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Monday, June 09, 2014  
India: A Democracy on the road to Kleptocracy
"Once democracy yields to Kleptocracy, good governance is given a silent burial. The vacuum thus created is filled by a vicious nexus among politicians, bureaucrats and the corporate who companioning together change the laws of the land to serve their respective interests."

Piyush Pant

   

The revelations by WikiLeaks and Neera Radia tapes, though done on different planes, have a common thread running through them. Both have done the yeoman service of exposing the duplicity of behaviour, secret dealings and lobbying which the governments and corporate houses indulge in. Both have exposed the levels of corruption and ethical violations rampant in the corridors of power and the corporate world. Julian Assange says that the WikiLeaks mission is to lay bare the “full ecosystem of corruption”, the internal executive ethos, and all the supporting little decisions that enabled the flagrant ethical violations. While WikiLeaks has exposed the big brother countries that tell one thing and do the opposite; Radia tapes have exposed the way corporate do lobbying to even fix the appointment of Ministers so that they could reap the fruits of dictated and manipulated government policies. These tapes have also exposed how the ministers and bureaucrats function as cronies of the corporate sector and influence the actions and policies of the government in their interest.

What to talk about Ambanies, Mittals and Anil Agarwals, even top industrialist Ratan Tata, hitherto much praised for his ‘clean and honest’ dealings, has been exposed for taking the help of lobbyist Neera Radia to bend the spectrum allotment in his favour. Thus Radia episode makes it quite clear that the real power centre in democracy under capitalist system exists outside the formal and legal structures of the State, while the elected organs are rendered more and more powerless and corrupted by the money, with each passing day. A kind of feeling is setting in that we are moving from ‘Democracy’ to ‘Kleptocracy’ i.e. a system of non-governance characterized by injustice, rampant greed and corruption.

Kleptocracy is a Greek-derived term. It means “rule by thieves”. It is used for an establishment that takes the advantage of the rampant corruption in government echelons to increase the personal wealth and political power of the government officials and the ruling class through the embezzlement of government funds at the expense of the wider populace, sometimes without even the pretence of honest service. Once democracy yields to kleptocracy, good governance is given a silent burial. The vacuum thus created is filled by a vicious nexus among politicians, bureaucrats and the corporate who companioning together change the laws of the land to serve their respective interests.

Over a course of time, the corporate interests take over the other interests and corporate start dictating terms to the politicians and the bureaucrats. For this they take recourse to greasing their palm or taking the help of lobbyists who, acting on behalf of corporates, influence the policy decisions of the governments, even trying to influence the appointment of ministers to the ministries which are of particular interests to them. Revelations by Neera Radia tapes are clear pointers to this direction. Similarly in the case of Korean giant corporate POSCO, the somersault done by Environment and Forest Minister Jairam Ramesh is a testimony to how influential these multinational corporate have become. As they try to enter the vast untapped Indian market to woo more than a billion customers, they need to extricate tax breaks and contracts in their favour from Indian babudom. Some companies get these by corrupt means, covering their tracks by middlemen, as some foreign managers acknowledge in private. But a number of companies are turning to lobbyists who use subtler tools of influence, partly out of fear of anti-bribery laws in their respective countries which threaten jail term even for chief executives if they let workers pay bribes overseas.

This trend of lobbying has started showing in India too as the business groups are beginning to wield a disproportionate influence on the policy environment as compared to civil society organizations lobbying for public good. The fact is that globally the corporations bankroll the electoral process and also spend large sums in lobbying governments to defend their markets and further their interests. According to a UK-based consultancy named SustainAbility, over 3 billion dollars were spent in lobbying in the US in 2004 while 90 million Euros were spent in the EU in the same year. Matt Miller, a senior fellow at the Centre for American Progress, points out that big  business in US  wield immense clout in US public policy making through lobbying. He gives the example of Lockheed Martin who spent 55 million dollars in the early years of 2010 during which period it bagged defence contracts worth 90 billion dollars for a ROPI (Return on Political Investments) of 163,00%. Similarly Boeing spent 57 million dollars for contracts over 81 billion dollars resulting in a ROPI of 142,000%. Miller is of the view that it is impossible to conclude a deal without a “political sales-force” backing the deal.

But in US, a degree of openness is ensured by the Lobbying Act which compels corporations to reveal their perambulation around the Senate, Congress, Pentagon and other public institutions.                       

On the contrary, there is no mechanism in India to bring accountability to lobbying and publicly reveal the lobbying positions of companies and the money spent on it. The secretive deals on spectrum allocation in the telecom sector are fine example of lobbying without any pretence to accountability. The power, mining, airline, oil and gas sectors have also been hotbeds of intense lobbying in India. What is startling is that when the government takes any move on corporate responsibility norms it is taken as restrictive and anti-liberalisation by the Indian industry which often proposes self-regulation in lieu of legislation. But it doesn’t happen.   

What is really happening is that these multinational as well as national companies are making their lobbying arms stronger by recruiting retired Indian bureaucrats to do the dirty job by making them use their connections and relations with former junior colleagues to clinch the issue.  Thus ex-bureaucrats are now playing a major role for their corporate bosses in crucial infrastructure sectors like telecom, power, roads and ports where large-scale deregulation has taken place. Now with areas such as banking, insurance and coal mining opening up, the flow of former bureaucrats will certainly increase.

Already this has started taking place. Naren Joshi, managing director of General Insurance Corporation left the organization to join multinational ING Insurance. Steel baron Laxmi Mittal has managed to woo and hire many top ranking employees from SAIL for ISPAT’s commercial marketing operations. Among them are MRR Nair, former SAIL chairman, and its executive director Mr. Malai Mukherjee. In 2007, it was reported that a lady IAS officer, retiring from Ministry of Defence, joined Tata Industries when the Tatas, among others, were being considered for being declared as a Raksha Utpadan Ratna. Similarly a retiring finance secretary was picked up by Hyundai India for a whopping salary of Rs. 1.37 crore. Few years back Gopi Arora, the principal secretary to late Prime Minister Rajiv Gandhi had joined ANZ Grindlays after retirement. Way back in 1998, several former IAS officers opened up ‘polyclinics’ to sell their services. One such association was named ‘Management & Economic Advisers’ in Delhi. It comprised of Suresh Mathur – former industry secretary, R Vasudevan – former power secretary, and Sanjeev Sunder – former surface transport secretary. Mathur’s portfolio included telecom giant AT&T and General Electric, while Sunder became consultant for Bharat Forge. Everybody remembers the controversy surrounding former I&B secretary Rathikanta Basu who joined media tycoon Rupert Murdoch’s Star TV as CEO even before his two years were over.

The lure to succumbing to the hefty pay packets in exchange of providing PR services has become so intense that the bureaucrats no longer have patience to follow the mandatory cooling-off period from the date of retirement. Information gathered through RTI has revealed that since 2001, one hundred bureaucrats have sought permission to join private sector jobs. Take the case of Naresh Dayal, who held the post of secretary, Union Ministry of Health and Family Welfare and retired on September 30, 2009. Soon after, he filed an application for permission to join GlaxoSmithKline Consumer Health-care as a non-official director. He got permission on May 21, 2010. While some officers join private sector after retirement, others choose to join after taking voluntary retirement. 

Actually to survive and thrive in the competitive corporate battlefield, tycoons have only two options-either to bribe the politicians and the serving bureaucrats or to employ the retired bureaucrats who can, in turn, tackle the political class and serving bureaucrats. It is the latter which is gaining popularity.

(Author can be contacted at panditpant@gmail.com)

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