Sunday, November 28, 2010

The agony of Ratan Tata

Ratan Tata is aggrieved that Niira Radia's telephonic conversation with him was tapped and is now public knowledge. Niira Radia of Vaishnavi Communications, a PR agency had her telephone bugged by IT authorities. The tapped conversations with numerous industrialists, media people, bureaucrats,politcians and others serendipitously exposed the sinister ways in which influence peddling vitiates governance.

Obviously Tata's sangfroid is under test. He seems to have cracked under pressure. Though his foibles pale into insignificance when compared to those of others, it is undeniable that he has not resisted the temptation to game the system and to have more accommodative or less malicious politicians in seats of power.

The respected doyen made two mistakes. One he needlessly gave a clean chit to the lobbyist under investigation. The other error is that he demands that the recorded conversations should not be aired. The damage has been done and it is now too late to undo the past indiscretion. Pleading for secrecy is totally unlike Tata and it does irreparable damage to his well-earned reputation.

Tuesday, November 23, 2010

The New York Times on the Spectrum Scam

Here is how the New York Times looks at the scandal allegedly involving $ 40 bn:


November 21, 2010

Unlikely Person at the Heart of India’s ScandalBy LYDIA POLGREEN

NEW DELHI — He was a small-town lawyer from a regional political party in a southern Indian state. By almost any measure, Andimuthu Raja, who had no background in telecommunications or in business, seemed an unlikely candidate to be the government minister presiding over the fastest-growing cellphone market in the world.

But he had the only qualification that mattered: the ironclad backing of the political chieftain of his party, a crucial ally of the governing Congress Party. Without his party’s 16 members of the lower house of Parliament, the government cobbled together from squabbling allies would collapse.

Mr. Raja is now at the center of what may turn out to be the biggest political corruption scandal in Indian history. He is accused of using his post to sell off valuable mobile telephone spectrum licenses in 2008 at rock-bottom prices. His decisions may have cost the Indian treasury as much as $40 billion, according to a government investigative report released last week.
The widening scandal, coming on the heels of two major political scandals involving senior Congress Party officials, has eroded faith in India’s government. Last week, India’s prime minister, Manmohan Singh, widely regarded as a figure of unimpeachable integrity, was rapped by the Supreme Court for failing to investigate quickly. The scandal also threatens to undermine one of the cornerstones of India’s rapidly growing, technology-driven economy.

The story of how Mr. Raja rose from small-time regional politician to telecommunications minister is emblematic of how politics in India, the world’s largest democracy, really work. Small, regional parties, often formed along family or caste lines, hold outsize sway here, taking command of crucial and potentially lucrative parts of the government to fill their pockets and party coffers.
“When there is a multiparty coalition at the center, you have got to turn a blind eye to the actions of some of the less principled parties,” said Prem Shankar Jha, a political analyst.
Since 1989, when Rajiv Gandhi’s government went down in defeat in the wake of a corruption scandal involving military contracts, no party has won an outright majority in Parliament. As a result, forming a government has required complicated and often messy coalitions with smaller regional parties. These parties often have no national agenda and see power in the center as little more than an opportunity to loot.
The Congress Party has had no shortage of corruption scandals of its own. But it currently controls the most crucial government functions — internal security, foreign policy, defense and finance — and has entrusted them to seasoned leaders with unassailable credentials. But the realities of coalition politics, in which crucial allies must be given important posts, have left some large ministries in the hands of smaller parties, which have in turn put questionable politicians in important jobs.

This has led to embarrassing scandals and mismanagement in the past. In 2006, the coal minister, Shibu Soren, a politician from the eastern state of Jharkhand and an important ally of the Congress Party, was forced to resign after he was convicted on murder charges. India’s railways, the country’s largest employer, are in the hands of Mamata Banerjee, a populist leader whose sole aim appears to be defeating the Communist Party of India in West Bengal and putting her party, the Trinamool Congress, in power.
Mr. Raja’s party, the Tamil Nadu-based Dravida Munnetra Kazhagam, or D.M.K., was once a liberation movement built on Tamil nationalism. But the party has largely jettisoned ideology. An octogenarian, wheelchair-dependent patriarch named M. Karunanidhi and his plentiful and perpetually feuding progeny run it, and it more closely resembles a sprawling family business empire than a political party.

