From Radia to Sahara: Why India lnc loves to play victim

An Economic Times story this morning on India Inc not joining a United Nations effort to stamp out corruption says a lot about our corporates and their value systems as citizens of a developing nation.

Indian businessmen are quick to play the victim whenever government agencies go after them. A case in point is the way Sahara has been acting after market regulator Sebi began asking questions about its debenture issues. Remember how corporates rallied together when the Radia tapes became public?

On issues of public importance such as corruption or human rights abuses, they shy away from doing anything concrete except making token gestures and speeches. When Anna Hazare began his movement against corruption two years ago, many corporates came forward to fund him. Around the same time, a number of people, including 22 Nobel laureates, were campaigning for Dr Binayak Sen’s release but not a single corporate was part of the movement.

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[caption id=“attachment_695207” align=“alignleft” width=“380”] Scepticism arises not because Indian businessmen mistrust each other but they trust each other too much and are comfortable as a community that abides by established practice[/caption]

Does this mean that Indian corporates are insensitive or they are concerned only about their profits? Perhaps not. But often their actions and statements make you suspect otherwise. For example, former CII President and Godrej group chairman Adi Godrej’s statement on why no Indian company is part of the UN initiative to curb corruption shows at least a lack of earnestness.

“The United Nations is generally perceived as a diplomats’ group, not one for businessmen. So if the UN Global Compact wants us to join their international working group against corruption, they should approach us through industry bodies like the CII,’’ Godrej was quoted as saying. He could not have been more bureaucratic in his answer than that. If Indian companies are really serious about tackling issues, I would imagine them to jump at every available opportunity.

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At the Delhi Economic Conclave organised by the finance ministry, CII and NIPFP last winter, Princeton game theoretician Avinash Dixit proposed a radical effort by corporates to stop corruption. Professor Dixit was proposing a solution on the supply side where politicians demand and companies pay bribes. He felt businesses were best placed to check this.

Dixit’s solution was the business community get together and keep a watch on their own. If anyone was found to have paid a bribe to bag a contract or some other favour, he or she would be ostracised as penalty. The rest of the community will refuse to do business with him. It would be very difficult for a company to operate in isolation, Dixit had reasoned. It is somewhat akin to community members bringing on peer pressure to prevent default in micro-finance projects.

In theory the proposal sounded excellent but naive if you know Indian business. Predictably, there were sniggers in the audience comprising mostly businessmen. Scepticism arises not because Indian businessmen mistrust each other but they trust each other too much and are comfortable as a community that abides by established practice. Anyway, the cost of bribes is ultimately borne by the consumer.

That is why it is not surprising that there is no company from India to pitch in for an international effort against corruption.