Citizens' Issues
Corruption: A challenge for managers

Corrupt people take shelter under the age-old protection available to those facing allegations to the effect that “until proved guilty”. If we miss the opportunity to cleanse public life and allow our position in international assessments to drift further, it may take ages to redeem the country’s reputation

In November 2010 writing on “Demand and supply of corruption in India” Dr Bimal Jalan made the following observation on the working of the watchdogs of governance in India: “Investigations are carried out, guilt is established, appeals are filed but nothing much happens after that. Years pass; courts, people and the media soon move on to other cases.” The same feeling, in different situations has been finding expression through word of mouth, media reports and on faces of aam admi captured by electronic media and telecast across the world.

The simmering discontent in the minds of one billion people who toiled to make India rich and were denied any share in the end-product of their work is there for all to see. This discontent is finding expression in various forms, some peaceful, some violent, and most of the time as statistics on hunger deaths, increasing number of people going down the “poverty line” which itself is defective and designed to camouflage real situation. The political leadership is being blind to the realities when they are trying even at this late hour to resolve the issues being focused in well-intentioned movements like the one spearheaded by Anna Hazare. The issues get dodged or diverted by raising trivial differences of views, where the real problem is the fear of any ‘watchdog’.

India has an array of politicians, statesmen, businessmen and bureaucrats who do not face corruption charges. These eminent individuals have a moral responsibility to help the country pull out of the present crisis. UPA (United Progressive Alliance) chairperson Sonia Gandhi had exhorted for “zero tolerance” to corruption while addressing Congressmen in Allahabad sometime back. Her vision did not find takers even among her followers inasmuch as the government guided by her failed to take steps to ensure that at least people facing huge corruption charges did not hold public offices. While convalescing in the United States last year, Sonia Gandhi once again remembered the need to tackle corruption and on return to India promptly requested her party to do something about it.

Going by the dictionary meaning, the word corruption is associated with words like bribe, cheating, evil, badness, decayed, stinking, decayed, false, defilement, wickedness, violation, defective, spoilt, faulty, wrong, malignant, offensive, immoral, unchaste, vile and fallen (the list can go on). Suffice to say, anyone or any institution/organization having something attributable to any formations out of any of these words can be alleged to be corrupt. Luckily not so. It is generally accepted that what is legal is not corrupt. Then, like morality, the perception of corruption varies from individual to individual, society to society and country to country. Meaning, what is construed as legal in one context need not be so in another context.

For the rich and the powerful, there will always be legal remedies, as, historically, the laws are made and interpreted in their favour. No wonder, while really corrupt people take shelter under legal interpretations and the age-old protection available to those facing allegations to the effect that until proved guilty, the benefit of doubt would go in favour of the accused, eminent statesmen and innocent common man get dragged into controversies related to corruption, despite their efforts to maintain high moral and ethical standards in their own lives. In the deluge of corruption that the world is witnessing today, no Krishna will be able to float on a leaf unaffected by the deluge. The value system which is in disrepair globally needs a shock treatment. The initiative can come from India, if the nation decides to make every embarrassment an opportunity to correct and move forward. This can be done only by handling individual corruption cases on the basis of the facts of the case and not with reference to the impact such action will have on coalition government’s equilibrium or the immediate inconvenience or discomfort some individuals will face.

There are several ‘current’ corruption cases which compete between and among them as to which one has more quality ingredients of immense possibilities for multiplying personal net-worth without any value addition. While on the subject of corruption, one is reminded of a quote from Kautilya:

“Just as fish moving inside water cannot be known when drinking water, even so officers appointed for carrying out works cannot be known when appropriating money. It is possible to know even the path of birds flying in the sky, but not the ways of officers moving with their intentions concealed.” (Kautilya Arthasastra, 2.9.33, 34)

Leaving political in-fights and probes by various agencies to take their course, management institutes like IIMs and academicians should consider seriously studying the most ‘popular’ corruption cases of recent times such as 2G spectrum auction, Common Wealth Games and  the allegations against family members of former CJI K G Balakrishnan having amassed wealth disproportionate to their known sources of income. As, generally, management institutes have a soft approach to squandering of money by private sector enterprises, to protect the interests of private sector, subjects like a comparison between the managements of Air India and Kingfisher Airlines with their counterparts in India and abroad also could be done.

