FORCED CORPORATE FUNDING TO POLITICAL PARTIES ?

The following article is inspired by T.K. Arun.

The Satyam swindle is outrageous, no doubt. The facile outrage over this outrage, however, is even more outrageous. Politics in the world's largest
democracy is an expensive affair, running to several hundred thousand crore rupees every year. The bulk of this money comes from companies, generated off the books. Indians have collectively been closing their eyes to this malaise. Can the Satyam episode serve to shake off this sickly pretence? The Satyam culprits should, of course, be prosecuted. Even more germane is the need to overhaul the entire system of political funding that makes cooked books not only possible, but mandatory.

It was widely reported in the media recently that several crore rupees went missing from the BJP's central office in the Capital. No police complaint was filed. Assume this was a mere story. But does anyone have any doubt that not just the BJP, but every major political party in the country, funds itself out of the goodwill, forced or voluntary, of corporate India?

When we see our political leaders whizzing around in hired helicopters and chartered planes, let us be clear that some substantial contribution has been made by some industrial house or the other. Do all industrial houses disclose every paisa of what they contribute? Do they reveal even 10% of what they donate? Will those who receive these donations permit them to reveal that money has changed hands? After all, a significant portion of political contributions end up with individual leaders rather than with their parties.

And it is not just politicians and political parties that require to be propitiated to get things moving in our system. Bureaucrats too are important players in their own right who have to be taken care of. Civil servants who wear suits that cost more than their pay commission arrears and lead flamboyant lives symbolise money being generated off the books no less than high-flying politicians.

Nor is the problem limited to officials at the top. The petty bureaucracy is even more demanding, with more frequent, insistent and multifarious demands for permitting business in India to occupy buildings, make transactions, create jobs and incomes, indeed, to breathe. An automobile major dropped its plans to run company-owned showrooms in the country after pilot experiments came up with a shortage of grease - they could either service the cars on sale or lubricate the palms that suddenly proliferated all around.

Nor is this all. Protection rackets, some of them with a thin political disguise, also demand their cut. In the northeast, companies have shown, in the past, money paid as ransom to liberate kidnapped officials as deductible expense. This led to disputes. So such expenses all over India are now paid without being shown on the books at all.

And let us be clear. All these companies making these payments have employed internal and external auditors, to comply with regulatory requirement.

Reputed audit firms routinely sign off on books they perfectly know to be cooked in assorted ways. They have no choice but to collude. After all, they have to work in this country and with its business as it is. The blame lies with the system as a whole, not selectively with those who are forced to play a role in the system.

And the very creation of funds off the books generates further points of vulnerability and corruption that politicians and the bureaucracy can use to extort funds. Over-invoicing of supplies is a routine method. This calls for the collusion of a series of players along upward linkages. Most of them would insist on their take.

In the absence of an institutional method of funding politics, we have the present, alternate method of financing: loot of the exchequer, extortion from the public, corruption of the entire system. The rot runs deep and breaks to the surface occasionally as toxic pistules that may take the shape of a Satyam here or an engineer beaten to death for not coughing up money for a birthday bash, somewhere else.

This must change. But who will take the initiative? Political parties? Why should they, on their own, change a system that has been yielding riches on a grand scale to parties and partymen, at least the leaders? Some reform-minded politicians might emerge from the woodwork, however. But they will need a constituency of strong support. Who will provide that? The public at large should. But the lead should be taken by corporate India and large investors.

Market capitalisation on the stock market has emerged as the most vital source of riches for businessmen. Money off the books lowers the market cap. This is incentive enough for business leaders to take up the fight. In the increasingly globalising market for capital, clean books become even more vital. Historically, capitalists have played a revolutionary role in building democracy. Indian capitalists have their chance now to make history. Will they be content to just do more Satyams?

As far as i can understand supporting Narendra Modi, Chief Minister of Gujarat by all the top corporates at recent Vibrant Gujarat Summit at the same time is no coincidence. It was not because of sudden love For Modi, which prompted all the big corporates to support him in one voice, as the next Prime Minister. They seem to have learnt their lessons from the Satyam scam. We all know that Satyam was a conduit for the politicians to get their illegal money stashed abroad, to get back to India. The modus operndi was that Satyam used to make fictious billings to bogus companies abroad. The bogus companies abroad used to make payments against Satyam's billings. After receiving the illegal money in the shape of payments, it used to be transferred to hundreds of benami accounts in shape of FD's. At an opportune time, these politicians used to encash these FD's. Thus Satyam was playing a role of a middleman to get ill gotten wealth of the politicians, back into India.

But once, one of the investors broke the news and the nexus, the entire blame came on Raju, the founding chairman of Satyam. Within 48 hours, he was arrested, before he could spill the beans to media. Till today, SEBI has tried its best to lay its hands on Raju, but nothing has happened till now. And truth will never be known.

Big corporate houses are now scared to cook up books for the sake of politicians, as they have known from the Satyam scam, that politicians do not take a second to disown them, if such kind of a scandal breaks out again. They found In Modi, an honest man, who is only concerned for the development of his state, without any kickbacks. They are sick of corrupt politicians, who can break their companies, face humiliation and thus imprisonment like Raju, if any such scandal erupts in future. Satyam case may be a blessing in disguise.