What 'business as usual' means in India

Things fall apart; the centre cannot hold.' W B Yeats's line from his poem The Second Coming seems eerily prophetic in the present time. 

Take a look at the state of India's three largest parties today. The Congress prime minister is in hospital, the first time in our history that we celebrated Republic Day without seeing or hearing from the prime minister. 

Kalyan Singh, the erstwhile chief minister of Uttar Pradesh, has walked out of the BJP, to join rival-turned-friend-turned-rival-turned-friend Mulayam Singh Yadav. And in Kerala, one of the bastions of the CPI-M, the Marxists are getting ready to fight for the political career of the local party boss, Pinarayi Vijayan. 

We all know that the dates of the 15th general election will be announced in about six weeks. But it is open to question if the three largest political entities are in any kind of shape to fight the polls. And what happens even if they do win? Does it mean any hope of better governance, or shall it be just business as usual? And just what does 'business as usual' mean in India?

 

The answer to that is the SNC-Lavalin scandal, which offers a snapshot of how things work -- or don't work -- in our country.

 

Readers outside Kerala have probably never even heard of SNC-Lavalin. And even readers in Kerala are probably most familiar with the name because Pinarayi Vijayan, the boss of the CPI-M's Kerala unit, may be involved -- or so the Central Bureau of Investigation reportedly claims. 

Very briefly, for the benefit of those who are unfamiliar with the case, the Canadian firm SNC-Lavalin was awarded a contract for the renovation and modernisation of the Pallivassal, Chengulam, and Panniyar hydroelectric projects. Pinarayi Vijayan was the power minister in the E K Nayanar ministry from 1996 to 1998, and he is now apparently accused of offering undue favours to the Canadian firm. The CBI is now seeking sanction to prosecute him. 

The CPI-M says the case has been cooked up by a pliant CBI to please its Congress masters in Delhi. The Congress retorts that it cannot be blamed if Pinarayi Vijayan is finally facing the music for his misdeeds. You can be sure that both sides will give the case plenty of air with the polls coming up. 

Here is a suggestion: Forget about Pinarayi Vijayan's involvement and whether or not the CPI-M should sack him from his party post. Instead, take a good, hard, long look at what it says about doing business in India.

 

First, we never seem to get what we pay for. The total installed capacity of the Pallivassal, Chengulam, and Panniyar plants put together is 115 MW. Rs 374 crore was paid in order to increase generation of electricity. Today, after all the 'work', I am told not that a single additional MW has been added to the original figure. What has the Indian taxpayer received in exchange for his Rs 374 crore? 

The issue, to my eyes, is not whether Pinarayi Vijayan was at fault or whether, as the CPI-M now alleges, the contract was signed by the concerned minister in the Congress-led A K Antony ministry, G Karthikeyan. The simple fact is that a lot of money was paid out with little or nothing to show for it. 

Second, why do so many government deals always seem to carry peculiar riders attached to them? A team that included both Pinarayi Vijayan and the then Chief Minister Nayanar went to Canada in October 1996 to renegotiate with SNC-Lavalin. One of the items in the new deal was 'raising the complementary grant component of the package from Rs 43 crore to Rs 98 crore. The last component -- the grant from the Canadian aid agencies - was to be arranged by SNC Lavalin for setting up of a modern cancer hospital in Malabar.' (So says the CPI-M weekly newspaper People's Democracy.) 

The construction of a cancer hospital is a good thing in itself but why on earth should it be linked to upgrading power plants? Was this a government project, or was it supposed to be an act of private charity? If the government of Kerala so desired it could have built such a cancer hospital on its own, without dragging a Canadian firm into the picture. Was any land acquired and transferred in the process? 

In the event, it seems that this clause was not legally enforceable. In the welter of charges and counter-charges between the CPI-M and the Congress, only one clear fact stands out -- which is that no such hospital exists today even 12 years after the deal was struck. 

Third, why is it that some third party always pops up when a government is negotiating? In the SNC-Lavalin case, we get to hear of a firm called 'Technicalia Consultants'. Based in Chennai, this was the firm that was given the contract to actually build the hospital. (Apparently, neither the government of Kerala nor SNC-Lavalin possessed the necessary expertise!) And as a result it was through Technicalia Consultants that any Canadian grants of money were to be routed. 

Fourth, and last, why do cases in India drag on and on? And why do they never seem to gather speed except when one party or the other stands to gain electorally? 

Why SNC-Lavalin was paid such high fees to do seemingly little? Why was an extraneous issue like a cancer hospital dragged into the modernization of power plants? And why was Technicalia Consultants, or any other third party, brought into the picture at all? 

