Citizens' Issues
Corruption bad, tax evasion good, cooking the books best—a basic primer from Transparency International

Whenever you criticise corruption and lack of ethics in India, be sure to track where the money is siphoned out—to the so-called developed countries, ‘free’ from corruption

Come October every year, we witness a repeat phenomenon. It is done with much breast-beating and nodding of heads after morning tea and networking. This is usually followed by a sumptuous lunch, after which there is a nap during the afternoon session, which is given to sponsors of various (sometimes dubious) sorts. Finally, there is an evening cocktail reception, which is well-attended, for obvious spirited reasons. This is also called the function for revealing the Global Corruption Perception Index by Transparency International (TI). It is usually done with some sweeping generalisations like "India continues to be (most) corrupt". This was the tagline for 2010.
Typically, a TI survey involves interviewing about 1,00,000 people globally every year, from about 85 countries. It involves specific questions pertaining to the supply side of corruption, which exists in about 180 countries. There is no further information on who these people are, how they are selected, and what their eligibility for such surveys is. It is assumed, however, on the basis of conversations had in passing with some people at TI-India (whose India office is about 300 metres as the crow flies from where I live) that it is more or less the same people every year. These are people who are supposed to be "influential" people—whatever that means.
You can read more about TI-India here:

For this, they have a global network, which seems to have the eyes and ears of those who matter, and a very well-oiled PR web.
TI releases, mainly, two products every year—(1) The Global Corruption Barometer in December and (2) The Corruption Perception Index in October. In both cases, since inception, the end result places India at the bottom of the barrel as far as corruption goes. So whether it is 1,000 families surveyed, or a lakh people interviewed, the results are invariably the same—the developed countries are shown as being less corrupt and the developing countries are shown as being more corrupt. This repeats without fail—and is then the basis of a fair amount of media publicity and perception management. So, the realities of corruption globally get conveniently sidelined.
And the reality is this—that for a "supply side" of corruption to exist in some developing countries, as there is, in immense proportions without a shadow of doubt in India, there has to be a "demand side" of corruption, elsewhere. This is especially true in non-corrupt developed countries—and that has been an historical truth from the day financial transactions were first invented. It is very interesting to note, therefore, that the issue of who sponsors, supports and provides financial backing for TI's very influential and fairly affluent lifestyle. It is often not as transparent as it should be. In addition, as this article will show, countries proven to be the worst in a corruption index in "demand-side" corruption are shown as being the best and purest of the lot in the TI indexes above. Is that because TI has been sponsored by the likes of Enron, Elf, Siemens, Lockheed Martin and others? Are they themselves at the centre of major issues pertaining to tax evasion, corruption and cross-border monetary movements, of the not exactly, the pure sort?
So, to take this further, this article tries to explain, what "demand-side" of corruption is.

Here is a simple number—The World Bank has endorsed estimates that in 2009, illicit financial flows out of developing countries were to the tune of $850 billion to $1 trillion. These were as provided by Global Financial Integrity (GFI), which made a strong case to interpolate TI's figures on supply-side corruption. It was done to understand, where the corruption money went, where did it go in, and more importantly, who or what motivated it. Likewise, it is estimated that the narcotics economy from mainly developing countries reached anything between $650 billion to about $1.1 trillion per annum in 2010—figures collated from various sources-so, where did it enter the global financial network?
The question deserves being repeated.
Where does this money go, how does it get "cleaned up" and re-enter the system? Is it possible that the poorer developing countries can handle such heavy monetary flows out and back in? Are these born out of a variety of corrupt practices, on their own? Certainly not! To do this, they need the help of the global tax evasion and secrecy networks. This is how the countries find themselves as "cleanest least corrupt" on TI's list. It is almost as though TI's list of non-corrupt countries is a beacon for the supply side of corruption to synchronise with the demand side—the cleaner a country is in TI's list, the more likely it appears to be able to provide ample safe parking for the funds flowing out of corrupt countries. It is a bit confusing, at this juncture, so here's a simpler example on the street level, pithy, but relevant.
(From the Indian context of the recent anti-corruption movements, it is very important to understand this—all of us know that massive amounts of wealth, assets and money have been looted from India and parked somewhere abroad. But it is almost impossible to track this, and even more difficult to get it back. Grinning ministers, standing side-by-side claiming they have resolved internecine issues, do not get the looted assets back. It is like the old classic song about theft ...

