emboldens our executives to take bold decisions without any fear of retribution. Let us all combine our energies in further enhancing the Integrity quotient of HAL.

HAL is not only an organization, it is also a symbol of trust of people of India in our defence support preparedness. Our future well-being will hinge upon credibility, profitability and commitment in serving our customers in terms of quality and delivery schedules. Every department will need to haul together just as a multicellular organism operating in harmony.

http://www.hal-india.com/vigilance/Marg-Darshan/Margadarshan_2_Apr12.pdf





Purchase Manual – Issue 3 (2013), foreword:

http://hal-india.com/Pur.%20Manual%20&%20Sub-%20Cont/PurchaseManual.pdf



A2:

Does the company’s Chief Executive Officer or the Chair of the Board demonstrate a strong personal, external facing commitment to the ethics and anti-corruption agenda of the company?

Score:

1

Comments:

Based on public information, there is some evidence that the Chairman demonstrates a strong personal, external facing commitment to the ethics and anti-corruption agenda of the company. In 2013, the Chairman signed a Memorandum of Understanding with Transparency International India regarding the adoption of an Integrity Pact, becoming the first defence PSU to do so. The company therefore scores 1. To score higher the company would need to provide at least one more example of the Chairman’s active external engagement in anti-corruption matters.

References:

Public:

Company website: HAL First Defence PSU to Sign MoU with Transparency International India

‘HAL has signed a Memorandum of Understanding (MoU) with the Transparency International India (TII) for adoption of Integrity Pact (IP). “Considering that HAL deals with number of domestic and international business partners for goods and services, the MoU will go a long way in establishing higher standards in our operations”, says Dr. R. K. Tyagi, Chairman, HAL.

The MoU was signed by Dr. Tyagi and Justice Kamleshwar Nath, Chairman, TII at a function in New Delhi yesterday. HAL has so far signed "Integrity Pact" with 115 vendors (85 foreign and 30 Indian).

“Integrity Pact” is a tool developed to ensure that all activities and transactions between companies or Government departments and their suppliers are handled in fair and transparent manner.

TII will support HAL by providing advice and resources to implement the Integrity Pact program successfully. Incidentally, HAL is the first Defence PSU to sign such an MoU with TII.’

http://hal-india.com/First_Defence_PSU.asp



Company website, CEO inaugurating the Integrity Circle (2014):

http://www.hal-india.com/PhotoGallery_SlideShow.aspx?MKey=43&cKey=37

Company website, Annual Vigilance Talk (2013):

‘Annual Vigilance Talk-2013 was organised by HAL Vigilance Department on 28th Oct 2013, during Vigilance Awareness Week-2013. Hon’ble Justice N Santosh Hegde, Former Supreme Court Judge & Former Karnataka Lokayukta, delivered a talk on “Integrity and Good Governance in Public Institutions”. The program was held at Ghatge Convention Center, HAL Airport Road, Bangalore, which was attended by senior officers of HAL. The program was live webcasted to all Divisions of HAL located outside Bangalore.’

http://www.hal-india.com/Common/Uploads/DMS/Photos-of-Annual-Vigilance-Awareness-talk-2013.pdf

Purchase Manual (2013), Foreword, p.2:

http://www.hal-india.com/Common/Uploads/DMS/PurchaseManual.pdf


A3:

Does the company’s Chief Executive Officer demonstrate a strong personal, internal-facing commitment to the ethics and anti-corruption agenda of the company, actively promoting the ethics and anti-corruption agenda at all levels of the company structure?

Score:

1

Comments:

Based on public information, there is limited evidence that the Chairman, who fulfils the role of CEO, demonstrates a strong personal, internal-facing commitment to the ethics and anti-corruption agenda of the company. Evidence shows that the Chairman supports the company’s vigilance department, by actively taking part in the annual Vigilance Awareness Week. The company therefore scores 1. To score higher the company would need to provide at least two more examples of such engagement.

References:

Public:

HAL Vigilance Magazine, Marg Darshan (October 2014), p.1:

Chairman’s message:

‘Dear colleagues,

This edition of Marg Darshan provides an insight into the - 'National Framework to prevent corruption'. The articles on United Nations Convention Against Corruption (UNCAC), Prevention of Corruption Act, Corruption Risk Management & articles covering other legislations connected to the theme including Companies Act, RTI etc., are very much important and relevant for creating awareness. It is all the more appropriate when our Organization is entering into more competitive market along with the possible structural changes including disinvestment.

I also note that the theme of CVC for this year's Vigilance Awareness Week - 'Combating Corruption.

Technology as an Enabler' and that of the current edition of Marg Darshan, mutually sync with the aim of creating awareness and to combat corruption by widening the scope for applying technology in eradicating the same.

In the present competitive environment, Transparency and Technology are two faces of the same coin, wherein the application of technology in various felds always provide a cutting


edge in the performance and maintaining ethics in an organisation. It is relevant to mention that several players in the private sector observed October 10, 2014 as the 'Compliance day' and also celebrated the 'Compliance and ethics week' immediately thereafter. It is obvious that the concern for 'transparency' and 'ethics' has spread its wings beyond the ambit of Government Institutions.

I appreciate the efforts of Vigilance Department in creating awareness amongst employees in preventive Vigilance. I also note that the theme emphasised by the CVC for current year's Vigilance Awareness Week is need of the hour and on this aspect, I prefer to make a mention about the IT enabled processes (viz: e-procurement, e-payment, etc) being professed in HAL in order to enhance the transparency, quality & timeliness and to reduce any possibility of misgivings. These efforts are relevant and timely keeping in view the initiatives being taken by the Government of India on the 'Make in India' campaign, as it presents a great opportunity for further indigenisation of defence projects.

I wish all the best to Team Vigilance and appreciate the efforts in bringing out yet another Bi-annual issue of Marg Darshan which is in your hands now.

Dr R K Tyagi

Chairman’

http://www.hal-india.com/Common/Uploads/DMS/MD-OCT-issue-full-pages.pdf

TI notes:

Annual Vigilance Talk (2013):


Vigilance Awareness Week 2014 Photos:


Vigilance Awareness Week 2013 Photos, p.1:

http://www.hal-india.com/Common/Uploads/DMS/MD-OCT-issue-full-pages.pdf





(p.2):

(p.3):


http://www.hal-india.com/vigilance/Image-Gallery/co.pdf

Company website: Vigilance

‘Transparency in Public Procurement: A booklet was released during the VAW 2012 by the chairman HAL.’

http://www.hal-india.com/Initiatives.asp

Marg Darshan Vigilance Magazine – Promoting Good Governance in HAL, Vol XI Issue No. 1 (April 2014), p.1:


‘Ingenious ideas to promote good governance are extremely important. I am happy to note that Vigilance Department under the leadership of Anurag Sahay, C O, continues its preventive vigilance initiatives by laying emphasis on CVC 's theme of the year “Promoting Good Governance in public institutions." This edition of Marg Darshan contains articles from officers of diverse functional background. The contributions focus on micro issues and suggest measures to promote good governance in the critical functional areas. This is a worthwhile initiative complimenting last edition of Marg Darshan, on same theme but focusing on macro strategies in promoting good governance. Good governance not only needs procedural reforms but also demands commitment and ownership of all stake holders in understanding, implementing of policy guidelines and promoting good practices. I am confident that this edition will definitely enhance confidence among all stakeholders by implementing good practices in various functional areas like HR, Outsourcing, Procurement, Facility Management, Medical & Health unit etc, which have clear vigilance sensitivity. The article on "The Lokpal And Lokayuktas Act, 2013 ", is an important and timely contribution for creating awareness of the Act amongst all of us. HAL is facing new challenges in disinvestment, re-structuring and increased competition in Defence Aerospace Sector. I have no doubt that this edition of Marg Darshan enhances our confidence in facing such challenges through promoting diligent and transparent decision making process.’

Marg Darshan Vigilance Magazine – Promoting Good Governance in HAL, Vol X Issue No. 2 (October 2013), p.3:





‘It gives me great pleasure to note that the Vigilance Department has devoted this edition of Marg Darshan to “Promoting Good Governance in HAL". The Central Vigilance Commission has been promoting Transparency , Fairness, Equity and encouraging competitiveness as well as Leveraging of Technology in all areas of functioning of the Government and its organisations. Technology brings in efficiency as well as transparency and therefore needs to be assimilated and integrated into all aspects of our decision making. By making all activities (especially those related to procurement, payments, outsourcing and recruitment etc. that are vulnerable to unethical practices) available on an open platform to all the stakeholders, the likelihood of abuse is greatly reduced. Decision makers will be empowered to take quick decisions, as good governance measures through technology abled solution would aid prudence and clarity of purpose.

We have an obligation towards our stakeholders to provide them the necessary information regarding tender notification, status of tenders, placement of orders, status of products delivered and payments etc., all these are possible when we fully embrace technology .ERP and IFS system will need to be implemented fully. Recruitment, Hiring of Consultants, Allotment of Accommodation, Deployment of assets of the company is required to be done in a transparent manner which technology can ensure. This will reduce complaints and raise the morale for higher production and performance.’

Marg Darshan Vigilance Magazine – Vol X Issue No. 1, (April 2013), p.3:


‘This edition is focused on a subject of interest and the theme of this edition is “Strengthening of Internal Controls”. The theme is thought provoking which has relevance across all the Departments. I am convinced that unless our internal procedures and systems are proven to be effective in terms of quality, time and costs, our final product cannot meet the expectations of our customer. We need to be 'Customer Centric', with due concern to ethical benchmarks. As a Defence PSU, we need to be diligent in our dealings. Through this edition of the Marg Darshan, I reach out to all HALites to dedicate ourselves to enhance our performance, and fulfil the objective of excellence and customer delight. I compliment the Vigilance Department for involving officers from diverse Departments to suggest ways and measures for strengthening internal controls in HAL in the true spirit of participative Vigilance.’

Marg Darshan Vigilance Magazine – Facets of Vigilance, Vol IX Issue No. 2 (October 2012), p.3:


‘It gives me great pleasure to acknowledge the consistent efforts being made by the Vigilance Department towards spreading the message of anti-corruption through preventive measures. The regularity of publication of Marg Darshan, is an indication of their commitment. The Vigilance Department has also been taking innovative steps to create greater awareness of rules and procedures so that decisions are not taken out of ignorance or incomplete knowledge. Fiscal prudence in our decisions will go a long way in sustaining our Company. Integrity, Credibility and Quality should be the Mantra for our professional


domain. Consistent performance with high standards of quality, delivery in time as per the agreed terms will see that the Company is held in high esteem in the Indian PSEs. Through this medium, I urge all employees to strive towards taking the Company forward to become a Maharatna in the near future.’

Marg Darshan Vigilance Magazine – HAL’s Anti-Corruption Strategy, Vol IX Issue No. 1 (April 2012), p.3:


‘At the same time we also need to be vigilant in the way public funds are utilised. Rules and procedures are already in place. Competent authorities need to exercise due diligence while taking a decision. Whenever situations arise that are not covered in the rulebook, the sanctioning authority would take decision based on the circumstances in an explained and rational manner. We cannot be fearful/slow in decision making or blame rules & regulations as obstructive.

I am happy to note that the Vigilance Department is in the forefront of creating awareness of our policies, guidelines, and Dos & Don’t through their various publications likeV2, Marg Darshan etc. and programs like Sampark etc. Let us create an atmosphere which emboldens our executives to take bold decisions without any fear of retribution. Let us all combine our energies in further enhancing the Integrity quotient of HAL.

HAL is not only an organization, it is also a symbol of trust of people of India in our defence support preparedness. Our future well-being will hinge upon credibility, profitability and commitment in serving our customers in terms of quality and delivery schedules. Every department will need to haul together just as a multicellular organism operating in harmony.

Vigilence Manual Vol-1, p.22:

http://www.hal-india.com/vigilance/VigilanceManual/VigManual-1.pdf



A4:

Does the company publish a statement of values or principles representing high standards of business conduct, including honesty, trust, transparency, openness, integrity and accountability?

Score:

2

Comments:

Based on public information, there is evidence that the company has published a statement of values representing high standards of business conduct, including trust and integrity. To work with integrity the company has a commitment to be honest and trustworthy, and to achieve trust requires transparency. The values are briefly explained on the company’s website and in company documents.

References:

Public:

Company website: About Us

‘•Trust and Team Spirit

We believe in achieving harmony in work life through mutual trust, transparency, co-operation and a sense of belonging. We will strive for building empowered teams to work towards achieving organisational goals.’

‘•Integrity

We believe in a commitment to be honest, trustworthy and fair in all our dealings. We commit to be loyal and devoted to our organisation. We will practise self discipline and own responsibility for our actions. We will comply with all requirements so as to ensure that our organisation is always worthy of trust.’

http://www.hal-india.com/ourvalues.asp

Company website: About Us

‘Commitment

We shall accomplish our mission with:

Absolute integrity and dedication

Total customer satisfaction

Honesty and transparency

http://www.hal-india.com/ourvalues.asp


Courtesy and promptness

Fairness

Total quality

Innovation and creativity

Trust and team spirit

Respect for the individual

Humility

Compassion

We commit ourselves to do our duty to the best of our ability, integrity and efficiency with the prime motto of fulfilling the customer’s, shareholders' and individuals requirements and to rise to their expectations and beyond.

Our Expectations

We expect you to

Be prompt and reasonable

Be fair, honest and transparent in dealings.

Adhere to time and delivery schedules

Extend your cooperation in all our endeavor

Provide us detailed specifications

Acquaint us with the systems and maintenance procedures and product performances criterion

Indicate realistic schedule and make prompt payment

Comply with the service instructions and timely maintenance procedures.’

'Corruption Free Services

We shall:-

(i) Adopt systems and procedures which leave no scope for any corrupt practices.

(ii) Maintain absolute confidentiality of the information/ complaints.

(iii) Believe means and ends cannot be separated. Good ends call for good means. Good means cannot but lead to good ends. There shall be no need for any one at any time to offer bribe or any other inducement for doing business with us. We shall promptly and expeditiously enquire into all genuine and legitimate complaints of corruption against any employee of our organization.

(iv) Always be honest and transparent and would like to be seen as honest. We shall not claim any judicial privilege for our documents and records except in rare cases that too in the interest of national security.

