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Business News/ Opinion / The changing business of bribes in India

The changing business of bribes in India

Bribes are now being channelled through corporate deals rather than cash

Illustration: Jayachandran/MintPremium
Illustration: Jayachandran/Mint

The latest corruption scam involving a top politician once again throws light on how bribes are being channelled through corporate deals rather than the old transfers of cash. The Central Bureau of Investigation last week said it was looking into an investment by Jindal Steel and Power in a company owned by Dasari Narayana Rao, who was coal minister when the Jindal firm secured a coal block in Jharkhand. The federal investigation agency suspects that the investment is actually a pay-off for getting the coal block.

The Jindal case is the most recent in a series of corruption investigations involving Indian politicians on funds flowing through corporate entities. Is this the new face of bribery?

The suitcase crammed with cash has traditionally been a popular metaphor for corruption—and with good reason. For example, there was the sensational claim made by Dalal Street scamster Harshad Mehta that he had handed over a suitcase of cash to P.V. Narasimha Rao when the latter was prime minister. Then there were the grainy video images of wads of currency being placed before former Bharatiya Janata Party (BJP) chief Bangaru Laxman by reporters posing as arms dealers.

There is enough anecdotal evidence to suggest that cash still greases the crooked machinery of Indian politics. The Election Commission of India continues to catch vehicles loaded with cash during election campaigns. The Reserve Bank of India data on money supply usually shows a spike in cash (or what the central bank describes as “currency with the public") whenever the country is preparing to go to the polls. The preference for high-value currency notes in recent years is partly explained by high inflation, but perhaps also by corruption.

However, many current corruption scams also tell us a fair bit about the changing nature of venality in India—more specifically the corporatization of the process. Consider some recent evidence, starting with the infamous telecom scam. The crux of the case against Shahid Balwa of Swan Telecom is that his company lent Rs200 crore to Kalaignar TV, controlled by the Dravida Munnettra Kazhagam, the party of former telecom minister A. Raja. Investigating agencies have claimed that this money was actually a pay-off for getting 2G licences during the controversial 2008 spectrum allocation. Compare this with the case of Sukh Ram, telecom minister in the Narasimha Rao government, who was caught with Rs3.6 crore of cash hidden in suitcases and bags at his home.

Several other cases have hit the headlines in recent months. India Cements vice-chairman and managing director N. Srinivasan has been questioned for investments of around 140 crore in companies controlled by Y.S. Jagan Mohan Reddy, head of the YSR Congress in Andhra Pradesh, allegedly in exchange for favours. Srinivasan has denied these charges. BJP leader Nitin Gadkari was investigated after revelations that a firm linked to infrastructure company Ideal Road Builders (IRB) had lent 164 crore to the Purti Group controlled by Gadkari. IRB had won many road contracts between 1995 and 1999, when Gadkari was minister in charge of the public works department in Maharashtra.

Activist Arvind Kejriwal blew the lid on sweet deals between Robert Vadra and realtor DLF, including land transactions as well loans given to companies controlled by the son-in-law of Congress president Sonia Gandhi. Once again, both sides have denied any wrongdoing. Meanwhile, the Prime Minister’s Office last week turned down a request by a Right to Information activist for a report on how the Vadra-DLF investigations are progressing.

A lot has been written and said about how companies with political access have managed to capture natural resources such as land, minerals and spectrum. What has attracted less notice is that the gatekeepers of these resources—powerful politicians—have also used their companies to collect money. Crony capitalism has worked at both ends of these deals.

One reason why corporate deals have replaced cash is that the amounts involved have grown; the money at stake these days cannot be stuffed into a few suitcases. Another reason is that there is growing pressure on offshore tax havens, where dirty money would once sit without a care.

What do the new modes of payment of bribes reveal about the changing face of corruption in India? Tell us at

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Published: 18 Jun 2013, 06:24 PM IST
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