All it takes to go from chutzpah to chaos is a blind corner. Few in recent times would know this better than the policymakers of West Bengal—and their enforcers.
The Singur episode with Tata Motors Ltd is now a modern classic of how not to work with government intervention. Another contemporary classic is from Nandigram, several hours’ drive south of Singur. Here the state government and Indonesia’s Salim Group were prevented by public protests in 2007 from going ahead with a massive special economic zone (SEZ), a venture of New Kolkata International Development Pvt. Ltd (a joint venture of Salim Group, Unitech Ltd and a company owned by a Salim associate) and West Bengal Industrial Development Corp.
Both projects faced intense public agitation over the practice of some bureaucrats, police, and leaders and cadre of the ruling Communist Party of India (Marxist), or CPM, strong-arming farmers to part with land—both cultivable and not—to the state, and for such acquisitions to be passed on to proposed businesses.
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Earlier this week, West Bengal’s department of information technology (IT) yanked a couple of project sites at Rajarhat on the outskirts of Kolkata it had offered Infosys Technologies Ltd and Wipro Ltd. The firms were expected to take up residence in a proposed IT park. A scandal from the preceding fortnight, violence involving local land sharks and political mafia that had helped purchase land for a resort in the area—and were allegedly involved in procuring land for the IT park—gave the government cold feet. “The government does not want to be involved in any illegal activity,” a press release from the department announced. “… (We) cannot proceed with the project.”
Infosys and Wipro should rest easy. Increasingly, businesses with global footprint, ambition and stock listings that ride investment on direct government intervention or inadvertent intervention in areas of any conflict—a war, civil war, or violence rooted in corruption and political mismanagement—could find themselves in court at home and elsewhere.
A slim document titled Red Flags: Liability Risks for Companies Operating in High-risk Zones, published in 2008 by International Alert (www.international-alert.org) and Fafo Institute (www.fafo.no) lists several grounds for litigation, including some that are commonplace in India. Under international law, expelling people from their communities by “the threat or use of violence to force people out of their communities can be a crime”, Red Flags maintains. “A company may face liability if it has gained access to the site on which it operates, where it builds infrastructure, or where it explores for natural resources, through forced displacement.”
Other points of liability include “engaging abusive security forces” (directly or through the proxy of state police or paramilitary) to effect and perpetuate a project; and “allowing use of company assets for abuses”, such as overlooking mistreatment of people by security forces and providing company facilities for such activity to take place.
The government of West Bengal has diligently courted grief. Since it assumed power in 1977, the CPM, more than its coalition partners, has skilfully built a ground-up network, a broederbond of cadre and leaders that thrives on a mix of intimidation, corruption and administration. They gradually came to control the politics, political economy and business, and dealt harshly with the opposition. This cracked spectacularly in Singur and Nandigram, where Maoist rebels and the Trinamool Congress got the flak—or credit—for engineering foment which should have been placed at the doorstep of the state’s Marxist leadership and its system of patronage.
In the Lalgarh region, which I visited past June during the confrontation between security forces and a team of tribals and Maoist rebels, it was easy to track “anti-establishment” targets. Almost without exception, the largest and best homes, and businesses and farmland belonged to, or were controlled by, the local leadership of the CPM. Rebels and aggrieved residents killed many, and chased away more.
JSW Steel Ltd is setting up a plant in neighbouring Salboni. Chief minister Buddhadeb Bhattacharjee narrowly escaped an assassination attempt by Maoists in November, when he was returning to Kolkata after attending the foundation ceremony at the site of the plant. Two ministers from New Delhi were with him.
There is nothing to indicate that this region has become less restive after intervention by security forces, and businesses that choose to work in this area do so at their own risk—all risk. Surely it is time lessons were learnt in West Bengal and elsewhere in India.
Sudeep Chakravarti writes on issues related to conflict in South Asia. He is the author of Red Sun: Travels in Naxalite Country. He writes a fortnightly column on conflicts that directly affect business.
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