The temptations of corruption are universal

David M. Malone

Its business and public sector climate is being seen abroad as at serious risk from dishonest practices.

The temptations of corruption are universal. My own country, Canada, experienced a serious political corruption scandal some years ago that contributed to a change of government in Ottawa in 2006.

Corruption in business, while deplored everywhere, has long been seen as a fact of life in large swathes of the world. Indeed, economists sometimes argue over whether some forms of the phenomenon are “enabling” in contrast to others deemed purely negative.

At times, to foreign observers, India seems neither better nor worse at fighting corruption than some other dynamic developing economies. But today, India's business and public sector climate is seen abroad as at serious risk from corrupt practices.

Strong institutions of the state promoting accountability — particularly robust audit capacities and transparency in government, parliamentary oversight of government spending and an alert judiciary — are key to combating corruption. A concerned citizenry, informed by a free and investigative media, is also vital. India possesses all of these assets in varying degrees.

India's foreign policy today, while seeking to protect the country's security, is driven uppermost by the promotion of the country's economic interests. The prevalence of corruption may seem far removed from a country's international relations. But in this globalised era, in which countries compete for investment capital, this is not true.

Thus, recent allegations of gross corruption, as in the 2G auction case, and of mismanagement possibly aggravated by corruption, such as that besetting the recent Commonwealth Games are relevant to India's standing on the global stage.

India's success in generating strong growth in recent decades has transformed the country's image, now that of an emerging power. The excitement over India has developed in spite of poor performance in reducing the absolute numbers of its poor (unlike China, which, with much higher national income and growth levels, has been able to make sharp inroads into poverty).

Wide contrasts

Indeed, first-time visitors to India are easily confused by the contrast between booming growth of some economic sectors and the continuing reality of widespread and grinding poverty — in spite of many government programmes touted to alleviate the latter. Often it seems as if India's private sector is succeeding in spite of the government sector, while the poor suffer the indifference and, in some cases, the rapacity of the latter.

When, internationally, I speak with enthusiasm about India, I am nowadays often confronted with sceptical questions about its recent corruption scandals.

While Indians take pride in the overseas investments of its large private sector firms, they sometimes forget to ask why Indian firms find it so much easier to invest abroad than at home. The reasons are many, from fractious domestic politics, to conflicts over land — but the opaque relationships between Delhi and some of India's private sector clearly count among them.

By and large, India's foreign policy has been prudent and responsible. Its bilateral diplomacy is energetic and the country has accessed the top tables of global diplomacy on security as on financial matters. In recent years, it has mostly resisted the temptations of force and the regional bullying that its size would make possible.

Media coverage

But India is not yet so well established globally that it can afford coverage of its affairs in the international media to be dominated by corruption scandals, big and small. (Figures cited in relation to the 2G affair if confirmed, would place it in the ranks of potentially the largest corruption scandals ever, anywhere).

Mrs Sonia Gandhi, who has proved herself a much more deft politician than her patronising critics assessed her only a few years ago, is thought to have retained from the Bofors affair, which tarnished the reputation of her late husband, a horror of corruption. Core Union government ministers in key portfolios are admired, among other qualities, for their personal integrity. But it is widely known in Delhi and beyond that more peripheral political personalities, often hailing from regional parties, sometimes tend to their party's coffers through the patronage and leverage that their portfolios offer. Political finance reform, attempted in a number of other countries, might provide a path forward.

It takes two (at least) to effect a corrupt transaction. Recent months have reflected poorly not just on some of India's politicians but also on business practices, both overt and covert, in several firms.

India's investigatory and judicial processes can be slow. But in matters of gross corruption and malfeasance (Satyam being one example), swift action leading to fair trial is vital, and not just for those indicted and for the victims of fraud. It is vital also for India's image when, as now, the balance of international reporting (reflecting debate in the Union parliament and discussion in India's national media) is generating negative reviews for the country.

India's investigatory machinery and its courts are often up to the challenge. But judicial reform might help place the judiciary itself above suspicion and could improve efficiency (and hence judicial effectiveness). In politics and public service some countries have informally linked higher pay scales to higher penalties for corruption, hardly fool-proof but perhaps worth considering where affordable.

India harbours huge potential for itself and for the world. Indians deserve all possible rewards from the country's global engagement. Friends of India abroad, myself very much included, have been heartened at the degree of local fight-back against corruption in India. Let's hope that civil society, politicians of integrity, business leaders of moral character and the media do not simply allow the current crop of scandals to exhaust themselves, then reverting to “business as usual”.

If these matters fade without clear-cut resolution, they will simply add to the weight of international questions about India as a business opportunity, and as a global leader. Such an outcome would be a great shame.

( David M. Malone publishes his book ‘Does the Elephant Dance? Contemporary Indian Foreign Policy' in weeks ahead.)