Vested Interest

By Ramesh Akkineni

from an article in Business Standard

Talk then veered around to corruption and I realised that most people in our country still don’t have any idea of the sums involved and the political and administrative behaviour that these sums generate. Most of them think of corruption only in terms of the small bribes they are obliged to pay public officials, namely, speed money.

The truth is hugely different, literally when you see that annual purchases by the Central and state governments put together run to at least around Rs 200,000 crore. The Centre accounts for about 80 per cent of these. Why, purchases of crude oil alone would run to well over Rs 100,000 crore. Add defence purchases and a host of other things and you get an idea of the magnitudes. Then there is illegal income from theft, say, as in electricity. This income is around Rs 35,000 crore annually. Water and public health medicines would run a close second, I imagine.

The purchases alone create a huge vested interest, both legal and illegal. The legal one is the legitimate commission that is paid to agents who render administrative services, say, of the sort that the late Win Chadha of Bofors fame, had claimed to be rendering. The legal commission can vary between 0.5 and 1 per cent — of Rs 200,000 crore on the whole. The illegal commissions are the bribes. These vary from 4 to 7 per cent of single deals that make up the total above. But only a few large and non-regular purchases or contracts attract these bribes. So it is not 4 to 7 per cent of Rs 200,000 crore but of a smaller sum. But it is still a very tidy sum. The bribes and other illegal incomes have to be laundered also. That generates its own stream of perpetual incomes.

When there is a honey pot of this magnitude, the flies will inevitably gather. And it doesn’t matter if the pot is in the private or the public sector. After all, if the company you run buys a few hundred or thousand crore worth of things annually, you would have to be very silly not to run the legal commission through a company that you alone own. It happens everywhere. (In the mid-1980s, the chairman of an American multinational had his driver set up a company to supply food and booze to the executive dining room. The annual profit was $300,000.)
One can go on, but the point must be clear. Even if you were to eliminate corruption completely, there would still be a very substantial amount left in the tub of legal commissions.

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