Monday, February 17th, 2025

Opinion: Our companies should also become multinational, this is the wish of every Indian, but Adani’s case is different.

Author: TK Arun
America’s securities regulator Securities and Exchange Commission (SEC) has accused Adani Group of bribery. This news is not good for India’s big business groups and the Indian economy. Adani Group is known for completing big projects. Whether SEC’s allegations are true or not will be known only after investigation. But one thing is clear from this that Indian companies will have to make some big changes to do business at the global level. Today the world has become globalized. Capital, goods and talent are moving beyond the country’s borders. Expectations of accountability and transparency have also increased. In such a situation, Indian companies will have to meet international standards.

The SEC prosecutes only 1% of its cases under the Foreign Corrupt Practices Act (FCPA). In such cases the fine is also very heavy. However, SEC settles 98% of its cases through settlement. Whether a fine is imposed or not, whether the offense is accepted or not, depends on the individual case. It remains to be seen what will be the outcome of Adani’s case.

It is a bitter truth that bribery and corruption have long been a part of Indian business and politics. Corruption in the private sector occurs so that businessmen and officials can become rich themselves by defrauding their companies and shareholders. Government officials also take bribe. They take bribes to stop, delay or hurry up the work of businessmen. There is also political corruption which prevents other types of corruption from being eliminated.

Bank managers charge commission for approving loans. Purchase managers select vendors on commission basis only. There is always suspicion of insider trading on the fund manager. They tell their friends and relatives in which shares their fund is going to invest. Then their friends and relatives already buy those shares or their derivatives. And when the fund buys those shares the prices go up and they make profits.

When a company buys another company, the owners of the sold company transfer some money to the foreign account of the promoter of the buyer company. In this way they rob the buyer company itself. Greed and the low probability of being caught or punished are what drive such behavior. Traders say that they need capital to expand their business.

When the industrialists of today’s wealthy world were in the race to become rich, raising capital was a dirty job. This included piracy, slave trade, slave plantations, plundering of colonies, and exploitation of women, children, and laborers. Indian industrialists can only envy their counterparts in the rich world in the early stages of their development and proceed to accumulate capital through their own dirty little methods.

The most dangerous corruption is political corruption. Most Indians take pride in being the ‘world’s largest democracy’. But only a few people consider it necessary to give money to run the democratic machinery. This machinery includes the expenses of political parties, their offices spread across the country, their workers, travel, publicity, rallies etc. It is expected that the parties will raise funds as per their own. And that’s what they do.

When GD Birla also quietly gave funds to Congress, so that the party could maintain Mohandas Karamchand Gandhi’s image as a Mahatma and carry on other political activities. No Seth ji wanted the British government to know how much funds it was giving to the party which wanted to overthrow it. That tradition of quiet, informal funding continued even after independence. In the beginning, the money was only used to fund politics.

Gradually, this type of funding involved extortion, demand for money in exchange for protection from the state and looting of the public treasury through inflated government contracts. These methods were used to create personal wealth as well as to fund politics. In this way, funding of our political parties depends on the industries of the country. Then corporate governance as well as the integrity of accounts and audits has to be weakened, large amounts of money have to be taken off the books to fund the political machinery.

In the early years of liberalization, companies realized the benefits of declaring business profits instead of hiding them during stock market booms. This led to better valuation of companies on the stock markets and promoters climbed the lower rungs of the ladder of billionaires. In the Satyam scam, the company showed fake profits and even paid tax on them, so that share prices could increase and money could also be raised by pledging them.

Satyam had taken more money from the market than the costs of the projects. The additional capital thus raised is withdrawn during the implementation of projects to create the funds required to make payments to politicians, bureaucracy as well as other security apparatuses. Foreign funds are used to buy shares and increase their prices so that even more capital can be raised from the loans taken from the market by selling shares. The mutual nexus of business corruption and political corruption promotes development for some time. This may seem common inside the country, but to people outside it seems scary.

Business corruption nourishes politics of all ideologies. To free the industry from this burden, the political machinery will have to create an alternative way of funding. For this, voluntary contribution can be expected from 1 billion voters. This money should have come voluntarily without any pressure and should have open accounts. For this, politics will have to be clean. This is possible only when unethical activities like horse trading in politics are stopped because no political party can make public the accounts of expenditure incurred on such work. Right now, money is being given even to the common voters to get their votes, people are being paid and brought to rallies.

Only the one who has never committed any sin in his/her life should cast the first stone at the one guilty of sin. By implementing this adage, India can become a guide for democratic politics. If Indian politics follows this then there will be no need to raise stones. Our aim should be even purer than this – not to pick up stones, but to stop sin. It may be difficult, but extremely sacred.

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