(v) Implement all the policies and directives of Central Vigilance Commission.'

http://www.hal-india.com/citizen.asp

Annual Report 2012 – 2013, Page 13:


‘“Integrity” is one of the seven values that your company continues to achieve in all its business transactions. Keeping in line with the highest standards of corporate governance that the company has set for itself, the Company has signed a Memorandum of


Understanding (MoU) with Transparency International India (TII) for bringing more transparency in procurements as well as better compliance with the CVC guidelines on Integrity Pact (IP). It became the first Defence PSU to sign such a MoU with TII.’

Vigilance Manual Vol-I, pp.3-4:

‘Citizens Charter for HAL

This Charter is a declaration of our commitment, expectations and highest standards with total quality to achieve excellence in Design, Manufacture and Maintenance of Aerospace defence equipment, Software development for Aerospace application and Design Consultancy by managing the business on commercial lines in most fair, honest and transparent manner, with corruption free service for the benefit of the customers who are our partners in progress to ensure safe custody of public money.

a) Commitment






Fairness

Total quality




Humility

Compassion

Commit ourselves to do our duties to the best of our ability, integrity and efficiently with the prime motto of fulfilling the customers and shareholders requirements and to rise to their expectations and beyond.

b) Our Expectations

We expect you to









(pp.5-6):

‘Corruption Free Services


We shall:-



(iii) Believe means and ends cannot be separated. Good ends call for good means. Good means cannot but lead to good ends. There shall be no need for any one at any time to offer bribe or any other inducement for doing business with us. We shall promptly andexpeditiously enquire into all genuine and legitimate complaints of corruption against any employee of our organization.


(v) Implement all the policies and directives of Central Vigilance Commission.’

Whistleblower Policy (July 2010), p.1:

‘The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. Towards this end, the Company has adopted the Code of Conduct (‘the Code’), which lays down the principles and standards that should govern the actions of the Company and its employees.’

http://www.hal-india.com/vigilance/Whistle-Blower-Policy-HAL/Whistle-Blower-Policy-HAL.pdf

Code of Business Conduct & Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited (January 2008), p.1 :

‘1.2 The purpose of this Code is to enhance ethical and transparent process in managing the affairs of the Company’

(p.4):

‘5.2 Be honest and trustworthy & practice integrity

5.2.1 Integrity and honesty are essential components of trust. Without trust an organization cannot function effectively.

5.2.2 All Board Members and Senior Management are expected to act in accordance with highest standards of personal and professional integrity, honesty and ethical conduct, while conducting business of the Public Enterprises.’

(pp.5-6): ‘5.5.1 To strive continuously to bring about integrity and transparency in all spheres of the activities.

5.5.2 Work unstintingly for eradication of corruption in all spheres of life.’

http://hal-india.com/HAL-CoC.pdf





A5:

Does the company belong to one or more national or international initiatives

that promote anti-corruption or business ethics with a significant focus on

anti-corruption?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company belongs to one or more national or international initiatives that promote anti-corruption, or business ethics with a significant focus on anti-corruption.

References:

Public:

TI notes:

HAL MoU with TI India:

August 6, 2013: ‘HAL has signed a Memorandum of Understanding (MoU) with the Transparency International India (TII) for adoption of Integrity Pact (IP). “Considering that HAL deals with number of domestic and international business partners for goods and services, the MoU will go a long way in establishing higher standards in our operations”, says Dr. R. K. Tyagi, Chairman, HAL.



TII will support HAL by providing advice and resources to implement the Integrity Pact program successfully. Incidentally, HAL is the first Defence PSU to sign such an MoU with TII.’


http://www.hal-india.com/HAL%20First%20Defen/ND__29

HAL International Training Certificate, Photos:

International Anti-Corruption Academy (IACA), Vienna, like International Anti-corruption Summer Academy, Procurement Anti-Corruption Training (PACT) etc.


Annual Report 2012 – 2013, Page 13:


‘“Integrity” is one of the seven values that your company continues to achieve in all its business transactions. Keeping in line with the highest standards of corporate governance that the company has set for itself, the Company has signed a Memorandum of Understanding (MoU) with Transparency International India (TII) for bringing more transparency in procurements as well as better compliance with the CVC guidelines on Integrity Pact (IP). It became the first Defence PSU to sign such a MoU with TII.’

Company Website: Vigilance

‘The Integrity Pact envisages an agreement between the prospective vendor/bidder and the buyer committing the persons/officials of both the parties not to exercise any corrupt influence on any aspect of the contract. Only those vendors/bidders who have entered into such an Integrity Pact with the buyer (HAL) would be competent to participate in bidding with HAL wherever the value of each contract exceeds Rs 20 Crores.

This Pact is a preliminary qualification for entering into any contract with HAL. The Pact will be effective from the stage of Invitation of Bids till the complete execution of the Contract.

The Central Vigilance Commission (CVC) has appointed Shri Dhirendra Singh, IAS (Retd.) as Independent External Monitor (IEM) to oversee the implementation of the Integrity Pact.’ http://www.hal-india.com/integrity.asp

Company website: HAL First Defence PSU to Sign MoU with Transparency International India

‘HAL has signed a Memorandum of Understanding (MoU) with the Transparency International India (TII) for adoption of Integrity Pact (IP). “Considering that HAL deals with number of domestic and international business partners for goods and services, the MoU will go a long way in establishing higher standards in our operations”, says Dr. R. K. Tyagi, Chairman, HAL.



TII will support HAL by providing advice and resources to implement the Integrity Pact program successfully. Incidentally, HAL is the first Defence PSU to sign such an MoU with

http://www.hal-india.com/HAL%20First%20Defen/ND__29


http://www.hal-india.com/integrity.asp


TII.’




A6:

Has the company appointed a Board committee or individual Board member with overall corporate responsibility for its ethics and anti-corruption agenda?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company has appointed a Board committee or individual Board member with overall corporate responsibility for its ethics and anti-corruption agenda. The company’s Vigilance Department is responsible for the company’s anti-corruption intiatives, but it is not a Board committee.

References:

Public:

TI notes:

Company website, Integrity Pact:

‘The Integrity Pact envisages an agreement between the prospective vendor/bidder and the buyer committing the persons/officials of both the parties not to exercise any corrupt influence on any aspect of the contract. Only those vendors/bidders who have entered into such an Integrity Pact with the buyer (HAL) would be competent to participate in bidding with HAL wherever the value of each contract exceeds Rs 20 Crores.

This Pact is a preliminary qualification for entering into any contract with HAL. The Pact will be effective from the stage of Invitation of Bids till the complete execution of the Contract.

The Central Vigilance Commission (CVC) has appointed Shri Dhirendra Singh, IAS (Retd.) as Independent External Monitor (IEM) to oversee the implementation of the Integrity Pact. Address of IEM is as follows :

Shri Dhirendra Singh, IAS (Retd.)

Flat No. 102, Earth Court-2

Jaypee Greens,


Surajpur Kasna Road,

Greater Noida- 201310.

Phone:0120-2324305,

Email:[email protected].’

http://www.hal-india.com/Integrity%20Pact/M__45

Vigilance Manual Vol-1, p.21:

‘The Vigilance scheme of HAL was drawn on the model recommended by the Central Bureau of Investigation. The Board of Directors of HAL approved the scheme vide item No.19 in the 21st Meeting of the Board of Directors dated 26th February 1967 held in Bangalore. Ever since its inception, the Vigilance Department co-existed with Security Department and was generally identified as S&V Dept. Based on the outcome of the Regional Workshop of Chief Vigilance Officers held in Bangalore on 10th and 11th December 1997, action was taken by HAL Management for bifurcation of Security and Vigilance Department in the Company, with a view to strengthen and focus only on anticorruption activities. With a view to tackle corruption and making the functioning of investigating and Vigilance agencies more independent, effective, credible and prompt, the Department of Public Enterprises (Govt. of India), vide there letter No 5(7)/98(GL-009) GM dated 25th September1998, has recommended model vigilance set-up for the PSE’S as a broad guideline to be adopted with such modifications as may be appropriate in the case of an individual undertaking. Based on the recommendations made in the above letter of DPE the vigilance setup in HAL was recognized and the present set-up established.’


‘During the year 1998, the Vigilance set up was separated from the security Department and established based on the recommendations of Department of Public Enterprises, with a view to make the Department more effective, credible and prompt.

HAL Vigilance Department has a work force of Officers 50 & 77 workmen. Vigilance Officers and workmen are positioned in all the Divisions of HAL spread throughout the country who report to the CVO stationed at the Corporate Office of HAL in Bangalore.

The Vigilance department plays a vital role in ensuring that the Rules and laid down Procedures of the Govt and Company are adhered to in all circumstances and the discretionary powers vested with the individuals are exercised judiciously so that there is transparency in all official dealings. Vigilance Department pioneers the Anti-Corruption work of the Company.’

http://www.hal-india.com/vig-about-us.asp


‘Head of Systems Audit / Director (HR) will submit their report after investigation to the Chairman, Audit Committee. If an investigation leads the Chairman of the Audit Committee to conclude that an improper or unethical act has been committed, the Chairman of the Audit Committee shall recommend to the management of the Company to take such disciplinary or corrective action as the Chairman of the Audit Committee may deem fit. It is

http://www.hal-india.com/Integrity%20Pact/M__45



clarified that any disciplinary or corrective action initiated against the Subject as a result of the findings of an investigation pursuant to this Policy shall adhere to the applicable HAL Conduct, Discipline & Appeal Rules, 1984 (CDA Rules).’


‘The Central Vigilance Commission (CVC) has appointed Shri Dhirendra Singh, IAS (Retd.) as Independent External Monitor (IEM) to oversee the implementation of the Integrity Pact. Address of IEM is as follows:

Shri Dhirendra Singh, IAS (Retd.) Flat No. 102, Earth Court-2

Jaypee Greens, Surajpur Kasna Road,


Phone: 0120-2324305, Email : [email protected].’




A7:

Has the company appointed a person at a senior level within the company to have responsibility for implementing the company’s ethics and anti-corruption agenda, and who has a direct reporting line to the Board?

Score:

2

Comments:

Based on public information, there is evidence that the company has appointed the Chief Vigilance Officer with responsibility for implementing its ethics and anti-corruption agenda. The Chief Vigilance Officer is identified as Shri Anurag Sahay.

References:

Public:


(p.24): ‘Duties of Chief Vigilance Officer

(i) To act as a link between HAL and Central Vigilance Commission on the one hand and HAL and Ministry of Defence on the other. To investigate and report on the complaints forwarded by the Central Vigilance Commission/ Ministry against officials of


HAL. Also to assist/advise the Chairman HAL, in combating corruption.

(ii) To ensure that assessments are made of the scope and modes of corruption and malpractices in the HAL and to suggest measures to check them.

(iii) To examine rules and procedures/ to remove loopholes and defects with a view to eliminate or minimize factors, which provide opportunities for corruption and malpractices.

(iv) To plan and enforce regular inspections, surprise checks for detecting failures in quality or speed of work, which be indicative of the existence of corruption or malpractice.

(v) To scrutinize all complaints and information received in the Corporate Office having vigilance angle and to arrange for adequate enquiries to be made and action to be taken on the reports received.

(vi) To refer to Central Bureau of Investigation in consultation with Chairman those complaints and information which require enquiries by them and to ensure that Central Bureau of Investigation is given all the assistance in all enquiries by way of arranging production of records files, etc.

(vii) Maintain proper surveillance on officers of doubtful integrity and officers who are on the Agreed List.

(viii) Ensure prompt observance of Conduct Rules regarding integrity covering

(a) statements of assets and acquisitions

(b) gifts

(c) relatives employed in private firms or doing private business

(d) benami transactions.’

(p.34): ‘Functional and Administrative control over Vigilance Officials:

All matters pertaining to functional and administrative control over vigilance officials like, recruitment, induction, grant of leave, training, transfer/job rotation, promotion, movement/temporary duty/forwarding of applications/writing of Performance Appraisal Reports/Disciplinary action etc. would be exercised by the Chief Vigilance Officer.’


‘HAL Vigilance Department has a work force of Officers 50 & 77 workmen. Vigilance Officers and workmen are positioned in all the Divisions of HAL spread throughout the country who report to the CVO stationed at the Corporate Office of HAL in Bangalore.’

‘The Head of the Vigilance Department in HAL is Chief Vigilance Officer (Officer on deputation from Central government deputed by the CVC).

List of CVO’s In HAL Till Date:

1. Shri T Srinivasulu, IPS From 1984 To 1989.

2. Shri Rm Vasant Kumar,IPS From 1990 To 1991.

3. Shri Ku Shetty,IPS From 1992 To 1994

4. Shri Ys Rao, IPS From1994 To 1997


5. Shri A Vijay Anand, IRS From 1999 To 2004

6. Shri V H Deshmukh, IPS From 2004 To 2009

7. Shri Anurag Sahay, IRS From 2009 –Till Date’.



‘The Central Vigilance Commission (CVC) has appointed Shri Dhirendra Singh, IAS (Retd.) as Independent External Monitor (IEM) to oversee the implementation of the Integrity Pact. Address of IEM is as follows:

Shri Dhirendra Singh, IAS (Retd.) Flat No. 102, Earth Court-2

Jaypee Greens, Surajpur Kasna Road,


Phone: 0120-2324305, Email: [email protected].’


Company website: Organisation Chart

http://www.hal-india.com/Organisation-Chart.pdf





A8:

Is there regular Board level monitoring and review of the performance of the company’s ethics and anti-corruption agenda?

Score:

1

Comments:

Based on public information, there is limited evidence of regular Board level monitoring and review of the performance of the company’s ethics and anti-corruption agenda. The Chairman of the Audit Committee receives quarterly reports from the Director of Human Resources or the Head of Systems Audit, in regard to whistleblowing reports. The company therefore scores 1. To score higher the company would need to provide evidence of a formal Board level review of the company’s entire ethics and anti-corruption agenda, or that it commissions a similar external review.

References:

Public:


‘Duties of Chief Vigilance Officer

(i) To act as a link between HAL and Central Vigilance Commission on the one hand and HAL and Ministry of Defence on the other. To investigate and report on the complaints forwarded by the Central Vigilance Commission/ Ministry against officials of HAL. Also to assist/advise the Chairman HAL, in combating corruption.



