There are enough reasons to suspect that companies overseas influence Indian politics
Pranab Mukherjee is likely to be India’s next President. It seemed to be
touch and go until the tide turned in his favour. It has been suggested
that the corporates swung it for him not because he is one of the most
seasoned Indian politicians but because they wanted him out of the
Ministry of Finance. He has acted tough on retrospective taxation and
GAAR – the measures in his recent budget to tackle black income
generation. But it would not be surprising if the real pressure was from
foreign shores. Indian corporates are sensitive to what their foreign
counterparts think. So is our political leadership. Britain and
Netherlands exerted strong influence on the Vodaphone case. How much of
our politics is being determined by such pressures?
Pressure on polity
Several recent events testify that pressure is certainly being exerted
on the polity: Hillary Clinton’s visit to India to influence the
government’s policies on trade with Iran and on FDI in retail, the
S&P downgrade of India, the Aircel Maxis deal. There are also less
visible cases of foreign pressure as in defence purchases (the British
were upset at our rejection of the Eurofighter), energy sector
investments (oil, gas and nuclear), opening of markets and so on.
The Bofors scam has had a continuing impact on politics since 1987. Sten
Lindstrom, the former head of the Swedish police who led the
investigations into the Bofors-India howitzer deal, recently underlined
that there was conclusive evidence that Ottavio Quattarocchi, a close
friend of the Nehru-Gandhi family, was one of the recipients of
kickbacks. His role in swinging the Bofors deal at the last minute was
known. It is not in doubt that payoffs were made or that the Bofors guns
are good. The only unsettled issue is who got the money.
That Mr. Quattrochi had powerful friends was confirmed when he was
allowed to escape the country during the Congress rule. The case was
apparently deliberately spoilt by the investigative agencies, including
the CBI and, therefore, lost in the courts — in Malaysia, Britain and
Argentina. The red corner notice against him “could not be executed”
since our police agencies could not “find” him even though journalists
could interview him.
Evidence points to a high level cover up. M.S. Solanki, then the
External Affairs Minister, sacrificed his Cabinet berth rather than
reveal what he wrote in the paper he passed on to the Swiss counterpart
at a meeting. At that point of time, the Swiss bank accounts were being
investigated by the Indian agencies to trace the Bofors payoff trail.
Could such a sacrifice of a political career be for an ordinary leader?
Who took the money even if not Rajiv Gandhi and why did the
investigative agencies spoil the case? Investigations are essential to
clear the air about these questions. A former Minister in the Prime
Minister’s Office mentioned to this author in an interview on the black
economy that when he went with the Bofors file to the then Prime
Minister, he was told to close the file as it could cause a threat to
his life. No wonder, none of the non-Congress Prime Ministers changed
the course of investigations to bring them on track and none of the
Congress Prime Ministers has wanted the truth to come out.
Kickbacks are common globally. Sweden is one of the least corrupt
countries in the world but its corporations have bribed to get contracts
as the Bofors case shows. U.S.-based multinational corporations have
resorted to bribes in spite of their being illegal under that country’s
law. Recently, Walmart admitted to having bribed its way through in
Mexico. When the top management learnt of it, rather than exposing
corruption, the internal probe was closed. The same Walmart has been
trying to enter India. Ms Clinton’s agenda included “persuading” India
to open its doors to foreign retail. The only Chief Minister she visited
was Mamata Banerjee, the important UPA partner opposing FDI in retail.
It is reminiscent of Henry Kissinger and the Secretaries of Energy and
Defence flying to India to lobby for Enron in the mid-1990s. Enron
admitted to spending $60 million in India, to “educate” policymakers.
It is not just a few MNCs that indulge in corruption or use their
governments to apply pressure on policies. MNC banks are known to help
Indians take their capital out of India. UBS bank, the largest Swiss
bank, was fined $750 million by the U.S. for helping its citizens to
keep secret bank accounts. The same UBS bank was allowed entry into
India in spite of its known role; was it a reward for helping some
powerful people?
Executives of Siemens, a supposedly honest MNC and an important player
in India, were indicted in the U.S. in December 2011 for bribery in
Argentina. Investigations revealed that the company also made illegal
payments to the tune of $1.4 billion from 2001 to 2007 in Bangladesh,
China, Russia, Venezuela and other countries. These were often routed
via consultants. The company paid fines and fees of $1.6 billion to the
U.S. and German governments for the bribes it paid across the globe.
Siemens started bribing soon after the end of World War II to get
contracts under the Marshall Plan which were mostly going to the
Americans. Since its prosecution, Siemens claims to have appointed
Compliance Officers to check bribery. But, with the prevalence of a high
degree of illegality internationally, can one company be honest while
others are not? How would it win contracts when those in charge expect
to be bribed? Since non-transparent processes are set up, at every step,
decisions need to be influenced, as seen in the Bofors case or the 2G
spectrum allocation.
The Vodaphone case is significant. MNCs (Indian and foreign) have used
tax havens and tax planning to avoid paying taxes in India. They create a
web of holdings to hide the identity of the real owners of a company or
who it is being transferred to. In 1985, in the Mcdowell case, the
Supreme Court bench observed, “Colourable devices cannot be part of tax
planning and it is wrong to encourage or entertain the belief that it is
honourable to avoid the payment of tax by resorting to dubious
methods”. This judgment was overturned in 2003 in Union of India vs Azadi Bachao Andolan
on the use of the Mauritius route to avoid paying tax in India.
Vodaphone took advantage of this judgment to successfully argue against
having to pay capital gains tax in India on transfer of a company in a
tax haven which owned the Indian assets. Mr. Mukherjee was trying to
recover lost ground.
Dominant interests
Indian policies have been subject to foreign pressures since the days of
the Cold War in the 1950s. But until the mid-1980s, the decisions were
accepted as being in the “long-term national interest.” There were
accusations in the procurement of the Jaguar aircraft also but these did
not create the furore that the Bofors scam did. Since the late 1980s,
as in the case of Bofors or the new economic policies in 1991 or the
Indo-U.S. nuclear deal, sectional or individual interests have become
dominant. These have played havoc with national politics. Pressures and
counter pressures are mounted through political parties and their
leaders and big business.
The lesson is that foreign pressures tend to damage processes that
national politics cannot undo. The public is left bewildered by the
goings on, as in the present case of selection of the presidential
candidate.
(The writer is Chairperson, Centre for Economic Studies and Planning,
School of Social Sciences, Jawaharlal Nehru University. Email:
arunkumar1000@hotmail.com)
curtsy-The Hindu
No comments:
Post a Comment