December 13, 2012, Issue 51 Volume 9
Illustration: Anand Naorem
WALMART’S DISCLOSURE on the fees it paid to lobby for opening up the Indian market created an uninformed and noisy debate in Parliament. The notion that allowing Foreign Direct Investment (FDI) in multi-brand retail would be the only stumbling block for Walmart’s entry into India quickly evaporated as proceeding in both Houses were disrupted for two straight days because of this disclosure report. As the time of its entry into India gathers pace, any piece of news to do with the company is being greeted with protests.
Earlier this week, the multinational retail giant disclosed in a report to the US Senate that it spent $25 million over the past three years on lobbying, including on issues related to “enhanced market access for investment in India”. Opposition members picked on this number and stalled Parliament, claiming lobbying was illegal and accused the government of taking “bribes” for pushing Walmart’s entry into India. BJP members demanded a probe into the matter. To the surprise of many, the government agreed to an inquiry into Walmart’s lobbying practices.
“This disclosure has nothing to do with political or governmental contacts with Indian officials,” says a Bharti-Walmart spokesperson. “It shows that our business interest in India was discussed with US government officials along with 50 or more other topics during a three-month period. Naturally, our Washington office had discussions with the US government officials about a range of trade and investment issues that impact our businesses in that country and worldwide, and disclosed this in accordance with the law.”
A look at the facts will help us understand better the legality of lobbying. For a start, though it is true that Walmart did pay lobbying firms to push for retail reforms in India, it is also true that it voluntarily disclosed this information. In America, lobbying is a valid practice, a right protected under the US constitution. Therefore, to say that lobbying equals bribery is an outlandish assumption. Just because there are no laws in India regulating lobbying to influence policymakers does not make it illegal. You have laws to make an act illegal, not having a law doesn’t make it otherwise. It is wrong to say Walmart bribed its way into India when there are no facts to prove so, although it may be the right time to address long pending issues around disclosures and lobbying in the country.
How should industry or individuals in a democracy try and convince policymakers of a particular position if not by lobbying? Unlike in the US, where the constitution allows it, we, in India, are running away from lobbying. We cannot expect transparency unless we have a right to approach our elected officials on any issue, in a manner similar to groups such as the CII and FICCI, who work with the government on behalf of corporate India, and with the rest of the world on behalf of India. In the US, such groups would have to register as lobbyists.
“Lobbying is often viewed with suspicion since it is confused with fixing,” says Sunil Kant Munjal, Joint MD, Hero Corp. “If it is in the form of advocacy to wean others to your point of view, it is absolutely fine and is an accepted practice worldwide and in India.”
Walmart has been the mascot of the battle between the UPA and its political opponents, who have been anti-reform in retail, their argument being it will hurt small traders and farmers. There is no doubt that the rollout of FDI will be complex and tedious and this latest controversy is a part of it. But what is also clear is that Walmart will need to rethink how it plans to make the most of India’s push for reforms amidst growing hatred for its brand. For the BJP to translate lobbying into bribery is misleading. What they should highlight is Walmart’s investigation of its Indian officials under the US Foreign Corrupt Practices Act (FCPA). They are more likely to find some ammunition there. Instead, they are confusing the two issues.
The company has undertaken a detailed investigation of its own arm in India with regard to internal bribery charges under the FCPA. It has sacked five employees in India, including CFO Pankaj Madan, following the inquiry, and Walmart India CEO & MD Raj Jain — who has just returned from the United States — is under severe pressure to sort out the mess.
The lobbying fee disclosure is not connected to this case at all but with all the wounds suddenly open, anti big box retail segments are making use of every opportunity to show how the entry of Walmart will be detrimental to India’s economy. It, of course, helps to remember that retail is not just Walmart or vice-versa.
Says Ronen Sen, former Indian Ambassador to the United States: “Anywhere you have democratic institutions, this is a registered way of doing things.” Sen further says that Indians have for long engaged in lobbying to push their case.
Unfortunately, in India, lobbying as a term is still associated with Niira Radia and the 2G spectrum scam, acts to be scoffed at, proofs of the unsavoury business- politics nexus. But the truth is, lobbying is undefined, vague and controversial because we have never considered a framework for it or its scope, albeit it has existed in every sphere — corporate, government, NGOs and more. And not one party can be exempted from indulging in it.
Often lauded for his business-friendly ways, Gujarat Chief Minister Narendra Modi reportedly hired Apco Worldwide, a public affairs firm, to boost his image internationally. Apco today boasts of a client list that includes names such as former Indian ambassador to the US Lalit Mansingh, US ambassador to India Tim Roemer and many more.
The UPA had also paid a US firm to lobby for the Indo-US civilian nuclear deal. As reported by the Daily Mail in November 2012, Washington-based Barbour Griffith & Rogers (BGR) was hired by the Indian embassy to seek media interviews for Prime Minister Manmohan Singh and get Congressional resolutions passed in his support ahead of a US visit.
“What is being said reveals ignorance,” says Sen who was instrumental in the Indo-US nuclear deal. “As India’s ambassador, I have actively engaged in lobbying, wherever it was. For example, when the erstwhile Soviet Union broke up, we had to lobby for a certain point of view to influence opinion. Even during legislations, as foreign envoy, I would get into the language of the legislation and lobby to get it changed with our trade, economic and security agenda in mind.”
INDIAN TECH companies routinely hire lobbying firms to get improved visa rules passed. Reliance, Tata and Nasscom have all used the services of global firms to get a foot in the door in other markets or appointments with governments.
Does an Indian citizen have any basis for seeking answers from those who receive funds? As a nation, we do not believe in disclosure of campaign finance, lobbying funds or even any gifts received by those in office. As a result, our political class gets uncomfortable whenever there is talk of disclosing information voluntarily. Why would any politician or entity disclose that they accepted any money when no such rule makes it incumbent on them to do so?
What this debate has once again exposed is our discomfort with transparency where all institutions — government, corporations or the bureaucracy — will have to deal with an open system of discussion, debate and decision. The government should take this opportunity to seek a basic framework to recognise lobbying as a legitimate industry, which should be given due importance when policies are drafted. At the same time, we need to recognise that excessive influence of money like in the US is not desirable and hence, the need for a set of rules.
We would also do well to acknowledge that lobbyists are professionals, who possess special skills of persuasion and tact to make a point of view acceptable to those who did not approve it. So that we understand that when Walmart spends $25 million on lobbying, it is because it used the best professional help it could to achieve its objectives. Calling it a bribe is not only irresponsible, but also defamatory.
Shaili Chopra is Business Editor, Tehelka.
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