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FICCI has a say in major economic and industrial policies. Its office-bearers interact with top ministers and government officials. Its new president is the chairman of HSBC which has a spotty reputation overseas while in India it is alleged to have been involved in large and crude havala transactions. Is this desirable?
Federation of Indian Chambers of Commerce and Industry (FICCI) is the oldest apex chamber of commerce in India. It covers the country, and represents all sizes of industry, and trade. It consists of numerous specialist and generalist associations. Unlike the other two apex chambers it is not confined to manufacturing companies or to those mainly with foreign shareholding control.
As an apex chamber FICCI has a say in major economic and industrial policies of India. Its office-bearers interact with top ministers and government officials. They are expected to be objective, above any suspicion of vested interest, and represent views of industry and trade for the good of the country. The general reputation of their organizations and themselves must be spotless.
The election of the first woman president of FICCI last week raises concern. A senior and experienced person she is a well-known public personality. She will be the first banker to head FICCI. She has had work experience in three foreign financial institutions—Grindlays (now Standard and Chartered), Morgan Stanley and HSBC. In HSBC she has risen to heights no Indian has before. She is chairperson of the bank in India. Her connections and networking among politicians, administrators and businessmen in India is enviably wide and would be very useful to FICCI in making its voice heard.
Her appointment would normally be very welcome. I am acquainted slightly with her and have no personal animosity to her or her employer.
The latest issue of the ‘Economist’ writes about the big banks (HSBC, Standard and Chartered, UBS, etc) and their illegal activities for which they have paid unusually large fines in the USA. It calls these banks “too large to fail” and that hence their top executives are not in jail. HSBC alone paid a staggering $1.9 billion as fines in the USA to settle charges that included money laundering. The LIBOR scam in the United Kingdom resulted in some banks paying large fines in the UK and the US. The ‘Economist’ says that American regulators wanted to avoid criminal trials of the top executives of the concerned banks including HSBC because these banks are huge and such trials and convictions could have disrupted world financial markets. HSBC has thus a spotty reputation overseas.
In India there have been reports about HSBC being involved in large and crude havala transactions. It was reported that their representatives would collect rupees from homes and offices in India and guarantee that they would be deposited in overseas safe havens on which the depositor could draw cheques. Such transactions are unlawful under Indian laws. No investigation or action by the government has so far been reported. No political party has yet made an issue of this. The allegations may well be false. But they have not been disputed.
Naina Lal Kidwai who has been in HSBC for many years at the highest levels has been elected as President of FICCI. This is despite her bank in the USA being punished for wrongful activities. In India HSBC is alleged to have been involved in what if proven, are criminal acts. Such crimes must have been committed during her time at the top of HSBC India. If the allegations are true, they may have been committed without her knowledge. A full investigation may also clear the bank in India from these charges.
The image of industry has taken a beating in recent years (spectrum scam, coalgate, land grabs, and others). The FICCI president must belong to an organization that has a spotless record, as must its representative. All associations (chambers, trade, sports, professional) must follow this good practice.
Read here about Arvind Kejriwal’s HSBC expose.
(Surendra Laxminarayan Rao is a columnist in leading Indian newspapers. He has written or edited fifteen books, many papers and hundreds of articles. His latest book is "Powering India - A decade of Policies and Regulation". He was also the first chairman of the Central Electricity Regulatory Commission)