The power to corrupt

Paranjoy Guha Thakurta Delhi

The phenomenon of corruption is as old as the hills, as ancient as greed. And so is corruption in India. When it comes to the country’s corporate sector, however, stories about corruption go back almost half-a-century, to the years after India became politically independent. The stories continue. Only the content changes, not the form. The names of the individuals involved change, not the manner in which they manipulate the system or the way the infamous nexus between business, bureaucracy and politics operates.

There’s an important difference between India’s track record in curbing corporate corruption and the functioning of the criminal justice system in other democracies, including the US. The claim that the law is above no man sounds good in theory. In actual practice, in India and elsewhere, the long arm of the law does indeed tend to favour the rich and the powerful. There are instances galore in the US when affluent corporate captains have had to spend time behind bars – most recently, this happened to some of the top executives of the failed Enron Corporation.

In India, instances of well-heeled industrialists being jailed for financial misdemeanours are few and far between. When VP Singh was Union finance minister in Rajiv Gandhi’s government, in 1985 and 1986, a number of prominent businessmen were apprehended for tax evasion and some of them, such as the late Lalit Mohan Thapar, even had to spend a night or two in Tihar Jail.

But this was a rather short-lived phase. Many believe that his actions against industrialists was the root cause for VP Singh’s estrangement from Rajiv Gandhi as well as other Congress leaders who privately held him responsible for trying to cut off their ‘lifeline’ of funds. After all, it’s hardly a secret that majority of Indian politicians are generously funded by businesspersons for conducting election campaigns, among other things. In return, those providing money and resources to politicians expect various kinds of favours in return as part of a cosy system of quid-pro-quo.

During the days of the licence control raj in the 1960s, 1970s and 1980s, the favours would come in the form of quotas and permits. As the bureaucracy gradually let go of its controls over the levers of the economy, the forms of corruption too started changing. Dhirubhai understood this process well. He once told Time magazine that he was not Mother Teresa — but the manner in which he successfully “managed the environment” undoubtedly raised the hackles of his business rivals.

It was not as if Indian politicians had not helped other industrialists in the past. The difference in the business-politics nexus lay in the fact that by the time the Reliance group’s fortunes were on the rise, the Indian economy had become more competitive. Thus, it was not enough for those in power to promote the interests of a particular business group. It became “necessary” to simultaneously put down the competition.

Therefore, the fortunes of Swan Mills, the Orkay group headed by Kapal Mehra, not to mention Nusli Wadia’s Bombay Dyeing, all had to be ‘sacrificed’ to facilitate the speedy growth of the Ambani empire. Even Ramnath Goenka’s Indian Express chain of newspapers – that had taken on the Ambanis in the mid-1980s – got trifurcated after his demise.