Corporate crime has begun to risk democracy itself. Rajya Sabha MP and former FICCI presidentÂ Rajeev Chandrasekhar Â tells Shoma ChaudhuryÂ that the Indian legal system needs to be overhauled to tackle corporate crime
Rajeev Chandrasekhar, 46, first began writing to the prime minister in 2007 warning him about the impending 2G scam. As a former telecom entrepreneur and a member of the Parliamentary Standing Committee on Information Technology, he was uniquely placed to know what was going on but the PMO did nothing. In a season of bewildering corruption, Niira Radia and A Raja are just symptoms of a staggering new phenomenon in India â corporate crime at an enormous scale. Crimes such as the 2G spectrum scam, two times the size of Indiaâs health budget, and the unfolding LIC scam shed no blood but bleed millions. How can we get our money back? How can we hold the powerful to account? How do we read the new landscape? Chandrasekhar has some urgent solutions: a new legal system for corporate crime; mandatory disclosure of transactions that involve a private-public partnership, national resources or tax-payersâ money. Excerpts:
Rajeev, you wrote repeatedly to the prime minister from 2007 onwards forewarning him about the impending 2G scam; then later suggesting ways to rectify it. How did the PM respond?
It was a standard response from the PMO. He replied like he usually does. Thank you for your letter. We will look into it.
But you were on the Standing Committee on Information Technology, which included telecom. Did you all never meet? Were there no alarm signals going out from the others?
We did meet. But the Standing Committees are a part of the whole problem. They spend extraordinary amounts of time on issues like the land use of post offices and the quality of BSNL services but not on the fundamental question of oversight of the executive. Take the review of spectrum allocation for example. There is nothing in the system at present that can oversee the working of an independent regulator like TRAI. The only body that can do that is Parliament. And Parliament does it through Standing Committees. But if you look at the percentage of time these committees spend in doing that job, it will be a minuscule fraction. We donât understand our priorities. We spend hours on completely irrelevant issues.
But why is that? Is it because these committees donât have experts? Should they have civil society members?
We just need to be willing to put in hard work because it is hard work. It may be controversial for me to say this but the problem is when the Standing Committees meet to decide on the issues they will examine over the next 12 months, it all becomes about planning their trips, travel expenses and sightseeing â euphemistically called learning experiences. This is unfortunate because Parliament is the only body that can ask questions to the regulator. You and I, as individual citizens, have no locus or authority to challenge a regulatorâs policy decision. The only way we can do it is to ask questions either directly in Parliament or indirectly through Standing Committees. So this oversight of Parliament on the Executive needs closer examination because the 2G scam has proved that corporates are capturing public policy.
Again, is there a problem with the composition of these committees? How do we fix things?
One of the ways to make sure this doesnât become a cosy meeting place and functions as an effective arm of Parliament is to ensure that the transcripts of committee meetings are available to the public â both video and text. I have gone to the extent of saying these meetings should be open to the public. In the UK, for example, when the Chairman of the Reserve Bank deposes to Parliament, people can sit in the gallery and listen. In the US too, depositions like in the Texas Oil Spill are public. I had written to all parties proposing this. Only the Left supported it. Two national parties opposed it saying if you televise Standing Committee meetings, there will be too much grand standing and they will become partisan. But, at the very least, we need to make the transcripts public so people can scrutinise and understand the functioning of the committees.
Getting back to 2G, as a telecom entrepreneur, you sensed the murkiness way back. Can you talk about your own experience?
I entered telecom in 1991 with considerable idealism. It was Rajesh Pilot who bought me back from the US. There was this drive to do a lot of new things for India. You enter with that kind of thought then you run slap-bang into real India, which was Sukh Ram and the WLN scam. My company went bankrupt in 2001 and I saw first-hand how banks could be told by the government to either aid or cut off funding at the behest of a politician or corporate rival. It was obvious that public policy and institutions could be captured to benefit some and destroy others.
For all the hoopla around entrepreneurship, my own experience has been that you can be clever and hardworking but in India it takes very little to destroy someoneâs business and make anotherâs bloom. I sold off in 2005 because, as I said on record, Iâd been in telecom for 10 years and the only remaining challenge was lobbying for free spectrum. I was neither interested nor good at that.
