Corporate Crusaders Inc

Why whine about corporate wars when no action is taken against top babus who play favourites in the fight?

CORPORATE wars, we have been told by Home Minister L.K. Advani and Disinvestment Minister Arun Shourie over the last few days, are becoming so serious, they are sabotaging government decisions. Though none of these worthies tells us what got sabotaged, and at which corporate’s instance, it is likely they are referring to decisions about privatisation and bank loans. Of course, the fact that such heavyweights had to whine publicly is a clear admission that the government is unable to prevent itself from becoming hostage. How can it when, as this newspaper reported, bills for the Cabinet Secretary’s (prabhat kumar) parties were picked up by Ashok Chaturvedi of Flex Industries who was arrested last month for bribing Chief Excise Commissioner Someshwar Mishra to fix deals for himself as well as other corporates?

The most serious evidence of these wars, of course, is the spate of letters written by heavyweights like Samajwadi Party leader Amar Singh and former Prime Minister H.D. Deve Gowda, asking the government and financial institutions to go slow on a loan to Ruias’ Essar Oil refinery — though the loan was cleared last week, both Singh and Gowda cited allegations in the press that the Ruias had been siphoning off funds and were chronic defaulters in terms of loan repayments. Though there is no explicit evidence, presumably Advani and Shourie believe these letters were sent off at the behest of some rival corporate. Equally well known is the case of a former secretary in the finance ministry who arm-twisted financial institutions to clear a Rs-800 crore loan to Chaturvedi though this was not even on the agenda of the institution’s board — this loan was later stopped by the Prime Minister’s Office when the Central Economic Intelligence Bureau produced a tape showing Chaturvedi was fixing deals with Mishra. (The CEIB official, Kailash Sethi, who did the, probably unauthorised, phone wire-tap was shunted out this week, again a sign of how murky the goings-on in the government are.)

And some months ago, letters from MP Rasheed Alvi set the country’s financial circles ablaze when he alleged huge financial irregularities by the Ambanis of Reliance Industries. Along with his letters, Alvi provided more than a thousand pages of documents to ‘prove’ his case. This set off an investigation, still underway, by the Department of Company Affairs. And, as Shourie himself proved, Naresh Goyal of Jet Airways was able to get various MPs to write letters asking for restrictions on foreign capital in aviation — as head of a FICCI sub-committee on aviation, Goyal made this recommendation, through citations of incomplete and irreleva- nt examples. These were then copied, to the last comma and even the ‘etc’, by MPs and even the standing committee of Parliament that went into the issue.

The issue, then, is not whether corporates lobby for favours, they all do. The point is what does the government do when it gets caught in between? So, for example, in the case of the Essar loan, should it wait for several months, perhaps even a year or more, till there is fool-proof evidence, either way, of this siphoning? The Ruias, by the way, swear they have done nothing of the sort, and all they have done is to pump in money into group companies, but that too with the written sanction of the financial institutions. If this course was pursued, though, it is safe to say that with the Essar Oil project not getting completed, the institutions would probably have to write off thousands of crores of loans already advanced by them to the project. Nor would removing the Ruias from the board of Essar Oil help — in other cases, like Malavika Steel, where the promoters were removed, the financial institutions simply don’t know what to do with the project.

But then, what is the guarantee the project will be completed now, or that further cost escalations will not take place, and that the fresh loans will not be siphoned off? As in the case of the Rais of Malavika Steel, who have been accused by the CBI of producing forged bills to siphon away funds. One solution could be that top accounting firms, like say Arthur Andersen or PricewaterhouseCoopers, could be asked to certify all expenses above a certain threshold level — that would ensure the money is properly spent.

Of course, the only way to deal a body-blow to corporate rivalry getting played out through the government is to ensure tough action is taken against politicians/bureaucrats who’ve been caught playing favourites in this game. The former secretary in the finance ministry who helped Flex is trying to get a plum job even now, and there is no sign of any action being taken against civil aviation secretary A.H. Jung or labour minister Sharad Yadav — by removing Air-India chief Michael Mascarenhas on corruption charges, both played in the hands of corporate lobbies, and now the CBI has said the charges were completely specious. It will be interesting to see what action, if any, the government now takes against the ex-Cabinet Secretary in the Flex case. Till this happens, there’s really no point railing on against corporate antics — it solves nothing, but just proves your impotence.

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