 But unless we understand the real issues, and stop believing everything the thieves themselves say, we will never reach the second half of the song which deals with recovery).
So for a moment, let us simplify matters. In a typical scenario, who is more corrupt, who is guiltier—a sex worker selling her body in Falkland Road, Mumbai, for whatever reason, or the customer who pays for it, for whatever reason too? Or is it the landlord, the pimp, the cops, or the system that makes it possible for this transaction to take place? Who is more corrupt? In a typical scenario, we have all been programmed to blame the bottom end of the food chain, and believe that the person selling her body, is corrupt, but we know that is not really correct. It is like calling a bottle of liquor evil. Consider Mary Magdalene, anybody, or Shabri of the berries!
(From the further interesting aspect of the traditional areas where prostitution is rampant in Central Mumbai, it is interesting to be aware that the landlords and tenants for some of the more famous buildings where are found the famous "cages" are the same landlords and tenants for some of the more famous hotels and other "heritage" properties in South and Central Mumbai. I will have more to say on that some day).
To understand the "demand side" of corruption, we have more recent research and findings by a group of international tax experts, media-persons and others. Tax secrecy and lack of co-operation with investigative agencies in cases of "supply side" corruption assets reaching their shores is most rampant. It is especially true in countries considered not corrupt by TI. To take this further, they evolved something called the "Financial Secrecy Index", which listed out on scientific empirical evidence a graded list of countries, where it was easiest to park stolen assets—to put it simply. And not just did these countries simply provide the facility for parking stolen assets—they actively and aggressively went about seeking these stolen assets, in most cases actively conniving with corrupt "supply side" countries and regimes worldwide. And then, to ensure that these stolen assets could not be tracked back, they made laws of their own which simply prevented any... transparency.
Here's more on the issue of financial secrecy and corruption, both demand and supply side, not just skewed against the developing world.

 At its simplest, the list and ranking of the most corrupt countries from the "demand side" of corruption can be found here. It appears to be almost an inverted copy of TI's list.

 The top-10 most corrupt countries, from the point of view of financial secrecy and lack of co-operation with investigations, in order worst to best, are USA, Luxembourg, Switzerland, Cayman Islands, UK, Ireland, Bermuda, Singapore, Belgium and Hong Kong,  

 As an ex-seafarer, this does not surprise me—we were exposed to the realities of geo-politics and international commerce at a very early age. However, most of us chose to ignore the realities, as we wandered through the other issues of life. When it is brought out in such a scientific manner, with facts as well as figures very vividly interspersed with episodes of known global corruption, it is a revelation to me. At the same time, I know it is true—international trade, banking and the payment processing industry teaches one a lot, as does the gaming industry and the preventive defence industry.
The issue of corruption in India does not start or finish with a lower level functionary taking a bribe. It does not start or finish with a multi-thousand crore scam either. If anything, that is not even a symptom of all that is wrong. The issue of corruption in India, as in other emerging countries, has more to deal with the larger thefts with assets being sent out, taking place in and around India, since around the time the Europeans came into the Indian Ocean economies. Before that, in what can be called the Islamic era of Indian Ocean economies, what was stolen from the people remained in India, and justly or unjustly—rotated around!
Yes, it wasn't perfect, but the Kohinoor moved around within the subcontinent.
But this huge change took place right after the Europeans came over, when their economies were floundering in the 18th century and "new worlds" were being "discovered."  They realised that here were people, whose "leaders" were, unlike the Chinese and Japanese civilisations, willing to sell their souls and wealth, for symbols and secrecy. And one of the first things these invaders from across the oceans did, when they landed in Al-Hind was to convince us that we and our ways were inferior and corrupt.
A similar risk exists today. Can you see our friends at TI doing the same thing for their bidden masters even today? Right from the smallest smirk about anything "traditional" to convincing us that we are absolutely more corrupt than anybody else—it is all so brilliantly orchestrated. Can you see that?
I can. I said earlier on I live 300 metres away from TI's India offices at Lajpat Bhavan. I know people there, who have increasingly become unhappy about the way things are going. Lajpat Bhavan is a fairly large campus that I have been visiting, since I was a pre-teen schoolchild. As a coincidence, I know many of the gardeners, guards and safai karmacharis there. Much of our shopping for non-MNC products is done from there. Nothing much stays secret in Lajpat Bhavan.
My grandparents marched with Lala Lajpat Rai in undivided Punjab. There was always this self-belief and refusal to buy the European line for anything without questioning, something I learnt, at and in my grandmother's lap, which is being flouted by TI in India.
What TI does to try and destroy the truth and bring it out as though corruption is only supply side from India, is unforgiveable, anti-national, and demeaning to itself, as well as an insult to our intelligence. It would behove them better if they stop toeing whatever line they have been told to follow. We must look at corruption indexes from a more holistic and global perspective, both supply and demand side. And it would be really something if mainstream media this time around asked them to do so, too— instead of just swallowing everything like Macaulay's children.
Certainly, there is a lot that is wrong with things in India—but can we also have a 360 degree look at what is being done to India, in the context of the rest of the world, too?



