The Silence Over Corporate Corruption
In the last issue of Hardnews, we wrote about a major Indian business house with growing interest in the UK and beyond, whose senior employees were detained by the London Metropolitan Police for ferrying a large sum of foreign exchange. At least two of the four detained held senior positions in a company recently set up in the services industry. Surprisingly, the London police, that is yet to file charges against them, has been unusually reticent about when it will press charges.
What seems to have happened is a little different from what has been an accepted practice in our country: A businessman gets caught indulging in some illegal activity. He approaches the political bosses, works out a quid pro quo, and gets the police and other law enforcement authorities off his back. In India, and surely elsewhere, fortunes have been made in this manner as the maximum profit is made by businesses through illegal means. Normal profit is not what sustains greed, but whopping windfall profits earned by violating the laws of the land. In other words, people would make more money by smuggling than by selling the yellow metal legally.
Similarly, the bootlegger makes more money peddling his cheap country liquor in places where prohibition is in force or where controls are exercised by the State than he would otherwise. Similarly, not paying excise and custom duties or manufacturing what is banned, allows businesses to make extraordinary profits.
To reiterate, businesses need the government to look the other way to beef up their bottom lines. Also, powerful companies need the government to put in a policy regime that helps them maintain a monopoly situation or control access to the industry. For that they bribe and corrupt anyone and everyone. Being a crony helps in shaping policies to their advantage. Governments, here and elsewhere, attract a lot of flak on the issue of corruption. Politics has become a dirty word and politicians the most reviled and obnoxious lot in society. Businessmen still enjoy great respect despite bleeding the financial system here, as elsewhere. Ever wonder why? We will answer that later.
Look at Kingfisher Airlines, Deccan Chronicle Holdings and scores of other fat cats that are heavily in debt and still manage to pontificate on how the government needs to ‘reform’ to speed up the economy. Mind you, ‘reform’ for them only means the government providing an easier, unquestioning, credit line even when the fundamentals of the business are warped.
Otherwise, what is the reason companies so badly in debt continue to enjoy the benevolence of the public sector banks? Despite such a repetitive display of criminal intent, the media continues to glorify the ‘animal spirits’ and the ostentatious lifestyle of these businessmen.
Kingfisher Airlines owner Vijay Mallya’s following, if spin doctors are to be believed, remained undiminished until the wife of an employee who had not been paid his salary for months committed suicide. Even then the media, that shapes public perception, was not too hard-hitting. Save for stray blogs by the disgruntled employees of the airlines, there was no ‘investigative journalism’ looking into how loans were given to the airlines even when it was sinking rapidly.
Even Deccan Chronicle continued to be lavished with loans and certificates of credit worthiness when it had just hollowed it. Sharp, incisive TV exposes reserved for the likes of Salman Khurshid or Nitin Gadkari are never directed at them. Even the hysterical Arvind Kejriwal, who spent his career as an Income Tax Officer going through the balance sheets of businessmen and the returns of many High Net Individuals (HNIs), prudently never stepped out and said that it is business houses that have to be tamed
The reason the media does not pay attention to corporate corruption and fraud is simple. Big business owns the media. As government shrinks and the influence of the private sector increases, the influence of the ‘big bad government’ recedes further. “We just do not know how to manage the media,” a senior government functionary said helplessly when tasked with dousing the fire of allegations against the government.
Their misery will continue until the government develops the courage to rein in unaccountable corporate houses that believe in bribing everyone to bend the resolve of lawmakers and enforcers to hike their profits. And when that does not work, they get bolder: bankrolling anti-government agitations.