Modi Sarkar must junk UPA’s flawed approach
Narendra Modi’s government has sensibly extended the extremely restrictive scope of the corporate social responsibility (CSR) guidelines prescribed earlier by the ministry of corporate affairs (MCA). As with most decisions of the United Progressive Alliance (UPA), the ‘mandatory’ CSR rules were structured to drive a torrent of private corporate funds to a few narrow areas and entities selected by the government.
Although the UPA government stopped short of introducing penalties for failure to comply with the CSR rules, these would, undoubtedly, have come in an UPA3. After all, the structure for a perpetual and an expensive bureaucracy had already been put in place in through the National Foundation for CSR (NFCSR) under the Indian Institute of Corporate Affairs (IICA).
The NFCSR is a government-promoted NGO which will raise funds and spend them for capacity building and awards like any other industry body. The UPA found nothing incongruous in its establishment, or that of IICA, which is a separate and needless body that could as well do what the NFCSR plans to do.
Under UPA, IICA would probably have morphed into a regulator to prod and punish corporate India to spend a gigantic Rs30,000 crore of private sector profits for ‘socially responsible activities’.
Will Modi Sarkar put a stop to this ridiculous waste? Or is it too soon for an about turn, especially since lakhs of NGOs and thousands of consultants have their eye on the CSR gravy train? Although there is a crowd of vested interests eyeing this pool of funds, we believe that the government needs to pause and review rather than push forward with hasty implementation of mandatory CSR. I say this even though we have a sister entity called Moneylife Foundation that urgently needs to raise funds for its activities.
First, we need to step away from the UPA philosophy, where the government itself behaved like a large NGO which spread its benevolence in select areas and through select organisations. Second, the Intelligence Bureau (IB) report, as well as other data on the NGO sector, suggests that there is need for a massive clean-up before pumping valuable, post-tax money belonging to investors, into CSR.
According to a 2009 study commissioned by the government, India has a staggering 3.3 million active not-for-profit organisations. This translates to one NGO per 400 Indians—a multiple of the number of primary health centres or primary schools. Of these, an elite set of NGOs receives substantial foreign donations and, as the IB report suggests, some of these are being used for anti-national activities.
The government also is a big donor of land and money to NGOs. The Planning Commission has set aside Rs18,000 crore for the social sector in the XI Plan; in addition, NGOs receive funds from state governments and Union ministries. Further, various regulators, such as the Reserve Bank of India (Depositors Education & Awareness Fund), MCA (Investor Education & Protection Fund) and the capital market regulator have appropriated a few thousand crore rupees of unclaimed money belonging to investors and depositors.
It is common knowledge that a large chunk of this money is either mis-utilised or siphoned away. Isn’t it correct that we demand some transparency, disclosures and weeding out of a few million dubious, or defunct, NGOs before allowing the government to direct private sector funds to them?
More importantly, CSR ought to be defined by the core competency of the corporate donor, rather than funnel funds to areas selected by the government. On 18th June, MCA, in a welcome move, expanded the list of areas eligible for CSR funding. But this is patchwork. Domain knowledge ought to have a role in deciding what a company should consider ‘socially responsible’ work for itself. Here is what we mean.
What would CSR be for an advertising agency? Campaigns to spread awareness about road safety, or cancer, done free of cost for an NGO. Similarly, for an IT company, email or hosting services provided free, or the development of a socially useful app, is appropriate CSR.
Companies ought to have the freedom to direct CSR to the right causes, based on their expertise or area of operation.
Also, so long as an NGO is transparent about its activity and accounts, and meets the income-tax department’s criteria for tax exemptions, why should MCA decide whether or not it will be eligible for corporate funds under CSR? Hopefully a forward thinking Modi Sarkar will realise that CSR by coercion and fiat will only lead to leakage and diversion of funds and defeat its basic objective. What is worse, it will choke funding to many deserving activities and entities especially small and earnest start-ups in the not-for-profit sector.
UTI is celebrating its 50 years of existence, unashamed of two bail-outs with taxpayers' money
In February 2014, UTI Mutual Fund (UTIMF) launched its celebration of 50 years of operations without a trace of embarrassment or irony. Former finance minister P Chidambaram and SEBI chairman UK Sinha, who earlier headed UTIMF, flagged off the celebration.
A coffee table book of UTI’s history was released that day in the presence of almost all but two of its most controversial ex-chairmen in nearly four decades. One was the late MJ Pherwani (who grew UTI into a mammoth fixed-returns giving trust and development finance institution rolled in one, but set it up for a future fall) and the other was the late PS Subramanyam, who presided over its collapse, after it had already been seriously weakened. Did the coffee table book document its ignominious fall and split? How did UTIMF justify its claim of 50 years of glorious existence?