The saddest part of the whole SNC-Lavalin saga is that, with minor modifications to the details, you could probably come up with a similar scandal in several other states. The names change, parties flit in and out of power, cases are filed and forgotten -- it is just business as usual in India. 

To quote from the same poem by Yeats, when we look at our politics, we can only conclude that 'The best lack all conviction, while the worst are full of passionate intensity.' 

By T V R Shenoy, As published at Rediff.com on 27th Jan'09

Distinction between 'Bribe' & 'Speed Money'

A businessman I met at an industry body gathering a few years ago narrated this distinction between giving a bribe and paying 'speed money'. "A bribe is payment to a government officer for doing something he should not do and speed money is payment for doing something he should." The discussion was to do with logistics in general and the specific challenges of clearing goods through the log-jammed ports.

I tried arguing, for a moment, about the greater good about not doling out speed money to keep the system clean and transparent. I gave up when I heard a senior customs official present at the gathering acknowledge that speed money had to change hands, if you did not want your products to rot at the docks or your importers to dishonour a time-bound consignment.

A week ago, the World Bank in Washington out of the blue announced it was banning IT services major Wipro from doing business with it for four years for "providing improper benefits to Bank staff". Turned out Wipro had offered New York Stock Exchange listed American Depository Receipt stock to the World Bank, "through the bank's chief information officer and staff."

Three World Bank staffers purchased 1,750 shares for approximately $72,000 at the initial public offer price, Wipro revealed after the World Bank's announcement. And quickly sought to play down the impact of the World Bank's ban on its revenues. The 'broad market', perhaps hands full with the unravelling Satyam scandal seemed to take the explanation with good stead.

So what was Wipro doling out, bribe or speed money? I would assume that like any restricted offering, which is what a Directed Share Programme ought to be, the upside was in the fact that some people could get hold of the shares as against others who did not. The price is incidental. Somewhat like getting a well-priced IPO stock in India in the primary market, with the expectation it will zoom on listing or thereabouts.

So maybe it was closer to speed money. Handing out a favourable allotment in a share offer because a good relationship will help the company in the long term. And what better way to do it than to make your customers a part of the shareholder family? Except that World Bank employees are not customers - the Bank is and it's what I would call a governmental organisation. Nor are they the equivalent of customs officials who can hold up cargo. But then that's the point, the fine line only gets finer.

On the other hand, hear Wipro's pronouncements (on its website) about unyielding integrity. "On integrity there will be no compromise...we will always act to establish the foremost standards of honesty and fairness." And another one: "Integrity is being ethical beyond doubt. It is living the law of the land in spirit. It is what will give us the confidence to stand up to any scrutiny." And so on.

Wipro chairman Azim Premji in an email communication to his employees did stand up to that scrutiny and quite aggressively at that. "Let me reaffirm that Wipro was right from a legal and as well as an ethical standpoint. We believe what we did was right and we did it in the right manner," he said.

I had a thought. What if Mr Premji had 'confessed' that Wipro had indeed provided improper benefits to World Bank staff - since no one is using the word bribes - and that he was prepared to, as key promoter and chairman of the company, face the consequences and the law of the land. Would things have spun a little differently? Maybe, maybe not. But then Mr Premji did not own up. Nor then has he sued the World Bank for slander or improper action.

To be fair, Mr Premji did not engineer a financial fraud a la Mr Raju. Second, it's possible that Mr Premji did not know who the ADR shares were being offered to. And these were mostly given off by the head of the local outpost or thereabouts. Though it's unlikely the transaction would have happened were the internal guidelines on whom to give shares to or not very clearly defined.

Which brings me back to the first point. Businessmen have clearly two kinds of rules and values, one for what they think they can't or should not do and second, what they are entitled to or at least their companies are. I am sure if you are a board member or a senior enough employee you must have heard that oft-used phrase, "We have to do this. It is right and good for the company." So the distinctions between what is illegal or unethical blur.

I am not being naive here to say Indian businesses are the only ones who pay speed money and palm it off as legitimate business expenses when clearly it is not, even from an accounting perspective. But I do find it amusing that every other businessman who has bashed Satyam publicly knows fully fell that Satyam only represents the worst of balance sheet excesses. And of course fraud.

Here is an aside which I am sure some know. Several businessmen have told me privately since l'affaire Satyam erupted that in India (or perhaps anywhere else for that matter) you do not accept your financial follies, at least publicly. Two businessmen from fairly large companies said to me: "We are not saying what he did was right. But Ramalinga Raju was an idiot to have confessed."

