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India Inc’s Open Letter: a Call to Arms against Corruption and Bribery

October 20, 2011

By Daniel Robinson

Daniel Robinson is the Economics Intern at Global Financial integrity.

~FreeBirD®~ / Flickr

On Monday, October 10, a variety of prominent Indian business leaders under the larger title of India Inc released their second open letter to the Indian government.  This letter argues for the need to make striking changes to India’s legislation regarding bribery and corruption.  It was written with an eye toward a newly proposed law called the Lokpal Bill which has been discussed extensively over the past year and is expected to be formally presented before India’s parliament in the near future.  This bill intends to fight corruption by creating an ombudsman-style body with the power to investigate corruption in the government and consider citizens’ complaints.

The advancement of the Lokpal Bill is the result of a push for action over both the short and long terms.  Over the past few years there has been a popular call for change underscored by allegations that India’s telecommunications minister sold mobile phone licenses to the highest bidder in 2008.   However, passing a bill of this kind is by no means a new idea for India.  According to The Times of India, Indian policymakers have unsuccessfully attempted to implement an investigatory organization of this kind a total of ten times over the last 40 years including Prime Minister Manmohan Singh’s concerted effort in 2004 which was subsequently blocked by powerful lobbying groups.

India Inc’s discussion of corruption and bribery in the letter focuses on the need to not only institute an effectively designed bill but to push beyond the current proposal.  Although India Inc supports the current bill, it believes that “the Lokpal Bill is only one small but critical step in the national task of weeding out the plague of corruption in India.”  Whereas the Lokpal Bill effectively addresses a large amount of the existing corruption, the businessmen argue that it would fail to consider the problems in “daily life which [are] vitiated by corruption in almost every sphere of [our] normal dealings.”

In order to fight corruption on a broader scale than the bill offers, India Inc looks outside of national boundaries for advice.  The letter encourages the government to consider the United Kingdom’s Bribery Act 2010 which extends personal liability to the highest levels of an organization and includes up to ten years of jail time for anyone involved in bribery.  Following the UK’s framework would make it far more difficult for Indian executives to escape blame for their subordinates’ actions by simply “turning a blind eye.”  To prevent executives from throwing others under the bus without actually changing their corporate practices, the UK guidelines make the entire company culpable for “the failure to prevent bribery by an associated person.”  In addition, India Inc argues that it is necessary to punish “the giver as well as the receiver of the bribe” in order to effectively diminish the impact of corruption.  This is to say that while preventing executives and politicians from accepting bribes is certainly important, the problem will not be fully corrected unless there is a greater deterrent against offering bribes in the first place.

After underscoring the need for improving the conditions in India, the letter notes the importance of eliminating judicial flaws.  Regardless of the extent to which a law would prevent corruption, the unfortunate fact is that legislation alone will not produce the necessary change.  In reality, enforcement and the pervasive mindset play at least as important a role in the task of creating legal order as the laws do on their own.  In countries such as India where corruption runs rampant, progress can only be made by addressing both the legal system and the bureaucratic framework that ensures the effective application of the laws.  It is a valuable start to enact more concrete laws.  However, without restructuring the implementation process, conditions cannot actually be improved.  As India Inc’s letter astutely points out, one of the greatest challenges in the fight against corruption is that prior to widespread institutional reform, “even the best crafted legislation will not cleanse the system.”

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Disclaimer: Unless specifically stated to be the views of the Financial Transparency Coalition, the opinions expressed on this blog are solely the opinions of the individual blogger and are not necessarily those of the Financial Transparency Coalition.

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