In 2006, I got an opportunity of getting into politics. I didnât have grand hopes of fixing the system but one of my main motivations was my desire to reverse the dysfunctionality and scams in the telecom sector. That explains my extraordinary letter-writing on the subject. So when this scam was developing, I wrote to all party leaders in 2007 asking them to support a discussion on this in Parliament. It wasnât a fully cooked scam yet. I tried explaining it to whoever was interested. A few people in politics and media understood. But if you ask me why itâs taken so long for everyone to react to this, Iâd say most of us didnât get it.
Economic scams of today arenât straightforward. Itâs not about one person bribing another to get a pot of gold. Itâs about fixing a contract and the underlying fine print of that and the value that accrues to you from that. Itâs not boxes of cash anymore. Itâs about contracts and deals.
Weâll come back to this larger issue of white-collar crime. For now, Rajaâs been sacked. But how do we get the money back? How do we fix corporate culpability? And can it be fixed?
There are two basic minimum things people have to do when they take an oath of ministership. First, they have to make good the losses to the exchequer. If Raja or Niira Radia want to sign a cheque, they can do it, but the losses must be made up. Second, the CAG has confirmed a crime has been committed, so the perpetrators have to be punished. This is not an academic moral issue. It is about rule of law and sufficient checks and balances against creating a culture of kleptocracy. We have to make sure this kind of a scam does not happen every few years; or that every new minister, bureaucrat and businessman doesnât create opportunities to make a killing.
For a layperson, the obvious option seems to be to cancel the licences and re-auction them. Is there any hitch with this?
Yes, that is the way. You have to think like a layperson. I donât think it should be allowed to enter the sophisticated realm of legality. We should keep it simple. Take back the licences or get back the money. Actually there are three types of companies involved in this now. One is the existing operators like Airtel, Vodafone, Idea, Tatas and Reliance Comm who got extra spectrum. Then there are the new companies like Unitech and Swan who got spectrum and sold it off. Third are the companies who got spectrum but are sitting on it and not rolling out services. These three have to be tackled separately. The first guys have to be told you got the additional spectrum illegally not the licences, so you pay a fine of Rs. 3,000 crore each and keep the spectrum or surrender it.
With the second group, there are two problems. Those who sold off their spectrum should be asked to pay a retrospective windfall capital gains tax. The government should claim a 95 percent tax on it. As for the guys who bought these licences from the original buyers, they have to be told that either their licences will be taken back or they should pay massive penalties in the range of Rs.3,000-Rs. 5,000 crore each.
The third guys whoâve taken spectrum but are doing nothing with it should be told to forfeit the money they paid and the spectrum should be taken back. Through all this, there is one basic theme: we believe you have done wrong and we will make the penalty painful, not just a small rap on the back. Whatâs disturbing is that Kapil Sibal (who has taken over from A Raja) is already pushing this into an arcane realm of legalese. I can tell you his arguments for this right now. He is thinking if we cancel licences, both investors and consumers will be upset. Neither of these concerns is valid. To say investors will be upset is to say that a criminal will be upset for being put behind bars for a crime.
The fact is nothing is going to happen to investors if we take a strong stand on this. They will continue to invest. The simple stand should be if you do anything against the laws of India, you have to pay for it. The government canât give an assurance that we shield you from being conned. In China, these companies would have been kicked out. Tax payers canât be held responsible for the bad investment decisions of companies.
Absolutely! Protecting âinvestment climateâ has become a ploy for dishing out favourable treatment to corporates that might be detrimental to India. I was appalled with Ratan Tataâs offer to clean up the Bhopal gas tragedy site, contingent on Dow Chemicals being let off its liability for Union Carbide in India. Dow has paid for UC liabilities in the US; why not in India? There was a flurry of letters in government worrying that holding Dow responsible would jeopardise their promised investments. Thatâs just one example.
Rolling out the red carpet is fine but rolling over and playing dead is not. India is a nation with a critical mass where companies want to invest money. You have to deal with corporations from a point of strength. We still havenât learned how to attract investment with national interest in mind.
When UPA 2 was formed, I remember a quote from Shekhar Gupta where he said that âone of the big differences between UPA 1 and UPA 2 will be that CII and FICCI wonât dictate policy making.â I thought this is really heartening â here is a journalist who is pro-establishment who is saying this. But it has not worked out that way. Basically the problem is that too many businessmen are sitting around the government telling them what is good for the public. That ends up sacrificing public interest for business. Of course, business and entrepreneurship is good for India and the government should help the business community. But primarily, government policy should be about citizensâ interest. It canât be the other way around.