Central public sector enterprises (CPSEs) chiefs and directors joining private firms during the one-year cooling-off period after retirement will have to pay a penalty of at least Rs 10 lakh, according to new rules.

The Department of Public Enterprises (DPE) has created this model bond after consultations with the Central Vigilance Commission and Ministry of Law and Justice.

The DPE also asked all administrative ministries/ departments to direct CPSEs, under their control, to take immediate action to execute the model bond in their companies.

All chairman-and-managing directors, managing directors and functional directors of CPSEs will be required to sign bonds undertaking to comply with the Department of Public Enterprises (DPE) rules on post-retirement, the document said.

“If the obligor accepts any appointment in a company within one year from the date of his retirement without government’s prior approval, he will have to pay the penalty,” it said.

Not abiding by the conditions of the bond will attract a penalty equivalent to the basic pay drawn during the last six months along with interest or Rs 10 lakh penalty, which ever is higher, it added.

The DPE, however, said that if the obligor fails to pay the bond amount, the CPSE will be at liberty to initiate appropriate civil action for recovery of the bond amount.

The document said the department has found a number of instances of CPSE executives joining the private companies after their retirement. Therefore, the model bond has been created.

As on March 2011, there were 248 CPSEs in the country.

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