PSU execs joining pvt firms right after retirement face Rs 10 L fine
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Heads of state-run firms who join private companies before the end of their post-retirement cooling-off period now face fines of at least Rs 10 lakh. All PSU chiefs and functional directors will be required to sign bonds undertaking to comply with government rules on post-retirement employment.
The Department of Public Enterprises, the nodal agency for all central PSUs, has mandated a year's cooling-off for functional directors and chairmen of PSUs before taking up employment with a private firm in the same line of business, or with which they have had business relations.
The rule has, however, been flouted, among others by a former chairman and managing director of BHEL, who joined private sector rival Larsen & Toubro immediately after retirement, though with a designation that suggested that he was working in a different business vertical.
The DPE, after consulting the Central Vigilance Commission, has now directed that officials must undertake to abide by the rules or forgo retirement benefits. Flouting the conditions of the bond will attract a penalty equal to six months' last basic pay along with interest on government loans, or Rs 10 lakh, whichever is higher.
"Private firms tend to employ serving and retired PSU officials not only for their experience and understanding of the sector but also for their contacts in the bureaucracy. Over the past few years, we have found several instances of PSU executives joining the private sector right after retirement," an official said.