The Hindu Business Line : Corruption, a threat to democracy

India must fight corruption as it destroys investor confidence in political institutions. In most European nations, there is a corporate criminal law, whereby companies are held accountable for corruption cases.

Corruption has permeated all levels of Indian politics and bureaucracy.

Mohan Murti

At the recently concluded India Economic Summit in New Delhi, organised by the World Economic Forum, several interactive sessions had one common issue that kept coming up for discussion during question hour: The national malaise called “corruption”. Appallingly, each time the question was posed to a public political figure at the sessions, the retort was vague, indistinct, blurred. One senior political figure — a senior Cabinet Minister — even cooll y laughed it off as a “perennial problem you have to live with”, much to the shock of European investors who were participating.

Every year at this time, a private organisation called Transparency International ranks countries on how corrupt they are perceived to be. The current index is notable for what has not changed: The sad persistence of India at the middle of the heap. India is ranked 85 out of a 180 countries in Transparency International’s Corruption Perceptions Index.

European investors are convinced that corruption is a pervasive element of Indian politics and bureaucracy. Widely reported in the business media in Europe is the case of the former Jharkhand Chief Minister, Mr Madhu Koda, who is facing charges for a multi-crore scam involving charges of laundering crore.

Media view

European media wrote: “India has some of the best laws in the world. But only on paper”. One European newspaper had an editorial in which India is described as a country with decline in moral standards in society and in the midst of a break-down of political virtues within the State. That is a shame. The revelations that have surfaced on the monumental scale of corruption in the Koda administration have made Europeans dizzy. The colossal sums being bandied about is beyond belief. And, we have hardly started, or ended. Like the Americans say, “You ain’t seen nothing yet”.

In fact, we will never know the true amount of India’s money that have gone into private pockets. One prominent European newspaper asks: “If only one ex-Chief Minister can steal over one billion euros, imagine the rest.”

Europe scores high

Europeans feel systems in India today encourage corruption because of the mammoth red tape and delay (bureaucracy); lack of transparency from the Central and State governments; the judicial system cannot guarantee justice, fairness and equality; casteism and nepotism among the corrupt to protect each other as with the expression “thick as thieves”.

According to Transparency International’s Corruption Perception Index, European countries are among the least corrupt in the world. The anti-corruption watchdog says that even problem-child Romania has improved its rating. Denmark, Finland, Austria can now call themselves the least corrupt countries in the world. The Netherlands overtook Switzerland and rose from ninth place to seventh. The new EU countries also rose in the rankings.

Externally, the Council of Europe’s work against corruption has inspired other institutions, such as the United Nations, in the development of legal tools against corruption. The approach of the Council of Europe in the fight against corruption has always been multidisciplinary and consists of three interrelated elements: The setting of European norms and standards, monitoring of compliance with the standards and capacity building offered to individual countries and regions, through technical co-operation programmes. The monitoring of compliance with these standards is entrusted to the Group of States against Corruption.

Corporate Criminal Law

In most of the European nations there is a corporate criminal law, whereby companies are held accountable for corruption cases. In addition, corrupt companies are barred from receiving public contracts.

European shareholders of listed companies put stern questions to company heads at annual meetings. The two largest stockholder pressure groups ensure utmost transparency about industry perks and payments – which is standard operating procedure within the corporate world in Europe.

Corruption abroad

The German civil service law stipulates heavy penalties within the criminal code. An act of bribery is committed when an office holder is offered, promised, or granted an advantage (not only money) in return for an action which has already been carried out or is to be expected. Moreover, a civil servant risks punishment should he derive advantage by linking an official duty with a service in return, even though he fulfils his duty correctly. Indeed in Germany there are criminal codifications against bribery of employees in the private sector.

Now, foreign corruption is illegal in the European Union, and German prosecutors in particular have been cracking down as some of the nation’s most prominent companies have succumbed to scandal. European investors want governments in India to open to public scrutiny, carry out bidding for government contracts transparently and on the Internet, cut red tape and restructure government offices to remove opportunities for bribery.

Europeans feel that India cannot be only aiming at 8-9 per cent GDP growth. Corruption is a mortal threat to democracy and corrupt practices will undermine and may eventually destroy investor’s confidence in political institutions and state administration. When this happens there is a risk not only to investors, but even democracy will not function; it may become a charade or simply disappear.

As Adi Sankara said: “Kim yanena dhanena waaji karibih (Of what use are elephants, horses, vehicles if your morals and virtues are not good).”

(The author is former Europe Director, CII, and lives in Cologne, Germany. blfeedback@thehindu.co.in)

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