(iv) To plan and enforce regular inspections, surprise checks for detecting failures in quality or speed of work, which be indicative of the existence of corruption or malpractice.’

(p.25): ‘ (xv) To supervise timely submission of various Reports & Returns those need to be submitted to CVC/Ministry/CBI.’


‘Duties of DGM/Chief Manager (Vigilance) at Corporate Office

(i) He will assist CVO for ensuring implementation of Corporate Policies and CVC on the vigilance matters in the Company.

(ii) He will be responsible for collection/collation of all vigilance reports & returns from all the divisions including Corporate Office and further onward submission to the Ministry.’

(p.72): ‘Periodic Review and Evaluation

The Principal periodically reviews the effectiveness of Integrity Pact Program through all or some of the following:

a) IEM will have to submit a Quarterly Report on the progress and effectiveness of Integrity Pact Program.

b) IEM and senior leadership of the Principal will do a self-assessment of Integrity Pact Program’s effectiveness and identify areas / ways to improve.

c) Principal will have to conduct a complete and periodic review by an outside agency, including Government Officials, suppliers, Independent Observers etc. about IP’s effectiveness in reducing corruption.

d) Principal will have to meet with CVC and TI-India on an annual basis to discuss the above.’

(p.27): ‘Duties of Deputy Manager (Vigilance) / Vigilance Officer at Corporate Office

(i) He will be responsible for compilation of the articles for Department Publications/Magazines.

(ii) He will assist the Manager (Vigilance) in Anti Corruption work of Corporate Office and HAL Management Academy.

(iii) He assist the Manager (Vigilance) to analyze and process all the investigations reports of the divisions and review disciplinary proceedings when called for.’


‘The Director (HR) or Head of Systems Audit shall submit a report to the Chairman of the Audit Committee on a regular basis about all Protected Disclosures referred to him / her since the last report together with the results of investigations, if any, on quarterly basis.’


A8(a):

Is there a formal, clear, written plan in place on which the review of the ethics and anti-corruption agenda by the Board or senior management is based, and evidence of improvement plans being implemented when issues are identified?

Score:

0

Comments:

Based on public information, there is no readily available evidence of a formal, clear, written plan in place, on which the review of the ethics and anti-corruption agenda by the board or senior management is based. TI notes that there is some evidence that improvement plans have been implemented when issues have been identified; for example, the company’s Vigilance Manuals have been revised.

References:

Public:

TI notes:







‘New Intiatives of the Vigilance Department

Review of Works and Contracts Manual


Revision of HAL Vigilance Manuals

Change in Logo of Vigilance keeping in sync with objectives and present day times

ISO 9001:2008 Certification

Exploring implementation of e-Awas (e-enabled quarters allotment system)

Induction of Officials into Vigilance Dept from diverse background, to make it a heterogeneous workforce with an aim to deliver multi-pronged anti corruption service armed with varied professional competencies.

PRAYAS: A compendium of selected Vigilance cases which bring out acts of violation of rules and procedures to prevent recurrence. It also aims to share experience with regard to investigations for Vigilance professionals.

Transparency in Public Procurement: A booklet was released during the VAW 2012 by the chairman HAL.

OLIV (Online Vigilance Clearance System)

Data Centre Sensitizing Selection Committees for Recruitment. HAL-Pedia



Reforms in appointment of consultants:

The Department has been advocating adopting of a transparent system in the Appointment of Consultants as this was one of the areas which needed immediate attention in view of the changing business strategies globally. There have been instances where some of such appointments attracted punitive vigilance intervention. Keeping all the facets in view, HAL has adopted a detailed policy for appointment of consultants in line with guidelines issued by CVC.

Reforms in Delegation of Powers:

Delegation of Powers (DOP) of the Company which was issued in the year 2008, was taken up for scrutiny by Vigilance Dept. Aim was to ensure that the powers conferred on the authorities are invoked with due diligence and accountability from the point of financial propriety. Management considered the suggestions of the Vigilance and necessary improvements have been made in the different Clauses of DOP.

Reforms in HAL CDA Rules – imposition of penalty after retirement etc:

Central Vigilance Commission and the Ministry, had issued directives for amendment to the service rules (Conduct Discipline & Appeal Rules) for incorporating provision for continuance of disciplinary after retirement and imposition of penalty. Vigilance Dept in compliance of the same, took up the matter with the Management and ensured necessary amendments.

Reforms in intimation of Moveable Property:

It was observed by Vigilance Dept during various scrutiny that officers were not intimating the acquisition of moveable property in the Property Returns and moreso not within a month of transaction which is the norm. Added to this some officials confused the issue and were intimating/declaring transactions in moveable property in their Annual Property Returns filed at the end of each calendar year and not within 30 days as mandated. Vigilance Dept took up the issue with the Management and since then a policy reiterating



the procedure has been circulated for compliance by all officers.

Reforms in obtaining of Vigilance Clearance:

Vigilance Department in HAL issues Vigilance Clearance to its officials for purposes mandated by the Company. It was observed that the Dept seeking Vigilance Clearance, was providing inputs in a piece meal/incomplete manner which was resulting in avoidable delays in processing/issuance of Clearances. A format was devised to enable the Dept seeking clearance to provide required information in a structured manner. This has apart from minimizing the time cycle in processing of large number of clearances has also facilitated proper record keeping/updation.

Reforms in procurement process:

Streamlining the procedures involved in Public Procurement has been the thrust of the Vigilance Dept in HAL. Being a strategic Defence PSU, HAL has to procure, considerably from various vendors. The focus of Vigilance Dept in this area is ensuring/monitoring whether the basic tenets of public procurement such as transparency, fairness, equity and value for money has been followed in the process of these procurements. ‘Less discretion and more competition’ has been the mantra driving the Vigilance thereby discharging the duty of a dutiful guardian of public money. Experience gained by Vigilance through its Preventive and Punitive Vigilance activities over a period of time has only facilitated to address grey areas to plug loopholes. Improving Vigilance administration by leveraging technology is the best tool to minimize human interface and accelerate automation leading to transparent systems and Vigilance Dept in HAL has made this as its signature movement. Leading from the front Vigilance Dept has ensured successful implementation of e-Payments. Today almost 90% of payments made by HAL is through e-mode. Aim is to make it 100% within a couple of months.

e-Procurement:

The Central Vigilance Commission is promoting e-Governance to improve transparency in government functioning. As regards public procurement, the modern IT tools can be leveraged in enhancing transparency in the form of e- Tendering, e-Procurements, e- Payments, e-Auction and uploading/posting of tender details on the official website of the Company. Keeping in line with the same, top on the agenda of Vigilance Dept is e-Procurement for which a full fledged Data Center with required infrastructure is being put in place for hosting a independent and customized e-procurement for HAL. Apart from the above, Vigilance Dept continuously strives through its mechanism to address issues like re-tendering, non-involvement of middlemen, authenticated e-correspondence by valid digital signature, reforms in receipt and anlaysis of offers; updating of vendor directory, vendor development; etc unstintingly. Regular interactive sessions by the Chief Vigilance Officer with the community of HAL has also sensitized informed decision making. Today there is tremendous awareness on the need to be vigilant in day to day duties.

Recoveries/Savings:

Due to its untiring efforts both through Preventive and Punitive Vigilance activity, Vigilance Department apart from acting as an catalyst in streamlining of systems, has been able to contribute directly to the financial well being of the Company. The efforts of Vigilance Dept has yielded recoveries and savings to the tune of Rs. 6,67,58,683=00 approximately in the last three years.


Systems Improvement:

Following circulars of HR and Finance departments have been issued by Management due to intervention of Vigilance department. Some of them are :

Issues Related to HR Department:

(a) Guidelines on Recruitment Activity. (b) Intimating regarding movable property exceeding Rs.20,000/- within a month. (c) Vigilance Department to be the nodal agency for handling of complaints (Complaint Handling). (d) Outsourcing of recruitment activity. (e) Consultation with Vigilance Department in disciplinary cases. (f) Policy on Engagement of Consultant & Experts. (g) Amendments to rules pertaining to forfeiture of Gratuity when the Officer has retired from Service. (h) Settlement of PF dues of Contract Labour. (i) Payment of Canteen Allowance. (j) Pre-employment Medical Standards. (k) Entitlement of Canteen and Conveyance allowance while on deputation. (l) Derecognition of qualifications obtained from institutions not recognized by UGC/Certifying Govt. Agencies. (m) Pre employment Medical Standards.

Issues Related to Finance Department:

(a) Revised procedure for acceptance of Single offer against tender notified in revised DOP. (b) Delegation of Powers with regard to accepting liability by the Company while signing MOU/NDA. (c) Suggested guidelines to bring clarity in responsibilities of user Department/IMM/Works Deptt/IT Deptt./Cash/Bank Section/Bills payable Section. (d) Returning of unopened price bids. (e) System improvement in procedures adopted in the Cash Office Section. (f) Guidelines for Recoveries to be made from Contractors in accordance with Contractual terms and obligations. (g) Independent verification of antecedent/genuineness of senders before registration in Vendor Directory. (h) Guidelines for parity in TA/DA entitlements in respect of non HAL employees sent on deputation after approval by Competent Authority. (i) Guidelines for Tendering System for procurement of capital items requiring change in scope of the tender notice. (j) Preparation of Estimate of a work in conformance with MES SSR rates. (k) Adoption of FE rates as on the day of opening of price bids.’ http://www.hal-india.com/Achievements.asp

http://www.hal-india.com/Achievements.asp


A9:

Does the company have a formal process for review and where appropriate update its policies and practices in response to actual or alleged instances of corruption?

Score:

2

Comments:

Based on public information, there is evidence that the company has a process to review and also updates its policies and practices, in response to actual or alleged instances of corruption. This is the responsibility of the Vigilance Department and the Chief Vigilance Officer. Evidence suggests that in response to unethical consultant appointments the Vigilance Department introduced a detailed policy for the appointment of consultants.

References:

Public:


Duties of Chief Vigilance Officer





(v) To scrutinize all complaints and information received in the Corporate Office having vigilance angle and to arrange for adequate enquiries to be made and action to be taken on the reports received.’


Vigilance Manual Vol-2, page 191:

‘10 Recommendation for systematic improvement

Any fraud, corruption, irregularity or impropriety indicates a failure of control mechanism or gaps in systems and procedures at the end of the report the CVO should try to recommend systemic improvements in order to prevent the risk of a recurrence of the lapse/ misconduct.’



‘Head of Systems Audit / Director (HR) will submit their report after investigation to the Chairman, Audit Committee. If an investigation leads the Chairman of the Audit Committee to conclude that an improper or unethical act has been committed, the Chairman of the Audit Committee shall recommend to the management of the Company to take such disciplinary or corrective action as the Chairman of the Audit Committee may deem fit. It is clarified that any disciplinary or corrective action initiated against the Subject as a result of the findings of an investigation pursuant to this Policy shall adhere to the applicable HAL Conduct, Discipline & Appeal Rules, 1984 (CDA Rules).’


Reforms in appointment of consultants:

The Department has been advocating adopting of a transparent system in the Appointment of Consultants as this was one of the areas which needed immediate attention in view of the changing business strategies globally. There have been instances where some of such appointments attracted punitive vigilance intervention. Keeping all the facets in view, HAL has adopted a detailed policy for appointment of consultants in line with guidelines issued by CVC.





A9(a):

Does the company have a formal anti-corruption risk assessment procedure implemented enterprise-wide?

Score:

1

Comments:

Based on public information, there is some evidence that the company has a corruption risk management system implemented enterprise-wide. A system has been implemented that identifies, assesses and mitigates risks. It has been recently introduced and the Management Committee of the Board has mandated the Vigilance department to work on the modalities of the implementation. TI notes that the Chief Vigilance Officer ensures that assessments are made of the scope and modes of corruption, and suggests measures to check them. However, there is no further evidence of when and how mitigation plans should be applied. The company therefore scores 1.

References:

Public:

HAL Vigilance Magazine, Marg Darsan (April 2014), p. 2:

CVO’s desk:

‘Corruption Risk Management (CRM) in HAL

I would like to bring to your attention a key aspect of our functioning on which we are presently engaged. Corruption Risk Management (CRM), we believe is an extremely important tool for Integrity Management in the Company. As you may be aware, Company has recently issued a Risk Management Policy. The Risk Management Policy issued by the

Company establishes a framework to identify risks, assess and rate risks and come up with mitigation measures. The Management Committee of the Board has mandated the Vigilance

Department to work on the modalities of implementation of CRM within the Company. In identifying the corruption related risks and the possible mitigation measures we propose to have broad ranging consultations with all the stakeholders within the Company. We strongly

believe that if we can identify the corruption risks and undertake the possible measures for

mitigation, it would be the single most significant preventive vigilance strategy. In coming

weeks and months we would be approaching various divisions to create awareness regarding the CRM and for consultations with you for identification of risks and possible


mitigation strategies. CRM would definitely bring the awareness of corruption risks not only

within the thought processes of the executives but also in the decision making structures of the Company.’

http://www.hal-india.com/Common/Uploads/DMS/Marg_Darshan%20_April-2014.pdf

Code of Business Conduct and Ethics for Board Members and Senior management of Hindustand Aeronautics Llimited (January 2008), p.10:

‘6.11 Identity, mitigate and manage business risks :

It is everybody's responsibility to follow the Risk Management Framework of the Company to identify the business risks that surround function or area of operation of the Company and to assist in the company-wide process of managing such risks, so that Company may achieve its wider business objectives.’

http://www.hal-india.com/Common/Uploads/ContentTemplate/3_Down_HAL-CoC.pdf


FOREWORD (February 2014), Human Resources:

‘Vigilance cannot be considered as an activity merely to prevent corruption.

Considered holistically, it can acquire a more meaningful role. In fact, vigilance has to

be seen as a part of the overall risk management mechanism of an organization

whereby systems are structured in such a manner so as to prevent leakages even

while making the organization transparent and accountable in its dealings with

customers both internal and external.’

(p.24):






(v) To scrutinize all complaints and information received in the Corporate Office having vigilance angle and to arrange for adequate enquiries to be made and action to be taken on the reports received.’

