Dec 12, 2012

What do you do when Heads of State indulge in lobbying ?

The chorus is getting louder. So what if Wal-Mart had spent Rs 125 crore ($25 million) in lobbying to gain access to the lucrative Indian retail market. After all, it's not one-off case, US firms have been doing it for long, says another news report (Hindustan Times, Dec 12, 2012. Not only the print media, almost all TV discussions in India in the past few days have by and large carried the same line.

The demand is for legalising lobbying, following the pattern in the US, and thereby bringing in some regulations to make it more transparent. After all, the US has 12,220 lobbyists (consultants, lawyers, associations, corporations, NGOs etc) registered in 2011. There are over 15,000 lobbyists based in Brussels alone, who try to influence the European Union legislative process. In India, except for the industry lobbying groups -- Confederation of Indian Industry (CII), Federation of Indian Chambers of Commerce and Industry (FICCI) and the Associated Chambers of Commerce and Industry of India (Assocham India) -- not much is known about the other players in lobbying.

There are layers at which lobbying operates. Starts with academic institutes, and then goes to economists and scientists. They help with funded studies and reports that come in handy to convince the bureaucrats and politicians. Media then steps in raising the pitch. And finally, it is the politicians, political parties and ministers who remain the prime targets.   

But what worries me more is when Heads of State start indulging in lobbying. If you have followed the news reports regularly, all Heads of State of major economic powers who visited India after 2009 had lobbied strongly in favour of FDI in retail. US President Barack Obama, UK Prime Minister David Cameron, Former French President Nicholos Sarkozy and German Chancellor Angela Merkel had impressed upon the Indian Prime Minister Manmohan Singh on the need to open up for big retail. US Secy of State Hilary Clinton, who had earlier served on the board of Wal-Mart, had even gone to the extent of lobbying with the West Bengal chief minister Mamata Banerjee when her party Trinamool Congress was part of the UPA-II Coalition in India. 

Although the Indian government has agreed to institute an inquiry in to the specific case of Wal-Mart lobbying to know who was paid , if at all some payments were made, to influence the political decision making, the fact remains that the rut runs much deeper than what is visible. Take the case of Dow Chemicals, which later bought Union Carbide. According to a news report, Dow Chemicals had in 2011 spent $ 8 million (Rs 50-crore) to seek market access in Thailand, India and China. Well, this is is only one of the activities that companies often indulge in. Prior to lobbying activities in 2011, the US Securities and Exchange Commission had in 2007 fined Dow Chemicals $325,000 for bribing Indian officials to fast track permission to sell their pesticides brand that are banned in the US and many other countries (Dow bribed Indian officials with cash. jewellery and hospitality, Economic Times, June 28, 2010.

India had instituted a Central Bureau of Investigation (CBI) inquiry into the bribery case. But did you hear anything after the case was filed? And knowing how the Union Carbide was for all practical purposes let off the hook for its role in Bhopal Gas disaster, big business would never be held accountable for its acts of omission and commission, forget about criminal culpability.  

Monsanto, the global seed and technology giant, is known to be aggressively pursuing the introduction of controversial genetically-modified crops in the developing world. In 2005, the US Department of Justice had charged Monsanto with bribing Indonesian officials, and the company had agreed to pay a fine of US$ 1 million (Department of Justice, Interestingly, the bribe amount of $50,000 to a senior Ministry of Environment official was shown as 'consultancy fee' in the company's books. In other words, it was shown as a lobbying fee. How does one therefore try to separate lobbying from bribery? No company has a separate head for bribery in its books and records. I don't know how can an inquiry separate the grains from chaff?

The GM industry has set up an NGO for lobbying purposes. The International Service for the Acquisition of Agri-biotech Applications (ISAAA) has an office in India, like many other developing countries. It lobbies with the scientific institutions as well as the politicians. There are instances of such lobby groups routinely taking journalists and government officials on visit to Monsanto's headquarters in America. This may be purely legitimate form of lobbying, but goes a long way in manipulating public opinion. Coming back to Wal-Mart, the New York Times had sometimes back had taken the lid off a massive scandal by Wal-Mart in Mexico -- where it allegedly paid bribes to seek expansion of its stores (Wal-Mart's US expansion plans complicated by bribery scandal. NYT April 29, 2012. In India too, an investigation has been launched into the violations of the foreign investment rules by Wal-Mart.