The cases cited are illustrative meant to indicate that they are multi-dimensional in nature as stakeholders include politicians, ministers and government officials and a dispassionate study by academicians may bring out socio-economic issues that may have to be addressed as part of the fight against corruption. The study should aim at unearthing the connections or nexus between and among stakeholders at various levels and come out with suggestions/recommendations about the safeguards that can be built into the system to minimize recurrence of similar instances. The safeguards could include, stricter penalties for economic crimes, denial of party tickets to ‘tainted’ politicians for fighting election, periodic publication of names of individuals/organizations involved in economic offences involving, say, Rs100 crore or more and voluntary/automatic vacation of public offices by individuals occupying high public offices and facing allegations which courts or government agencies like CBI admit for investigation.

If we miss this opportunity to cleanse public life and allow our position in international assessments to drift further, it may take ages to redeem the country’s reputation.

(The writer is a former general manager of Reserve Bank of India. He can be contacted at mgwarrier@rediffmail.com.)

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COMMENTS

VISHWAS TOTLA

5 years ago

An excellent analysis of corruption, the main reason being electoral politics,i.e., money to win elections. The fact that the feudal system is still prevalent in another form needs to be noted, and this system is supported by police and judiciary, and sometimes by media too. It is thought that the right education will rectify the blunders, but it has proved to be untrue and the fact is it is aggravated exponentially for the sociological reasons. The need of the hour is bringing the or amending the legislation to bring all the political class and the government servants under strict law which must involve capital punishment, confiscation of ill-gotten wealth, jailed for life etc. This must be part of LOK-PAL, and only then the system gets rectified. Second reason is the ritualistic hindu way of life which has got a lot of flamboyancy and self-esteem to demonstrate leading to accepted grade of corrupt practices. The historic mental attitude has not yet changed. And they presume as their right to enjoy the position entrusted by GOD, very much unfortunate.

ashok sen

5 years ago

A very well written article on corruption,and how our standing in the world is poor on this count.

The problem is that corruption is so endemic, people in all spheres of life have taken it as a part and parcel of daily life,and have by and large lost hope of any change,as the rule makers,who are supposed to be above all the corruption,are the most corrupt.

People have not forgotten the scams - Bofors, CWG, 2G, Adarsh, Lalu Ghotala, e.t.c. They see for years no real action by those in power,who could bring the guilty to face punishment for these massive scams; why should they then listen to Mrs. Gandhis preachings,when her familys involvement in Bofors still lingers in peoples minds.There is total despair/disillusion among the people,and only if a few more upright persons of the calibre of Dr. Abdul Kalam's coming to the fore, can possibly change the perception that we are finished on the matter of corruption and there is no hope.

Press Council wants electronic, social media under its purview

Journalistic ethics apply not only to the print media but also to the electronic media and there is no reason why electronic media be not regulated by a statutory body says the Press Council

 
New Delhi: The Press Council of India (PCI) has urged Union Government to carry out necessary amendments to bring electronic and social media under its purview, saying broadcast media's claim for self-regulation is 'futile' and 'oxymoron', reports PTI.
 
The PCI, which also sought to be renamed 'The Media Council', cited the recent incidents where social networking sites were used to spread rumours that triggered exodus of people belonging to north-eastern states to justify its demand for widening its area of operation and said there should not be any "dilly-dallying" in the matter by the Government.
 
In a statement released on Tuesday, the PCI said that it had resolved that the "Government of India be requested to initiate suitable legislation to amend the Press Council Act, 1978, by (i) bringing the electronic media (both broadcast and social media) within the purview of the Press Council Act, and renaming it as The Media Council." 
 
The PCI also sought more powers for itself, the statement said, adding that it had passed a resolution to this effect at a meeting held yesterday in the capital.
 
"Journalistic ethics apply not only to the print media but also to the electronic media, and hence there is no reason why electronic media be not regulated by a statutory body, when the print media is regulated," it said.
 
PCI Chairperson Justice Markanday Katju has in the past also expressed views that the electronic media should be under the purview of the council.
 
The PCI also gave reasons for passing the resolution to include the electronic and the social media within its ambit.
 
"When the Press Council Act was enacted, there was no electronic media, and hence there was no need for any legislation for regulating the electronic media," the PCI statement said.
 