A pliant media is silent about this hoax. Now UTIMF, which had remained headless for a long interregnum under the UPA, wants to continue the celebrations with the Bharatiya Janata Party (BJP) government in power. Media reports say the Fund has persuaded the government to issue a postage stamp to commemorate its 50 years of existence.
For those with short memories, here is a quick update. In July 2001, under ferocious public pressure, a BJP-led government, with Yashwant Sinha as finance minister, reacted with alarm to UTI’s decision to freeze the sale and purchase of its famous Unit-64 Scheme. The Scheme had been started in the year of UTI’s birth and finds no mention in its fake 50-year celebration.
Earlier, in 1999, UTI had survived another collapse with a Rs3,300-crore government bailout. It had a terrific opportunity to revive in the dotcom bubble, but chairman PS Subramanyam only ran it to the ground. In 2001, sharp criticism over continued dubious investments, collusion with brokers, betrayal of public trust and the setting up of yet another joint parliamentary committee to investigate the Ketan Parekh scam forced the government to split the investment behemoth into two.
One was UTI Special Undertaking (SUUTI) which acted as a holding company for certain unlisted investments and blocks of major listed investments and realty owned by UTI. The other was UTI Mutual Fund which is ‘celebrating’ 50 years of existence. Millions of Indians who invested in US-64 for higher returns and tax benefits will attest to the fact that there is no connection between the two entities. So how do the 50 years tot up?
The FTC alleges that T-Mobile used third-party billing to collect hundreds of millions of dollars from customers by hiding unauthorized charges in their phone bills about premium texting subscriptions that cost $9.99
T-Mobile USA CEO John Legere was quick to skirt responsibility this week after the Federal Trade Commission (FTC) filed a complaint that said the mobile carrier bilked hundreds of millions of dollars from customers by hiding unauthorized charges in their phone bills.
“…We put in place procedures to protect our customers from unauthorized charges,” Legere said in an online statement Tuesday. “Unfortunately, not all these third party providers acted responsibly—an issue the entire industry faced.”
The complaint, which seeks to recoup millions of dollars for consumers, centers around third-party providers and the clandestine practice of “cramming.”
According to the FTC:
In a process known as ‘third-party billing,’ a phone company places charges on a consumer’s bill for services offered by another company, often receiving a substantial percentage of the amount charged. When the charges are placed on the bill without the consumer’s authorization, it is known as “cramming.
The FTC alleges that T-Mobile used third-party billing to collect up to 40 percent of the total amount charged to customers. The fees were for purported premium texting subscriptions for content such as “flirting tips, horoscope information or celebrity gossip that typically cost $9.99,” according to the complaint.
Often the third-party charges were “bogus,” the complaint further alleges, and never authorized by the customer. And once they came through, the charges appeared buried and ambiguous on a customer’s bill, according to the complaint (See FTC graphic below).
Furthermore, the FTC alleges that in some cases T-Mobile continued to bill its customers “years after becoming aware of signs that the charges were fraudulent.”
“It’s wrong for a company like T-Mobile to profit from scams against its customers when there were clear warning signs the charges it was imposing were fraudulent,” FTC Chairwoman Edith Ramirez said in a statement. “The FTC’s goal is to ensure that T-Mobile repays all its customers for these crammed charges.”
Look to the fine print
In his statement, Legere said that it is T-Mobile’s position that “customers should only pay for what they want and what they sign up for.” Well, it appears what customers sign up for with T-Mobile is the possibility of being scammed or “crammed” by a third-party provider.
From the company’s terms and conditions (Effective March 27, 2014):
Your Device can be used to purchase services and products from third-party providers and Charges for these purchases may be included on your T-Mobile bill. …We use filters to block spam messages, but we do not guarantee that you will not receive spam or other unsolicited messages, and we are not liable for such messages.
And once it appears on the bill (Again, under terms and conditions):
Billing. You agree to pay all charges we bill you or that were accepted or processed through your Device.
Got that? Accepted OR processed. So let’s review: It appears there’s no guarantee you won’t have to pay for unsolicited third-party charges if the charges are “processed” through your phone. Hmm.
One thing you can do to protect yourself is opt out of third-party purchases. T-Mobile offers the exemption but you have to do it yourself by visiting www.T-Mobile.com or calling Customer Care.
For more tips on protecting yourself from cramming and other types of cell phone fraud click here.