Crony Capitalism and Corporate Loot :
Corruption of the Liberalised Era
Stung by the tapes implicating his own lobbyist Niira Radia in the country’s worst ever corruption scandal, Ratan Tata has chosen to act the injured martyr. In an interview with Indian Express editor Shekhar Gupta aired on the Walk the Talk show of a media house (also stung by the Radia tapes), Tata said just the other day Obama had hailed India for having arrived on the world stage, but the developments since then suggested that India was in danger of becoming ‘crony capitalist’ and a ‘banana republic’. When Tata spoke of crony capitalism, was he referring to the revelation that corporate lobbyists had Ministers, leaders of both ruling and opposition parties, judges and media persons in her pocket? When he spoke of a ‘banana republic’ was he referring to the worrying situation where extremely rich corporations, with the collusion of governments and imperialist powers, seem able to violate laws with impunity, undermine democracy and loot the country’s precious resources (as happened in the original ‘banana republics’ of Latin America)? It seems not – what Tata is talking about, instead, is the fact that a corporate lobbyist’s ‘privacy’ was violated and her phones tapped; and the tapes then leaked to the media (he implies the leak happened to tarnish Tata and benefit some rival corporation). Tata has also approached court to gag the further leaks of tapes.
Similar sentiments were expressed by HDFC CEO Deepak Parekh, also in Walk the Talk, where he said that “the India story is at risk, the PM must act”: i.e, MNCs would take fright if the spectre of phone taps (and presumably stern action for violation of laws of land) awaited them in India. He said, “We had really taken off and we were the darling of the Western world, of the multinationals, everyone wants to invest in India and suddenly there’s a snap... it has really taken the wind off our ambitions and I am very disappointed.”
Reinforcing these voices from ‘India Inc.’, Union Minister for Agriculture Sharad Pawar, himself implicated in the latest spate of scams for having conspired to violate environmental regulations and benefit family members in land allotments for a multi-crore real estate project at a hill station, Lavasa, said in another Walk the Talk show, “The corporate sector is nervous, but I’m confident the PM will act.” He specifically expressed criticism of ‘NGOs and media’ for protests against various projects in Maharashtra, and the Union Environment Ministry for heeding these protests and invoking environmental laws to halt projects, as well as CBI investigations into the banking sector. To demand accountability of the corporate sector to the law or to investigate their functioning will, according to Pawar, undermine the ‘confidence in the area of investment and investors’ that the Prime Minister and present and previous governments have been faithfully committed to create throughout the past two decades.
On cue, the PM, when he finally broke his silence, said not a word about the fact that his Ministers and the very process of ‘governance’ itself stood compromised as agents of corporate interests. Instead, he reassured the corporate sector that privacy would not be invaded! (It must be recalled that the PM can no longer take refuge in the claim that it was only a Minister from a ‘regional ally’ – the DMK – who is tainted; the latest batch of leaked tapes carry several references to corporate influence on the appointment of many other Ministers including Congress ones like Kamal Nath and Murli Deora, as well as indications of routine corruption on part of these Ministers.)
Corporate Smokescreen
What is happening? Why are corporate voices seemingly speaking the vocabulary of Leftist analysis?
For Indian people, the Radia tapes were a particularly powerful and graphic demonstration of crony capitalism at work. Thanks to the tapes, the phrases ‘crony capitalism’ and ‘banana republic’ leaped out of the pages of Left publications and into popular imagination and parlance. That corporations influence government policy, ensure appointment of pliant Ministers, pay off judges and control how respected mediapersons represent the news can no longer be dismissed as some wild leftist conspiracy theory – the aam aadmi and aurat have heard with their own ears that it is nothing but the truth. In this situation, corporate forces are rallying to do some damage control. And, as the voices quoted above show, their tactic is to try and muddy the waters and confuse the issue. The corporate barons and their faithful allies in the media are erecting a smokescreen to make it appear as though it is the corporate sector that is the real victim of crony capitalism, and what is at stake is the dream of liberalized India!
Crony Capitalism:
Threat to Liberalisation or a Product of It?
