Corruption in India a ‘fact of life’, say U.S. diplomats

Updated - December 04, 2021 11:39 pm IST

Published - April 11, 2013 02:29 am IST - Chennai:

“American interference” was the political catchphrase of the 1970s. With Indira Gandhi’s claims of a “foreign hand” and allegations of CIA-funding against her, it was easy to believe that a vast American conspiracy was active backstage to the great Indian tamasha.

But the Americans themselves saw a different villain, according to a U.S diplomatic cable sent from New Delhi during that period: “India’s ‘united givers fund,’ the Congress party.”

Its “collectors” — sometimes “politicians themselves, sometimes a ‘bagman’ for the party, sometimes, most recently, eve[n] a bureaucrat” — approach large and small firms alike, says the cable, accessed and released online by WikiLeaks.

It is in this July 7, 1976 communication ( >1976NEWDE09954_b, Secret ) that the Americans first reveal that >Sanjay Gandhi ’s Maruti was seeking to be an agent for the British Aircraft Corporation, as already reported by The Hindu .

The cable was a response to a State Department request for a comprehensive assessment of India’s anti-corruption laws as inputs into a U.S. plan then for an “international agreement on illicit payments.”

But, the Embassy wrote, such a “comprehensive inventory may give the misleading impression that corruption/illegal payments are well under control in India.”

In fact, as the cable put it, the Indian experience had led the Embassy to the “cynical conclusion” that in India “there is a direct and positive relationship between laws against corruption and the extent of corruption itself, i.e., each such law only means that there are more people to bribe.”

The communication dismisses with disdain the “anglo-saxon legalistic” mindsets back home in the U.S that won’t understand the “cultural/political/economic fact of life” that was corruption in India, and sounds almost respectful of the discerning Indian who distinguishes “between corruption for political purposes and that for personal purposes.”

“It is more acceptable to take money for the Congess [sic] party than for one’s own personal comfort. While it is illegal for a corporation to make a contribution to a political party it is perfectly legal for the same corporation to make an equal payment to the Prime Minister’s relief fund or other organization which essentially serve the same purpose. It is legal to purchase advertising in party publications whether or not they are ever published.”

And then there are the acceptable levels and modes of corruption. “‘Speed money’, a small payment required to move papers, secure admission to a hospital, obtain a train ticket, etc. This is illegal but not considered corrupt since it is supposed to balance the niggardly income normally given to recipients of such payments. Similarly, nepotism, whether it benefits one’s family, caste or language or regional group is considered acceptable.”

The embassy acknowledges that “for the anglo saxon mind and the treasurer of a multinational corporation these distinctions are important” but “to the Indian realist they are sophistries.”

Of course, there is the occasional backfiring. “An Indian manufacturer paid a substantial bribe to the minister of civil aviation for a particular contract.” However, “the project became a source of controversy for reasons which had nothing to do with the bribe. The minister sought to return the bribe but the donor insisted on interest.” Finally, “a compromise was reached whereby an additional contract was awarded [to] the manufacturer.”

The ‘innovative’ Indian method of awarding contracts to the favoured bidder is explained in the words of a World Bank official “with extensive experience in India.” He “had never seen a case where an original low bidder ever received a contract” since “repeated tenderings combined with specification changes are instituted by the GoI until the appropriate bidder becomes low bidder as well.”

The examples of corruption coincide with the Emergency, still fondly recollected by some as when government offices actually worked and the babus flinched on being offered bribes. The embassy finds no evidence that corruption levels came down during this period.

As a prelude to this assessment, the embassy acknowledges the impossibility of putting the “extent and modalities of corruption in India” in one message. It also adds that “corruption is not a phenomenon which was brought to India by the West” since various kinds of corruption and corresponding punishments are prescribed by Kautilya in Arthashastra.

However, it does acknowledge that “the foreigner is an active participant in this form of activity, and in many ways is a preferred player.” The ace up his sleeve is, of course, “foreign resources.” “A contribution of foreign exchange in a foreign bank account is of high value and normally accompanies any major international transaction.”

In view of all this, the embassy’s suggestion to the State Department on the international agreement on illicit payments is that if “such a code ... is passed, US firms in India would probably lose some business while India goes on as before.”

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