The only unfortunate moral of the story is that do what you have to do but don't get caught. And if you do, then leap up in righteous indignation! Or better still, find the right definition or phrase for what you are doing. And, like speed money, wait till that phrase gets institutionalised. And till then, whatever else happens, just don't confess.

By Govindraj Ethiraj as published on Rediff.com on 20th Jan 2009

The Pride of Being Currupt

Raju need not fear ostracism once he's out - society will embrace him.

A friend in Washington told me that Indians working in the World Bank and International Monetary Fund began to swagger around with a new bounce to the step and a gleam in the eye when the Rs 64-crore (Rs 640-million) Bofors scandal broke.

'We are in the big league now' they gloated. 'Not your chota-mota stuff!' The Rs 7,136-crore (Rs 71.36 billion) Satyam fraud must have them bursting with pride.

Size is a national obsession. Indians have stashed away more than anyone else -- a noble $1,456 billion -- in Swiss banks. We thrive on superlatives. Even Jawaharlal Nehru rejoiced in the Suratgarh farm being "the biggest farm in Asia".

A policeman claimed during the nineties' spate of kidnappings in Calcutta he could identify the kidnappers from the ransom demanded.

A crore (Rs 10 million) meant impressive Delhi criminals; a few lakhs suggested dehati gangs in Bihar; a measly thousand or two indicated local street-corner toughs. "Boys who extort Durga Puja chanda" he said contemptuously.

A double-column newspaper heading reflected another aspect of the complex.

'Grandpa Dawood celebrates in Pak' reported with no hint of criticism that 'champagne corks popped' and 'hundreds of kilos of pedas' were distributed in Karachi, Dubai and Mumbai to celebrate the birth of India's most wanted fugitive's grandson.

I shouldn't imagine any Mumbaiker refused either the bubbly or sweets. For that matter, Delhi and Mumbai society hostesses would probably scratch out each other's eyes for the honour of lionising Ibrahim Dawood at their parties if he ever appears in India.

Similarly, the poor might flock to gaze on Charles Sobhraj; the rich will fall over each other to shake his hand. As someone said of Britain's royal family, our heroes are famous for being famous.

Fame is the spur, never mind for what, bearing out Wilde's aphorism that 'the only thing worse than being talked about is not being talked about'.

The frequency with which the phrase 'world famous' is used implies we live not for ourselves but for the world. Even in remote towns Indians frankly confess to absurd doings like eating dahi while turning somersaults in the air to make the hallowed Guinness Book of Records.

A R Rahman put it nicely when he said, "Indians are crazy about Oscars". Slumdog Millionaire would be far more enjoyable if the Oscar judges enjoy it.

Indira Gandhi was uncharacteristically out of tune with this mood when she wanted tax evaders to be ostracised. She must have known that people admire and envy a leading member of a prominent industrial family who pays no tax.

Sir Biren Mookerjee was thought to be inept when the tax people threatened to seize some of the grounds of his Calcutta mansion.

Mrs Gandhi wasn't the only premier with a blind spot. V P Singh's prescription to force corrupt Indians to migrate showed he had no idea that half the population would happily call itself corrupt to escape foreign exchange and travel restrictions.

'India's Enron' has done India proud. It doesn't lead the fraud pecking order with WorldCom (Rs 43,650 crore or Rs 436.5 billion) or Xerox (Rs 29,100 crore or Rs 291 billion) but the real Enron lags behind with only Rs 2,866 crore (Rs 28.66 billion) missing.

Our Byrraju Ramalinga Raju has also beaten the flamboyant daredevil of the derivatives who gambled away the world's oldest merchant bank. Nick Leeson's fun and games cost Rs 346 crore (Rs 3.46 billion) less than Raju's creative accounting.

The pujas and representations by his friends confirm Raju need fear neither ostracism nor forced emigration once he's out. Society will clasp him to its bosom.

Reports say he chatted 'for several hours' with fellow Andhra jailmate, Kosaraju Venkateshwara Rao, former chairman of Hyderabad's Krushi Bank, who allegedly duped depositors of nearly Rs 32 crore (Rs 320 million) and fled to Bangkok.

What did they talk about? Raju may have said that Rs 32 crore was peanuts. "Even Global Trust went under for Rs 812 crore (Rs 8.12 billion)!" Also, that 8,300 Krushi depositors were nothing to write home about since Satyam's 53,000 employees and their dependents probably account for 424,000 jobs.