The truth is otherwise: liberalization is what has enabled crony capitalism on this scale, and corporate houses are its greatest beneficiaries. What are at stake are the country’s public wealth and social spending, its precious natural resources, and the rights of its poorest citizens. It is possible that the leaks are at least in part due to inter-corporate rivalries. But even if so, the impact of the leaks has spilled far beyond what might have been the original intention of damaging some particular corporate house’s interests. The leaks, whatever their original motivation, are dramatically helping to awaken India’s people from the very dream peddled by the ‘dream merchants’ of liberalization – foremost among them, Manmohan Singh and a range of corporate ideologues.
Let us examine how this is so.
In the ‘license quota raj,’ the nature of corruption was such that in the main, the beneficiaries of corruption were Ministers and bureaucrats who took bribes; corporate houses which gave the bribes argued that they would be denied licenses and other legitimate dues if they refused to pay bribes. Now, in the liberalized economy, the nature of corruption is different. Liberalized state policy demands that corporate interests be appeased and wooed – by making (and often breaking) laws to ‘free’ land, minerals, water, and other resources from the control of people or the state, and hand them over at throwaway prices to be exploited by corporates; in addition to massive tax breaks, write-offs of loans and other revenues due from corporates, and other massive sops. For the corporations, therefore, what is at stake is mind-bogglingly lucrative resources at cheap costs, and massive giveaways and waivers. These gifts, giveaways and waivers play a secret but most significant role in the spectacular rise in wealth of Indian CEOs who have made it to the world’s list of billionaires. Even if no corruption were to be involved in this process, it would still involve an enormous loss to the public exchequer and transfer of public assets like natural resources into private hands. Corruption on a scale unimaginable in previous times is, however, embedded in this process, as corporate interests vie to secure these huge, lucrative assets and sops. The inducements that a Koda/Raja/Kamal Nath receive are a ‘cut’ from these huge common assets, which they facilitate to transfer to the hands of the corporate houses. For ideologues of liberalization, there is no crime involved in the draining of the public exchequer and resources to facilitate corporate profit – as long as ‘corruption’ does not occur in the process. What they do not tell us is that this loot – and making and breaking of laws (relating for instance to land acquisition, forest rights of tribals, environment protection, seed laws etc) by governments that enables this loot - is a crime regardless of whether individuals in government have benefited from it or not. In the telecom scam, for instance, the amount of Rs 1.76 lakh crore does not represent the amount given to a Minister as a bribe; it is the amount robbed from what was due to the public exchequer thanks to the decision to give away spectrum at negligible cost. That a Minister took bribes to ensure (by rigging the selection process) that certain selected corporate cronies got this cheap spectrum is only a fallout of the fact that such a lucrative resource such as spectrum was being virtually given away and transferred to corporates in the first place.
‘Privacy’ to Loot?
Does Ratan Tata have a right to claim ‘violation of privacy’ in the phone taps and leaks? Is he right when he claims he never benefited from the telecom scam? If spectrum – a precious and scarce national resource - was gifted away, who benefited? And who was Niira Radia working for when she fixed Raja’s appointment as telecom minister?
The beneficiaries of the scam include companies like Swan (a front for Reliance) and Unitech (a real estate company with no previous interests in telecom) which, in spite of failing to fulfil DoT guidelines for issue of licenses, bagged the Spectrum allotment (out of turn) for a mere Rs. 1651 crore, and then within a matter of six months made a killing by selling off shares to foreign companies at the prevailing market rate, making at least 700% return on their ‘investment’! Other beneficiaries include Anil Ambani’s Reliance Communications and Tata’s Tata Teleservices which, in 2008, secured GSM and CDMA licences at prices fixed in 2001. Tata Group, like Unitech and Swan, also sold 25% of Tata Teleservices shares to NTT Docomo at market price for about Rs. 13,000 crore.
Clearly, Tata too was among the beneficiaries of Raja’s favours in the telecom scam, along with Ambani and others. But while Tata is by no means the sole beneficiary of the multi-crore scam, it is clear that Radia was working for none but Tata in securing Raja’s appointment as Minister. Radia was a lobbyist for Mukesh Ambani also, and pulled similar strings for him in the gas episode, but when it came to telecom, it seems she was representing Tata alone. In one of the tapes, an unidentified person asks Ms Radia, why “you people [i.e. the Mukesh Ambani group represented by Radia] are supporting [Raja] like anything ... when the younger brother [Anil Ambani] is the biggest beneficiary of the so called spectrum allocation?” Radia replied, “Issue bahut complex hai…Mere client Tatas bhi beneficiary rahein hain (The issue is very complex… my client, the Tatas, have also been a beneficiary).”
