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| Vol. 4, Issue 5 May 2012 |
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Perspectives |
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Politics |
Wading through the Slush Funds
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| The only ways out of the mire of business and politics are transparency and exemplary white-collar punishment |
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Published : 1 January 2011 |
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KRISHNENDU HALDER / REUTERS |
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| From production to lobbying, scandal must be addressed.
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| T |
HE NEXUS BETWEEN BIG BUSINESS and politics is
neither new nor unique to India. But what the recent
disclosure of recordings of phone conversations
involving corporate lobbyist Niira Radia exposes
is the range of this relationship’s perniciousness and
how it has corrupted the nation’s body politic. On one level,
the leaked recordings are all about the |
massive undervaluation and misallocation of the precious electromagnetic spectrum used by mobile telecommunications companies; on another, they are about ministerial appointments being influenced by corporate interests.
The revelations, together with the spectrum scandal, paralysed
the winter session of Parliament for three weeks as
the United Progressive Alliance (UPA) government refused
point-blank to accede to the Opposition’s demands to set up
a Joint Parliamentary Committee to probe the scandal. The
government put up a brave face when the Supreme Court
decided to monitor the investigations, led by the Central Bureau
of Investigation (CBI), but its representatives privately
admitted that the episode had tarnished the image of not just
the government but of Prime Minister Manmohan Singh as well. The latter’s had never before been in such doubt.
The focus of the scandal shifted to the prime minister
when former Union Minister for Communications and Information
Technology Andimuthu Raja put in his papers,
however reluctantly. Since Raja’s transgressions are in little
doubt, the issue now is why the prime minister had chosen
to ‘overlook’ them even as that redoubtable minister went
about selling nearly 40 billion dollars worth of spectrum
down the river.
It’s such an unbelievable sum that the ‘spectrum scandal’
has put a big dent in the globally-vaunted story of the Great
Indian Telecom Revolution. The 25 November issue of The
Economist had an editorial that stated that telecom licences
were sold in an “underhand and chaotic way,” and went
on to criticise the prime minister, who, it said, “is generally
seen as a saintly technocrat floating above the fray, [but
whose name now] has been dragged down into the muck.”
The problem for the UPA lies in the swiftness both of its
perceived moral decline and in the potential for an electoral
reprisal. It has been less than two years after it returned
to power in May 2009 with a bigger majority than it had after
the 2004 general elections, but the second UPA regime
already appears beleaguered, fighting with its back to the
wall to ward off accusations that it turned a blind eye to
corruption and crony capitalism.
It’s not just that the business-politics nexus is out starkly
in the open, with corporate captains openly airing charges
against each other—witness, for instance, the public exchange
of letters between Rajeev Chandrashekhar, former
president of the Federation of Indian Chambers of Commerce
and Industry, and Ratan Tata, heads of one of the
largest private corporate conglomerates in the country: the
other new dimension to the scandal was the revelation that
media ‘personalities’ were assisting lobbyists and fixers.
That rogue stockbrokers like Ketan Parekh and the late
Harshad Mehta spent time behind bars were rare events. A
politician who pays the same price is even rarer—such as
Sukh Ram, former Union Telecommunications Minister,
sentenced in 2009 to three years after being found guilty of
“being part of a criminal conspiracy to defraud the exchequer.”
The punishment had been long in coming: Sukh Ram
had made it to The Guinness Book of Records 13 years earlier
after the CBI seized more than 30 million rupees from his
pooja room.
The US is stricter with white-collar felons. In 2009,
Bernard Madoff was incarcerated for turning his wealth
management business into Ponzi schemes and defrauding
thousands of investors of billions of dollars. He had been
lauded as a financial expert and had served as non-executive
chairman of NASDAQ. In 2005, Martha Stewart, magnate,
publisher and television host, served five months in prison after being convicted for lying to people who had
invested in companies she controlled. Kenneth Lay and
Jeffrey Skilling, both senior Enron executives, were given
long prison terms, joining in penal luxury other financial
criminals such as Dennis Kozlowski of Tyco and Bernie
Ebbers of WorldCom.
But white collar crime in India remains more or less spotless.
The country’s criminal justice system favours the rich
and the well-connected. As the Radia conversations reveal,
corporate captains here routinely engage the services of
‘image managers’ and ‘public relations professionals’ to lobby
with bureaucrats, ministers and Members of Parliament
(MPs) to change a line or two in the fine-print of policy documents,
which can translate into huge profits.
Then, again, Indian politics’ synergy with industry goes
back a long way. During the Independence movement, Gandhi
made no effort—and probably saw no reason—to conceal
his close relationships with a number of ‘nationalist’ industrialists
such as Ghanshyam Das Birla (in whose house he
was assassinated), Jamnalal Bajaj and Kasturbhai Lalbhai
(who acted as a treasurer of the Congress party). Under Indira
Gandhi’s leadership of the Congress, the character of
the nexus changed as ruling politicians reduced their dependence
on ‘donations’ from businesspersons and increasingly
began deploying the ‘services’ of ‘loyal’ bureaucrats
and heads of public sector undertakings. When the licence-control
raj was at its peak, quotas and permits were quid
pro quo for big contributions, especially towards election
campaigns. The late Dhirubhai Ambani was one entrepreneur
who, in corporatespeak, ‘managed the environment’
rather well. After Indira Gandhi returned to power in the
1980 general elections, he openly shared a platform with
her at a victory rally.
But perhaps what’s changed since then is that businesspersons
don’t just want to influence politics, they want to
do politics, if necessary by becoming MPs. Since that grail
is promised and delivered only to a chosen few, the next
best things are slush-funding elections and getting their
kind of politician appointed to their kind of post. Depending
for transparency—the only measure that will end this
corruption—on tapped phone conversations leaked to the
media is poor replacement for the institutional repairwork
needed to stem the rot.
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