Rao wondered why Raju, with offices from Toronto to Calgary and Parsippany in New Jersey to Santa Clara in California, hadn't run, like three Satyam colleagues.

'The government runs faster' Raju replied. Bangkok is a hop, step and jump away, but India established diplomatic relations with Costa Rica and sent an ambassador to get Dharma Teja.

Foreign isn't safe. Look at poor Akshay Vishal in America! "Besides, how will anyone know one has refused VIP treatment (even if it wasn't offered), turned spiritual and reads Buddhist books if the Indian media doesn't have access?

As published on Rediff.com, written by Sunanda K Datta-Ray

A Nation Without People

Thanks to the petroleum-truckers strikes the whole nation was almost came to a screechy halt. Fuel pumps were low on inventory waiting for government to cut costs further so that they will buy cheaper fuels to sell on cheaper prices.

Alas! There were no cuts and fewer fuels when it all happened.

Well... for the first time since the local Indore city transport, which is considered as a model for many cities including Delhi, launched, I got a chance for a ride! (My bike went dry!)

It was a small ride and a funny one too. It has only been over two years since the Atal City Transport, named after the great leader of our times, Atalji, has started in the city. But looking at the buses one cannot decide if it is two years old or twenty!

It had big windows, without glasses, wet seats, due to overnight rains, broken holders for standing crowd.

You say... this is India... everything is broken here... They cannot give us the European facilities... They this... They that... Government is all crap... blah blah blah!

I resist.

When the buses first ran in the city, they were beautiful and up to the international standards.

Narrow streets and the residents were not used to these beautiful monsters running right between them.

If by chance there was an accident, people not just beat up the driver... BUT hurled stones at the bus and broke all the glasses.

IF there is some tension in the city, the first thing came under fire were these buses.

People tore off all the advertisements or the radium showing route on the buses to see if it comes out clean.

People also enjoyed calligraphy all over the bus inside out.

It is a matter of pride to have some part of the public property as a privet possession and showing it off.

My friends... do you really think government is responsible for this mess?

No.

It’s us. The proud people of India who say India is great and developing and we do not have international facilities.

How you expect the government to take care of each glass of the bus that you broke for personal pleasure. They gave us a system which is almost became a lifeline to the city over the 'Nagar-Seva-killing-bus' horrors.

We do not break the windows of our house in protest if the food is burned in the kitchen.

If this is our city, we must preserve what we have.

 If this is our country, we must do the same for it in the same way.

And if not... call it A Nation Without People.

Pathetic tale of services sector in India

'A customer is the most important visitor on our premises; he is not dependent on us. We are dependent on him. He is not an interruption in our work. He is the purpose of it. He is not an outsider in our business. He is part of it. We are not doing him a favor by serving him. He is doing us a favor by giving us an opportunity to do so. -- Mahatma Gandhi

Computerization is the latest mantra of bankers, both in the private and public sectors.

Never mind that most times computers don't work. The rest of the time, bankers don't. And when they do work, they work at cross-purposes leaving customers completely exasperated. And from time to time they also employ their other weapon: a strike.  

Try depositing a cheque at, purchase a draft from or deposit cash in a bank; you would know what I mean. Remember, these are routine matters that the banks are supposed to handle day in and out. God forbid, if you have to handle some stray cases of foreign remittances or expect some other exotic services from banks!

  

No wonder, every time after his monthly visit to his bank my aged father, a retired banker himself and a Gandhian -- who never believed in violence all his life, tells me -- "I need to shoot these guys!"

The most obnoxious part in the entire exercise is that bank employees often join us in our ranting about the abysmal quality of services. Little do we realize that in the process they claim a co-victim status when they are in effect responsible for the mess in the first place? 

Should you think that you could get things rectified by lodging a complaint with a superior on the dismal state of affairs, you are sadly mistaken. Most of the superiors would invariably in some meeting or out of town. One wonders whether it is a ruse to run away from ground zero.

  

Once we often chided our nationalized banks for the poor quality of services. Then came foreign banks and private banks in India. The whiff of fresh approach to banking brought about by these organizations flattered to deceive. 

While the nationalized banks have learnt to bill virtually for every 'service' provided by these new generation banks (the only thing banks do not charge their customers is for the air you breath and water you drink inside their premises), the latter have learnt the art of providing abysmal service and getting away with it.  

In effect, the lines that separated the nationalized and the private banks, between Indian and foreign banks and between the old and the new generation banks have become increasingly blurred. In the process, the Mahatma's quote about customers -- that used to be displayed so prominently in the main business hall of banks -- has become a mockery.