(p.77): ‘Periodic Review and Evaluation

http://www.hal-india.com/Common/Uploads/DMS/Marg_Darshan%20_April-2014.pdf



The Principal periodically reviews the effectiveness of Integrity Pact Program through all or some of the following:

a) IEM will have to submit a Quarterly Report on the progress and effectiveness of Integrity Pact Program.

b) IEM and senior leadership of the Principal will do a self-assessment of Integrity Pact Program’s effectiveness and identify areas / ways to improve.

c) Principal will have to conduct a complete and periodic review by an outside agency, including Government Officials, suppliers, Independent Observers etc. about IP’s effectiveness in reducing corruption.

d) Principal will have to meet with CVC and TI-India on an annual basis to discuss the above.’


A10:

Does the company have a formal anti-corruption risk assessment procedure for assessing proposed business decisions, with clear requirements on the circumstances under which such a procedure should be applied?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company has a formal anti-corruption risk assessment procedure for assessing proposed business decisions, with clear requirements on the circumstances under which such a procedure should be applied.

References:

Public:

NA


A11:

Does the company conduct due diligence that minimises corruption risk when selecting or reappointing its agents?

Score:

2

Comments:

Based on public information, there is evidence that the company does not use agents in the procurement process.

References:

Public:

Purchase Manual – Issue 3 (2013), p.65: '8.8.7 Non-Involvement of Indian Agents 8.8.7.1 Following clause shall be incorporated in all enquiries, tenders, purchase orders, contracts/ agreements: 8.8.7.2 “The seller confirms and declares to the buyer that the seller is the original manufacturer/licensor/distributor/stockist/channel partner of the stores referred to in this contract and has not engaged any individual or firm, whether Indian or foreign whatsoever, to intercede, facilitate or in any way to recommend to HAL or any of its functionaries, whether officially or unofficially, to the award of the contract to the Seller; nor has any amount been paid, promised or intended to be paid to any such individual or firm in respect of any such intercession, facilitation or recommendation. The Seller agrees that if it is established at any time to the satisfaction of the Buyer that the present declaration is in any way incorrect or if at a later stage it is discovered by the Buyer that the Seller has engaged any such individual/firm, and paid or intended to pay any amount, gift, reward, fees, commission or consideration to such person, party, firm or institution, whether before or after the signing of this contract, the Seller will be liable to fund that amount to the Buyer. The Seller will also be debarred from entering into any supply Contract with HAL for a minimum period of five years. The Buyer will also have a right to consider cancellation of the Contract either wholly or in part, without any entitlement or compensation to the Seller who shall in such event be liable to refund all payments made by the Buyer in terms of the Contract along with interest at the rate of 2% per annum above LIBOR rate. The Buyer will also have the right to recover any such amount from any contracts concluded earlier with HAL or Government of India.” 8.8.7.3 It should be ensured that the supplier confirms/responds to this clause at the time of


registration as well as along with the offer. 8.8.7.4 Ministry of Defence has issued regulatory provisions in respect of Indian Authorised Representatives/ Agents, where permissible. (Ref: http://mod.nic.in/newadditions/repagent.htm ) 8.8.7.5 Following additional clause shall be incorporated in all enquiries, tenders, purchase orders, contracts/agreements. “HAL has not appointed any agent in India or outside India for procurement of any items and deals directly with vendors. In case any individual or firm approaches you posing themselves as authorized agent of HAL, it is requested that you should not entertain such claim and in addition inform immediately to HAL”. Designation of the officer to whom information to be sent should be indicated.’ Company website: Vigilance ‘Reforms in appointment of consultants The Department has been advocating adopting of a transparent system in the Appointment of Consultants as this was one of the areas which needed immediate attention in view of the changing business strategies globally. There have been instances where some of such appointments attracted punitive vigilance intervention. Keeping all the facets in view, HAL has adopted a detailed policy for appointment of consultants in line with guidelines issued by CVC.’ http://www.hal-india.com/Achievements.asp

http://mod.nic.in/newadditions/repagent.htm



A12:

Does the company have contractual rights and processes for the behaviour, monitoring, control, and audit of agents with respect to countering corruption?

Score:

2

Comments:

Based on public information, there is evidence that the company does not use agents in the procurement process.

References:

Public:

Purchase Manual – Issue 3 (2013), p.65: '8.8.7 Non-Involvement of Indian Agents 8.8.7.1 Following clause shall be incorporated in all enquiries, tenders, purchase orders, contracts/ agreements: 8.8.7.2 “The seller confirms and declares to the buyer that the seller is the original manufacturer/licensor/distributor/stockist/channel partner of the stores referred to in this contract and has not engaged any individual or firm, whether Indian or foreign whatsoever, to intercede, facilitate or in any way to recommend to HAL or any of its functionaries, whether officially or unofficially, to the award of the contract to the Seller; nor has any amount been paid, promised or intended to be paid to any such individual or firm in respect of any such intercession, facilitation or recommendation. The Seller agrees that if it is established at any time to the satisfaction of the Buyer that the present declaration is in any way incorrect or if at a later stage it is discovered by the Buyer that the Seller has engaged any such individual/firm, and paid or intended to pay any amount, gift, reward, fees, commission or consideration to such person, party, firm or institution, whether before or after the signing of this contract, the Seller will be liable to fund that amount to the Buyer. The Seller will also be debarred from entering into any supply Contract with HAL for a minimum period of five years. The Buyer will also have a right to consider cancellation of the Contract either wholly or in part, without any entitlement or compensation to the Seller who shall in such event be liable to refund all payments made by the Buyer in terms of the Contract along with interest at the rate of 2% per annum above LIBOR rate. The Buyer will also have the right to recover any such amount from any contracts concluded earlier with HAL or Government of India.”


8.8.7.3 It should be ensured that the supplier confirms/responds to this clause at the time of registration as well as along with the offer. 8.8.7.4 Ministry of Defence has issued regulatory provisions in respect of Indian Authorised Representatives/ Agents, where permissible. (Ref: http://mod.nic.in/newadditions/repagent.htm) 8.8.7.5 Following additional clause shall be incorporated in all enquiries, tenders, purchase orders, contracts/agreements. “HAL has not appointed any agent in India or outside India for procurement of any items and deals directly with vendors. In case any individual or firm approaches you posing themselves as authorized agent of HAL, it is requested that you should not entertain such claim and in addition inform immediately to HAL”. Designation of the officer to whom information to be sent should be indicated.’

Company website: Vigilance ‘Reforms in appointment of consultants The Department has been advocating adopting of a transparent system in the Appointment of Consultants as this was one of the areas which needed immediate attention in view of the changing business strategies globally. There have been instances where some of such appointments attracted punitive vigilance intervention. Keeping all the facets in view, HAL has adopted a detailed policy for appointment of consultants in line with guidelines issued by CVC.’




A13:

Does the company make clear to contractors, sub-contractors, and suppliers, through policy and contractual terms, its stance on bribery and corruption and the consequences of breaches to this stance?

Score:

2

Comments:

Based on public information, there is evidence that the company has made clear to suppliers through contractual terms, its stance on bribery and corruption, and the consequences of breaches to this stance. Vendors and suppliers are required to sign the Integrity Pact, which states that both parties must not exercise any corrupt influence on any part of the contract. Similarly, the Purchase Manual shows that the company has the right to disqualify a contractor from the tender process in response to corrupt activities.

References:

Public:


‘Integrity Pact with Vendors

The Integrity Pact envisages an agreement between the prospective vendor/bidder and the buyer committing the persons/officials of both the parties not to exercise any corrupt influence on any aspect of the contract. Only those vendors/bidders who have entered into such an Integrity Pact with the buyer (HAL) would be competent to participate in bidding with HAL wherever the value of each contract exceeds Rs 20 Crores. This Pact is a preliminary qualification for entering into any contract with HAL. The Pact will be effective from the stage of Invitation of Bids till the complete execution of the Contract.’


Purchse Manual Issue 3 (2013), p.207:

‘BRIBES AND GIFTS

Any bribe, commission, gift or advantage given, promised or offered by or on behalf of the contractor or his parties, agent or servant or any one on his or their behalf to any officer, servant, representative or agent of HAL or any person on his or their behalf in relation to the



obtaining or to the execution of this or any other contract with HAL shall in addition to any criminal liability which the contractor may incur, subject the contractor to the cancellation of this and all other contracts with HAL and also to payment of any loss or damage resulting from any such cancellation under clauses-8 and 10 thereof. Any question or dispute as to the commission of any offence under the present clause shall be settled by HAL in such manner and on such evidence or information as they may think fit and sufficient and their decision shall be final and conclusive.’

(p.278): ‘5. Commitments of the Bidder(s) / Seller(s).

5.1 The Bidder(s)/ Seller(s) commit himself to take necessary measures to prevent corruption.

He commits himself to observe the following principles during his participation in the tender process and during the contract execution.

i) The Bidder(s)/ Seller(s) will not, directly or through any other persons or firm, offer promise or give to any of the Buyer’s employees involved in the tender process or the execution of the contract or to any third person any material or other benefit which he / she is not legally entitled to, in order to obtain in exchange any advantage during the tendering or qualification process or during the execution of the contract.

ii) The Bidder(s)/ Seller(s) will not enter with other Bidders / Sellers into any undisclosed agreement or understanding, whether formal or informal. This applies in particular to prices, specifications, certifications, subsidiary contracts, submission or non submission of bids or any other actions to restrict competitiveness or to introduce cartelization in the bidding process.

iii) The Bidder(s)/ Seller(s) will not commit any offence under the Prevention of Corruption Act 1988: further the Bidder(s)/ Seller(s) will not use improperly, for purposes of competition or personal gain, or pass on to others, any information or document provided by the Buyer as part of the business relationship, regarding plans, technical proposals and business details, including information contained or transmitted electronically.

5.2 The Bidder(s)/ Seller(s) will not instigate third persons to commit offences outlined above or be an accessory to such offences.

6. Previous Transgression

6.1 The Bidder /Seller declares that no previous transgressions have occurred in the last three years with any other company in any country conforming to the anti corruption approach or with any other Public Sector Enterprise in India that could justify bidder’s/Sellers’ exclusion from the tender process.

6.2 If the Bidder / Seller makes incorrect statement on this subject, Bidder / Seller can be disqualified from the tender process or the contract, if already awarded, can be terminated for such reason without any liability whatsoever on the Buyer.

7. Company Code of Conduct

Bidders / Sellers are also advised to have a company code of conduct (clearly rejecting the use of bribes and other unethical behavior) and a compliance program for the implementation of the code of conduct throughout the company.’


(p.279): ‘8. Sanctions for Violation (Disqualification from tender process & exclusion from future contracts and Criminal charges against violation by Bidders / Sellers)

8.1 If the Bidder(s)/ Seller(s), before award or during execution has committed a transgression through a violation of Clause 5, above or in any other form such as to put his reliability or credibility in question, the Buyer is entitled to disqualify the Bidder(s)/ Seller(s) from the tender process’.

http://www.hal-india.com/Pur.%20Manual%20&%20Sub-%20Cont/PurchaseManual.pdf

http://www.hal-india.com/Pur.%20Manual%20&%20Sub-%20Cont/PurchaseManual.pdf


A13(a):

Does the company explicitly address the corruption risks associated with offset contracting?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company explicitly addresses the corruption risks associated with offset contracting.

References:

Public:

TI notes:

Annual Report 2012-2013, p.22:

‘Offset Business

With an objective to maximise export opportunities arising out of Offset programmes linked to Indian Defence acquisition programmes, various strategic initiatives were taken to establish and progress business framework / agreement with the OEMs.’


A13(b):

Does the company conduct due diligence that minimises corruption risk when selecting its offset partners and offset brokers?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company conducts due diligence that minimises corruption risk when selecting its offset partners.

References:

Public:

TI notes:

Annual Report 2012-2013, p.22:

‘Offset Business

With an objective to maximise export opportunities arising out of Offset programmes linked to Indian Defence acquisition programmes, various strategic initiatives were taken to establish and progress business framework / agreement with the OEMs.’


A15:

Does the company have an anti-corruption policy that prohibits corruption in its various forms?

Score:

1

Comments:

Based on public information, there is evidence that the company has an anti-corruption policy. The company therefore scores 1. To score higher the company would need to provide evidence that it explicitly prohibits many of the forms that corruption might take, for example the giving and receiving of bribes and kickbacks.

References:

Public:

Vigilance Manual Vol-I, p.3:


This Charter is a declaration of our commitment, expectations and highest standards with total quality to achieve excellence in Design, Manufacture and Maintenance of Aerospace defence equipment, Software development for Aerospace application and Design Consultancy by managing the business on commercial lines in most fair, honest and transparent manner, with corruption free service for the benefit of the customers who are our partners in progress to ensure safe custody of public money.’

Foreword Design and Development Director:

‘The objective of corruption free HAL cannot be done entirely by a small team of 40 plus Vigilance Officers. Undoubtedly, unless all stakeholders are involved in the process, effective Vigilance cannot be achieved. Every one working in their position, department have to come forward to fill the loopholes in the system.

To cull out all relevant circulars and guidelines in form of a manual is a laudable initiative. This is a major step towards bringing awareness of various Vigilance concepts and practices in the organization.’

(pp.5-6): ‘Corruption Free Services

We shall:-







(p. 16):

‘Vigilance Angle:

As defined vide CVC Office Order No.74/41/2005 dated 21st Dec 2005, Vigilance

angle is obvious in the following acts:

(i) Demanding and/or accepting gratification other than legal remuneration in respect of an official act or for using his influence with any

other official.

(ii) Obtaining valuable thing, without consideration or with inadequate consideration from a person with whom he has or likely to have official dealings or his subordinates have official dealings or where he can exert influence.

(iii) Obtaining for himself or for any other person any valuable thing or pecuniary advantage by corrupt or illegal means or by abusing his position as a public servant.

(iv) Possession of assets disproportionate to his known sources of income.

(v) Cases of misappropriation, forgery or cheating or other similar criminal

offences.

