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.

India's Lobby on Capitol Hill

The lobbying game
Foreign nations such as India pick their lobbying firm with an eye to extracting maximum advantage in the areas of foreign aid and trade matters, including intellectual property rights. But whatever it is they want, the lobbying firms in Washington help their clients get it from the US legislature, the executive branch and the bureaucracy - from a trade concession to more aid, or help in dealing with another country. For instance, the American-Israel Public Affairs Committee (AIPAC), studded with big-name Jewish politicians, diplomats and lawyers, is one of the pre-eminent foreign-policy lobbying groups. The two main items on AIPAC's current legislative agenda are foreign aid - Israel receives close to $5 billion in US aid annually - and passage of the Iran sanctions bill.

Lobbying firms are also expected to deflect criticism against their client country, if and when the US Congress takes note, concerning violations of human rights or infraction of trade regulations and the like. Congressional indignation, after all, may lead to partial or total economic and financial sanctions.

The large and powerful lobbying firms such as Verner and Akin do these chores at the cost of a tidy annual financial contract often exceeding $50,000 per month. To get clients, the lobbying firms have their big guns working overtime in consort with the politicians who can wield influence on the people in power. For a foreign nation such as India, it is considered beneficial to have a powerful big gun, or big gun's company, on the payroll. That would provide India, for instance, some sense of security - a comfort blanket for a price - in dealing with the anti-India lobby within the US. The PR firm guides India's policymakers on how to deal with adverse forces in the US and how to maximize the benefit from those who are willing to consider India a "friend".

In Washington, power players do have party affiliations, but such affiliations do not put them in exclusive corners. In fact, firms such as Akin have on their rosters lawyers from both the Democratic and Republican parties. Still, power players change with the changing of the guard at the White House, and countries change lobbying firms in sync. The latest change by the Indian Foreign Office is in accordance with the unwritten rules of the PR game.

Clinton's people
The two "stars" that lit up India's lobbying efforts in past years were former senator Robert Dole (Republican-Kansas) and former Brooklyn congressman Stephen Solarz (Democrat-New York). Solarz, an important pillar of the Israeli lobby and once a powerful congressman, helped facilitate India's rapprochement with Israel. Solarz is a showman who went to the extent of putting on a sleeveless jacket - popularized by India's first prime minister Jawaharlal Nehru and since called the "Jawahar coat" in India - and calling himself the "congressman from Bombay". But those were the old days. Neither Solarz nor Dole has much to offer politically in Washington any longer. Some claim that Dole did not do much lobbying for India anyway, while the last time Solarz was heard of he was having a problem holding his liquor at a party.

But Dole, a Republican presidential contender and the former Senate minority leader, was not the only power player who acted as a lure for India to hire Verner in 1998. President Bill Clinton's former treasury secretary Lloyd Bentsen, former Texas governor Ann Richards (another Clintonite) and former Senate majority leader George J Mitchell all were on the Verner roster and helped the firm, at least indirectly, to get prized contracts. In fact, Verner, founded in 1960, has deep roots in the Democratic Party and is definitely not a favorite with Republican presidents. One of its partners, McPherson, was White House counsel to president Lyndon Baines Johnson. Another partner of the firm and a former assistant secretary of state, Bert Bernhard, who directed Maine Democratic senator Edmund Muskie's failed 1972 presidential campaign, served as special advisor to secretary of state Dean Rusk during the Johnson presidency.

Yet another important insider at Verner is Leonard Garment, an AIPAC member and a wheeler-dealer within Washington's powerful Israeli lobby. Garment was a counsel with Richard Nixon's White House and he also provided legal assistance to Clinton in the Monica Lewinsky affair. Garment has another asterisk beside his name: he was hired by Mark Rich, the billionaire criminal living in exile in Switzerland for almost 20 years who was pardoned by the departing Clinton as his last act of clemency. Rich is also acknowledged to be a major financier of Prime Minister Ariel Sharon's Likud Party in Israel.

The Akin, Gump stable
Given the strong presence of the Israeli lobby at Verner, one might be tempted to conclude that by dumping Solarz and Verner, the Indian Foreign Office is loosening its close ties with the Israeli lobby. However, things are not so simple. The new firm, Akin, Gump, Strauss, has its own Israel reps and Clinton men: first and foremost is Vernon Jordan, now chairman of the Wall Street firm, Lazard Freres, and Bob Strauss, former US ambassador to Russia and former chairman of the Democratic National Committee.

Jordan, surely one of the most powerful African-Americans in the US today, was brought into Akin by Bob Strauss in 1982, and later became one of Clinton's closest friends. Strauss entertains Democratic presidents the way another power broker, Clark Clifford, used to. Strauss is also a very "good friend" of Israel. While Jordan is a member of the secretive economic power grouping, the Bilderberg Society, Strauss is a power broker and a strong pro-Israel voice within the Democratic Party, a sort of backroom Joe Lieberman.

On the other hand, Akin also has a very important friend of the Bush family on its roster: that is James C Langdon, a lawyer. He is based in Washington and a crystal ball is not necessary to figure out that he played some role in the Indian Foreign Office's decision to change its lobbying firm. According to Ken Silverstein, an investigative reporter based in Washington, the Akin firm is well connected to the Republican Party. Nine officials from the lobbying shop served as members of the Bush administration's Transition Advisory Teams, including Bill Paxon, the former congressman from New York, who remains close to the House Republican leadership.

Also noteworthy is that Akin is close to Saudi Arabia. Maybe this has something to do with the closeness of former president George H W Bush and his associates to the Saudis. Saudi Arabia is one of Akin's clients, and the firm handles many other rich Arab clients as well. Recently, Akin was found lobbying on behalf of Glossco Freezone, a business on the Caribbean island of Aruba controlled by the Mansur family, some of whose members were indicted in the US on charges of conspiracy to launder drug-trafficking proceeds, a Washington Post report stated in 1999.

The bad and the ugly
To move a titch away from the Clinton people to get a tad closer to the powers-that-be is, no doubt, appropriate action under prevailing circumstances in Washington. In addition, Verner did have something of an image problem in India. Most embarrassing for the Indians were allegations of Verner's links to Warren Anderson, the chief executive officer of Union Carbide. Union Carbide was found guilty by the Indian courts for the leak that killed thousands in the city of Bhopal on a cold winter night in 1984. India's Lok Sabha (the lower house of parliament) had questioned the Ministry of External Affairs as to why it did not file even a request with the US State Department for Anderson's extradition. One answer that makes the rounds is that Verner had advised the Indian Embassy in Washington not do so because there was no published precedent for extraditing a corporate official. That did not sit well with many in India.

This is not to imply that the Akin group has stayed away from controversial associations. Founded in 1945, it is the 10th-largest law firm in the US and has a great deal of interest in "improving mineral-extraction methods in the Central Asian nations and China, developing port facilities in Central America, building a global satellite network and investing in virtually every emerging market", as one analyst put it.

What might bother some Indians the most is the Akin group's links to Enron. It is widely known that Clinton's commerce secretary, the late Ron Brown, accompanied Enron chairman Kenneth Lay to India. Clinton treasury secretary Robert Rubin listed Enron as one of the firms with which he had had significant contact while at Goldman Sachs. Enron was represented by the law firm of Akin, Gump, Strauss, Hauer & Field, the firm where Clinton advisors Bob Strauss and Vernon Jordan worked. Enron was accused in India of bribing a large number of Indian politicians, particularly those in the state of Maharashtra. Not a few would like to point fingers at Akin for allegedly helping Enron adopt these unethical measures to bag the lucrative Dabhol contract.