Ministry Leaks Will Continue Until India’s Lobbying Industry is brought Under the Ambit of Law

23 February, 2015

The public perception of some of the largest private sector players in the country can best be captured by a slight tweak to what American journalist Matt Taibbi had written about Goldman Sachs in 2010: India’s most powerful private companies are great vampire squids wrapped around the face of humanity, relentlessly jamming their blood funnel into anything that smells like money.

Unfortunately, this is not entirely untrue.

The twelve people who were arrested for the leaks of sensitive documents from the Petroleum and Natural Gas Ministry this week included five senior executives from Reliance Industries, the Anil Dhirubhai Ambani Group, Essar, Jubilant Energy and Cairn India. The remaining seven comprised serving and former low-ranking employees from the ministry, the owner of a small consultancy firm for the oil sector, and a senior journalist who runs a web portal and who allegedly made money by selling secret government documents.

The entire episode would not be a surprise for anybody who has worked on policy and governance. Indeed, it appears to be a known fact that such leaks to corporate houses are commonplace, even customary. During the course of my reporting for a story about the oil and gas sector last year, I asked a former petroleum secretary about Reliance’s seemingly uncanny ability to procure classified documents. He responded with a chuckle and went on to tell me that, when Dhirubhai Ambani—the founder of the company—was alive, it was rumoured that he had a copy of the budget with him even before it was tabled in Parliament. In my short reporting career, the endless anecdotes that I have heard of Reliance’s influence over the ministries from multiple bureaucrats, journalists and public affairs professionals for private companies, has convinced me that the company seemed to function as a shadow government.

A former secretary of one of the four Raisina Hill ministries once described to me how representatives of Reliance—among other private companies—would come to visit him or his juniors with a prepared draft of an upcoming policy that could affect their companies. These drafts, he admitted, would often be superior to the ones that some of the top bureaucrats could produce. The babu would have a million files on his table, while the private firm could commission an entire team for the preparation of a single policy document. The former secretary then went on to tell me that, sometimes, when the overworked bureaucrats were short of time and attention, they would send one of these drafts up the chain. This is probably the most benign form of lobbying. There would be no quid pro quo, and the company would get what it wanted.

In the current case—from what the Delhi police have shared at present—enterprising consultants got their hands on secret documents, for which they paid the peons at the Petroleum ministry, before selling them at a considerably higher price to a large corporate house. This is a common template. But, in possibly an equal number of instances, money need not be exchanged for each document. It is rumoured that in most ministries and public sector companies on which  large corporate firms have any inter-dependence, the top positions are auctioned for sums that run into crores. In case the winning bureaucrat or PSU (public sector undertaking) employee does not have the requisite amount, he or she is sponsored by one of these companies. The companies then extract their pound of flesh over the officer’s tenure. And they hedge their bets, often getting officers who have proved to be favourable to them positioned in  lower ranks, allowing them to grow within the system and helping them at each layer of the hierarchy.

However, not every promising bureaucrat is sponsored. Sometimes the help received from one or more of these companies in securing an important position—even ministerial berths and constitutional posts—is enough incentive to do their bidding. The corporate organisations lobby with ministers or parties to get such a bureaucrat elevated to a position of influence. Once that is ensured, it is understood that this beneficiary will lobby for them from the right position. It is not an unusual question for a journalist, trying to understand a new beat, to ask his fellows about the camp to which the minister or the officer belongs, “Bada bhai ya chhota bhai?(The elder brother of the younger one?),” alluding to the Ambani brothers. Another former petroleum secretary I spoke to last year told me that the ministry has two types of bureaucrats: R positive and R negative, depending upon their intimacy with Reliance. He went on to clarify that in reality, the bureaucrats could only be R positive or R neutral. If you were R negative you were shunted out.

Representatives of these firms are unabashedly pompous about their connections. One such top-level executive from one of the five companies embroiled in the latest leaks, once boasted to me that he was always informed of the Central Bureau of Investigation’s (CBI) functioning, ranging from the daily events at  the CBI chief’s office to the schedules of the investigating officers, in minute-by-minute detail. He—and others—would throw around names of top politicians, bureaucrats, lawyers and editors who were either friends or whom he had helped out or fought with at some point. If you are in a position that matters in Lutyens’ Delhi, these businessmen have a story to tell about you.

The three estates of Delhi’s decision-making are: ministers and political parties; bureaucrats and PSU officers; and private companies and lobbyists. Here, too, the fourth estate is the media. Leaks from lobbyists have often found their way into our news. A good lobbyist, I was once told by one, will always charm a journalist with interesting stories, even if they were unusable. Gossip can also be a great tool in Delhi. A former associate of Niira Radia once told me that Reliance and other big firms are constantly in touch with journalists who are open to feeding them information about upcoming stories, even the next day’s leading headlines. The calls are made to editors or proprietors, who—not always for unscrupulous reasons, but in taking a legitimate editorial call—are willing to hold or kill the stories. The call could come from representatives of the companies or political leaders. This practice, in addition to the threat to withdraw advertising spends, works as an effective leash to keep a news network in check.

This model, though not necessarily outdated could soon be replaced. Instead of dealing with reporters and editors, companies have started buying out or investing in media houses. Reliance Industries owns the IBN network with CNN IBN and INB7 under it. On 14 January this year, Newslaundry—and independent media outfit—reported that Mukesh Ambani’s company also has a major investment in NDTV, through an indirect, unsecured loan to the promoter group, Radhika Roy Prannoy Roy Holding Private Limited, undeclared by the television company. The ADAG has had investments in the TV Today Network, owned by the Living Media Group, and Bloomberg India. Rumours are rife about additional investments by these and other companies in the media sector.

Representatives of both RIL and ADAG were arrested yesterday. So was a senior executive of Jubilant Energy, a firm whose non-executive director and chairman is Shyam Bhartia, married to Shobhana Bhartia the owner of HT Media group that owns Hindustan Times, Mint and other entities.

However, just because large corporate companies have direct investments in media groups, it would be wrong to presume that journalists procure documents, leaks, from ministries on their behalf. Secret government documents have often formed the backbone of serous investigative journalism all over the world. The government, as it moves ahead in this case, would be unwise if it clubs together sincere journalistic practices—even if inconvenient to them—with corporate espionage and lobbying, and acts against them. At the same time, the media should also come clean to its consumers about its associations with big businesses if it wants to retain whatever residual trust the citizens have in it.

No matter what the outcome of this case, such practices by private players cannot be expected to stop. They might slow down their activity, but with investments and profits worth thousands of crores of rupees dependent on public policy, the stakes are high. Private firms have an existential motive to influence decision-making. Arrests such as these make for great news, but they will not stop the crisis of crony capitalism.The lobbying industry is becoming more sophisticated with large international players, public relation firms, law firms and boutique, specialised firms entering the market to replace the traditional middlemen. Invoking the Official Secrets Act cannot always be a response to what these companies will do for their clients. The government needs to legalise and regulate the growing lobbying industry in the country, which, at present, lies outside our scope of the law. Right now, all lobbying exists in a regulatory vacuum. Not only does this promote nefarious practices by the private companies, it also unjustly vilifies all four of the estates of Delhi’s policy making I have mentioned above.

Most journalists are sincere, as are a majority of bureaucrats, and a lot of ministers. A strong policy framework for lobbying, enforced by an effective regulator can help mitigate the endemic corruption in policy-making. It won’t kill the vampire squids, but it can definitely weaken those blood-sucking tentacles.