(vi) There are, however, other irregularities where circumstances will have to be weighed carefully to take a view whether the officer’s integrity is in doubt. Gross or willful negligence; recklessness in decision making; blatant violations of systems and procedures; exercise of discretion in excess, where no ostensible public interest is evident; failure to keep the controlling authority/ superiors informed in time – these are some of the irregularities where the disciplinary authority with the help of the CVO should carefully

study the case and weigh the circumstances to come to a conclusion whether there is reasonable ground to doubt the integrity of the officer concerned.

(vii) Any undue/unjustified delay in the disposal of a case, perceived after considering all relevant factors, would reinforce a conclusion as to the presence of vigilance angle in a case.

The raison d'être of vigilance activity is not to reduce but to enhance the level of managerial efficiency and effectiveness in the organisation. Commercial risk taking forms part of business. Therefore, every loss caused to the organisation, either in pecuniary or non-pecuniary terms, need not necessarily become the subject matter of a vigilance inquiry. Thus, whether a person of common prudence, working within the ambit of the prescribed


rules, regulations and instructions, would have taken the decision in the prevailing circumstances in the commercial/operational interests of the organisation is one possible criterion for determining the bona fides of the case. A positive response to this question may indicate the existence of bonafides. A negative reply, on the other hand, might indicate their absence.’

(p. 25):

‘THE PLEDGE :

(Administered by Chairman, HAL to Vigilance Functionaries during the Bi-Annual Conference, 25th Apr to 27th Apr 2012 )

“We, the Vigilance Professionals of Hindustan Aeronautics Limited, do hereby solemnly pledge that we shall continuously strive to bring about integrity and transparency in all spheres of our activities. We also pledge that we shall work unstintingly for eradication of corruption in all spheres of life .We shall remain Vigilant and work towards the growth of our Organization. Through our collective efforts, we shall bring pride to our organization and provide value based service to our countrymen. We shall strive to achieve total satisfaction of all stakeholders through result oriented quality anti corruption services with trust, integrity and efficiency. We shall exhibit the highest standards of ethical behavior in our official and personal conduct. We shall do our duty conscientiously and act without fear or

favour”.’

Code of Business Conduct & Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited (January 2008), p.3:

'3. APPLICABILITY:

3.1 This code shall be applicable to the following personnel :-

a) All Whole-time Directors including the Chairman of the Company.

b) All Part-time Directors including Independent Directors under the provisions of law.

c) Senior Management.

3.2 The Whole-time Directors and Senior Management (Grade IX & above) should continue to comply with other applicable/to be applicable policies, rules and procedures of the Company.’

(pp.3-4): ‘4. CONTENTS OF CODE

Part I : General Moral Imperatives

Part II : Specific Professional Responsibilities

Part III : Specific Additional Provisions for Board Members and Senior Management

This code is intended to serve as a basis for ethical decision making in the conduct of professional work.

It is understood that some words and phrases in the code of ethics and conduct document are subject to varying interpretations. In case of any conflict, the decision of the Board shall be final.’


(p.4): ‘5.2 Be honest and trustworthy & practice integrity





Conduct, Discipline and Appeal Rules – 1984 (September 2013) p.6:

‘Further, the following acts would be demmed to be misconduct and officer committing such acts would be liable to disciplinary action:’

'Accepting or offering any illegal gratification or indulging in any corrupt practice’.

http://www.hal-india.com/Vigilance/CDA-Rules-Booklet.pdf

Purchase Manual Issue 3 (2013), p.92:

‘In all their dealings and transactions, the personnel of the Purchase Departments shall conduct themselves in an exemplary manner in keeping with the best interest, dignity and tradition of the Company and their profession. In this connection, the 'Code of Conduct & Ethics' adopted by the Indian Institute of Materials Management, which is reproduced below, shall serve to guide their actions.’

‘To subscribe and work for honest and truth in buying and selling, to denounce all forms and manifestations of commercial bribery, and to eschew anti - social practices.’



A16:

Is the anti-corruption policy explicitly one of zero tolerance?

Score:

2

Comments:

Based on public information, there is evidence that the company’s anti-corruption policy is explicitly one of zero-tolerance. The company states that Board members and Senior Management must work for the eradication of corruption in all spheres of life.

References:

Public:



This Charter is a declaration of our commitment, expectations and highest standards with total quality to achieve excellence in Design, Manufacture and Maintenance of Aerospace defence equipment, Software development for Aerospace application and Design Consultancy by managing the business on commercial lines in most fair, honest and transparent manner, with corruption free service for the benefit of the customers who are our partners in progress to ensure safe custody of public money.’

(pp.5-6): ‘Corruption Free Services

We shall:-







Code of Business Conduct & Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited (January 2008), p.4:







A17:

Is the company's anti-corruption policy easily accessible to Board members, employees, contracted staff and any other organisations acting with or on behalf of the company?

Score:

2

Comments:

Based on public information, there is evidence that the company’s ethics and anti-corruption policies are easily accessible to Board members, contracted staff and third parties. The four volumes of the company’s Vigilance Manual, the Code of Business Conduct and Ethics for Board members and Senior Management, and the Rules booklet are all available on the company’s website.

References:

Public:


Links for the four volumes of the company’s Vigilance Manual.

http://www.hal-india.com/VigilanceManual.asp

Code of Business Conduct & Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited (January 2008)


Conduct, Discipline and Appeal Rules – 1984 (September 2013)


http://www.hal-india.com/VigilanceManual.asp




A17(a):

Is the company’s anti-corruption policy easily understandable and clear to Board members, employees and third parties?

Score:

1

Comments:

Based on public information, there is some evidence that the company’s ethics and anti-corruption policies are easily understandable and clear to Board members, employees and third parties. However, TI assesses that the company’s Vigilance Manual is dense and it does not clearly provide guidance on corruption related issues. The company therefore scores 1.

References:

Public:

Integrity Pact:

www.hal-india.com/Common/Uploads/DMS/New IP format.pdf

Transparency in Public Procurement, Vigilance Awareness Week (2012):

www.hal-india.com/Common/Uploads/DMS/Transparency in Public Procurement.pdf

Vigilance Manual Vol-I, pp.3-4:

‘Commitment






Fairness

Total quality




Humility

Compassion

http://www.hal-india.com/Common/Uploads/DMS/New%20IP%20format.pdf

http://www.hal-india.com/Common/Uploads/DMS/Transparency%20in%20Public%20Procurement.pdf


Commit ourselves to do our duties to the best of our ability, integrity and efficiently with the prime motto of fulfilling the customers and shareholders requirements and to rise to their expectations and beyond.

Our Expectations

We expect you to









(pp.5-6):

‘Corruption Free Services

We shall:-






Code of Business Conduct and Ethics for Board Members and Senior Management of HAL (January 2008), p.4:







Conduct, Discipline and Appeal Rules – 1984 (September 2013), pp.27-28:

‘5. Employment of near relative of the officer of the Company in any firm enjoying patronage of the Company:

i) No officer shall use his position or influence directly or indirectly to secure employment in the Company or any firm enjoying patronage of the company for any person related whether by blood or marriage to the officer or to the officer's wife or husband, whether such a person is dependent on the officer or not.

ii) No officer shall except with the previous sanction of the Competent Authority, permit his son, daughter or any member of the family to accept employment with any company or firm, with which he has official dealings or with any company or firm, having official dealings with the company provided that where the acceptance of the employment cannot await the prior permission of the Competent Authority, the employment may be accepted provisionally subject to the permission of the Competent Authority, to whom the matter shall be reported forthwith.

iii) No officer shall in the discharge of his official duties deal with any matter or give or sanction any contract to any company or firm or any other person if any member of his family is employed in that Company or firm or under that person or if he or any member of his family is interested in such matter or contract in any other manner and the officer shall refer every such matter or contract to his official superior and the matter or the contract shall thereafter be disposed of according to the instructions of the authority to whom the reference is made.

Note : Employees should inform their respective Divisional/Office management through their Section/Departmental Head about employment of their near relatives (viz. father, mother, spouse, children including step children, brother, sister) in the firms with which the Division/Office of HAL have business dealing. This is with a view to protect the interest of the company and ensure that the concerned Division/Office enters into a fair and proper business/ transaction with such firms.’


A18:

Does the anti-corruption policy explicitly apply to all employees and

members of the Board?

Score:

2

Comments:

Based on public information, there is evidence that the company’s ethics and anti-corruption policies explicitly apply to all employees and Board members.

References:

Public:

Vigilance Manual Vol-I, foreword:

‘The instructions and guidelines contained in the Manual are applicable to all employees and are required to be adopted and practiced in letter and in spirit.’

(preface): ‘The instructions contained in the Manual are mandatory and it is expected that the officers at various levels will refer to the Manual for guidance in making HAL a completely transparent organization.’

Code Of Business Conduct & Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited Members (January 2008), p.3:

'3. APPLICABILITY:

3.1 This code shall be applicable to the following personnel :-

a) All Whole-time Directors including the Chairman of the Company.

b) All Part-time Directors including Independent Directors under the provisions of law.

c) Senior Management.

3.2 The Whole-time Directors and Senior Management (Grade IX & above) should continue to comply with other applicable/to be applicable policies, rules and procedures of the Company.’

(pp.3-4): ‘4. CONTENTS OF CODE

Part I : General Moral Imperatives


Part II : Specific Professional Responsibilities

Part III : Specific Additional Provisions for Board Members and Senior Management

This code is intended to serve as a basis for ethical decisionmaking in the conduct of professional work.

It is understood that some words and phrases in the code of ethics and conduct document are subject to varying interpretations. In case of any conflict, the decision of the Board shall be final.’


A20:

Does the company have a policy on potential conflicts of interest, and does it apply to both employees and board members?

Score:

1

Comments:

Based on public information, there is evidence that the company has a policy on potential conflicts of interest. However, the policy is spread across numerous documents and does not offer a clear definition of a conflict of interest. The company therefore scores 1.

References:

Public:


‘Commitments and obligations of Principal

(i) The Principal will commit to have ethical and corruption-free business dealings with counter parties.

(ii) The Principal will value its relationship with all counter parties and will deal with them in a fair and transparent manner.

(iii) The Principal and/or its associates (employees, agents, consultants, advisors etc) will not seek any favour, undue benefit or accept bribes for themselves or for third parties.

(iv) will deal with all counterparties with equity, reason and fairness.

(v) will exclude all associates who may be prejudiced or have a conflict of interest in dealings with counter parties.’


‘There should be a provision requiring the officer concerned not to deal with the contract or other cases where he has an interest in case dealings are involved with a firm where his wife, dependents or other relations are partners/employees etc. It should be incumbent on the part of the officer to report this fact to the competent authority. Policy on Conflict of interest should be incorporated in the rules.’




Transparency in Public Procurement (2012), p.9:

‘Code of Ethics should be formulated and notified to promote transparency in procurement administration and to avoid conflict of interest of the officials involved in the process.’

(p.24): ‘12. Conflict of Interest

Conflict of interest, if any, arising out of bidders and other entities or officials should be avoided. For example, consultant of the Project should not be allowed to bid for any of the tenders of that Project.

All tender processing authorities should confirm that they do not have conflict of interest in the subject tender being processed.

In a tender, either the Indian agent on behalf of the Principal / OEM or Principal / OEM itself can bid but both cannot bid simultaneously for the same item/product in the same tender.

If an agent submits bid on behalf of the Principal / OEM, the same agent shall not submit a bid on behalf of another Principal / OEM in the same tender for the same item/product.

Bid documents should clearly indicate whether one Vendor can submit more than one bid. For example, some bidders quote for option-1, option=2 etc. Tender should indicate whether multiple bids submitted by the same Bidder will be considered.’

http://www.hal-india.com/vigilance/Transparency%20in%20Public%20Procurement.pdf

Code Of Business Conduct & Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited Members (January 2008), pp.11-12:

‘As Board Members’

‘7.2.2 Undertake that without prior approval of the disinterested members of the Board, they will avoid apparent conflict of interest. Conflict of interest may exist when they have personal interest that may have a potential conflict with the interest of the Company. Illustrative cases can be:

Related Party Transactions: Entering into any transactions or relationships with the Company in which they have a financial or other personal interest (either directly or indirectly such as through a family members or relation or other person or other organization with which they are associated.

Outside Directorship: Accepting Directorship on the Board of any other Company that competes with the business of the Company.

Consultancy / Business / Employment: Engaging in any activity (be it in the nature of providing consultancy service, carrying on business, accepting employment) which is likely to interfere or conflict with their duties responsibilities towards Company. They should not invest or associate themselves in any other manner with any supplier, service provider or customer of the Company.

Use of official position for personal gains: Should not use their official position for personal gains’.







iii) No officer shall in the discharge of his official duties deal with any matter or give or sanction any contract to any company or firm or any other person if any member of his family is employed in that Company or firm or under that person or if he or any member of his family is interested in such matter or contract in any other manner and the officer shall refer every such matter or contract to his official superior and the matter or the contract shall thereafter be disposed of according to the instructions of the authority to whom the reference is made.

Note: Employees should inform their respective Divisional/Office management through their Section/Departmental Head about employment of their near relatives (viz. father, mother, spouse, children including step children, brother, sister) in the firms with which the Division/Office of HAL have business dealing. This is with a view to protect the interest of the company and ensure that the concerned Division/Office enters into a fair and proper business/ transaction with such firms.’


A21:

Does the company have a policy for the giving and receipt of gifts to ensure that such transactions are bona fide and not a subterfuge for bribery?

Score:

1

Comments:

Based on public information, there is evidence that the company has a policy for the receipt of gifts, to ensure that such transactions are bona fide and not a subterfuge for bribery. Gifts worth more Rs.1500 received by an officer or any of their family members must be sanctioned by the Competent Authority. The company therefore scores 1. To score higher the company would need to provide evidence that a similar policy applies to giving gifts.

References:

Public:


‘XV. Gifts:

Save as otherwise provided in these rules, no officer of the Company shall accept or permit any member of his family or any other person acting on his behalf to accept any gift.

Explanation: The expression “Gift” shall include free transport, board, lodging or other service or any other pecuniary advantage when provided by any person other than a near relative or a personal friend having no official dealings with the officer.

