Somesh Arora: The nexus trail — Which is the lesser evil?

The current exposure of the Political-Journo-Corporate nexus is creating quite an uproar in general public. The outcry is understandable. The underlying thinking is that India should imbibe and reflect all the ideals enshrined in our Constitution. Deviance, therefore, attracts attention and cynicism. However, in reality no political system is free from its own share of ills and mismanagement.

Functioning of a sovereign State , in even a democracy, remains shrouded in secrecy away from the public glare. No state can afford to be totally transparent in a whole gamut of its functioning. We, therefore, have a plethora of intelligence officers writing their memoirs post-retirement or sites like WikiLeaks making money through exposing what is not known to the public about the governments of the day.

It is believed that of all the government business about 40 to 50 per cent is carried out in opacity even in the countries professing transparency. When freedom of press in any country becomes a reality, there is always a certain section of the media which does its job with dedication and this throws open about 4 to 5 per cent of the state secrecy out in public. For a country like India, given its numerical strength of 1.2 billion, this 4 to 5 per cent assumes significance because it translates into reams of newspaper print, hours of TV media and gigabytes of the computer memory.

Against this backdrop, the current furore over the ‘Radia tapes’ needs to be understood.

Certain sections of the corporate world are anguished about things being blown out of  proportion and their private lives being thrown  Continued from page 1

open to Public.

PM has justified the subjugation of right of privacy to the state’s right to protect its national interest.

Phone-tapping for any state is nothing new, but the contents coming out in open indicates failure of intelligence agencies to keep its secrecy.

The government will do well to curtail rights of those agencies, who clamour for such facility for themselves, but are unable to discipline their officers against prevention of leakage. Especially agencies that deal with economic offences have to use such facilities with due diligence. We have the shining example of one such premier agency in Customs and Excise Department, which has never worked with such facility, but still has some of the best detections and anti-evasion record to its credit.

It does not seek any information returns, or the shifting of burden of proof on offenders under law and solely depends upon foot soldiers of intelligence officers and evidentiary trails to deliver the best.

In any case, the best intelligence always comes from the covert sources as far as economic offences are concerned. Not having tapping facility cannot be such a big handicap for tax agencies nor having it is a boon after a while, as the targets start taking all precautions. The corporate lobbyists will now only start using better technologies, bringing to naught the technology of these departments. There is also a need to keep intelligence and investigation separate as the departments having public dealings and such facility of electronic surveillance are bound to misuse it in the long run.

That brings us to the larger question of corporate ethics and governance raised by the PM.

A peep into history indicates that with the advent of mafia and gangs in 19th century in USA and Italy, their nexus with politicians started gradually and became evident to the world in 1950s.

The alliance only flourished with drug trade in 1970s providing the former with enormous cash flows and later the power umbrella. In 1980s, the most profitable business for this mafia was drug and arms running.

The American Mafia (or simply the Mafia in the United States), also known as Cosa Nostra or La Cosa Nostra, was an Italian-American criminal society and offshoot of the Sicilian Mafia. The Italian-American Mafia emerged in New York's Lower East Side and other areas of the East Coast of the United States during the late 19th century following waves of Sicilian and Italian immigration. It has its roots in the Sicilian Mafia, but has been a separate organization in the United States for many years. Neapolitan, Calabrian, and other Italian criminal groups merged with the Sicilian Mafia to create the modern pan-Italian Mafia in North America.

The Indian version, however, mainly constituted of drug lords and smugglers or occasionally in the hinterland, the coal and other mine mafias. It was believed that the drug mafia had penetrated the political systems of at least 25 countries out of 160 odd in 1980s and the number was likely to swell to 70 countries by the year 2010.

Thank god! It did not happen, that was only because from 1990 started liberalization process of many developing countries on one hand and also because countries like Afghanistan, Pakistan saw political destabilization due to arms and drug peddling, which was realized as a bad example of this nexus. In India, the body blow dealt to gold smuggling due to liberalization and reduction in duty coupled with dent on drug smuggling through sealing and fencing of Pakistan border, ensured the virtual demise of smuggling syndicates and local mafia.

The combine of mafia-bureaucrat- politician was most lethal as the growth of power of mafia only led to swelling of their ranks by more criminals. There were quite a few instances of power being surreptitiously taken in the countries, where this mafia was active. However, this also saw the emergence of new nexus of politicians, bureaucrats – land mafia in India. This was primarily due to the reason, the drug smuggling syndicates along with tax evaders found out that it was land which had the highest rate of absorption of black money and which could be exploited by developing links with politicians and bureaucrats, which allowed easy change of land used to them from agriculture to commercial/residential. This marked the beginning of an era where the new nexus spread its wings even to the smaller states and towns, while it still continues to exist, its power of buy political influence stands considerably eroded and curtailed, as recession of 2008 ensured elimination of the cash power. This nexus was, however less dangerous than the earlier avatar as it at least promoted employment levels in construction industry and enabled canalizing of laundered money in the growth of infrastructure.

Around last ‘realty boom’ in India, the realty sector saw entry of new corporate players with established reputation attempting to compete with these land mafias with better practices for the consumers, in a sector which is largely unregulated till now. However, the liberalized access to Indian market also saw emergence of new nexus which is of politician- corporate-journalists seeking to help each other through hectic lobbies to manipulate rules through a system of white color distortions, not easily understood by a common man but leading to windfall profits for certain corporate to the exclusion of others, who may be more competent but lacking in clout. In this case, profitability came more out of nexus and connections rather than any intrinsic worth of the business operations.

The nexus like all the previous versions is no doubt unholy, but if one looks at the overall picture then it is definitely lesser evil. That these kind of nexus exist almost everywhere in the business world will be no over statement. The politicians need money to win the elections and regain power and where no other way of funding exists they have to rely on supply chain of the beneficiaries of their own political power. As is evident out of the three types discussed, the last one can be dubbed as lesser of the three evils. Since, it does not involve the inflow of bad capital in the hands of drug lords and smugglers, nor does it involve the support of power in assisting land mafias, who also indulged in bloodshed as many had the background of gang warfare.

The last nexus seeks to obtain undue economic gains by rubbishing competition through political influence and clout and undermines the competitive prowess of those who may be better equipped to deliver. None the less, the wealth generated through the manipulations goes to create better employment levels because ultimately it ploughs back to the business and economy. And also, till the time the corporates involved are Indians, it at the most returns back to India after doing a round-tripping offshore voyage.

But one big negative factor involved in this alliance is that politicians need their cut in cash as they have to spend the same in elections on masses and this involves conversion of clean money collected from shareholders to dirty money in the economic system. But this is the price the country has to pay till the time elections are not funded by the state through a legitimate tax system.