Recent scandals have sparked debate over the need to regulate India’s unbridled corporate lobbyists
The infamous phone calls between corporate lobbyist Niira Radia and various Indian officials, caught on tape by the country’s Income Tax Department in 2008 and 2009, provide a rare insight into the nature of corporate lobbying at the highest levels of India’s government. Legislators, senior civil servants, legal professionals and journalists were all identified as targets of the lobbyist. The revelations were widely publicized and shook public confidence in the standard of governance in the country.
“The system of lobbyists in India has acquired an odour of bribery of legislators, officials and the media,” says GV Ramakrishna, a former chairman of the Securities and Exchange Board of India. “Cash gifts and election funding are now considered a normal activity of lobbyists.”
Dilip Cherian, the founder of Perfect Relations, a public relations company, argues that the majority of lobbying is above board and a legitimate part of the process of informed decision making. He concedes, however, that the practice has come to be viewed “in a negative light due to the aggressive agenda pushed by corporations or vested interests using not-so-above-board means to influence policymaking.”
A changing profession
Few argue against the beneficial aspects of lobbying when it is conducted in an ethical manner. The government is constantly engaged with various industry associations, social activist groups and think tanks, which raise legitimate issues on behalf of a wide range of stakeholders. Yet some observers fear that this tradition of healthy debate has given way to a more sinister form of lobbying in which seasoned professionals are paid large sums of money to influence key decisions, often through leveraging extensive networks of well-placed contacts.
So high are the stakes that lobbying has evolved from a process of social interaction into a precise science. Subodh Bhargava, a former president of the Confederation of Indian Industry (CII), notes that most campaigns are heavily reliant on scientific research and analysis. The decision-maker is clearly identified and models are employed to map the lobbying process from start to finish.
Traditionally, lobbyists would not conceal their vested interests in obtaining particular outcomes. They would work openly on behalf of their clients, collecting data, analysing the likely effects of different actions, publishing articles and negotiating with a range of stakeholders and decision makers.
But in an environment where corruption is rife and companies encounter dubious practices as well as legitimate processes on the road to obtaining favourable decisions from the government and regulators, many lobbyists have abandoned the rulebook. “Lobbyists are mostly working clandestinely, without revealing the companies or groups they represent,” says Ramakrishna. He adds that lobbyists no longer take ownership of their opinions, but arrange for them to be planted anonymously in the media, the support of which is often enlisted through dubious means.
Indeed, in one of the Radia tapes, the lobbyist is heard asking Vir Sanghvi, a former editor of the Hindustan Times, to favour her client, Reliance Industries, in his now-discontinued column Counterpoint. In response to Radia’s request, the editor is heard saying: “I’ve dressed it up as a piece about how the public will not stand for resources being cornered, how we’re creating a new list of oligarchs.”
“Very nice. Lovely. Thank you Vir,” replied Radia.
“It’s dressed up as a plea to [the prime minister] Manmohan Singh,” Sanghvi continued, “so it won’t look like an inter-Ambani battle [for the natural gas from the Kaveri basin].”
Perhaps the most disturbing revelation from the Radia tapes was the extent to which the lobbyist had intervened to ensure that A Raja, a former telecoms minister who is now in police custody over his role in the 2G spectrum scandal, retained his telecommunications brief for a second term.
In one conversation with the minster on 22 May 2009, Radia said: “[NDTV journalist Barkha Dutt] says … she has been following up the story with the prime minister’s office tonight. In fact, she was the one who told me that Sonia Gandhi went there. She says that he [the prime minster] has no problem with you.”
The leaked conversations prompted widespread condemnation in India and sparked a petition to the Supreme Court by the Centre for Public Interest Litigation (CPIL), a non-governmental organization, seeking the full public disclosure of all the Radia tapes. CPIL is being represented by prominent senior counsel and civil liberties lawyer Prashant Bhushan.
The strongly worded petition sought “the active intervention of SC [Supreme Court] to lift forever the officially protected cloak of secrecy that conceals from public gaze any revelation of the backdoor manipulation of government and active subversion of government decisions and policy for private commercial interest.”
During the case, justices GS Singhvi and Asok Kumar Ganguly asked for more information about Radia’s profession. Bhushan replied that she was a consultant whose brief included lobbying law makers, journalists and senior bureaucrats.
“That is not an ostensible profession,” said Justice Ganguly.
“According to her she is a consultant, according to you she is a wheeler-dealer,” added Justice Singhvi.
The confusion is understandable. The term “consultant” is commonly used for lobbyists in India, a result perhaps of the negative public perception of the work they engage in.
“Everybody wanted to give it a different name when somewhere it got bad publicity,” says Prema Sagar, the principal of Genesis Burson-Marsteller, a public relations agency in Gurgaon.
The court case continues.
Bhushan, meanwhile, tells India Business Law Journal that the Radia tapes are a clear example of corruption. He believes that the government officials who were heard in the tapes must have received some benefits from Radia or her clients.
