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Corruption in India: Four telling facts and stats

The ever-excellent Private Eye magazine here in the UK has run a pithy piece on the current political and corruption situation in India this week.

Amongst the damning political analysis of a weak government and rudderless ruling party I found four rather salient points:

1) ‘Many’ businessmen say they have spent more in bribes over the last two years than in the previous 40.

2) Tata invested $4bn abroad rather in 2009-10 compared with $200m locally

3) Mukesh Ambani, the world’s fourth richest man, invested $5bn in Africa and only half that amount in India, in the same period

4) Bharti Airtel, India’s largest mobile operator, invested $16bn abroad and $2bn at home, over a similar timeframeNow.

Whilst the stats tell us something here, there are of course lots of reasons why each of points 2, 3 and 4 might be true.

An appreciating currency, offshoring of taxable income, a desire to expand, taking up cheaper opportunities elsewhere, all of these are of course possible factors here.

But none of that means there is not at the very least a strong perception that corruption is rampant in India, and getting worse.

Let’s say that’s true (likely not that much of a leap!), what does it mean for large companies?

The issue is now high up the political agenda. Tackling it is another matter.

Here’s one proposed solution.

National incentive structures aside, (Which, by the way, business groups could take a public position on, particularly to push the notion that countries could climb the TI Corruption Perceptions Index and gain further FDI as a result) what can smarter business do in the fight against corruption?

Coalitions against corruption with clear reporting and joint ‘ethics pacts’ between groups of companies are another way large companies can help fight corruption.

The Philippines is one area where there has been a lot of activity.

Business coalitions have also been utilised in central and south America.

I know of at least three in Paraguay, Brazil and Nicaragua.

A further method is by supporting institutional reform.

Here’s a report I wrote on this area a few years back.

Here are some of the key lessons for managers from the report:

•Work in partnership or multi-stakeholder formats to increase legitimacy and decrease the potential for conflicts of interest, but recognise that this does not eliminate these problems.

• Coordinate with other actors involved in related development activities.

• Ensure a clear understanding of institutional capacity building goals, each actor’s responsibilities,and a timeline for progress. Outline these points in a ‘memorandum of understanding’ to help protectthe interests of all involved.

• Prepare stakeholders for the longer term nature of outcomes and focus on transparent processes.• Design a plan up-front for transitioning the ownership of programmes and capacity over to the state.

• Link institutional capacity building activities to one or more of a company’s core competencies.

Aside from supporting smart policy/incentive reform, not paying bribes (obviously), joining coalitions and engaging in supporting of institutional reform on a practical level, what else did I miss here? I’d be interested in reader comments.

P.S. Ethical Corporation’s recent briefing on India is here.

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