When the Congress Party returned to power in 2004, it won narrow advantage over the center-right Bharatiya Janata Party, whose former ally, the D.M.K., linked up instead with Congress. The D.M.K.’s reward was the telecommunications ministry and several other posts.

Mr. Karunanidhi sent his grandnephew, a local media tycoon named Dyanidhi Maran, to Delhi to become telecommunications minister. But Mr. Maran fell afoul of Mr. Karunanidhi’s eldest son. In an effort to quiet the burgeoning family feud, Mr. Karunanidhi replaced Mr. Maran, a powerful political player in Tamil Nadu, with Mr. Raja, who was much less well known but who had a close relationship with Mr. Karunanidhi’s daughter Kanimozhi, who is also a powerful party figure.
Mr. Raja had a history of party activism dating to his college days. He had been a minister in a previous government. He was the most important politician in the state from the Dalit, or formerly untouchable, community, and giving him a big job would secure Dalit votes.
“He was loyal and he was not a threat,” said Vaasanthi, an analyst who has written extensively about Tamil Nadu politics and who goes by one name. “That was his qualification for the job.”

Mr. Raja may not have been a threat to Mr. Karunanidhi’s children, who jealously guard control of the party as their birthright. But his handling of the spectrum sale has undermined confidence in what initially appeared to be India’s most stable and competent government in years.

Even Mr. Singh, widely seen as one of the most upstanding politicians in India, has been tarred in the scandal. While no one has suggested he was involved in corruption, India’s Supreme Court criticized him last week for failing to respond to a call for an investigation into Mr. Raja’s handling of the spectrum sale.

Mr. Singh has pledged to punish anyone found guilty in the scandal, but questions linger about why he did not act sooner to remove Mr. Raja, leading some to conclude that the Congress Party will sacrifice almost any principle to hold on to its governing coalition.

Mr. Raja resigned under pressure on Nov. 14, but he has denied any wrongdoing. India’s Central Bureau of Investigation is carrying out a criminal inquiry.
The Congress Party has faced its own corruption scandals in recent weeks. The senior politician who was in charge of the disastrous preparations for the Commonwealth Games last month had to resign from a minor party position amid multiple inquiries into fraud and graft. The chief minister of Maharashtra, the state that includes Mumbai, was also forced to step down after it was discovered that members of his family had improperly received valuable apartments meant for war widows.
Such scandals, analysts say, could undermine efforts by the Congress Party’s chief, Sonia Gandhi, and her son Rahul to win an outright majority in the next election, in 2014.

Impeccable integrity

Indian government is relentlessly striving to commit one mala-fide act after another. Attorney General's impish statement in the Supreme Court in the CVC appointment case deserves nation's condemnation.

When the Bench wanted to know if the mandatory eligibility criterion of "impeccable integrity" was satisfied by P J Thomas, the AG atrociously replied , "If integrity is a criterion, all judicial appointments will come under scrutiny, even constitutional ones." One wonders what the AG was driving at. Was he not in the process accepting that this simple requirement was not met in the case of CVC ?

Framers of Indian Constitution will certainly turn in their graves if they come to know how the government is playing ducks and drakes with institutions like presidency and vigilance commission. Ill fares the land and to hastening ills a prey, where arrogance accumulates and governance decays !

It is very sad that our premier is playing possum when onslaughts on ethical conduct are becoming more venomous. It is a shocking irony that standards of governance are hitting the nadir when an honest person is at the helm.

Monday, November 22, 2010

The "presumptive" argument

The ever-repulsive spokesperson of the Congress party has unconvincingly argued that CAG's report on 2G Scam refers only to "presumptive loss" to the exchequer and therefore the country is needlessly agitated over a non-issue.

Even before we could digest this argument, the normally sensible P.Chidambaram has sought to throw further light on the theory of presumption. "I place some 50-60 signatures in a day with the presumption that they are right to the best of my knowledge. Perhaps few may go wrong, but they were not malafide because the intentions were right." (The Hindu dated 22nd Nov.)

Is Chidambaram serving advance notice on the prime minister ? This specious presumption argument can be used by every decision-maker. So no one can be held accountable for any decision, for who will accept his intentions were wrong?