Threats of regulation
Responding to the scandal, in December 2010, India’s then minister of state for corporate affairs, Salman Khurshid, endorsed demands for lobbying to function within clearly defined limits. He even advocated consultations with the ministries of home, industry, commerce and law to consider the feasibility of introducing a law to regulate lobbying.
Khurshid was moved to the Ministry of Water Resources before he had time to act on his suggestions. His replacement at the Ministry of Corporate Affairs, Murli Deora, has yet to comment on the subject.
Nevertheless, the mere talk of regulation has set alarm bells ringing in corporate lobbying firms, which fear they may be subjected to US-style disclosure requirements.
In the US, the right to lobby is protected under the first amendment to the country’s constitution. However, the practice is also regulated by the Federal Regulation of Lobbying Act, 1946. Lobbyists who receive money for influencing legislation must register themselves with the authorities and disclose their employer, salary and duration of employment. They must also provide quarterly reports of their activities. Penalties for non-compliance or providing false information include a fine of up to US$200,000 and imprisonment of up to five years. In addition to this law, the Lobbying Disclosure Act, 1995, and the Honest Leadership and Open Government Act, 2007, fortify the legislative regime that constrains the country’s power brokers.
Despite the existence of such well-developed regulations, on his first day in office President Barack Obama thought it necessary to sign two executive orders and three presidential memoranda dealing with ethics and transparency in his administration. They were targeted at the so-called “revolving door”, which allowed lobbyists to join the government and use their time in public service as a way of promoting vested interests.
Under Obama’s new rules, lobbyists who become members of the administration are not permitted to work on matters they lobbied on, or in the agencies they lobbied, for two years. Anyone who leaves the administration is banned from lobbying the government and there is also a ban on any members of the administration receiving gifts from lobbyists.
Adopting the US model
Bhushan believes that similar rules are needed in India. “The government should ensure that public servants do not take post-retirement jobs with any company that they have dealt with in the past,” he says. He advocates penal action as a means of enforcing this prohibition.
Ramakrishna argues that lobbyists should be registered with the ministry of company affairs and compelled to provide details of the companies or groups they represent. Furthermore, their representations, he says, should be made only to the ministers or top civil servants. They should also be published online.
Nobody knows how much impact such regulations would have, especially when most of the “consultants” who thrive on their networks of connections do not want to be recognized as lobbyists.
Cherian at Perfect Relations argues that before Indian companies can realistically be expected to disclose their lobbying activities, there would need to be a corresponding increase in openness on the part of the government. “That would require a radical change and I’m not sure whether politicians are prepared to accede to such levels of transparency,” he says.
While the government may refrain from legislating due to fears that it too will have to live by the rules it creates, some observers have presented other arguments against the need for a new law.
“Another law or another regulator is not going to solve the problem because most of our laws are observed more in breach than in compliance,” says Lalit Bhasin, the president of the Society of Indian Law Firms.
“So much of India functions outside the norms of the rulebook,” concurs Cherian. “Everybody recognizes that legislating only results in rent collection by those enjoined with upholding the law.”
Cherian goes on to warn that “ill thought out rules will drive the practice underground and lead to the emergence of a new lot of non-regulated players.” He advocates self-regulation by the lobbying industry as the most workable solution.
Bhargava, the former CII president, is not comfortable with the bureaucracy that any new regulations would create and does not want a system where some lobbyists could be denied registration. Such a scenario, he says, would “open up another gate for corruption.”
He argues that a set of non-legislative guidelines for the conduct of lobbying in India might be the best way forward. Such rules could be implemented relatively quickly as they would not require parliamentary ascent.
Exercising the right to information
With the odds seemingly stacked against the enactment of new legislation, some observers are turning to the Right to Information Act, 2005, to shed light on the murky activities of corporate power brokers. Ramakrishna, for one, insists that Indian citizens have a right to know about the methods employed by lobbyists to obtain favourable decisions for their clients.
During his time as minister of state for corporate affairs, Khurshid had actually suggested including lobbying activities in the Right to Information Act. “Perhaps this model needs to include areas of lobbying, PR and specific influence that should be known to the public,” he said.
Bhasin says that with some new administrative rules, the Right to Information Act could be made applicable to lobbying. This, he says, could be done either through an amendment to the act or a judicial pronouncement.
But Bhargava continues to urge caution. “People are making a knee-jerk reaction,” he says. “We have this hype without substantive root-cause analysis.” Bhargava argues that the 2G spectrum scandal resulted from bribery and corruption, not from lobbying. However, he feels that the media has twisted the argument and created an opportunity to bash the lobbyists.
Cherian, meanwhile, believes there is a link between bribery and lobbying. He expresses the hope that “the 2G telecom controversy can result in a cleanup of some of the ills of the [lobbying] practice we are witnessing today”.