R Nandy

6 years ago

There has been a number of news items in the past regarding tax treaties b/w German/UK governments( with TDS being deducted directly by swiss authorities for investments made by German/UK nationals in swizerland.There will also be a nominal deduction in the begining.Of course this bypasses swiss secrecy laws as investor information will not be reveled to the home countries.This is very similar to a forced VDS scheme.
I think this is a very workable solution for India also.But,I have not seen any discussion on this in the Indian media.There are only talks of 'punishments' for the rich and black money ,as if all money kept abroad has been earned selling drugs.This is also a win- win situation both for the rich as well as the government and help in reducing the ever increasing fiscal deficit.



In Reply to R Nandy 6 years ago

R. Nandy ji, thank you for writing in.

The Indian mainstream media has its own compulsions of lying prostrate when asked only to bend when it comes to fair business reportage.

The Indian business community is meanwhile scurrying around to try and get some sort of an amnesty scheme up and running so that they can get stolen assets back into India before the tax havens tax them on behalf of the developed countries behind the said tax havens.

In the bargain, we can expect some of our political leaders to try and sell the country short again, unless we do something.

Please help and do your bit by distributing this article as much as possible. Most people have no idea that corruption is a multi-path street, choosing to believe the snake oil we have always been sold - that we are some sort of stand alone corrupt people and country.

Humbly submitted/vm


6 years ago

We need more of such articles with constructive analysis.
The working of all CVOs/NGOS needs to be evaluated vis a vis their Vision, Mission and Strategy.There are lot of gaps in"WALK THE TALK".
Col Dharma



In Reply to Lt Col K R DHARMADHIKARYRETD 6 years ago

Thank you for writing in, Colonel Dharma, and all one says is that we wish and hope that organisations like Transparency International will correct their take on both the demand side as well as supply side of corruption.

Please help by passing this article around,



6 years ago

i wonder if TI is selfproclaimed NGO?
who are their sponsors and auditors..hope not same as Satyam/ enron types?
we need to learn the art of marketing from these is like Gobbels truth version.

TI survey seems very similar to Oscar farce of every year..same panelists filling offline survey , winner is predecided.



In Reply to pk 6 years ago

TI International's sponsors are well known proponents of the "free market" school of thought, where free market means our markets are open for them, but their markets are not open for us.

This is the golden thumbrule of all the free market proponents globally.

Within India, TI has some sponsorships from some PSUs, so we know what that means. For the rest, they have a very brilliant PR agency and we do not know who pays them, they also have the Indian media lapping up what they say without question because the brochures are very shiny. And dinner with cocktails moves much in Delhi.

Are they an NGO? No, they behave more like a superior entity, passing their atrophied judgement on a Nation.

Humbly submitted/vm


6 years ago

Out of box thinking article. Yes what about Swisszerland which accepts slush money and hidesit or atleast till so far hiding it. Thieves who are hidden from the view of scrutiny by a helping hand are also to be termed thieves.



In Reply to RNandakumar 6 years ago

Thank you for writing in, R Nandakumar ji, and this article is also along the lines of the thought process with the Occupy Wall Street move. As well as simple truths and numbers now emerging every day.

The way the Swiss Banks with UK & US help managed to hold on to Jewish assets after WW-2 is just one example of how these things really work.

What is really ironic and sad within the Indian context is that the same large "consulting" firms including the Big Four and More which in the first case helped people move stolen assets out of India to tax havens abroad, are now wearing a paralel hat ostensibly to assist the Indian Government in recovery of those stolen assets!

All that is happening is that the loot and scoot is acquiring even bigger dimensions, as a desperation overtakes those who want to move out, before the real axe of hard times, inflation and recession hit India.

Humbly submitted/vm

SEBI wants companies to disclose 'relevant' risk factors

A SEBI panel has suggested that a comprehensive review was required for the disclosure requirements in the offer documents, which are filed by the companies before sale of their shares to public investors

New Delhi: Capital market watchdog Securities and Exchange Board of India (SEBI) is considering a new set of regulations for disclosure of only relevant risk factors by the companies in a format that is easy-to-understand for the investors, reports PTI.