Sunday, November 21, 2010

Lessons from the 2G Spectrum Scam (contd.)

The scam is so pernicious and deep that it is impossible to grasp fully the significance of the entire scandal. Failure of governance has never been so outrageous. Economic loss to the nation is enormous. The prime minister's role (or should we say non-role) has caused dismay all over the country. How could a supposedly honest leader be a helpless bystander when his team-mate was literally running amuck? Some columnists have averred that this could have happened only at the instance of some one more powerful than the prime minister himself.

Let us not blame only the Congress and the DMK for the abysmal fall in political standards. The BJP which used to claim that it was a party with a difference is shamelessly proving by its behaviour in Karnataka that it is an equal match for the Congress party. Politcs cannot become dirtier than this.

There are also disturbing reports that even some eminent journalists of the electronic media have had a role in rehabilitating proven scamsters in the central cabinet. It is easy to turn pessimistic in a situation like this. At the same time, one may also hope that things can only become better.

Saturday, November 20, 2010

Lessons from the 2G Spectrum Scam

The spectrum scam, the largest ever skulduggery in Independent India -- trust our politicians to make this reputation unsustainable even for a short time --  has enabled us to understand the legerdemain of the likes of A.Raja, to some extent. Suhel Seth of CounselAge, a respected observer of events, understated the obvious when he recently referred to these scamsters as scoundrels and rascals.

Some sections of the media played a remarkable role in uncovering at least partially the bottomless scandal. Ar nab Goswami of Times Now needs special mention. He was unrelenting in pursuit of the covert and not so covert machinations of the political-bureaucratic-business nexus. He richly deserves a Padma award for his efforts. Of course we are living in a fools' paradise if we hope that the government will honour such sincerity of purpose.

The Hindu true to its recently cultivated culture of conflating perversion and partiality was doggedly abstaining from editorially seeking the resignation of the egregious minister. After the minister put in his papers, the newspaper praised that he had done the right thing. The Hindu's representative,  one Mr.Radhakrishnan,  while participating in a TV panel discussion desperately and dolefully pleaded that the media leak of the CAG report on the scam before it was officially placed in the Parliament must be probed, thus exposing the shameless tilt of the newspaper. A newspaper that is less concerned about the contents of CAG report than about the logistics of its release is a national disgrace and not a national newspaper.

The Congress and the BJP vied with each other in adopting dilatory tactics in order to redirect the attention of the nation away from the sins of politicians. The BJP is equally shameless as the Congress in not addressing the main issue in the Karnataka land scam. These two national parties only take pride in mutual satisfaction that both have serially indulged in scams, cover-ups and recidivism. The Communist parties have behaved much better at least in the recent past.

Manish Tiwari, the irrepressible buffoon of the Congress party has once again proved his limitless capacity to outdo the ostrich in denying the obvious. His incorrigible tendency to disallow co-panelists to express themselves is not helping the Congress party in any meaningful way. Jayanthi Natarajan's repeated references to falsehoods as "the fact of the matter" were eminently avoidable. Her obstinate utterances unsurprisingly invited Subramanian Swamy's plea that she must revisit the law school.

One interesting matter has not received the attention it deserves. DMK claims that A.Raja resigned on the advice of his leader Mr.Karunanidhi whereas Kapil Sibal maintains that the ever-decent prime minister sought his resignation. Manish Tiwari has expressed both these contradictory views at different points of time. Jayanthi Natarajan has insisted that Raja had resigned and was not sacked. Prime Minister's taciturnity engendered and sustained this glaring confusion. The Raja's Rule mentioned in the previous post stands untested as of now.

Kapil Sibal's aggression is patently self-defeating. His sanctimonious dismissal of Subramanian Swamy's attempts to lay open the government's unconcern for good governance as procedurally incorrect , a trick also practised by Jayanthi Natarajan will hopefully not succeed in obfuscating the real issue. It is an old trick to shoot the messenger when the message is unwelcome. The new trick is to shoot the behaviour of the messenger if you can't shoot the messenger.