Note:

(1) An officer of the Company shall avoid acceptance of lavish or frequent hospitality from any individual or firm having official dealings with him;

(2) On occasions such as weddings, anniversaries, funerals or religious functions, when the making of gifts is in conformity with the prevailing religious or social practices, an Officer of the Company may accept gifts from his near relatives but he shall make a report to the Competent Authority if the value of the gift exceeds Rs.4000/- in respect of Officers in Grade-I; and Rs.7000/- in respect of Officers in Grade-II & above;

(3) On such occasions as are specified in Sub-rule (2), an Officer of the Company may accept gifts from his personal friends having no official dealings with him, but he shall make a report to the Competent Authority if the value of the gift exceeds Rs.4000/- in respect of Officer in Grade-I; and Rs.7000/- in respect of Officer in Grade-II & above;


(4) In any other case, an Officer of the Company shall not accept or permit any other member of his family or any other person acting on his behalf to accept any gifts without the sanction of the Competent Authority if the value thereof exceeds Rs.1500/-. Provided that when more than one gift is received from the same person / firm within a period of 12 months, the matter shall be reported to the Competent Authority if the aggregate value of the gifts exceed Rs.1500/-”.’


‘Ensure prompt observance of Conduct Rules regarding integrity covering

(a) statements of assets and acquisitions

(b) gifts

(c) relatives employed in private firms or doing private business

(d) benami transactions.’

(p.100): Vigilance staff, ‘do not accept gifts whose value is beyond the acceptable limits.’

Vigilance Manual Vol- 4, pp.2-3:

‘2. ACCEPTANCE OF GIFTS

2.1 ACCEPTANCE OF GIFTS BY GOVERNMENT SERVANTS

Gifts are presented by the public sector undertakings, banks etc. to a number of persons including government officials during festive occasions, such as, Diwali, Chrismas, New Year etc. this matter has been the subject of comments in the press, media etc. The commission has considered the matter and is of the view that this practice, at least, so far as government servants are concerned, needs to be discouraged. The CCS (Conduct) Rules provide that no government servant shall accept or permit any member of the family or any other person acting on his behalf to accept any gift except on occasions like weddings, anniversaries or religious functions. The practice of PSUs etc. sending gifts to government servants unnecessarily embarrasses them and puts them in a dilemma. The gifts are to be provided only to promote commercial/business interests and need not therefore be sent to government officials etc. who are only doing their duty. The Public sector undertakings, banks etc. are therefore, advised that they may follow this advice with immediate effect. The CVOs may bring this to the notice of the Chief Executives and all relevant executives.

2. Commission also would like to receive a report from the CVOs on the gift policy of the Company followed by them in the current year and the actual expenditure incurred by them as festival gifts. The Commission hopes to receive the special report by 15th January 2004 and every year thereafter. (CVC circular No. 002/MSC/70 Dt. 27 Aug 03)

2.2 ACCEPTANCE OF GIFTS BY GOVERNMENT SERVANTS

Please refer to the Commission’s letter No.002/MSC/70 (Office Order No. 40/8/2003) dated the 27th August 2003 on the subject cited above. While the Commission reiterates its instructions issued vide the aforesaid office order and emphasizes that the practice by PSUs etc. of sending gifts to government servants on the occasion of festivals be discouraged, it is clarified that these instructions would not apply to mementoes, diary & calendar, etc.


brought out by PSUs etc. for publicity and business promotion.

2. All CVOs are requested to bring this to the notice of all concerned. They should furnish a report on the expenditure incurred by them on festival gifts during this year, in their monthly and the annual report to the Commission. (CVC circular No. 004/MSC/032 Dt. 22 Sep 04)

2.3 RESTRICTIONS ON GIFTS TO GOVERNMENT SERVANTS

Please refer to ED(V)’s letter No. HAL/CO/VIG/41/2003/1626 dated 18.9.2003 enclosing therewith a copy of CVC’s Circular No. 002/MSC/70 dated 27.8.03, imposing restrictions on the practice of acceptance of gifts by the Government Servants.

2. While noting the advise of CVC as contained in the above communication, Chairman has dircted that we should not give any festival gifts to Govt. servants, and further, desired that yearly confirmation be obtained from the Divisions/Complexes by 5th January every year on the information sought by CVC in their letter referred to above.

3. You are requested to instruct the concerned to comply with the instructions and forward the requisite information in the format enclosed at Annexure-I to Corporate 3 Office by 5th January every year (4th January in case 5th January happens to be a holiday) to facilitate us to furnish the necessary inputs to CVC through Corporate Vigilance.

(HAL/P&A/20(28)-2/VG/2003/677 dt 18 Oct 2003)

2.4 FESTIVAL GIFTS TO GOVERNMENT SERVANTS BY PSUs ETC.

Please refer to the Commissions letter No. 002/MSC/70 (Office Order No. 40/8/2003) dated 27th August, 2003 and 004/MSC/70 (Office Order No. 60/9/04) dated 22nd September, 2004 on the subject cited above.

2. The Commission once again reiterates its instructions issued vide the aforesaid office orders and emphasizes that the practice by PSUs etc. of sending gifts to Government servants on the occasion of festival and New Year be discouraged. All CVOs are requested to bring this to the notice of all concerned. They should furnish report on the expenditure incurred by them on festival gifts during this year in their Monthly and Annual reports to the Commission.’




A22:

Does the company’s anti-corruption policy include a statement on the giving and receipt of hospitality that ensures that such transactions are bona fide and not a subterfuge for bribery?

Score:

1

Comments:

Based on public information, there is evidence that the company has a policy for the receipt of hospitality, to ensure that such transactions are bona fide and not a subterfuge for bribery. Company officers must avoid accepting lavish or frequent hospitality from any individual or firm that they conduct activities with. Furthermore, as a gift is defined as any service or pecuniary advantage provided by a person other than a near relative or a personal friend that has no official dealings with the officer, the company’s rule that the Competent Authority must sanctions gifts worth more that Rs.1500 received by an officer or any of their family members, applies to hospitality. The company therefore scores 1. To score higher the company would need to provide evidence of a policy that explicitly applies to the giving of hospitality.

References:

Public:


‘XV. Gifts:

Save as otherwise provided in these rules, no officer of the Company shall accept or permit any member of his family or any other person acting on his behalf to accept any gift.

Explanation: The expression “Gift” shall include free transport, board, lodging or other service or any other pecuniary advantage when provided by any person other than a near relative or a personal friend having no official dealings with the officer.

Note:

(1) An officer of the Company shall avoid acceptance of lavish or frequent hospitality from any individual or firm having official dealings with him;

(2) On occasions such as weddings, anniversaries, funerals or religious functions, when the making of gifts is in conformity with the prevailing religious or social practices, an Officer of the Company may accept gifts from his near relatives but he shall make a report to the Competent Authority if the value of the gift exceeds Rs.4000/- in respect of Officers in


Grade-I; and Rs.7000/- in respect of Officers in Grade-II & above;

(3) On such occasions as are specified in Sub-rule (2), an Officer of the Company may accept gifts from his personal friends having no official dealings with him, but he shall make a report to the Competent Authority if the value of the gift exceeds Rs.4000/- in respect of Officer in Grade-I; and Rs.7000/- in respect of Officer in Grade-II & above;

(4) In any other case, an Officer of the Company shall not accept or permit any other member of his family or any other person acting on his behalf to accept any gifts without the sanction of the Competent Authority if the value thereof exceeds Rs.1500/-. Provided that when more than one gift is received from the same person / firm within a period of 12 months, the matter shall be reported to the Competent Authority if the aggregate value of the gifts exceed Rs.1500/-”.’

(p.36): ‘XVIII. Return of hospitality accepted from Foreign Missions :

Diplomats are specially paid to enable them to entertain local officials and that the local officer's capacity to return their hospitality is limited. There need not, therefore, be anything like a quid pro quo basis maintained in the matter of entertainment between diplomats and Company Officers.’

(p.37): ‘XX. Putting up or staying with Foreign Nationals as Guests:

a) Officers should not stay as guests with foreign diplomats in India or abroad, except with the permission of the Competent Authority.

b) Officers should not invite foreign diplomats to stay with them as their guests in India. Residential accommodation whether owned by the officer or allotted to him by the Company, where he actually resides, should not be let out or shared with foreign nationals/members of Diplomatic Mission and their employees, except with the approval of the Competent Authority.’

(p.38): ‘XXII. Acceptance of lifts in Aircraft belonging to foreign embassies in India to Foreign

Government abroad:

No officer should accept or permit his wife or dependent to accept passage money or free air transport from a Foreign Mission/Government Organization. Exceptional ca se s whe re humanitarian or Compassionate grounds are involved should be referred to the Corporate Office for grant of permission

There would, however, be no objection to the acceptance of the cost of passage when invited by foreign Governments and organizations to participate in conferences, seminars etc., if the invitation is extended to a particular official by name with a view to benefit from the expertise of the officer invited. Cases of such an invitation may be referred to Corporate Office for obtaining approval of the Ministry of Defence before acceptance. In other cases in which participation in conferences etc., is considered desirable in the interest of the officer concerned or the Division sponsoring his deputation, the cost of passage should continue to be met by the sponsoring Division.

Within a foreign country, an officer could accept a free flight in connection with his official duties only. When an officer and his family are in a foreign country as State Guests it would


be permissible for them to accept free flights from Foreign Governments.’


A23:

Does the company have a policy that explicitly prohibits facilitation payments?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company has a policy that explicitly prohibits facilitation payments.

References:

Public:

TI notes:

Purchase Manual (2013), p. 65:

‘8.8.7 Non-Involvement of Indian Agents

8.8.7.1 Following clause shall be incorporated in all enquiries, tenders, purchase orders,

contracts/ agreements:

8.8.7.2 “The seller confirms and declares to the buyer that the seller is the original

manufacturer/licensor/distributor/stockist/channel partner of the stores referred to in

this contract and has not engaged any individual or firm, whether Indian or foreign

whatsoever, to intercede, facilitate or in any way to recommend to HAL or any of its

functionaries, whether officially or unofficially, to the award of the contract to the

Seller; nor has any amount been paid, promised or intended to be paid to any such

individual or firm in respect of any such intercession, facilitation or recommendation. The

Seller agrees that if it is established at any time to the satisfaction of the Buyer that

the present declaration is in any way incorrect or if at a later stage it is discovered by

the Buyer that the Seller has engaged any such individual/firm, and paid or intended to

pay any amount, gift, reward, fees, commission or consideration to such person, party,

firm or institution, whether before or after the signing of this contract, the Seller will

be liable to fund that amount to the Buyer. The Seller will also be debarred from

entering into any supply Contract with HAL for a minimum period of five years. The Buyer

will also have a right to consider cancellation of the Contract either wholly or in part,


without any entitlement or compensation to the Seller who shall in such event be liable to

refund all payments made by the Buyer in terms of the Contract along with interest at

the rate of 2% per annum above LIBOR rate. The Buyer will also have the right to

recover any such amount from any contracts concluded earlier with HAL or Government

of India.”’


Integrity Pact:

‘5.2 The Bidder(s)/ Seller(s) will not instigate third persons to commit offences

outlined above or be an accessory to such offences.

Sheet: 2 of 6 5.3 Agents / Agency Commission:

The seller confirms and declares to the buyer that the seller is the original

manufacturer or authorized distributor / stockiest of original manufacturer or

Govt. Sponsored / Designated Export Agencies (applicable in case of countries

where domestic laws do not permit direct export by OEMS) of the stores referred

to in this offer / contract / Purchase order and has not engaged any individual or

firm, whether Indian or Foreign whatsoever, to intercede, facilitate or in any way

to recommend to Buyer or any of its functionaries, whether officially or

unofficially, to the award of the contract / purchase order to the Seller; nor has

any amount been paid, promised or intended to be paid to any such individual or

firm in respect of any such intercession, facilitation or recommendation. The

Seller agrees that if it is established at any time to the satisfaction of the Buyer

that the present declaration is in any way incorrect or if at a later stage it is

discovered by the Buyer that the Seller has engaged any such individual / firm,

and paid or intended to pay any amount, gift, reward, fees, commission or

consideration to such person, party, firm or institution, whether before or after

the signing of this contract / purchase order, the Seller will be liable to refund

that amount to the Buyer’



A24:

Does the company prohibit political contributions, or regulate such contributions in order to prevent undue influence or other corrupt intent? Does the company record and publicly disclose all political contributions?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company has a policy that prohibits or regulates political activities, in order to prevent undue influence or other corrupt intent. The company prohibits the personal political activities of its officers, but there is no evidence of similar prohibitions for corporate political contributions.

References:

Public:

TI notes:


‘V (A). Prohibition of political activities:

Officers are prohibited from:-

a) becoming an office-bearer of a political party or an organization which takes part in politics;

b) taking part in assisting in any manner in any movement/agitation or demonstration of a political nature;

c) taking part in an election to any legislature or local authority; &

d) canvassing in any election to any legislature or local authority.’


A25:

Does the company have a clear policy on engagement in lobbying activities, in order to prevent undue influence or other corrupt intent, and discloses the issues on which the company lobbies?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company has a clear policy on engagement in lobbying activities, in order to prevent undue influence or other corrupt intent, or discloses the issues on which it lobbies.

References:

Public:

NA


A25(a):

Does the company prohibit charitable contributions, or regulate such contributions in order to prevent undue influence or other corrupt intent?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company prohibits charitable contributions, or regulates such contributions in order to prevent undue influence or other corrupt intent.

References:

Public:

NA


A26:

Does the company provide written guidance to help Board members and

employees understand and implement the firm’s ethics and anti-corruption

agenda?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company provides written guidance to help board members and employees, understand and implement the company’s ethics and anti-corruption agenda.

References:

Public:

TI notes:

Code of Business Conduct and Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited:

www.hal-india.com/Common/Uploads/ContentTemplate/3_Down_HAL-CoC.pdf



A27:

Does the company have a training programme that explicitly covers anti-corruption?

Score:

2

Comments:

Based on public information, there is evidence that the company has an explicit anti-corruption module as part of its ethics and compliance training programme.

References:

Public:


The duties of the Chief Vigilance Officer include, ‘To ensure adequate training in anti-corruption measures are imparted to the officers and staff of the Department.

(p.26): Duties of the DGM/Chief Manager at Corporate Officer include to, ‘assist the CVO in the training of all the officers of the vigilance department including nominating them on Govt. and privately sponsored training programmes.

