Wading through the Slush Funds

THE 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.