Besides, the regulator is also planning changes in norms to bring in more clarity in the disclosure of 'related party transactions' and litigations faced by companies.

The ‘related party transactions’ are those that a company enters into with its senior management personnel, promoters and associate entities, among others.

SEBI is concerned over the current practice of companies overloading investors with bulky documents of risk factors that are general in nature, but disguising even business- specific risks as ones having generic consequences, a senior official said.

As per the current regulations, all the companies—either already listed or seeking a listing on stock exchanges—are required to make disclosures about 'risk factors' for them as also the sectors that they operate in.

However, the regulations provide only a broad guideline for such disclosures and SEBI has come across numerous cases of abuse of the existing framework.

A SEBI panel has suggested that a comprehensive review was required for the disclosure requirements in the offer documents, which are filed by the companies before sale of their shares to public investors.

SEBI recently made changes in its norms for the format and contents of the public offer applications and abridged prospectus filed by companies. The changes would be now made in the norms for full offer documents.

It would also study the practices in various global jurisdictions before taking the final call, the official added.

The panel observed that the companies now tend to disclose all conceivable risks and details of litigations, irrespective of their actual materiality, or sometimes extend a specific risk to include generic consequences, thus compromising on clarity and accuracy of risks involved.

Subsequently, it has been proposed SEBI issue certain guiding principles to supplement the relevant regulations on these areas.

Besides, the committee also opined that there was a need to examine the disclosures that should be made with respect to Related Party Transactions.


Being world’s ‘largest’ democracy is not enough

India is in an advantageous position to assume greater global role provided she first conquers her inner conflicts like rampant corruption in high places and a callous, unresponsive and unaccountable administration

Every Indian feels proud when someone describes India as the world’s largest democracy! Life of aam admi in India would be largely different if the focal point of our pride were the quality of democracy rather than the quantity of its population. Hubris over the ‘largeness’ of our population which at best goes to highlight the virility of India’s men and fertility of her women is, therefore, somewhat misplaced. What has ‘democracy’ got to do with it? In the absence of ‘quality’, the value of ‘quantity’ is as meaningless as the abundance of water at high seas where the thirsty voyagers do not find a drop to drink. Rather than boasting about our numbers, there could have been more appropriate reasons to trigger mass euphoria, like quality of governance—better health, freedom from starvation, security against terror blasts, efficient service delivery system, people friendly administration and so on. That humble aspiration of the Indian masses, however, has been sadly belied by the politico-bureaucratic nexus that has firmly rooted itself in India’s governing systems.

There are glaring structural flaws in the world’s largest democracy as its ground application manifests in many ways. Ministers and bureaucrats have devised innovative escape routes and nearly always get away with omissions and commissions, which in a truly responsive democracy would be severely dealt with. While there has been widespread public disgust against poor service delivery mechanism in government offices, our bureaucrats have displayed their skills in working out machinations that would blunt any tool of honesty and efficiency. There are leaders who are still a source of hope for the masses but the number of those who generate mass despair and disgust is increasing shamefully.

Here is a snap test to confirm this. What kind of emotions do names like these evoke in your mind: Buta Singh, Sharad Pawar, Shibu Soren, Ajit Singh, Mulayam Singh, Amar Singh, Lalu Prasad Yadav, Mayawati, Bhajan Lal, Sukh Ram, Karunanidhi, Jayalalitha, and Yeddyurappa…? Much has been already written about those who are already in Tihar Jail and those on their way to it. They have ushered in a peculiar brand of politics unknown in other democracies of the world. Now think of the risks such a scenario poses when India is critically poised to leap into more responsible and powerful leadership roles at global level.

As is amply established by the endless scams involving high-profile ministers and their caucus, it is not odd cases of corruption but the entire governance on a decadent path and needs immediate cure. The contamination has spread infecting all limbs and vital organs of the country including judiciary and the armed forces. It is essential to examine the hows and whys of this decay making inroads into our systems. Let’s accept the fundamental principle—leadership is the nation’s fountainhead, and whatever flows from it, good or evil, shall spread all over. Bottom-level corruption and callousness cannot survive the thrust of good policies and actions from the top. In fact, right now a couple of Indian states are already setting new standards of good governance and a responsive democracy infusing hope in place of despair.