(p.36): Training for Vigilance Officials:

‘A yearly training programme will be prepared by the Corporate office for the Executives and staff separately. The training will be imparted to the staff centrally in the form of training capsules atleast twice a year. For the Executives, the Corporate Office will organize Workshops.

The Executives will be deputed to various training courses conducted by Government Institutes, CBI Academy, Central Forensic Science Laboratory, Central Detective Training School, and other training institutes of the State / Central Govt. Besides these Officers may be deputed to attend Seminars and Workshops organized by Universities/ private establishments.’

(p.98): ‘Vigilance Awareness programmes should be planned in the Action Plan periodically in co-ordination with the training department of the Divisions for both Executives and Non Executives.’



‘The Vigilance Department primarily focuses on Preventive and Punitive role. Another role is detective / surveillance. Preventive Vigilance is a pro-active approach, which looks at creating awareness and education on anti-corruption measure, simplification of rules and procedures, plugging loopholes in the system. Punitive vigilance deals with disciplinary action against the employees who have engaged in corrupt activities.’


Company website: Sampark a Vigilance Initiative to Connect ‘For the Vigilance Awareness Period 2010-2011, the emphasis of the Central Vigilance Commission (CVC) is on increasing awareness. In line with CVC's stress on Preventive Vigilance and increasing awareness, Team Vigilance, HAL has conceptualized SAMPARK, our new Preventive Vigilance initiative. Team Vigilance will SAMPARK you in your Divisions with specific inputs on various sensitive areas and share with you, insights gained over the years.

The attempt in SAMPARK is to deal with issues from a comprehensive and macro perspective based on all round experience gained from a plethora of cases company wide.

The Vigilance Department led by the Chief Vigilance Officer himself would bring SAMPARK to your Divisions' doorsteps and interact as well as connect with you in this endeavour to improve transparency and fair play in all our dealings. The focus is on real time issues that an average executive encounters in his day to day official life. The emphasis is on Vigilance issues from an executive's point of view and not on theoretical construct of Vigilance or its ethical dimensions.

SAMPARK endeavours to make Executives self sufficient in matters of Vigilance and thereby empower them to work effectively and efficiently, without misplaced fear of punitive Vigilance action.

A 2 Hour presentation by experienced and Senior Vigilance functionaries on main issues of concern like Procurement and Outsourcing, Personal Vigilance and Rationale in Decision Making, Recruitment and Works etc will be made. The presentation covers the problem areas in the topics mentioned based on actual Vigilance Cases. The CVO would himself steer, monitor and moderate the proceedings which will be followed by an open house question and answer session.

The Question and Answer Session is aimed at addressing the pertinent situations focused on the issues at hand. Vigilance Department appeals to all its fellow employees to raise queries specific to the issues of discussion at the end of the presentation on all topics to make SAMPARK truly rewarding for all concerned.’ http://www.hal-india.com/about-sampark.asp


http://www.hal-india.com/about-sampark.asp


A28:

Is anti-corruption training provided in all countries where the company operates or has company sites?

Score:

1

Comments:

Based on public information, there is evidence that company divisions receive Vigilance Awareness programmes and training, which includes education on anti-corruption measures. The company therefore scores 1. To score higher the company would need to provide evidence that this anti-corruption training is provided to all company employees.

References:

Public:


The duties of the Chief Vigilance Officer include, ‘To ensure adequate training in anti-corruption measures are imparted to the officers and staff of the Department.

(p.26): Duties of the DGM/Chief Manager at Corporate Officer include to, ‘assist the CVO in the training of all the officers of the vigilance department including nominating them on Govt. and privately sponsored training programmes.

(p.36): Training for Vigilance Officials:


The Executives will be deputed to various training courses conducted by Government Institutes, CBI Academy, Central Forensic Science Laboratory, Central Detective Training School, and other training institutes of the State / Central Govt. Besides these Officers may be deputed to attend Seminars and Workshops organized by Universities/ private establishments.’

(p.98): ‘Vigilance Awareness programmes should be planned in the Action Plan


periodically in co-ordination with the training department of the Divisions for both Executives and Non Executives.’













A29:

Does the company provide targeted anti-corruption training to members of the Board?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company provides targeted anti-corruption training to Board members.

References:

Public:

TI notes:


Training for Vigilance Officials:


Code of Business Conduct and Ethics for Board Members and Senior Management at Hindustan Aeronautics Limited (January 2008), p.14:

‘7.3.3 Annual Compliance Reporting :

All Board Members and Senior Management shall affirm compliance of this Code within 30 days of close of every financial year. A proforma of Annual Compliance Report is at

Appendix – II”. The Annual Compliance Report shall be forwarded to the Company Secretary. If any Director leaves the Company any time during a financial year, he shall send

a communication to Company Secretary affirming compliance of the Code till the date of his/her association with HAL.

(p.15):

‘Appendix II

HINDUSTAN AERONAUTICS LIMITED

CODE OF CONDUCT FOR BAORD MEMBERS


& SENIOR MANAGEMENT

ANNUAL COMPLIANCE REPORT*

I, …………………………………………………………………. do hereby solemnly

affirm that to the best of my knowledge and belief, I have fully complied with the

provisions of the “Code of Business Conduct and Ethics for Board Members and

Senior Management of HAL” during the financial year ending 31st March, 200__.

(Signature)

Name :______________________

Designation : ______________________

Date :

Place :

* To be submitted by 30th April each year’

Annual Vigilance Sensitisation Lecture Series:

http://www.hal-india.com/Annual%20Vigilance%20Sensitisation%20Lecture%20series/M__50




A30:

Does the company provide tailored ethics and anti-corruption training for employees in sensitive positions?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company provides tailored ethics and anti-corruption training for employees in sensitive positions.

References:

Public:

TI notes:

Company website, Vigilance Department:


http://www.hal-india.com/About%20Us/M__39

Annual Vigilance Sensitisation Lecture Series:








A31:

Does the company have a clear and formal process by which employees declare conflicts of interest?

Score:

0

Comments:

Based on public information, there is no readily available evidence of a clear and formal process by which employees declare conflicts of interest. Officers must inform their management through a section/departmental head, about employment of their near relatives in firms with which the company conducts business activities. However, there is no evidence that this declaration is conducted formally and in writing, or that it applies to other conflicts of interest.

References:

Public:

TI notes:





iii) No officer shall in the discharge of his official duties deal with any matter or give or sanction any contract to any company or firm or any other person if any member of his family is employed in that Company or firm or under that person or if he or any member of his family is interested in such matter or contract in any other manner and the officer shall


refer every such matter or contract to his official superior and the matter or the contract shall thereafter be disposed of according to the instructions of the authority to whom the reference is made.

Note: Employees should inform their respective Divisional/Office management through their Section/Departmental Head about employment of their near relatives (viz. father, mother, spouse, children including step children, brother, sister) in the firms with which the Division/Office of HAL have business dealing. This is with a view to protect the interest of the company and ensure that the concerned Division/Office enters into a fair and proper business/ transaction with such firms.’


A32:

Is the company explicit in its commitment to apply disciplinary procedures to employees, Directors and Board members found to have engaged in corrupt activities?

Score:

2

Comments:

Based on public information, there is evidence that the company has an explicit policy to apply disciplinary procedures to employees and Board members who have violated the company’s rules and Code of Ethics.

References:

Public:

HAL Conduct, Discipline and Appeal rules (1984), p.4:

‘RULE 4

Code of Conduct :

i) Every officer of the Company shall at all times-

a) maintain absolute integrity;

b) maintain devotion to duty; and

c) do nothing which is unbecoming of an officer of the Company or any act which may bring disrepute to the Company.

ii) Every officer of the Company shall take all possible steps to ensure the integrity and devotion to duty of all employees for the time being under his control and authority.

iii) Rules that are to be followed by officers in respect of specific matters/ transactions such as sale/purchase of property, gifts, contacts with foreign national etc., are stipulated in Schedule-I. Breach of any of these rules would be deemed as misconduct and the officers who violate these provisions are liable for disciplinary action in accordance with the provisions contained in these rules.’

(p. 16): ‘Rule 13

Procedure for imposing punishment on Govt. employees on deputation:

Except in the case of officers on deputation who are appointed by the President of India and


Armed Forces Personnel, Chairman has powers to initiate disciplinary action and also place officers under suspension. Whenever an officer on Deputation is placed under suspension, the parent department of the officer should forthwith be informed explaining the circumstances leading to the order of suspension or commencement of disciplinary proceedings, as the case may be.’

http://www.hal-india.com/Common/Uploads/DMS/CDA-Rules-Booklet.pdf

Vigilance Manual, Vol. 2, pp. 9-10:

‘With the introduction of the HAL CDA Rules, with effect from 1st September 1984,

all Officers in Grade I and above in the Company are governed by the said Rules (as

amended from time to time). However other employees (in workmen cadre), working in

Corporate Office, Liaison Offices, Staff College who are not covered by the Standing

Orders, continue to be governed by the HAL Conduct Rules and HAL Disciplinary Action

Rules 1967.’

‘The matters relating to Conduct and Discipline of employees of HAL are,

accordingly dealt with under the respective Rules/Certified Standing Orders.4

HAL CDA Rules also apply to Officers on contract service and Govt. employees

on deputation other than those appointed by the President of India and Armed Services

personnel.

HAL CDA Rules 1984 contains, inter alia,

a. Code of conduct- Rule 4 read with schedule - I

b. Act which would be deemed to be misconduct - Rule 5

Any breach of Code of conduct as stipulated in Rule 4(read with schedule I) or

commission of misconduct as stipulated in Rule 5 would make the employee liable to

disciplinary action as per the procedure prescribed in Schedule II.’

http://www.hal-india.com/Common/Uploads/DMS/VigManual-2.pdf

Code of Business Conduct and Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited (January 2008), pp. 12-13:

‘7.3.2 Treat Violations of this code as inconsistent association with the organization.

Adherence of professionals to a code of ethics is largely and generally a voluntary matter. However, if any of Board Members and Senior Management does not follow this Code, the matter would be reviewed by the Board and its decision shall be final. The Company reserves the right to take appropriate action against the defaulter.’


Vigilence Manual Vol-1, p.25:

‘The CVO will assess the performance of the Vigilance officers in the capacity of Initiating Authority/Reviewing Authority as the case may be and would be responsible for the general administration (including detailing for training, transfer/job rotation,

http://www.hal-india.com/Common/Uploads/DMS/CDA-Rules-Booklet.pdf

http://www.hal-india.com/Common/Uploads/DMS/VigManual-2.pdf



promotion, sanction of leave, disciplinary action etc) of the Vigilance officers and workmen in the Divisions and Corporate Office.’

(p.26): ‘He will follow up the cases pending for disciplinary actions in the divisions with the divisional HOD’s.’

‘He will be responsible for anti-corruption work including investigations of Corporate Office and Management Academy and study of investigation reports received from Divisions and take action as per laid down rules for disciplinary action.’

(p.33): ‘Non cooperation/obstruction to Vigilance Officials in discharge of their duties by any employee of the Company would be deemed as misconduct and liable for disciplinary action as per the Rules of the Company.’

(p.60): ‘To ensure that the disciplinary authority concerned, issues a speaking order, while imposing a punishment on the delinquent employee. The order to be issued by the disciplinary authority should show that the disciplinary authority had applied its mind and exercised its independent judgment’.

Conduct, Discipline and Appeal Rules – 1984 (September 2013), p.5:

‘Rules that are to be followed by officers in respect of specific matters/ transactions such as sale/purchase of property, gifts, contacts with foreign national etc., are stipulated in Schedule-I. Breach of any of these rules would be deemed as misconduct and the officers who violate these provisions are liable for disciplinary action in accordance with the provisions contained in these rules.’

(pp.6-7): ‘Further, the following acts would be deemed to be misconduct and officer committing such acts would be liable to disciplinary action:’

‘Accepting or offering any illegal gratification or indulging in any corrupt practice;’

(pp.12-13): ‘Treat Violations of this code as inconsistent association with the organization.

Adherence of professionals to a code of ethics is largely and generally a voluntary matter. However, if any of Board Members and Senior Management does not follow this Code, the matter would be reviewed by the Board and its decision shall be final. The Company reserves the right to take appropriate action against the defaulter.’


‘The Company believes in the conduct of the affairs of its constituents in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behaviour. Towards this end, the Company has adopted the Code of Conduct (‘the Code’), which lays down the principles and standards that should govern the actions of the Company and its employees. Any potential violation of “the Code”, however insignificant or perceived, as such would be a matter of serious concern for the Company.’


Company website, Vigilance:

‘The Vigilance Department primarily focuses on Preventive and Punitive role. Another role is detective / surveillance. Preventive Vigilance is a pro-active approach, which looks at creating awareness and education on anti-corruption measure, simplification of rules and procedures, plugging loopholes in the system. Punitive vigilance deals with disciplinary action against the employees who have engaged in corrupt activities.

The major work profile of the Department comprises investigation of complaints, preventive vigilance like surprise inspections, regular scrutiny of procurement and contracts files and carrying out CTE type inspections, etc.’




A33:

Does the company have multiple, well-publicised channels that are easily accessible and secure, to guarantee confidentiality or anonymity where requested by the employee (e.g. web, phone, in person), to report concerns or instances of suspected corrupt activity?

Score:

1

Comments:

Based on public information, there is evidence that the company has multiple channels for employees to report concerns or instances of suspected corrupt activity. Channels include the Chairman of the Audit Committee, the Director of Human Resources, the Head of Systems Audit, the Vigilance Department, and the CVC. The company therefore scores 1. To score higher the company would need to provide evidence that employees are able to report anonymously.

References:

Public:

Company website, Online Complaint:

‘As per Central Vigilance Commission guidelines, no action will be taken on Anonymous / Pseudonymous Petition / Complaints.

We request you to post your Complaint in the Vigilance Complaint Form only to address serious issues for which you would like the intervention of the Vigilance department of the Company. Please do not use this particular forum to address any other queries.

Upon receipt of complaint, verification will be done to ascertain whether Vigilance angle exists in the complaint or not and complaint will be processed only if there is a Vigilance angle. Hence, complaints having clear cut Vigilance angle can only be addressed.

For faster processing of the complaint, it is suggested that Complainant may provide his/her E-mail ID in the field mentioned in the Complaint Form.

