The monster with multiple heads

By Roopen Roy Jan 10 2012

We have spent much of 2011 trying to install an omnipotent Ombudsperson. We did not succeed. Shall we spend some time now in analysing and understanding how corruption festers? The supply and demand chain of corruption has at least three major components: the giver, the taker and the keeper. In almost all cases, the taker is the primary target of public wrath. The alleged taker goes to prison first, such as the politicians in the 2G scam or in the mining scandal. The safe keeper is often in the shadows — sometimes operating outside the borders and jurisdiction of the Indian legal system. The giver is usually quite powerful and normally manages to stay out of jail — sacrificing pawns and minions instead.

The media goes into frenzy about bribe takers. But they focus the spotlight less often on the giver. The plot of this whodunit, as I have said earlier in these columns, revolves around the thunderous silence of a one-handed clap. There are no prizes for guessing where the funds derived from kickbacks or bribes go for safe keeping. Paradoxically, these ‘keeper’ countries, which are all in the First World, rank amongst the cleanest in transparency league tables. Unless the entire chain of corruption is dismantled by unhinging every link in the chain, we will never fight corruption effectively.

There is a common thread running through all the recent scandals. Whether they are scams in land, spectrum, mining rights, licences or permits — what engenders them? There is invariably a scarce resource to which competing people wish to have an unfair access and are willing to make under-the-table offerings to government officials who can use their discretion to favour one or a few over the others. Manmohan Singh in a recent speech has asserted, “Elimination of corruption is critical to support genuine entrepreneurship. It is also the demand of the ordinary citizen who encounters corruption all too often in everyday transactions with those in authority.”

In this speech he has referred to two different kinds of corruption. The 2G scam is the first kind where national resources have been unfairly allocated. As a consequence, the nation has suffered. The upright entrepreneur who refuses to bribe is at a disadvantage in such a system. He has a huge disincentive to remain honest. This is Corruption with a big C where the amounts at stake run into very large sums sometimes billions of dollars. Corruption with a big C also straddles large government procurements including arms deals where vast sums of money change hands — sometimes outside the country. The second kind of corruption that Singh has alluded to includes petty bribes, extortion, speed money and transmission and distribution losses in the process of trickle down. It is large in the aggregate but individual amounts — collected from a huge number of citizens by corrupt people down the chain — are relatively smaller. For instance, diversion of NREGA funds, bribe demanded by officials to issue certificates and entitlements, bribes in lieu of traffic fines, fire safety penalties and so on.

If we do a root cause analysis, certain simple conclusions leap out. In all scams, the government ministers or officials had huge discretionary powers over the allocation of scarce resources or spending or approval. Their powers were unchecked. The system was structurally opaque and not transparent. Therefore, it is important to reduce the untrammelled discretion of the government in the allocation of national resources, procurements and approvals. If corruption is proven, the entire chain must be dis-aggregated and all players punished. The heaviest punishment should be meted out to the giver who stands to gain the most and who usually steals the maximum from the nation. By imprisoning small fry and scapegoats, we are not sending a message that is loud and clear: India’s tolerance to corruption is zero.

On petty bribes, one answer, but not the only answer, is to use technology that will provide direct access to the beneficiary and eliminate the middleman. I will relate an anecdote from my personal experience. In the late 1990’s, I was involved in a project of computerising the payroll in a municipal corporation. We designed the system such that all wages would go directly by transfer to the bank account of the individual workers. Initially there was a huge opposition to the project. But by some miracle both unions supported it as we explained the benefits of the project, which included accurate calculation of wages and overtime and on-time payments. To open the bank account the worker had to come forward with a photo id card. Almost overnight a fairly large number of ghost workers dropped off the payroll. The project paid for itself in about 9 months simply through such savings. But technology alone is not the magic wand that will eliminate corruption. Crackdown on corruption at all levels is necessary.

There is no better safeguard against corruption than a vigilant civil society. But the penal system must work within our constitutional and democratic framework. China conducts summary trials and shoots down corrupt officials from time to time. There is no evidence, however, that it is a more effective system in rooting out corruption. The last thing we should do is to blame our democracy. As the Mahatma said, “Corruption and hypocrisy ought not to be inevitable products of democracy, as they undoubtedly are today.” We must find effective solutions of rooting out corruption without giving up on our democratic system.

(The writer is the Managing

Director of Deloitte Consulting, India. These are

his personal views)

Page updated

Report abuse