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Saturday, November 24, 2012

Can India wall its corruption mart?

It is rare for Wal-Mart to find itself in the role of victim.

Normally, when the retailer is in the news for reasons other than being ultra-big or ultra-inexpensive, it is for being unfair to its employees, beating down producer prices or some other such activity, in which its role is that of perpetrator. In India, however, it is almost inevitable that it is at the receiving end of injury.

The Indian operation is being investigated by the parent for violations of the US law that restrains American companies from indulging in corrupt practices abroad, the Foreign Corrupt Practices Act.

Its makers, no doubt, intended the law to prevent American companies from seeking unfair advantage through illegal gratification. They might not have anticipated a situation in which an American company doing business abroad has to pay bribes not to garner a privilege or do in a competitor but merely to survive, just to do business.

In Incredible India, expect the unexpected. Here, a long tradition of collecting political funding almost exclusively through graft has ensured that all businesses must grease some palms somewhere to exist, is a growing concerns. There is no way a retail outlet would get a power connection or a licence from whoever licenses shops and establishments without paying the mandatory tribute along with the official fee.

All a law like FCPA does is to stimulate some creativity in how to camouflage such tribute. You could bill it as fees to a consultant who procures the needed permits, you could claim the expenditure even as expenses on educating the decision-making community, as Enron had famously claimed in the nineties.

Globalising India cannot afford to continue with such a corrupt administrative culture, in which corporate victims of state-sponsored extortion have, in turn, to find victims in its own managerial ranks, to comply with some sanctimonious law. Indian democracy has to start funding itself through transparent means. 
Source : The Economic Times, 24 Nov 2012

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