Business

And You, Mister CMD?

The corporates' admonitory letter elicits some arch responses

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And You, Mister CMD?
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Reading Between Lines

  • Admits corruption isn’t accident, but part of the design
  • All groups can jointly combat graft, crony capitalism
  • Too much public anger to ignore matters; India Inc feels threatened by environmental activism

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After a couple of weeks of quiet deliberation, some of liberalisation’s finest children threw a calibrated fit around the middle of January. Fourteen industrialists and professionals—many of whom have made good during India’s transition to a globally-oriented marketplace from an insular one—told political leaders in an open letter that it was time for a good hard look at “the widespread governance deficit”. They didn’t quite call India a banana republic, but the missive wasn’t encouraging, focusing on corruption, discretionary decision-making, political “disruption” in a coalition “era”, and “impediments to development” like environmental regulations.

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The fourteen are being described as the Third Bombay Club, a version of the two earlier groups of Indian businessmen, the first of which wanted post-Independence India to pursue ‘inclusive’ policies, and the second that wanted slower reforms until Indian industry caught up with its developed-country counterparts. The new grouping is also being called India’s own “G-14”, akin to a powerful international group of countries, that wants to shake up a nation caught napping between repeated corruption scandals.

In theory, though, neither analogy works. The Bombay Club-III or India’s G-14 hardly wants to go back in time, nor are they as powerful. Rather, according to journalist and film-maker Paranjoy Guha Thakurta, they’re more like frightened beneficiaries of discretionary power, suddenly coming to terms with reality and their own powerlessness, much like an ordinary Indian citizen. “The letter has been sent by people who include a number of corporate leaders who have been the biggest beneficiaries of economic liberalisation. If today they are concerned about Lok Ayuktas (anti-corruption ombudsmen in states) and state misuse of power, just imagine how terrible the situation is for ordinary citizens,” says Guha Thakurta.

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Guha Thakurta’s recent documentary on Bellary’s Reddy brothers—mining magnates on Karnataka’s border with Andhra Pradesh—discloses how the brothers, with political support, mined iron without permission over large tracts at huge environmental cost. It is this sort of bizarre manipulation of law—other than the malfeasance exposed by the 2G scam or corporate lobbying in the Radia tapes or even the relatively mundane Commonwealth Games scams—that the letter-writers appear offended by.

Yet, according to Prof Surajit Mazumdar, a professor at the Institute for Studies in Industrial Development in Delhi, the letter’s concern appears limited to the adverse implications of the current situation on their way of doing business. “Otherwise,” he points out, “why this particular timing when the governance deficit has been part of the average Indian’s daily living experience for a long time?”

The letter does acknowledge that the poor and marginalised are not getting enough out of economic growth. But this, the writers argue, is because of impediments to economic development itself. “What we are deeply worried about is not to allow India’s huge growth potential and poverty alleviation challenges to be diluted or digressed from, and which would be a great loss, especially to the poor and the dispossessed,” they state.

Mazumdar says that recent experiences shatter the myth that replacing the state with the corporate sector to drive economic growth would reduce corruption. Instead, he says, “as long as the corporate sector is expected to deliver ‘growth’, it amounts to conceding to them an authority.”

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Karuna Nundy, a Supreme Court advocate representing Bhopal citizens in cases relating to the gas leak of 26 years ago, says that the corporate sector now wields immense hard and soft power over government. “We’re only just beginning to realise the extent to which this subverts due process against the average citizen. Last year the mechanics were laid bare in the Radia tapes. The ideas in the letter are important and some of the signatories have distinguished records, but it is a bit disingenuous to include Keshub Mahindra and other corporate leaders as signatories without addressing corporate accountability and respect for the rule of law.” Mahindra was convicted in the Bhopal case last year.

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Subroto Bagchi, vice-chairman of MindTree Ltd, says business may in fact benefit from some of the chaos in public life in recent years. “When society abandons character, people in public office see it as a free-for-all. Government loses the moral right to govern, people in public life align with both business and crime. Most business just loves the situation.” The political play is evident from the appeal to the Opposition parliamentarians to stop the disruption in law-making in the aftermath of the 2G scam.

This isn’t true across the board, avers Anu Aga, chairman of Thermax India. Aga, a Padmashri recipient, is one of the signatories of the note to the political leaders. She says she is most concerned about the lack of discipline in Parliament and environmental issues, such as the tendency to halt or start projects mid-way. But the blame needn’t fall on just one set of people. “Bureaucrats, obviously responsible for this ‘go/no-go’, are never punished,” Aga says. “I’m not saying we should let it go if a businessman does any wrong—we all hope that whoever does wrong is punished. This is a first step to accountability.”

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Even if some find them guilty of forgetting that liberalisation, coupled with the government’s inability to insulate itself from undue corporate influence, has led to a frenzied one-upmanship among entrepreneurs, often leading to deviation from laws, the letter is being welcomed for doing the right thing. The least it does is acknowledge that the poor and marginalised are not suffering alone, says Jaiprakash Narayan, president of political party Lok Satta. “This kind of hurting each other—saying corporates are responsible for corruption, or the government is, or media is—must stop,” says Narayan. A member of the second Administrative Reforms Commission set up by New Delhi in 2005, Narayan worked on a report that suggested sweeping revamp in officer selection in the civil services. “The report is gathering dust,” Narayan rues.

It’s a sentiment many in business acknowledge too—industry may need to reclaim its lost moral authority, agrees Kiran Mazumdar Shaw, CMD of Biocon, but the scale of graft impairs India’s image too, and everyone is implicated in that, not just government or business. “We simply cannot have double standards. We must recognise that governance standards are a measure of investment risk. Both the government and corporate India must be aligned in terms of governance and integrity,” she says.

For a nation shaken by an incessant series of corruption scandals, the letter from 14 well-known personalities has proved to be prime-time fodder. There are assurances that more letters—with concrete anti-corruption steps—are to follow. In the past, India has set up anti-corruption bodies, the CVC for instance. It also drafted the Lok Pal Bill (mentioned in the letter to leaders) but that is gathering dust. But that was when corruption was merely a noisy ‘he said-she said’ matter. Now that everyone agrees corruption is systemic, caused by each section of society and enshrined in the pattern of development India has chosen, the elephant in the room is at least harder to ignore.

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