Tata, whose lobbyist has been caught on tape fixing the appointment of a pliant Telecom Minister who benefited Tata among others in the allocation of spectrum and GSM/CDMA licenses, cannot now act self-righteous and cry ‘banana republic’ when the lobbyist’s illegal manipulations come to light. Crimes like corruption and corporate loot cannot be protected by the ‘right to privacy.’ The public have every right to know what illegal deals are being made by corporate lobbyists like Radia, and for whom. If Tata claims to be honest and righteous, why did he buy underpriced licenses and sell them later at a profit? Why does he not today propose that all the companies that benefited from under-priced spectrum and GSM/CDMA licenses pay the difference between market rate and their own purchase rate, setting an example himself?
Of course, Anil Ambani is no less a beneficiary of the telecom scam, not only by securing under-prices license, but securing spectrum through the front company Swan and selling it at a profit.
The Radia empire did not extend only to telecom, however. The tapes reveal her intervention in the Anil-Mukesh Ambani battle over gas, and her nexus with a whole web of ministers, MPs and mediapersons to ensure that a massive tax concession in natural gas be granted retrospectively to Mukesh Ambani, securing him a profit of Rs. 81, 000 crore – but also ‘killing’ any stories in the media about this super profit, and instead promoting stories that project Mukesh Ambani’s interest to be coterminous with “national interest” and protection (rather than profit) from a “national resource.” To ensure Mukesh’s edge in this battle for super profits, not only ruling party leaders obliged (in the tapes, Mukesh is quoted by a fixer to say, ‘Ab Congress to apni dukan hai’) but even the main opposition party itself obliged, selecting a lead speaker in Parliament who would deliver a line scripted by the Mukesh lobby!
Media: Taking Dictation from Corporates
In the Walk the Talk interview by Shekhar Gupta, aired on NDTV, Ratan Tata, in his eloquent warning against turning into a ‘banana republic,’ said, “if we under the guise of freedom of speech, or of any number of other so-called rights of democracy, abuse the luxury of democracy,” India would turn into a country where people “go to jail without adequate evidence, or their bodies are found in the trunks of cars”. It is interesting that Tata refers to the “freedom of speech,” democratic rights and democracy itself as a “luxury”! The peasants of Singur and tribals of Kalinganagar could give Tata a lesson or two about the kind of world where activists and political dissidents challenging powerful corporate interests like land grab “go to jail without evidence,” are found dead in fields, or are simply shot dead by police in cold blood. Protest against corporate land grab to protect livelihood and survival is a “luxury of democracy” that peasants and tribals do not deserve – while super-rich corporates like Tata enjoy the ‘democratic right to privacy’ and can go to court to get evidence suppressed in the name of ‘protecting privacy.’ Tata would probably like the US model of democracy where super-rich and powerful corporations enjoy the same ‘rights’ as persons – and use that ‘right’ to subvert the rights of ordinary citizens and buy up elections.
The “freedom of speech” that is so angering Tata is the fact that a handful of magazines published transcripts of the Radia tapes. However, overwhelmingly, the print and electronic media banded together to defend the media persons (even of rival channels) and suppress the evidence of corporate lobbyists influencing Ministerial appointments and media coverage of corporate-related stories.
In the tapes, senior columnist Vir Sanghvi is heard asking Radia “What kind of story do you want,” regarding the Ambani gas battle. He advertises his own column Counterpoint as “most-most read” and therefore the ideal place to put across Mukesh Ambani’s point of view. He is then heard taking detailed instructions from Radia on how the story should be structured, with her correcting him on various nuances of phrase and presentation. In a follow up call, he tells her the article has been written, and “I’ve dressed it up as a piece about how public will not stand for resources being cornered, how we’re creating a new list of oligarchs… It’s dressed up as a plea to Manmohan Singh, so it won’t look like an inter-Ambani battle except to people in the know.”