How far have we come in redeeming dreams of the founding fathers of our Constitution wherein the preamble itself is an expression of the aam admi’s aspirations (“WE, THE PEOPLE OF INDIA, having solemnly resolved … and do hereby adopt, enact and give to ourselves this Constitution”)? Here are some ground realities that showcase the working of India’s democracy today:

No recruitment in a government job is possible without favourable character verification from the local police station, which must state that the applicant has never been involved in any incriminating activity and has a clean personal record. An adverse comment from the police will mean rejection of the potential Babu, constable or soldier. The law of the land, however, mellows down considerably for our leaders, as their character credentials do not seem to matter even as they would boss over the clean record holders and lead the country. There are 162 MPs in the current Lok Sabha who are facing charges for legal offences, some as serious as robbery, murder and rape. As we watch, more politicians including ministers are being added to this number. Besides the public outcry, look at who all have been crying for action:

  •  The Law Commission of India in its 166th Report dated 4 February 1999 recommended ‘forfeiture’ of illegally acquired property of politicians and other public servants. The Commission also drafted and sent ‘The Corrupt Public Servants (Forfeiture of Property) Bill’ to the law minister. No action in 12 years!
  • Four Chief Election Commissioners have consecutively and persistently recommended enactment of a law to debar and disqualify the corrupt and criminal candidates from seeking election to the Parliament, State legislatures and other public bodies. The government and our political parties are all in a synchronous mute mode on this issue.
  •  The Administrative Reforms Commission constituted by the Unnited Progressive Alliance (UPA) 1 and chaired by Veerappa Moily who was himself the law minister till recently also gave voice to the above two proposals and recommended appropriate enactment besides institutionalisation of an effective Lokpal in its 4th Report titled ‘Ethics in Governance’ in January 2007. Yet, India awaits arrival of ‘ethics in governance.’
  • The least that the courts can do is to put the cases of tainted MPs/MLAs on a fast track setting a time limit by which the case must be led to its conclusion. Also, the charge-sheeted members should remain ‘suspended’ until absolved of the charges by the court on the same lines as is done for the government officers. Yet, most of them find more comfort in prolonging the cases than expediting. Why?
  •  The much discussed Lokpal Bill has been now introduced for the ninth time in Parliament, though the public demand for the same has been raging for over 42 years. The government has been driven to act only after Anna Hazare’s fast roused unprecedented public ire over the rising corruption in high places. Yet, the air is thick with suspicions about the political intent on institutionalising an effective Lokpal.

In sharp contrast to historic delays and inaction on bills that could significantly change lives of the Indian masses, Bills seeking salary hikes and perks of MPs by as much as 200% (from Rs16,000 to Rs50,000 plus 15 types of perks that add to an MP’s annual package of Rs45 lakh) are passed unanimously in a day without much debate. And, almost at the same time the Planning Commission adds insult to the injury of the suffering masses by declaring that those spending an amount of Rs32 and Rs26 per day in urban and rural areas, respectively, are no longer poor! Whereas India’s own official statistics peg India’s poverty between 37% (Tendulkar Committee) and 77% (National Commission for enterprises in the unorganised sector), there are as many as 645 million Indians living in conditions akin or worse than the 410 million living in the 26 poorest African countries. How do our MPs plan to deliver these millions from misery to a liveable, if not respectable, life style vis-à-vis their own?

India is at a peculiar juncture today. The western world is grappling with economic downturn. Starting from India’s immediate west there is terror, turmoil and anarchy in most of West Asia and North Africa. In such difficult times, India is on a growth path and in  strategically advantageous position to assume greater global role to influence decision making in vital international affairs provided she first conquers her inner conflicts like rampant corruption in high places and a callous, unresponsive and unaccountable administration.

World’s ‘largest’ can be its ‘Greatest’ Democracy, if we can change course soon enough. Option is ours—we can either capture or lose the opportunity, for no opportunity waits for long.

(The writer is a military veteran who commanded an infantry battalion with many successes in counter-terrorist operations. He was also actively involved in numerous high-risk operations as second in command of the elite 51 Special Action Group of the National Security Guard (NSG.) He conducts leadership training and is the author of two bestsellers on leadership development that have also been translated into foreign languages).




6 years ago

Excellent article, but there's no danger of anyone in govt reading it, let alone acting on it. As to your contention that "India is on a growth path and in strategically advantageous position to assume greater global role to influence decision making in vital international affairs", I am sorry but India has missed the bus again by pursuing a foolish policy of increasing interest rates drastically to stifle its own economic growth and exports, without doing anything to curb inflation. Nowhere in the world will you find a more unambiguously single minded suicidal economic policy. May be this is because we have an economist at the helm.

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