Corporate Lobbying and Corruption-Manipulating Capital

In India the word “lobbying” has recently acquired a whole new dimension after revelation of the Income Tax Department tapped phone conversations of an individual lobbyist which in turn revealed an unholy nexus between politicians, corporates, journalists and lobbyists writes Diljeet Titus .

  • Diljeet Titus

Lobbying, baptized corruption

The Webster’s dictionary defines “lobby” to mean “a group of persons who conduct a campaign to influence members of a legislature to vote according to the group’s special interest”. Going by the definition, lobbying is probably as old as democracy itself. Today you may find a “Lobbyist” in any organizational set up. Lobbying of late been woven into the democratic process. A human rights activist who meets legislators and ministers to press for ratification of an international convention may also be a lobbyist. The tenuous balance between legitimate and illegitimate lobbying activities is endangered when business houses with enormous funds back up close relationships with lawmakers and gain unauthorized access to the policy-making process, otherwise unavailable to “the common man”.

Conventional wisdom suggests that lobbying is the preferred means for exerting political influence in developed countries and corruption the preferred one in developing countries. However, lobbying and corruption are symbiotic in nature as both are ways of obtaining help from the public sector in exchange for favors.

Lobbying: Law interwoven with the Polity

In India, corporate lobbying, in the form of intensive briefings and presentations to ministers and senior civil servants, has expanded and the current political climate also makes ministers, officials, and legislators more receptive to it. Lobbying is not yet recognized in a statutory or non-statutory form in India. Thus there is no formal organization for lobbying. Operations like these are being routed through Public Relations Firms and some well connected individuals. However due to lack of organizational set up these firms largely operate on word of mouth. Scams like the recent 2G spectrum scam in India only go onto highlight the dire need to regulate legitimate lobbying. Union Corporate Affairs Minister, Salman Khurshid, has remarked that his ministry and other departments of the government are working on the issue of “regularizing” lobbying. The Planning Commission of India has also set up an expert committee to look into the issue of lobbying. However, in the wake of the disclosure of the Radia tapes, the entire lobbying profession has certainly taken a dubious dimension.

In India, the only law that has some relevance to lobbying is Section 7 of the Prevention of Corruption Act, 1988, which makes it illegal for a “public servant taking gratification other than legal remuneration in respect of an official Act”. In the United States, the U.S Lobbying Disclosure Act (LDA) was passed in 1995 and was further strengthened in 2009 making it a condition precedent for Lobbyists to register themselves with the secretary of the Senate and the clerk of the House of Representatives within a stipulated time. Besides, lobbyists are also required to file their financial activity reports. These reports help the public to know the lobbyist’s clients and other relevent details, thus making the process more transparent. Per corporate governance practices in India, directors sign the Code of Corporate Ethics which they have to adhere to in order to have a well-balanced view on business and ethics and to conduct their business within legal boundaries.

However, on the other side, anybody who is a party to the lobbying practice in India would be opposed to the idea of regulating the practice. These persons include Lobbyists/PR agencies that are working in our political and government system. Today, retired civil servants, newspapers and news channels, bureaucrats, politicians, industrialists, editors and journalists are amongst those who are used by these lobbyists to influence the government decision making process. A classic example is the case of Satyam where business ethics held no value as balance sheets were manipulated by illegal means. The hard earned money of investors was swindled by the board members with the least of morality or regard to the legal system. The ties between politicians, bankers and business tycoons are an open secret in the Satyam case.

The saga of scams today conflicts with the towering image of big corporates that are further glorified by advertising and other media portrayal. Big corporate houses often thrive on print and electronic media to influence government policies for their financial interests. Even the Supreme Court of India has expressed shock over the influence of corporate power players on the government and on its policies.

Necessary Evil

Regardless of the level of reform, it is has to be accepted that corporate lobbying is a necessary evil. It remains an integral part of the policymaking process of government at all times; only its manifestations vary. In the last few days, India has witnessed a raging debate on lobbying as it was raked up in the aftermath of a corporate feud that reached the corridors of power in Delhi. Lobbyists on either side had tried hard to tilt the government’s petroleum policy to their advantage. Lobbying in India is at a nascent stage.

Until recently, it was rated equivalent to influencing government policy with money. With increased transparency in governance, corporate entities realized that a more legitimate method is needed to influence policymakers. The authorities take cognizance of the fact that money associated with development works usually comes from the tax payers’ pocket which eventually lands up in corrupt hands and in the process development takes a back seat. Given where India stands at the global corporate map, India cannot afford to lose its money nor its resources to either of the two, corporate lobbying or corruption.

DILJEET TITUS is the Founder & Managing Partner of Titus & Co.