Friday, September 11, 2009

India's new lobbyists use American methods - Business - International Herald Tribune

NEW DELHI — Gaining political influence in India was once a simple affair: You handed over a suitcase of cash, in nonsequential notes.

But in India, as elsewhere in the developing world, the old business of corruption is meeting a new rival: the Washington-style business of persuasion, in which companies garner influence through golf games, planted news stories and PowerPoint presentations.

As global corporations woo a billion customers, there are tax breaks and contracts to be wrested from Indian officialdom. Some companies still get them by corrupt means, covering their tracks with middlemen, as some foreign managers acknowledge in private and as high-profile Indian media investigations have alleged.

But many companies, according to experts on India's corporate landscape, are turning to lobbyists who use subtler tools of influence, partly out of fear of anti-bribery laws like the U.S. Foreign Corrupt Practices Act, which threatens jail time even for chief executives if they let workers pay bribes overseas.

In Washington, lobbying is a huge, established industry and, of late, a source of controversy. But in India, where there is a long tradition of outright corruption, lobbying is regarded by many as a lesser evil.

Supporters say lobbyists are helping to pry open closed industries. They are praised for introducing fact-based analysis into the debate over liberalization, and for creating a cheaper alternative to bribery. "To some extent, it will reduce corruption," said Abhijit Sen, an economist who serves on the government's Planning Commission. "You can get certain things now for free that you once had to pay for."

Unlike in the West, lobbying is virtually unregulated in India, as in many other developing countries. And even as institutions like the World Bank increase efforts to curb graft in developing countries, lobbying will remain a gray area immune from equivalent scrutiny, said James Wolfensohn, a former World Bank president.

"The earlier efforts of lobbying in the developing countries was really writing checks to the parliamentarians and officials," he said by telephone. "And we were focusing on that much more than on hiring a lobbyist to promote the interests of Boeing in India."

But the rise of lobbying here has generated critics, who call for more scrutiny. Consumer groups contend that Washington-style lobbying can veer into manipulation, with fact-filled presentations supplemented by other practices like planting misleading news articles and disguising lobbying campaigns by multinational companies as indigenous grass-roots initiatives. Many of these practices, to which some of the lobbyists freely admit, are within the law, but critics say it can be harder to counter these tactics than more straightforward lawbreaking.

Sunita Narain, a well-known Indian environmentalist, describes the new lobbying as corruption by other means.

"I'm not very happy with this legalized corruption," said Narain, who for years has battled against the practices of multinational companies in India. "Give me old-fashioned Indian corruption. Yes, it stinks. But it's a stink that everyone knows."

Defenders of the lobbying say it signals a new partnership between the state and business in India. In the decades after independence in 1947, India was a socialist republic notorious for its "License Raj" - the lumbering bureaucracy that parceled out permissions needed to start, operate and close businesses.

Being a lobbyist meant begging for exemptions from a system that stifled entrepreneurship. Today, the lobbyists no longer have to beg.

"You have in the government and in the bureaucracy people you don't have to convince," said Prakash Karat, general secretary of the Communist Party of India (Marxist). "They are themselves clear that you have to implement policies in favor of the corporations."

So sympathetic are many bureaucrats that they often copy and paste language from lobbyists' presentations into government reports that grant the lobbyists their wishes. Sen, the economist, said that in a country that lacks world-class research centers, officials have little choice but to rely on the fact-filled presentations that the lobbyists provide.

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