In another conversation, celebrity anchor Barkha Dutt is heard agreeing to act as a courier between the Kanimozhi-Raja faction of DMK, lobbied for by Radia, and the Congress. Whether she did so or not cannot be known, but in a later conversation, Radia is heard telling someone that “Barkha has got the Congress to issue a statement.”
More recently, another celebrity media figure Rajdeep Sardesai conducted a debate on his channel CNN-IBN on whether or not corporate lobbying should be legitimized. Among the several ‘tweets’ that he claimed had been sent by viewers expressing their opinions on the debate, a viewer discovered that several of the tweets were fake – and sure enough the fake tweets were all in favour of corporate lobbying!
There are also several references in the tapes to interviews with corporate being ‘scripted’ and even ‘rehearsed’ in advance. And we can be sure that this process is continuing. In the series of interviews with CEOs and Sharad Pawar, Shekhar Gupta, for instance, fail to ask a single tough question to the person being interviewed. Even Sharad Pawar is not grilled on his linkages to corruption and violation of the law in the Lavasa case – rather, he is encouraged to attack people’s movements who are exposing the corruption and violations, and even to criticize a fellow Minister in the UPA Government if he has been forced to act against the violation!
What has come out very clearly is how powerful media houses and personalities are deeply in the pockets of corporations – and therefore obligingly ‘dress up’ corporate interest in the garb of ‘national interest,’ fake public opinion and even obligingly carry messages from corporate lobbies to ruling parties in order to help install the Minister desired by the corporate lobby.
Legitimising Lobbying?
There is an orchestrated chorus in the pro-corporate media that lobbying should be made legitimate and distinguished from corrupt practices. Union Minister for Corporate Affairs Salman Khurshid too has supported this view and mooted the idea of legitimized corporate lobbying.
For Tata to claim that his lobbyist was merely doing her legitimate job and accuse the political system of crony capitalism is disingenuous. Corporate lobbying is nothing but crony capitalism personified. The leaked tapes reveal the many lines of influence that ‘radia-te’ from Radia to virtually every institution of the state and public life – from ministers, parties, to judges and mediapersons. But this is only a tip of the iceberg. A huge number of corporate lobbying agencies wield this kind of enormous clout, shaping public policy and public opinion alike. Be it infrastructure, energy, telecom, mining or military deals, agribusiness, seeds, civil aviation, retail trade, education – MNCs and Indian corporations have powerful lobbies active that influence science policy, court verdicts, laws passed in Parliament, debates in Parliament, media coverage, even, as the taped conversations reveal, orchestrated “action” by pliant NGOs on certain occasions. Corporate lobbyists also work overtime to influence foreign policy, industrial policy, agricultural policy, education – every aspect of life and society – to open it up for MNCs. The Nuke Deal would have been impossible without the powerful lobbying of the US-India Business Council, which likewise played a role in the Bhopal cover-up and sell-out. We cannot be naïve enough to believe (as Tata or Salman Khurshid would have us do) that lobbyists are simply doing a legitimate ‘PR’ job, but that is not true. Theirs is a job that relies on cultivating a vast network of people who will do their bidding – and corruption is an inevitable and essential part of such cultivation. The Bofors scandal had highlighted the role of middlemen in military contracts; now middlemen are being legitimized and rehabilitated as ‘lobbyists’ on a scale then unimaginable. The cash for questions scandal in Parliament is another manifestation of the way such lobbying vitiates democracy. There is also the phenomenon of corporate lawyers doubling as political leaders and state functionaries – Chidambaram and Singhvi for example – taking the corporate stranglehold on democracy to a higher plane altogether!
We need only look at the experience of the US, where corporate lobbying is legitimate, to see how democracy there is subservient to corporate funding, and corporate lobbying scams (where public policy is found to have been framed to benefit corporate interests in tobacco, oil, real estate, and a range of other areas.
The defence of democracy and the end to corruption in India demand, first and foremost, that the policy of facilitating primitive accumulation of capital through transfer of assets to richest corporations at cheap costs is ended, and corporate lobbying firmly outlawed.