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Scandals plague India
Another day, another corruption scandal in India.
As Canada continues to push for a free trade deal with India, bribery and corruption remain major challenges to the South Asian country’s economy and businesses, with companies ill-prepared to meet the demands of global anti-corruption laws and tightening local regulation, a survey reveals.
The latest case last week had India's supreme court ordering police to probe 14 cases of alleged collusion between corporate executives and top bureaucrats
The cases came to light from tapped phone calls between former corporate lobbyist Niira Radia with unidentified business executives and government bureaucrats, the federal police agency told the court in a report.
Examination of "the telephonic conversations suggest corrupt means being adopted by private parties to extract gains", the court said.
The court said the conversations suggested "collusion between government officials and private enterprises" and ordered the Central Bureau of Investigation (CBI) to probe further.
At the same time, police have named one of India's leading industrialists as a suspect in a high-profile corruption inquiry into the alleged illegal allocation of coal blocks.
Kumar Mangalam Birla, chairman of conglomerate Aditya Birla Group, was accused of criminal conspiracy along with the government's former coal secretary P.C. Parekh, a federal police agency said.
India's national auditor last year alleged that the coal ministry had given away billions of dollars in windfall gains to 100 private and some state-run firms -- sparking a police probe into whether kickbacks were paid in exchange.
"There is a geunine fear in Canada that we'll get entangled with Indian companies involved with less than stellar way of doing business," said a Vancouver-based businessman, who was on the trade delegation to India last year with premier Christy Clark.
"India can be challenging because while we comply with the rules, others wont and there goes our competitive advantage," he said.
Indian companies are also not prepared to meet the demands of global anti-corruption laws, said a recent survey by Control Risks.
The survey reveals that 62 per cent of the Indian companies interviewed did not have a formal policy statement that forbids the use of bribes to secure business. That compares with 23 per cent of United States firms and 35 per cent of global companies.
In addition, 91 per cent of Indian firms did not have specialised anti-corruption training for employees, compared with 74 per cent of global firms and 52 per cent of US companies, according to Control Risks.
Indian companies were also found to be the least likely to have whistleblowing mechanisms. Only 24 per cent had such a confidential system, while 40 per cent of global companies and 52 per cent of US firms said they had that in place.
Just 18 per cent of Indian firms indicated that they were planning to increase expenditure on anti-corruption measures. That compares to the global average of 35 per cent and a US average of 48 per cent.
As new corruption scandals continue to emerge in India, Canada is continuing for a comprehensive economic partnership agreement (EPA).
The Canadian Government says that it has identified core economic opportunities in India in the energy, agriculture, infrastructure and education sectors.
According to a joint Canada-India study on the likely outcomes of a trade agreement, Canada’s economy could benefit to the tune of CAD6bn (USD5.7bn). The Canadian Government says this equates to almost 40,000 new jobs across the country, or a CAD500 boost to the average family’s annual income.
"The trade deal will be a win-win for Canada..but local companies need to be vigilant when dealing with India," said a Toronto based business analyst.
"India does work on a whom you know system rather than what you know process and this leads to graft many a time," he said.
But its not all bad news.
The anti-corruption watchdog Transparency International praised Indian firms' relatively high standards of transparecncy, in a survey of emerging market multinationals.
China got the lowest rating of the BRICS economies (Brazil, Russia, India, China and South Africa), whose companies made up three quarters of the total sample in the survey of 100 of the fastest-growing multinationals in 16 emerging economies.
Transparency said Indian firms perform best in the BRICS with a result of 54 percent and several occupy the top positions in the overall index, attributing this to laws in India about how multinationals must report on subsidiaries.
Top of the class overall came India's Tata Communications Ltd, which also topped the anti-corruption programmes category with 92 percent, followed by three more Tata companies.
India's corruption scandals
TELECOMS LICENCES
In February 2012, the Supreme Court cancelled 122 telecommunications licences awarded to companies in 2008.
The licences were issued by former minister Andimuthu Raja, who is accused of mis-selling bandwidth in what has been called India's biggest corruption scandal.
He is alleged to have issued the frequency licences on a "first-come, first-served" basis instead of auctioning them. Mr Raja denies wrongdoing.
In March last year, a former aide of Mr Raja, who owned a real estate company, committed suicide.
Auditors estimate the alleged mis-selling of the licences cost the exchequer nearly $ in lost revenue in what some analysts are calling India's biggest ever scandal.
The scandal has claimed two other politicians: Mr Raja's colleague in the southern DMK party, MP Kanimozhi, was arrested last year in connection with the scandal; and Textile Minister Dayanidhi Maran resigned last year following allegations that he coerced the founder of the mobile phone firm Aircel to sell off his stake to a firm favoured by the minister. He denies the allegation.
Police have also questioned business leaders, TV bosses and political figures in connection with the alleged scam.
ARMY BRIBERY ROW
In March 2012, army chief Gen VK Singh said a defence industry lobbyist had offered him a bribe of $2.7m (£1.7m) if the army bought hundreds of trucks that the general considered "sub-standard".
