passage to a corruption-free india
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8/17/2019 PASSAGE TO A CORRUPTION-FREE INDIA
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APRILMAY THE JOURNALwww.cii.co.uk
CORRUPTION & CRIME INDIA
APRILMAY THE JOURNALwww.cii.co.uk
CORRUPTION & CRIME
Corruption is perhaps as
old as human civilisation,
and omnipresent. The lure
of emerging markets for
globalising forces poses
new risks for them relating
to bribery, grease payments, extortion and
employee fraud. Covering or excluding
corruption or crime is no solution. Thisarticle is an attempt to share insights from
some exceptional thought leaders on corrupt
practices in India.
“Despite being universally disapproved
of, corruption is nevertheless universally
practiced. Notwithstanding this paradox,
there is very little literature that actually tries
to answer it.” So says Dr V Raghunathan,
an eminent thought leader and expert in
behavioural finance, who provides a good
starting for a better understanding of
managing corruption and risks in India.
What is corruption?For our purposes, Dr Raghunathan interprets
corruption as the misuse of public office for
private gains.
It would appear, adds Dr Raghunathan,
when most people denounce corruption,
they do so as thos e at the ‘receiving end’of corruption – paradoxically, the one called
upon to pay bribes. Corruption thereby
becomes repulsive for two reasons: both
morally and economically. As long as the
person is being forced to cough up the
bribe to have his legitimate entitlements
granted and is not paying it to receive undue
favours, it may be difficult in practical terms
to find fault with an average bribe-giver’s
point of view.
He then goes on to say that it may be
reasonable to expect the number of bribe-
givers to be much greater than the number
of bribe-takers. As the one in power, he or
she often is, or is regarded as, the cause of
corruption. Let us assume that the ratio of
bribe-givers to bribe-takers is 10: 1. When you
poll the population in general, a large majority
of them – nearly 90% being bribe-givers –
may disapprove of corruption because of themoral and financial costs it inflicts upon them.
Thus, it takes a mere 10% of the population
to act corrupt for the entire 100% to be
regarded as practising corruption, thus
creating the impression of corruption being
universally practised. How does one negate
this paradox and work towards making
corruption less universal? This remains his key
question. I M A G E : A L A M Y
Shades of corruptionCorruption and fraud, according to Ravi
Venkatesan in his HBR paper Confronting
Corruption, falls into four categories: bribes,
speed money, extortion and employee fraud.
They are defined thus:
Bribes: Multinational companies are
prohibited from off ering anything of value
to a government official, political party or
party official with the intent to influence that
person or to secure an improper advantage in
obtaining or retaining business;
Speed money, or ‘grease payments’: Speedmoney is a payment for doing something he or
she should do, faster;
Extortion: Extortionists are usually solo
rogue actors without institutional backing – it is
often possible to call their bluff ;
Employee fraud: Increasingly, the biggest
corruption threat facing a company is the risk
their own employees may be on the take. Greed
is also driving more management fraud.
The most corrupt professionsThe magazine India Today recently conducted
a poll on the most corrupt professions. As
expected, politicians topped the list, followed
by police and the lower judiciary. A surprise
revelation surfaced when journalists made an
unexpected appearance in the most corrupt list.
The Transparency Global Corruption
Barometerreveals that 41% of Indians believe
the media is “complicit in corruption”. In fact,
consensus exists in the profession on the need
to urgently tackle the issue, according to the
late editor Vinod Mehta in his bookEditor Unplugged.
What reinforces corruptbehaviour?What can possibly inhibit the conversion of
corrupt thought into action? Clearly the fear
of observation or detection, and the fear of
consequences, believes Dr Raghunathan.
So while an act of corruption may be driven
by greed, it can be inhibited by the fear of
detection and punishment.
The fact is that a society is as corrupt
as the system allows it to be. The weak
administrative and political institutions of
emerging democracies perhaps off er an
appropriate environment for corruption to
prosper. This probably explains why in many
developed societies, where the probability of
being caught while indulging in corruption is
higher and the consequences of being caught
are severe, the instances of corruption are
fewer.At one extreme, in India, it would seem that
we are beginning to take corruption in our
stride. We no longer squirm at being ranked
among the most corrupt countries in the world.
