Scams, FIRs and business sentiment

www.firstpost.com/business/cbi-case-against-km-birla-corporate-india-should-not-cry-wolf-1183133.html

Is India Inc. under unprecedented attack? And is this going to dampen business sentiment?

India Inc. would certainly expect the nation to believe so. Days after the Central Bureau of Investigation (CBI) named industrialist Kumar Mangalam Birla in its first information report (FIR) in the coal blocks allocation scam, the Supreme Court has asked the investigative agency to look into undue favours shown to top corporate houses. There are reports that the CBI is planning to name more businessmen in fresh FIRs.

Corporate bigwigs have been careful not to comment on the Supreme Court order but have come down heavily on the government and the CBI in the Birla FIR case. This is going to affect business sentiment and kill investments, they have warned. One can understand such alarmist statements from them – after all they will come out in strong defence of one of their own.

But it’s different – and worrying – when ministers also start holding out such veiled threats. Five key economic ministers berated the CBI for its action, with oil minister Veerappa Moily even invoking the sceptre of Aurangzeb, no less.

Almost exactly two years back – on 10 October 2011 – then law minister Salman Khurshid said much the same thing, when corporate big shots were put in judicial custody for alleged corruption in the 2G scam case. “If you lock up businessmen, will investment come?” he said in an interview to the Indian Express.

Commerce and industry minister Anand Sharma said he couldn’t “fathom how a case of impropriety can be made against Birla, an iconic industrialist respected all over the world”. It is equally difficult to fathom how Sharma arrived at the conclusion that iconic, respected people cannot commit improprieties. There are far too many examples in the recent past of businesses logging dizzying growth and their promoters becoming respected icons of their respective industries only to have these companies implode.

This article is not implying that Birla is among these fallen icons or that he is guilty of impropriety in Coalgate. Nor is it giving him or his company a certificate of good conduct. This article is not about Birla or Coalgate. It is about the rather shady nexus that has come to mark the business-politics interface.

The statements made by ministers are flawed for two reasons.

One, they only serve to reinforce the impression that the government is batting for big business houses and treating them with kid gloves – the bigger the business, the softer the gloves. It has given a handle to all opponents of India’s liberalisation process, who have always argued that this is benefiting only a few big industrialists. To that extent, the ministers speaking out like they did at a time their government is headed for elections on a pro-poor and inclusive growth agenda is only proof of utter political incompetence.

Two, if a country’s investment climate is going to be affected by companies being investigated for alleged wrong-doing, and if ministers are going to warn that India could end up going the Russia way “where investors are not prepared to go and billionaires are put behind the bars” then it is a very sad reflection of the way business is done in the country. (Someone should point out to Moily that Birla and other iconic industrialists may not exactly be flattered by the Russia reference.) It is an admission that the Indian businesses do not function in a transparent rule-based system. Who is that an indictment of?

Just look at some of the issues that the Supreme Court has asked the CBI to probe, based on intercepts of corporate lobbyist Niira Radia’s phone.

*  supply of low floor buses by Tata Motors to the Tamil Nadu government.

* allotment of coal blocks to Anil Ambani’s group and iron ore mines to Tata Steel

* kickbacks in the aviation sector

* favours shown by a former director general of hydrocarbons to Reliance Industries Ltd.

Some of the biggest names of India Inc. will come under the scanner (of course, they could well come clean). If, as Firstpost editor R. Jagannathan has argued, the FIR against Birla was designed to ensure that the Coalgate investigation doesn’t reach the Prime Minister, could it be that the panicky statements of ministers are designed to put off closer scrutiny of a slew of dodgy policy decisions that have not yet come to light?

There are a host of reasons why India is a bad place for business. Infrastructure sucks, money is expensive, permissions don’t come through, decisions are not taken, rules are not transparent. Addressing these issues will provide a strong foundation for healthy businesses and a robust economy. But this does not get the kind of attention that is showered on possible action against one corporate house. Ministers, instead, indulge in turf wars, squabble over clearances, green-light economically ruinous policies, introduce opacity into policies and create any number of rent-seeking opportunities. In fact, they do everything possible to make India a difficult investment destination. Corporate India would like the more fundamental issues to be addressed, but it is quite comfortable in operating in a shadowy environment, so long as it can get away with it.

So, yes, India’s investment climate will be affected if investigating agencies and the courts try to clean up this messy operating environment. Companies that have got used to prospering by managing the system will take time to adjust to an environment where they will have to play by a different set of more transparent rules. They will try to scuttle any move to a more transparent system by creating a scare about investments drying up.

India’s liberalisation saga till now has been more pro-large business than pro-market (the latter is what it should be). Economists championing an open economy – including present Reserve Bank governor Raghuram Rajan - have lamented this time and again. It is often said that it requires a crisis for India to reform. Perhaps the unravelling of a series of scams and sweetheart deals will be the crisis that India needs to reform its business environment. 