Please be sure that your matter merits the attention of the Vigilance Department. If so,


please Click here to submit your Complaint. and Check online Complaint status’

http://www.hal-india.com/Online%20Complaint/M__51

Whistleblower Policy (July 2010), pp.5-6:

‘10. All Protected Disclosures concerning operational management should be addressed to the Chairman of the Audit Committee / Director (HR) / Head of Systems Audit of the Company for investigation.

11. In respect of all other Protected Disclosures, those concerning the employees at the levels of Functional Directors and Chairman should be addressed to the Chairman of the Audit Committee, the Officers at the level of Grade-IX & X should be addressed to the Director (HR) and other Officers up to the level of Grade-VIII should be addressed to the Director (HR) / Head of Systems Audit, Corporate Office.

12. The particulars of Chairman of the Audit Committee are as under : -

Shri AJAY SHANKARC-1/19, Bapa Nagar NEW DELHI

Address of the Director (HR)

Director (HR)

Hindustan Aeronautics Ltd.,

15/1, Cubbon Road

BANGALORE – 560 001.

Address of the Head of Systems Audit :-

Head of Systems Audit

Hindustan Aeronautics Limited

Corporate Office

15/1, Cubbon Road


13. Protected Disclosures should preferably be reported in writing so as to ensure a clear understanding of the issues raised and should either be typed or written in legible handwriting.

14. The protected Disclosure should be forwarded under a covering letter which shall bear the identity of the Whistle Blower. The Chairman of the Audit Committee / Director (HR) / Head of Systems Audit as the case may be, shall detach the covering letter and forward only the Protected Disclosure to the Investigators for investigation within 30 days from the date of its receipt.

15. Protected Disclosures should be factual and have prima facie evidence / proof, not speculative or in the nature of a conclusion and should contain as much specific information as possible to allow for proper assessment of the nature and extent of the concern.

16. Anonymous petitions will not be entertained whatsoever.’

CVC – Important Features of the “Whistle-Blowers” Resolution, p.1:

‘The CVC shall, as the Designated Agency, receive written complaints or disclosure on any allegation of corruption or of mis-use of office by any employee of the Central Government

http://www.hal-india.com/Online%20Complaint/M__51


or of any corporation established under any Central Act, government companies, societies or local authorities owned or controlled by the Central Government.’

‘The designated agency will ascertain the identity of the complainant; if the complainant is anonymous, it shall not take any action in the matter.’

http://www.hal-india.com/vigilance/CVCWhistleBlower/Features.pdf

CVC Office Order, Press Release and Public Notice (May 2004), p.1:

‘The Government of India has authorised the Central Vigilance Commission (CVC) as the ‘Designated Agency’ to receive written complaints for disclosure on any allegation of corruption or misuse of office and recommend appropriate action.’

‘All CVOs are further required to take the following actions with respect to the complaints forwarded by the Commission under this Resolution:

(i) All the relevant papers/documents with respect to the matter raised in the complaint should be obtained by the CVO and investigation into the complaint should be commenced immediately. The investigation report should be submitted to the Commission within two weeks.

(ii) The CVO is to ensure that no punitive action is taken by any concerned Administrative authority against any person on perceived reasons/ suspicion of being “whistle blower.”

(iii) Subsequent to the receipt of Commission’s directions to undertake any disciplinary action based on such complaints, the CVO has to follow up and confirm compliance of further action by the DA and keep the Commission informed of delay, if any.

(iv) Contents of this order may be brought to the notice of Secy./CEO/

http://hal-india.com/vigilance/CVCWhistleBlower/office%20order_press%20release_public%20notice.pdf


‘1. As per Central Vigilance Commission guidelines, no action will be taken on Anonymous / Pseudonymous Petition / Complaints.

2. We request you to post your Complaint in the Vigilance Complaint Form only to address serious issues for which you would like the intervention of the Vigilance department of the Company. Please do not use this particular forum to address any other queries.

3. Upon receipt of complaint, verification will be done to ascertain whether Vigilance angle exists in the complaint or not and complaint will be processed only if there is a Vigilance angle. Hence, complaints having clear cut Vigilance angle can only be addressed.

4. For faster processing of the complaint, it is suggested that Complainant may provide his/her E-mail ID in the field mentioned in the Complaint Form.

5. Please be sure that your matter merits the attention of the Vigilance Department. If so, please Click here to submit your Complaint.’

http://www.hal-india.com/Pre-vigonline.asp







A33(a):

Are the whistleblowing channels available to all employees in all geographies?

Score:

2

Comments:

Based on public information, there is evidence that whistleblowing channels are available across geographies, to all employees. Channels include the Vigilance Department and the CVC.

References:

Public:







Director (HR)


15/1, Cubbon Road





Corporate Office


15/1, Cubbon Road


13. Protected Disclosures should preferably be reported in writing so as to ensure a clear understanding of the issues raised and should either be typed or written in legible handwriting.

14. The protected Disclosure should be forwarded under a covering letter which shall bear the identity of the Whistle Blower. The Chairman of the Audit Committee / Director (HR) / Head of Systems Audit as the case may be, shall detach the covering letter and forward only the Protected Disclosure to the Investigators for investigation within 30 days from the date of its receipt.

15. Protected Disclosures should be factual and have prima facie evidence / proof, not speculative or in the nature of a conclusion and should contain as much specific information as possible to allow for proper assessment of the nature and extent of the concern.

16. Anonymous petitions will not be entertained whatsoever.’

CVC – Important Features of the “Whistle-Blowers” Resolution, p.1:

‘The CVC shall, as the Designated Agency, receive written complaints or disclosure on any allegation of corruption or of mis-use of office by any employee of the Central Government or of any corporation established under any Central Act, government companies, societies or local authorities owned or controlled by the Central Government.’

‘The designated agency will ascertain the identity of the complainant; if the complainant is anonymous, it shall not take any action in the matter.’

CVC Office Order, Press Release and Public Notice (May 2004), p.1:

‘The Government of India has authorised the Central Vigilance Commission (CVC) as the ‘Designated Agency’ to receive written complaints for disclosure on any allegation of corruption or misuse of office and recommend appropriate action.’

‘All CVOs are further required to take the following actions with respect to the complaints forwarded by the Commission under this Resolution:

(i) All the relevant papers/documents with respect to the matter raised in the complaint should be obtained by the CVO and investigation into the complaint should be commenced immediately. The investigation report should be submitted to the Commission within two weeks.

(ii) The CVO is to ensure that no punitive action is taken by any concerned Administrative authority against any person on perceived reasons/ suspicion of being “whistle blower.”

(iii) Subsequent to the receipt of Commission’s directions to undertake any disciplinary action based on such complaints, the CVO has to follow up and confirm compliance of further action by the DA and keep the Commission informed of delay, if any.

(iv) Contents of this order may be brought to the notice of Secy./CEO/


‘1. As per Central Vigilance Commission guidelines, no action will be taken on Anonymous /


Pseudonymous Petition / Complaints.

2. We request you to post your Complaint in the Vigilance Complaint Form only to address serious issues for which you would like the intervention of the Vigilance department of the Company. Please do not use this particular forum to address any other queries.

3. Upon receipt of complaint, verification will be done to ascertain whether Vigilance angle exists in the complaint or not and complaint will be processed only if there is a Vigilance angle. Hence, complaints having clear cut Vigilance angle can only be addressed.

4. For faster processing of the complaint, it is suggested that Complainant may provide his/her E-mail ID in the field mentioned in the Complaint Form.

5. Please be sure that your matter merits the attention of the Vigilance Department. If so, please Click here to submit your Complaint.’




A33(b):

Does the company have formal and comprehensive mechanisms to assure itself that whistleblowing by employees is not deterred, and that whistleblowers are treated supportively?

Score:

0

Comments:

Based on public information, there is no readily available evidence that the company has formal and comprehensive mechanisms, such as analysis of reporting channel usage statistics or follow up with individual whistleblowers, to assure itself that whistleblowing by employees is not deterred, or that whistleblowers are treated supportively.

References:

Public:

NA


A34:

Does the company have well-publicised resources available to all employees where help and advice can be sought on corruption-related issues?

Score:

2

Comments:

Based on public information, there is evidence that the company has well-publicised resources available to all employees where help and advice can be sought on corruption-related issues. These resources include the Chairman of the Audit Committee, the Director of Human Resources and vigilance officers posted throughout the company’s divisions.

References:

Public:







Director (HR)


15/1, Cubbon Road






Corporate Office

15/1, Cubbon Road

BANGALORE – 560 001.’


Citizens Charter

‘Helpline :

(i) All our Divisions, Service Stations and Corporate Office are committed

to provide all assistance in the selection, design, manufacture and

maintenance of our products and services.

(ii) We shall equip our public relations department shall render necessary

information which are of common interest.

(iii) You are also welcome to visit us at our website www.hal-india.com for

immediate help and assistance to meet your product and service requirement.

(iv) A network of help line personnel has been identified in each

Division/Complex, which will provide immediate assistance in various matters.’

(p.23):

‘All the Vigilance Officers of the Department are adequately trained to

understand, implement and guide the subordinate staff in the implementation of the

Quality Standards as per the laid down procedures. They are also trained as

Qualified Internal Auditors to carry out Internal Audit periodically of each and every

Complex /Division Vigilance Unit to ensure that the Quality Management Procedures

are properly implemented.’

(p.28): ‘Duties of Heads of Departments of Vigilance Department in the Divisions

(i) He will be responsible for all the Vigilance matters of the Division

(ii) He will maintain and supervise the functioning and discipline of his Department.’

(p.34): ‘The Chief Vigilance Officer and the Vigilance Officials (posted in the Complex/Division) are the extended arms of the Central Vigilance Commission and are duty bound to implement the anti-corruption measures of the Government in HAL, completely and effectively.

(a) All vigilance officials will have unrestricted access (including their official vehicles) to any location in the factories/departments/hangars/Complex/Divisions/Office and their premises, Estate including buildings/ shops/establishments/welfare units/township/residential Quarters/ sports & entertainment amenities, ancillary units/liaison offices/RM Offices/Guest Houses etc., at any time for carrying out Vigilance work.


(b) All Vigilance Officials are empowered to seize records/ documents/files/information (contained in any electronic storage device in any form)/articles, for the purpose of vigilance investigation;

(c) All Vigilance Officials are empowered to examine employees of HAL for vigilance enquiries/investigation, record their statement, obtain their signature on such statements/obtain their signature samples etc.’


A35:

Is there a commitment to non-retaliation for bona fide reporting of corruption?

Score:

1

Comments:

Based on public information, there is evidence that the company has a non-retaliation policy for bona fide reporting of corruption. The company therefore scores 1. To score higher the company would need to provide evidence that disciplinary measures are applied to employees who breach this policy.

References:

Public:


‘While it will be ensured that genuine Whistle Blowers are accorded complete protection from any kind of unfair treatment as herein set out, any abuse of this protection will warrant disciplinary action.

a) Protection under this Policy would not mean protection from disciplinary action arising out of false or bogus allegations made by a Whistle Blower knowing it to be false or bogus or with a mala fide intention.

b) Whistle Blowers, who make any Protected Disclosures, which have been subsequently found to be mala fide or malicious or Whistle Blowers who make three or more Protected Disclosures, which have been subsequently found to be frivolous, baseless or reported otherwise than in good faith, will be disqualified from reporting further Protected Disclosures under this Policy.’

(p.8): ‘Protection

29. No unfair treatment will be meted out to a Whistle Blower by virtue of his/her having reported a Protected Disclosure under this policy.

30. The Company, as a policy, condemns any kind of discrimination, harassment, victimization or any other unfair employment practice being adopted against Whistle Blowers. Complete protection will, therefore, be given to Whistle Blowers against any unfair practice like retaliation, threat or intimidation of termination / suspension of service, disciplinary action, transfer, demotion, refusal of promotion, or the like including any direct


or indirect use of authority to obstruct the Whistle Blower’s right to continue to perform his duties / functions including making further Protected Disclosure. The Company will take steps to minimize difficulties, which the Whistle Blower may experience as a result of making the Protected Disclosure.

31. A Whistle Blower may report any violation of the above clause to the Chairman of the Audit Committee, who shall investigate into the same and recommend suitable action to the Management.

32. The identity of the Whistle Blower shall be kept confidential to the extent possible and permitted under law.

33. Any other Employee assisting in the said investigation shall also be protected to the same extent as the Whistle Blower.’

(p.6):

‘36. Investigations will be launched only after a preliminary review by the Chairman of the Audit Committee or Director (HR) or Head of Systems Audit, as the case may be, which

establishes that :-

i. the alleged act constitutes an improper or unethical activity or conduct, and

ii. the allegation is supported by information specific enough to be investigated or in cases where the allegation is not supported by specific information, it is felt that the concerned matter is worthy of management review. Provided that such investigation should not be

undertaken as an investigation of an improper or unethical activity or conduct.’


Information Sources:

Company Website:

http://www.hal-india.com/

Annual Report 2012 – 2013:


Code of Business Conduct & Ethics for Board Members and Senior Management of Hindustan Aeronautics Limited (January 2008):


Conduct, Discipline and Appeal Rules – 1984 (September 2013):


CVC – Important Features of the “Whistle-Blowers” Resolution:


CVC Office Order, Press Release and Public Notice (May 2004):


Marg Darshan Vigilance Magazine – HAL’s Anti-Corruption Strategy, Vol IX Issue No. 1 (April 2012):


Marg Darshan Vigilance Magazine – Facets of Vigilance, Vol IX Issue No. 2 (October 2012):


Marg Darshan Vigilance Magazine – Vol X Issue No. 1, (April 2013):

http://www.hal-india.com/














Marg Darshan Vigilance Magazine – Promoting Good Governance in HAL, Vol X Issue No. 2 (October 2013):


Marg Darshan Vigilance Magazine – Promoting Good Governance in HAL, Vol XI Issue No. 1 (April 2014):


Organisation Chart


Purchase Manual – Issue 3 (2013):


Transparency in Public Procurement (2012):


Vigilance Awareness Week 2013 Photos:


Vigilance Manual Vol-I:


Vigilance Manual Vol-2:


Vigilance Manual Vol- 4:


















Whistleblower Policy (July 2010):




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