Saturday, November 13, 2010

Raja's Rule

Most of us are naive enough to assume that in a cabinet and that too in a coalition cabinet, the ministers continue as ministers only as long as they enjoy the confidence of the prime minister. Our Communications and IT czar , Mr.Raja has clarified that our assumption is completely perverse and wrong.

According to a PTI report, when asked whether Prime Minister Manmohan Singh would ask him to resign, Mr.Raja said the question was "fictitious". He continued,"I have full confidence in myself". In other words, as long as a minister has confidence in himself/herself, the prime minister cannot ask for the minister's resignation.

This is the historical origin of Raja's Rule which simply says, "In a coalition ministry, a minister continues to be a minister as long as he retains confidence in himself, notwithstanding prime minister's lack of confidence in the minister". However we are awaiting clarification whether this rule applies to every minister or only to those ministers who have royalty embedded in their names.

The pun in the caption is unintended.

How clean is Mr.Clean?

With great difficulty the Congress party (aka Sonia Gandhi) chose Prithviraj Chavan as successor to the scam-tainted Ashok Chavan. The choice was hailed as confirmation of high moral standards of the party. Now read the following report from The Hindu:

"A Right to Information (RTI) application seeking the names of owners of flats in the Chief Minister's quota for weaker sections has revealed that Maharashtra's new head Prithviraj Chavan owns a flat in Wadala under the scheme.

Official sources clarified that Mr. Chavan did own a flat under the MP's quota, but was taking steps to return it. The flat was bought for his deceased mother Premilatai Chavan, who was being treated for cancer in Mumbai.

Mr. Chavan did not own a house in Mumbai, and had applied for a house under the MPs quota so that members of the family could stay while his mother was being treated. However, by the time the flat was allotted, his mother passed away, it is learnt from sources. RTI activist Anil Galgali had applied for this information in 2008.

He told The Hindu that he filed an application for information on all the people who had obtained flats under the Chief Minister's five per cent quota.
The request was refused. Mr. Galgali appealed, which was heard in February 2009. It was in March 2009 that he got the list of 4,200 names who were allotted preferential flats under the quota from the year 1984 to 2009.

“I read the list of names and came across one P. Chavan who, I realised, is the man who was in the Prime Minister's Office,” Mr. Galgali said. Then, he went about asking for the file from the collector's office, and found this flat in Bhakti Park, Wadala, was for the weaker sections who cannot otherwise afford flats. “Mr. Chavan got the flat because of the then Chief Minister Sushil Kumar Shinde,” Mr. Galgali alleged.

He said there was no income certificate, no domicile or no income tax documents. The applicant should also show that he did not own a house anywhere in Maharashtra, and should have an income below Rs. 1.5 lakh, which was the limit for eligibility at that time.

Mr. Chavan's stated income in the application form was Rs. 76,000 per year. Besides, he applied for the flat on May 17, 2003, and on May 19 his application was considered eligible. The letter of allotment was issued on May 20, 2003. He paid Rs. 3,66,969 for the flat which measures 1,032.74 square feet. Mr. Galgali said the per square foot rate of the flat was over Rs. 13,000-Rs.14,000 at present, and questioned how the income could be only Rs. 76,000 as shown.

He said there was double violation as not only was Mr. Chavan not eligible for the flat, but he had also given it out on rent.

The Congress said Mr. Chavan was clean, this proves he is not, said Mr. Galgali, who said he was not affiliated to any political party and neither was this motivated by any other considerations.
Since this information was available in 2009, when asked if any news reports had appeared at that time, Mr. Galgali said there were articles then too, but this time, since Mr. Chavan is the Chief Minister now, there was more interest. “Mr. Chavan should return the flat and set an example.”
Of the 4,200 names on that list, Mr. Galgali asked for the files on a few “famous” names, including Mr. Chavan, whose information he got within a week. “There were some 10,000 to 12,000 files and I did not photocopy all of them,” he clarified. The 36-year-old freelance journalist has been filing RTI applications for a while, and has totted up 500 requests since 2002. Now he has a request for those allotted flats under the Chief Minister's two per cent quota, where one has to pay the entire amount for the flat. That information too, is being delayed."

Is there any honest politician in India today? If such a person really exists, he must be hiding somewhere being mortally afraid that in case he reveals himself he will be lynched to death for betraying the political class.