So if the current churn is going to bring a directional shift in economic policy making – from pro-business houses to pro- free markets, then it needs to be welcomed. There will be some short term pain. But the gains that will come will be far more sustainable and provide a stronger foundation for the economy.

 

Rape Reparation

Today's Indian Express has a news item about the Planning Commission proposing a financial assistance scheme for rape victims. Apparently, rape victims will get up to Rs 3 lakh as compensation (apart from official assistance) to tide over the victim's immediate and long-term needs. This, the news item says, is part of an effort to ensure "restorative justice".
Restorative justice is a legal principle (am linking it to the wikipedia definition) and I still have to understand the complexity of it. Maybe the Planning Commission has a point. But I have my extremely cynical doubts about this proposal. 

Apparently, in a note to the Women and Child Development ministry, the Commission has said that apart from punishing the perpetrators the woman's dignity and self-confidence must be restored as well.
But is a sum of Rs 3 lakh (or any financial amount) going to do that? A woman's body and spirit have been violated. What she needs is justice and a few lakhs in her bank account is not necessarily going to get her that. Of course, this does not absolve the state from ensuring speedy justice for victims.
I would rather the state spends money in setting up fast track courts for rape cases and sensitising the police and the courts about the trauma of a rape victim and to deal with them with sympathy and sensitivity. Most rape victims baulk from going to the police or to the courts because of the crude questioning they are put through.
I am also worried that this could lead to other problems. To apply for this compensation, victims have to first file a first information report (FIR). Now, we all know how difficult it is to get an FIR filed and a copy obtained even for ordinary crimes, never mind what the police keep telling us. It is even more difficult in the case of rape. Now imagine a situation where a rape victim seeks a copy of the FIR in order to apply for this compensation. Once the cops know that a couple of lakhs at least are involved, are they going to make it easier for the victims to get the FIR? Won't this involve more harassment?
I also fear a rise in false allegations of rape in order to claim compensation. Many will be shocked that such scepticism is being voiced by a woman. But, let's face it, women are prone to misuse laws meant to help them. It won't hurt us to admit that.
I am not sure if in cases where compensation is being sought, the offender has to be identified, but in many cases, the victim does not know who it is. Whether it was the Maulana Azad Medical College student rape case or that of the girl working at a call centre who was abducted from Satya Niketan, neither knew who their rapists were. The police rounded up bad characters in a particular area and zeroed in on them and they confessed. 
This increases the possibility of misuse of this provision. The proposal mentions the setting up of a District Criminal Injuries Relief and Rehabilitation Board (see the story for details), but I am not sure how effective this will be, either in providing justice and compensation to victims or in preventing rape compensation scams.

Justice has to be just

Now there is a Facebook group called Justice for Ruchika. I got invites but am not planning to join. It’s not that I am not angered by the piffling conviction that S P S Rathore got. No woman who has traveled in a Delhi bus will feel differently.

But I am not joining the group for two reasons. One, I feel such groups are no different from meaningless candlelight vigils about which I have written earlier.
More importantly, I am just not comfortable with all that is happening now.

Slapping new charges, filing fresh FIRs (which eminent legal experts like Ram Jethmalani and K T S Tulsi have criticized) is perhaps not the best way of going about getting justice for Ruchika.

The right way to go about it would have been to pressure the CBI to appeal the verdict in a higher court and press for a longer sentence there, which is what happened in the Jessica Lal case, and making sure that the arguments are watertight.

Take the new charges of abetment to suicide. That seems to be on very weak ground. Apparently this had been dismissed by the high court and Supreme Court earlier. The CBI officer who had headed the probe has clearly said that the charge was weak even then because Ruchika had committed suicide three years after the molestation incident and left no suicide note. So on what basis are charges of abetment to suicide be framed and made to stick? Am not sure if abetment to suicide charges can be levied only by relatives saying so or whether it requires a suicide note. I would like to be educated about this.

The immediate rejoinder to that will be that the CBI official was protecting Rathore. Maybe. But that charge can stick only if the officer deliberately overlooked or destroyed strong evidence of abetment to suicide. There is nothing right now to suggest that.

There is unhappiness over the fact that Rathore has got interim anticipatory bail and I heard Anand Parkash saying on television that this shows the system is still trying to shield Rathore. Now this is clearly unfair. Giving bail to someone on a bailable offence is hardly an attempt to shield that person.

The initial outrage over the laughable six months that Rathore got has now snowballed into something uncontrollable and often ridiculous. The Indian Express had an editorial, Call off the mob, which highlights the danger of letting public outrage dictate justice. The points it makes are very valid. The topic of NDTV’s Big Fight programme is going to be “Is media trial the only way to get justice”. This is, quite simply, appalling. There can be no justification for the media arrogating to itself the role of judges.

Like I wrote in the end of my post on the media behaviour in this case on my other blog, the travesty of justice which happened should not become an excuse for vigilante justice.