We have come to accept corruption as our
national character and hence we do not view it
as a serious and alarming social malaise, as is
evident from the popular support enjoyed by
some of our scamsters in public life.
PASSAGE TO ACORRUPTION-FREE INDIA
As the world’s secondmost populous countryopens up to ever moreWestern business, theneed to overcome its
historical problems withcorruption becomesmore pressing by theday. Praveen Gupta shares some scholarlythoughts on the issue...
Thailand, China, Korea, India and Pakis
have high power distance, since these
countries are probably more autocratic
feudalistic or paternalistic.
In short, explains Dr Raghunathan, a
country like India will have to reduce it
power distance index enormously if it
hopes to make the society less corrupt
The authority to demand one’s entitlemfearlessly and face a public official will
snowball in society only if the power d
index is brought down. One can readily
the relationship the power distance ind
must have with literacy, education and
economic wellbeing.
So one hopes that as the country’s p
capita income improves and the literac
level goes up and we put various syste
checks and balances in place for great
transparency, we should be able to con
corruption and a day might come when
could say corruption is widely condem
and, quite rightly, not so widely practi
Tough roadBe prepared to tough it out, reminds
Mr Venkatesan in his HBR paper. He be
success is perfectly possible in emergi
markets without making compromisesthere are real consequences and real c
for those who uphold ethical behaviou
especially in the short term.
Global leaders should publicly suppo
bribery laws, speaking out against corru
practices in their industry and explicitly
acknowledging any loss of business that
results from ethical principles. Chief ex
must ensure that every employee in eve
part of the world is utterly clear about w
conduct is acceptable and what is not.
The thought leaders quoted here are
an epitome of courage in accepting an
articulating the state of corruption. Th
is also a recurring push on this front fr
the country’s expanding and assertive
middle-class. Thanks to activism in sec
of media coupled with the country’s ap
court (Supreme Court), the dissatisfac
channelling into a slow and steady cleaThat should only bring cheer to unde
in fiduciary, professional and personal
liabilities, concerned about reputation
cost of doing business in India as it ope
for more global action.
Praveen Gupta, FCII, Chartered Insurer is
managing director and chief executive o
Raheja QBE General Insurance Co.
An insider’s accountVinod Rai, India’s 11th comptroller and auditor
general (CAG), and a symbol of the country’s
anti-corruption movement, throws light on
his time as the CAG in his book, Not Just An
Accountant . It focuses on the many pitfalls
– ethical, political and economic – India
must avoid if it is to emerge a stronger, more
prosperous nation.In this narrative, rich in anecdote and
inside information, Mr Rai speaks of the major
scams that shook the country in the new
millennium. Among the case studies – chosen
for the diversity of failures they highlight – are
the procedural irregularities in the issuance
of licenses for the second-generation (2G)
spectrum; the XIX Commonwealth Games;
the enormous losses the country was forced
to endure in the allocation of coal blocks to
agencies incapable of efficiently exploiting
our national resources; the wilful flouting
of procedures and the clear evidence of
crony capitalism in the exploration of India’s
hydrocarbon resources; and the tragic tale of
civil aviation in India.
Mr Rai endeavours to keep future
generations apprised of the pitfalls to be
avoided in the mission for nation-building.
The pain they have experienced should inspirein them the strength for greater success. Each
challenge must spur greater response. Each
failure should provide a greater stimulus for
success. And more importantly, it is vital to
recognise that success will not be handed on
a platter; one will have to go out in the sun
and toil for it.
Reducing the ‘power distanceindex’Dr Raghunathan quotes Malcolm Gladwell
from his book Outliers, where he alludes to
Gerard Hendrik Hofstede’s ‘power distance
index’ as a framework for assessing cultures.
It measures “the extent to which the less
powerful members of organisations and
institutions (like in a family or a business)
accept and expect that power is distributed
unequally”. The higher the acceptance and
expectation of power inequality, the higherthe ‘power distance’.
Using this framework, it is seen that
countries like Austria, Australia, Israel, New
Zealand, Switzerland, the UK and several
Scandinavian countries represent low
power distance since these societies expect
and accept power relations that are more
consultative or democratic. On the other
hand, countries like Malaysia, Indonesia,