The general's allegation, made in an interview with The Hindu newspaper, provoked outrage in parliament and Defence Minister AK Antony promised an investigation. He acknowledged the general had come to him with the allegation more than a year earlier and asked for a written complaint.
The general did not put the complaint in writing and both men seemed to have dropped the matter.
Two days after the interview came out, a letter from Gen Singh to Prime Minister Manmohan Singh complaining that India's defences were largely obsolete and woefully inadequate was leaked, provoking more outrage in parliament.
This, despite a multi-billion dollar procurement drive in recent years to modernise the army's equipment.
Analysts say the modernisation drive has been hampered by a lack of planning and acrimony between the military and the defence ministry.
WIKILEAKS: 'CASH FOR VOTES'
There was uproar in India's parliament on 17 March 2011 after a leaked cable from the whistle-blowing Wikileaks website described how a senior Congress aide showed a US embassy official "chests of cash" allegedly used to bribe MPs to support the government in a crucial vote of confidence in 2008.
The vote was over a controversial deal between India and the US which paved the way for India to massively expand its nuclear power capability. The government's left-wing allies withdrew support, but Congress narrowly survived the vote. Opposition parties at the time accused the government of offering cash for votes.
The Congress party and all of those named in the cable deny the allegations.
The leak came just days after a new report by consultancy KPMG said that corruption threatened India's growth. It said that it wasn't simply the daily diet of petty bribes that hold back the economy, but the huge scams where billions of dollars are allegedly siphoned off by government and industry.
In July 2011, two people - a politician's aide and a political activist - were arrested in connection with the scandal. The Supreme Court criticised the police for carrying out a "shoddy probe".
A senior MP, Amar Singh, was also questioned after he was accused of offering to bribe opposition MPs to abstain from the vote. He denies the allegation.
ANTI-CORRUPTION CHIEF FORCED OUT
In early March 2010 the head of India's anti-corruption watchdog, PJ Thomas, was forced to resign by the Supreme Court on the grounds that he himself faces corruption charges.
The decision was an embarrassment for Manmohan Singh because he chaired the committee that cleared his appointment and publicly supported him.
Mr Thomas says the charges - which are 20 years old - are baseless. He has never been arrested and the charges have also never been tested by a judge in court.
MAHARASHTRA WIDOWS
In November 2010 Ashok Chavan, the chief minister of Maharashtra, one of India's most prosperous states, was forced to quit over his alleged role in a scam involving homes for war widows.
Retired senior army officers and relatives of senior politicians are accused of helping themselves to apartments in the Adarsh Society building in Mumbai that were meant for war widows.
Mr Chavan denies any wrongdoing. He was ordered to resign by Congress leaders while the matter is investigated.
In March 2012, a retired bureaucrat and two former army personnel were charged with criminal conspiracy, cheating, forgery and criminal misconduct in connection with the case.
COMMONWEALTH GAMES
The 2010 Commonwealth Games in Delhi were beset by more than poor organisation: police arrested various Games officials for alleged financial irregularities.
The build-up to the event was overshadowed by revelations of sleaze, incompetence and missed construction deadlines.
And in January 2011, yet another Congress party head rolled when Suresh Kalmadi, the Games organising committee chief, was removed from this post.
He has been under investigation over claims of corruption and denies any wrongdoing.
In August last year, a report by India's state auditor tabled in parliament said preparations for the Games were deeply flawed, riddled with favouritism and vastly over budget.
It said there were serious irregularities with bidding and contracts, and that the seven years organisers had to prepare were wasted.
The games cost $4.1bn (£2.5bn) instead of the $270m (£166m) first estimated, while revenue was only $38m (£23m).
The government said parliament would reflect on the report and "decide what needs to be done".
MINING SCANDALS
BS Yeddyurappa of India's main opposition Bharatiya Janata Party (BJP) quit as chief minister of the southern state of Karnataka in July 2011 after he was indicted in a mining scandal.
An anti-corruption report alleges the scam cost the exchequer more than $3bn (£1.8bn) between 2006 and 2010. Mr Yeddyurappa denies any wrongdoing.
Correspondents say illegal mining has been rife for years in Karnataka. The state produces about 45 million tonnes of iron ore a year and exports more than half of it to China.
The anti-corruption report on mining in Karnataka found that the promoters of privately-owned mining companies in the Bellary region - where most of the mines are located - paid off politicians, and then joined politics themselves, rising to positions in the state government.
These mining businessmen-turned-politicians exerted so much influence over the local officials that the Indian media began describing Bellary as a "new republic".
In November last year, a report claimed that nearly half the iron ore exported from the western state of Goa was illegally mined.
A draft report from government auditors that was leaked in March 2012 estimated that India lost $210bn between 2004 and 2010 by selling coalfields to companies without competitive bidding.
But the Comptroller and Auditor General (CAG) said the draft report was still under preparation and "the details being brought out were observations which are under discussion at a very preliminary stage". - BBC
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