Incompetence compounded by negligence 

According to Indian system of governance, kings, along with their senior ministers, used to travel incognito in their kingdom to get a first hand feel of governance. On most occasions, they realized that most of their well-laid plans, policies or programs were laid to waste by some callous officer responsible for implementation.

This idea, though it may sound outlandish in modern times, is perhaps more effective than the best laid systems for quality control, supervision and public relations. I am sure that a visit to a branch by a chairman, incognito, would actually tell him the poor quality of service dished out by his bank that it is a classic case of incompetence compounded by negligence.

All with a grimace

Let me hasten at this point in time to add that this piece is in essence not about bank and bankers, alone. In fact, this is true of India’s entire services sector. The reference at the outset, to banks, merely provides a context to the overall discussion.

Cellular service providers, insurance companies -- especially health insurance, vehicle service stations, annual maintenance contracts, mutual funds and other such service providers have one thing in common with our banking sector: obnoxious quality of services. In fact, most times it is non-existent.

Usually, signals provided by our cellular companies are so poor that often one feels that it would be better to send homer pigeons rather than talk on cell phones. Ditto with vehicle maintenance. Credit card service providers make you wonder if the great robber barons are still well and alive even in the 21st century. 

If you think you could get your claims on medical insurance settled as easily as the agent warranted, you are wrong. Remember, complying with the fine print is the most difficult thing on earth. 

And in a medical emergency -- you usually end with two choices -- tackling the imperial demands of the insurance company or taking care of the ill. Usually we end up with the latter. And if you think you can complain later, invariably the official would be inaccessible.

Sometimes, such officers are out for training; sometime, overseas too. One wonders why anyone would want to train someone who is already doing an excellent job at obfuscation.

In effect, in most cases one cannot walk into the office of these service providers and expect that they would deliver what they themselves had warranted. And given the modern trend in management, most of the components of services are outsourced -- including receipt of complaints -- making a mockery of the concept of ownership and responsibility!

In the alternative, one could often get to see some kids (usually aged in their early twenties), completely oblivious of even the fundamental operations of the organizations they represent, manning these vital desks.

The idea of posting a kid is obviously a well-thought out strategy -- you lose even your fundamental right to protest. The net consequence of all this is that we can only grimace.

If you assume all these are products of incompetence or negligence you are mistaken. I am sure some may disagree, but given the pathetic levels of services we suffer, one is indeed at liberty to assume that perhaps these organizations just don't care. Providing services is merely a ruse.

Remember, most of these are manned, managed and run by well-educated Indians. And most economists, oblivious of all this, assume that India will be a service powerhouse in the next few decades. Wonder whether they have ever been on the receiving end of these services.

Sivaganga, the pilgrimage centre

I began with the poor services of banks. Let me return to the latest bug that seems to have hit the nationalized banks -- a mandatory pilgrimage to Sivaganga. Yes, Sivaganga, the constituency of the former finance minister P Chidambaram. Most readers may be aware that for the past couple of years, virtually every bank opened a branch in Sivaganga.

Those who already had branches there contrived to open an ATM, or -- as the joke goes -- a second cash counter. And for this non-event full page advertisements are inserted (don't worry, we footed the bill) in national dailies and the entire top management descends on Sivaganga to ensure that the function is a grand success.

The obvious intention of the bankers is to please political masters and move to greener pastures! Perhaps, such use of national resources for personal aggrandizement is not within the definition of corruption in India. But definitely it is within the definition of customer service for our bankers.

In the process little do bankers realise that Sivaganga is one of the hundred districts -- and the only one in Tamil Nadu -- named by the Radhakrishna committee that went into farm distress in India.

Wonder where is the need for such intensive and extensive banking in Sivaganga which is under extreme economic duress!

For improving their quality of services, some banks have hit upon the idea of a getting a new logo, so as to give the impression of having acquired a new image to the general public.

A visit to such banks is enough for one to be deflated. After all, old habits cannot be cured with a new logo. But bankers are a mere reference point to the manner in which our services sectors function. 

Most of them -- there are, of course, some exceptions -- invent innovative reasons for non-performance and negligence.

We, the people of India, as customers continue to suffer in silence. Obviously, we are aware that you are a victim of my poor service as much as I am of yours. No wonder all of us collectively have decided that nothing can be done at an individual level, and individually understood that at a collective level, nothing can be done.

The author is a Chennai-based chartered accountant. Comments can be made at mrv@mrv.net.in