Monday, November 08, 2010

World Chess Championship

Magnus Carlsen of Norway is a phenomenal player in chess. Though only 19 years old, he is already rated as even better than the current world champion, Viswanathan Anand of India. He has raised a meaningful issue about the logistics of anointment of world champion. The present system is that a challenger to incumbent champion will have to emerge from a set of tiring tournaments. The challenger so chosen will play against the incumbent. This system , accordng to Carlsen and perhaps logically also, offers an undue advantage to incumbent champion who need not go through the dilatory process. Carlsen should be appreciated for flagging this issue. However his decision not to participate in the process unless the rules are changed forthwith is disappointing.

Corporate Governance : over-rated?

Do independent directors really make a positve difference? Does improved governance result in better corporate performance? The answers may be ambivalent at best. Following excerpts from The Economist (Schumpeter) are perhaps the most unflattering assessment so far:

"New research by David Erkens, Mingyi Hung and Pedro Matos, of the University of Southern California, powerfully reinforces the sceptics’ case. The authors conducted a comprehensive study of the performance in 2007-08 of 296 financial institutions with assets of more than $10 billion. They found that none of the tenets of good corporate governance stood up to close examination. Directors who were well informed about finance performed no better than know-nothings. Companies that separated CEOs and chairmen did no better. Far from helping companies to weather the crisis, powerful institutional shareholders and independent directors did worse in terms of shareholder value. Indeed, the proportion of independent directors on the boards was inversely related to companies’ stock returns.

Why was this? The authors argue that in the run-up to the crisis powerful institutional owners pushed firms to take more risks to boost shareholder returns. This suggests, they argue, that outside shareholders may be inherently more risk-hungry than managers who have their livelihoods tied up with their companies. They also argue that independent directors were much more likely to press firms into raising more equity capital even when the company’s share price was tanking. One possible reason for this is that independent board members are worried that their value in the market for directorships will plummet if they have overseen companies that have filed for bankruptcy or debated restructuring. "

What is there to comment?

Sunday, November 07, 2010

Multiple Conflicts of interest

The war of words between Oracle and Hewlett Packard is becoming curiouser and curiouser. It is now a dated story that Mark Hurd was sacked as CEO of HP ostensibly  for fudging his expense accounts in trying to mask a graver ethical lapse. This dismissal was characterised as stupid by Oracle's CEO, Larry Ellison who subsequently roped in Hurd as Oracle's President. HP accused Hurd of attracting conflict of interest in view of the possibility of proprietary information on HP's business strategy being misused by Oracle through Hurd.

Oracle fought back by intensifying its legal efforts to nail Leo Apotheker who was recruited by HP in the place of Mark Hurd. Apotheker was working for SAP, the German software behemoth when SAP had admittedly stolen Oracle's software. As if these conflicts of interest are not enough, a new interesting development has now taken place. Joe Nocera, a columnist at NewYork Times has decried HP's injudicious decision to take in Leo Apotheker who had allegedly played an apparently unjustifiable role in the theft of Oracle's software. So far it has been okay as a journalist's espousal of the need for ethical behaviour.

The interesting twist that now emerges as yet another conflict of interest is the information that Nocera's fiancee is the Communications Director of Boies, Schiller & Flexner, the law firm that is advising Oracle in its legal dispute with SAP. Oracle has alleged that Apotheker had a role in software theft.

Tuesday, November 02, 2010

Supreme Court on "Rarest of rare crime"

The Supreme Court recently had occasion to revisit what is the rarest of rare case which deserves capital punshment. The Hindu reported as under:

"Expressing serious concern over dowry death cases where young women are being killed, the Supreme Court has said that such offences are to be treated as the ‘rarest of rare' ones and extreme punishment of death should be awarded to offenders.

A Bench consisting of Justices Markandey Katju and T.S. Thakur said: “Although bride-burning or bride-hanging cases have become common in our country, in our opinion, the expression ‘rarest of rare' does not mean that the act is uncommon, it means that the act is brutal and barbaric. Bride killing is certainly barbaric.” "

Given that the crime we discussed in the blog on 10th Oct. was certainly brutal and barbaric, we reiterate that the accused in that Bengaluru case has to receive only capital punishment.