I don't therefore understand how can we believe that lobbying is completely a pious and legitimate activity unless we try to dig out how the companies bribe officials, and that includes economists, agricultural scientists and media owners, to get its way through. Lobbyists have known to be moving in the corridors of power, and more often than not carrying a bag of money. Ask any business and political journalist and they will tell you who's who of the corporates who have their lobbyists moving in the corridors of power. Not only Niira Radia, quote a large number of corporate lobbyists have been successful on the job, and seemingly operate silently without the public glare. Most decisions that you think have been taken in the national interest are actually swayed by money bags. Isn't that lobbying? Isn't lobbying therefore a cleaver phrase to provide a neat cover-up to everything bad associated with bribery?    

It is a known secret that media remains one of the biggest beneficiary of lobbying. Not carrying a news report, which obviously benefits the corporate client, is one such unnoticed activity that media indulges in very frequently. Let me illustrate. At the height of the Wal-Mart debate in parliament, some media houses (who knew about it) had refused to carry a news report from Punjab which showed Wal-Mart paying a meager Rs8 to farmers growing baby corn. Wal-Mart sold it in wholesale for Rs 100/kg, making a neat Rs 92 in the process. This would have negated and exposed the government's claim that big retail would provide a better price to farmers by removing middlemen. Moreover, some of the major newspapers have never (or rarely) carried any critical view on FDI in retail. We know it why. Still more importantly, the way media appears more than keen to seek legitimacy for lobbying raises eyebrows.     

Lobbying has over the years become more sophisticated. It is not only a particular bureaucrat or a government official who gets an all-paid foreign trip or jewellery or other expensive gifts (like the way doctors are bribed by pharmaceutical companies as part of the lobbying activities to promote their brand of drugs), lobbying is now becoming a diplomatic activity. Several times we know how the US Ambassador in India (backed by the USIS and USAID) for instance had lobbied hard to push American commercial interests, including the nuclear treaty. EU diplomatic missions regularly hobnob with Indian officials lobbying on behalf of their respective businesses. Sometimes back, Wikileaks had exposed the use of diplomatic channels for lobbying across the world. Diplomatic lobbying also comes with arm-twisting, if required. Many such instances were exposed in Wikileaks.

Also see: The world of lobbyists. Deccan Herald.


Anirudh blog said...

You very well said the fact about Wall-Mart and such other giant retailers. Govt. want to bring pvt. sector under anti corruption law like Lokpal. Is the lobbying also a type of corrupt practices. How can govt. control the hoarding and fixing prices of essential commodities done if such giants enter the market. Hoarding done by such giant companies cannot be punished. There should be a mechanism for keep any materials with shortest time and expiry date for in and out esp. FCI godowns and warehouses to address the issue. You are well exposed the UPAs game plan.


its true..lobbying should be aloud..but India also needs to improve. Because if don't want walmart in our country..We should get organized like..Walmart(an organized retail chain) Retail has to be improved in India. Need of Organized Retail

Beat the competition through Competition

ABTC said...

lovely post

Anonymous said...

when I see such things happening, I see 1 simple solution - Right To Recall & Reject. Politicians will do anything to save their "kursi / power". Right to Recall & Reject your elected reps anytime will be the REAL POWER in common man's hand. "vote" is the only real power people have in today's democracies but once-in-5yr or once-in-4yr-vote is THE PROBLEM. give people the Right to Recall & Reject and you will see Indian people changing everything themselves by forcing their leaders to do what the people want and NOT WHAT ELECTED REPS WANT else people throw the leaders out immediately with signature campaign following by immediate voting for Recall & Reject. NO NEED FOR COURT CASES OR BEGGING OR PROTESTS OR FASTS OR TV DEBATES etc etc. Dont worry about election expenses, thats the worry of EC and you cant sacrifice democracy just because you dont want to spend money on it. We have paid the price of this thru last 65 yrs. Urgent need. One simple solution.