"Subsequently, the electronic media has come into existence. Journalistic ethics apply not only to the print media but also to the electronic media...," it said.
 
The PCI said that experience had shown that "the claim of the broadcast media for self-regulation is futile and meaningless, because self-regulation is an oxymoron." 
 
"All social activity has to be regulated. Regulation is different from control. In control, there is no freedom, while in regulation, there is freedom but it is subject to reasonable restrictions in the public interest," the PCI statement said.
 
The Press Council also said that it was in favour of only regulation and not control, and that this regulation should be by an independent statutory authority like the Press Council of India and not the government.
 
The Council said that it presently has 28 members (apart from the Chairman), of which, 20 are representatives of the Press.
 
"These 20 members are not appointed by the government but elected by press bodies. All important decisions are taken by majority vote. If the electronic media is also brought under the Press Council (to be named The Media Council), the electronic media will also have their representatives in the Council," it said in its statement.
 
The Council said that recent happenings had indicated that regulation of media was important.
 
"In recent times, experience has shown that the unregulated electronic media is playing havoc with the lives of the people. An example is what happened to the people of North-East," the PCI statement said.
 
"Hence, the Press Council resolved that now the time has come when there should not be any dilly-dallying in the matter by the Government, and the amendments to the Press Council Act, as proposed above, should be made forthwith," the PCI said.
 

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SEC aims to shut down $600 million Ponzi scheme

The US watchdog, the Securities Exchange Commission, announced its intention to clamp down and virtually shut out a $600 million Ponzi scheme called ZeekRewards. Will our regulators and law enforcers learn?

United States market watchdog, the Securities Exchange Commission (SEC), announced its intention to clamp down and virtually shut out a $600 million Ponzi scheme called ZeekRewards. Such proactive action is rarely taken by the US regulators and law enforcers. Stephen Cohen, an associate director in the SEC’s Division of Enforcement said, “ZeekRewards misused the power of the Internet and lured investors by making them believe they were getting an opportunity to cash in on the next big thing. In reality, their cash was just going to the earlier investor”.

 

According to the SEC press release, it is believed that Paul Burks, the founder of ZeekRewards, has agreed to settle the SEC’s charges against him without admitting or denying the allegations, and agreed to cooperate with a court-appointed receiver. Burks has agreed to relinquish his interest in the company and its assets plus pay a $4 million penalty. Additionally, the court has appointed a receiver to collect, marshal, manage and distribute remaining assets for return to harmed investors.

 

The premise of the scheme was to recruit investors or “qualified affiliates”. Qualified affiliates have no role in the organisation except to recruit more helpless individuals and sign up as investors or qualified affiliates”. It is alleged that Burks withdrew approximately $11 million of investors’ (qualified affiliates) money and distributed $1 million to family members. According to SEC’s court complaint, which seeks to shut down the company, ZeekRewards employs a pyramid ‘Matrix’ to reward its investors for recruiting others to join the scheme. The company places each newly recruited affiliate into a “2x5 forced-fill matrix,” which is a multi-level marketing pyramid with 63 positions that pools new investors’ money. Basically, the success of the scheme depends how many people are ‘recruited’. These are the classic makings of the Ponzi and multi-level marketing scheme.

 

At some point of time, there will be far too many investors, or too few new investors to ‘pay’ the older ones, to sustain the pyramid scheme and is bound to collapse. And this is precisely what SEC thinks will happen. It said in the complaint, “ZeekRewards” current investor payouts are approaching, and may soon exceed, total incoming revenue. In July 2012, total revenue for ZeekRewards was approximately $162 million, while total investor cash pay-outs were approximately $160 million. Further more, it is believed that owners of ZeekRewards hold approximately $225 million in investor funds in approximately 15 financial institutions. These funds are in danger of rapid depletion. What is more pertinent is that vast majority of the funds are being held by payment processors as reserves against potential credit card “charge-backs”.

 

Ponzi Schemes are nothing new to the world. Their recurrence keeps happening, often right below regulators’ noses, especially in India. We, at Moneylife, had written about it at length and recently over here: (http://moneylife.in/article/mlms-now-want-to-invest-money-in-india-really/27968.html). Will our regulators and law enforcers take notice?

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