A phony Lobbying probe

The political class in India has become a prisoner of its own histrionics. It says something today and opposes it tomorrow. When it comes to ethics, it does hair-splitting that can shame the Indian smriti jurists of the past if some of its members can benefit from being so demanding with regard to the acts of their rivals. But when charges are directed against them, the moral yardstick gets extraordinarily liberal. It is one thing that FDI was welcomed to the fullest extent in sectors such as civil aviation, defense related industries or pharmaceutical products during the NDA period, and nobody even asked if these relaxations in policy were the result of some lobbying. But now the table has turned, and the BJP, as the main opposition party, is livid because a report has appeared that Wal-mart, in its statutory filing with the US Securities and Exchange Commission, has declared that it paid US $25 million over four years to lobby American lawmakers to help gain access to foreign markets including India. According to disclosures, there are nine countries where Wal-mart was lobbying. At this rate, it works out to spend of six million dollars per year, and that too in not just India but some other countries too. Wal-mart has said that the expenses are “a compilation of expenses associated with US Federal lobbying contacts and include staffing costs, association dues and payments made to consultants, all in the US”. The opposition is not impressed. It has forced the government into agreeing on a judicial inquiry to be set up to lead an investigation, in the words of Parliamentary Affairs Minister Kamal Nath, “pertaining to Wal-mart’s lobbying”.

But exactly is illegal, if not immoral, about lobbying? In Mahabharat, the most respected ethical literature in the annals of Hinduism, a whole chapter is devoted to the two warring clans of Kuru and Pandava intensely lobbying with the kings of contemporary India to join one of them or the other in the climactic battle of Kurukshetra. In the book’s long history, no Indian is known to have been appalled by their pleading. Bribing an official to secure advantage is certainly illegal as it violates provisions of the Prevention of Corruption Act. It is illegal in most countries, including the US, home of Wal-mart. However, it was left to the genius of Indian politicians of the Twentieth Century, new to governance of a recently independent country and confused on most issues, including ethical, to treat the business class as untouchable. In charting out the course for the nation’s development, Jawaharlal Nehru, the first Prime Minister, would listen to his dirigiste and self-important friend P. C. Mahalanobis at the Planning Commission than any Birla or Tata. It led to lobbying being held in suspicion. It is ironical that Nehru’s grandson, Rajiv Gandhi, had issued an order that there would be no “lobbying” for import of howitzer guns, an ill-conceived fiat which alone perhaps led to competitive bribery, with the ensuing scandal costing Rajiv his job. The opposition MPs of today, like BJP’s Arun Jaitley, JD(S)’s Sharad Yadav and CPI(M)’s Sitaram Yechury, who are clamoring for probe into lobbying, are ignoring the fact that putting a ban on lobbying may invite attempts at actual bribery, as it did in the case of Bofors howitzer. It may benefit the bribe-taker but the nation will suffer as it will make foreign investment costlier to that extent. The same thing is happening in most of Africa, raising the entry cost of foreign capital.

Besides, India cannot have double standards, one for foreign firms entering India and another for Indian firms doing business in foreign countries. Filings with the SEC  show that as many as 27 Indian companies have spent money on lobbying in the US. Ranbaxy, the drug major, has given US $90,000 to a lobbying firm to “preserve access to affordable generics”. According to a 2009 document, Reliance Industries Limited engaged lobbyist firm Barbour, Griffith and Rogers for a goal nebulously stated with the acronym TRD. The Indian government under Vajpayee resorted to lobbying and hired a US firm. How would Jaitley-Yechury-Yadav have reacted to a discussion in the US Congress demanding a judicial inquiry into the US engagement of these well-known Indian entities?

One can argue that lobbying is irrelevant in government decisions that involve sale or purchase dictated by auctions. This is because in such transactions, the government, as seller or buyer, is focused on the price element, and nothing else. But it is necessary for the state in an auction sale too to be told in advance about the bidders’ past records and future potential. It will be counterproductive, for that matter, to award an oil field for development to a party lacking in integrity despite bidding best because he is likely to short-change the authorities on both cost and sale. The job of a lobbyist is to provide the policymaker with the necessary facts before framing an efficient auction policy. If he still crosses the thin red line and offers money to the hand holding the auctioneer’s hammer, there should be efficient laws to book him at once. But lobbying and bribery are not the same thing. They are as different from each other as surgery from stabbing.

It is a pity that our politicians are making noises in the wake of the parliamentary debates on FDI in multi product retailing. It is  ironical that the BJP, generally regarded as economically more liberal than the Congress, has taken the matter so gravely after having beaten its drum for six years while opening up the economy to global capital. In its search for new identity, the BJP is turning towards the Left for anti-UPA alliance in 2014. No one knows whether the BJP lost 2004 Lok Sabha polls due to its liberal economic policy as it has not come out with an official study. But in order to win new friends taking an 180 degree turn will not pay dividends either.

(The author is National Editor of Lokmat group)