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Corporate Dec 11, 2012

From Enron to Wal-Mart: the dirty business of 'lobbying'

By Venky Vembu

There is an iconic photograph of a high-power meeting from 1995 that will go down in the annals of high-visibility corporate lobbying by a multinational giant to influence Indian political opinion to its advantage.

In the context of the ongoing controversy over disclosures that global retail giant Wal-Mart lobbied politicians in the US - and perhaps even in India - that photograph is illustrative of what happens at the intersection of politics and business.

In the photograph (which you can see here), Shiv Sena supremo Bal Thackeray - whose party had recently been voted to power in the State as part of an alliance with the BJP- is seated, in flamboyant saffron dhoti-kurta, in a chair in his residence. Diagonally across from him, seated on the edge of a sofa, with - as Anil Dharker described it here - "her hands neatly folded, her knees primly together, her smile that of a nervous schoolgirl", is Rebecca P Mark, head of Enron's international gas and power operations and one of the most powerful businesswomen of those times.

"Mark the Shark" - as she was known - is dressed in a short skirt and flashing a lot of leg, and her choice of wardrobe, while seated across from a conservative politician like Bal Thackeray, was the result of crafty calculation. Journalist Jeff Stein recalled in an article that Mark once summoned her employees to a meeting in the company's Houston headquarters - just to explain her wardrobe style. Stein wrote: "The mini-skirts and spike heels that were her trademark on three continents, she told assembled hands, had a purpose. Day in and day out, she said, she called on a foreign official who typically spent most of his time with other conservative men, her competitors. He will not remember most of them, she said, but he will remember me."

he most vociferous defence of Wal-Mart, following disclosures that the big-box retailer lobbied US politicians on, securing access to the Indian market has come from lobbyists in India who seem to be deficient in irony. AP

Rebecca Mark evidently made a stirring impression on Thackeray. That meeting stretched for far longer than scheduled, which left Chief Minister Manohar Joshi, who was to have met her later, fuming.

It is the political context of this meeting between the 'Shark' and the 'Tiger' that explains the enormous capacity of multinationals like Enron then - and Wal-Mart today -to bend the arc of politics to their advantage by overcoming even the most virulent opposition that they may face.

Enron, whose global fortunes were on the ascendant at that time (before it collapsed spectacularly in 2001), had been looking to get a foothold in India - much like Wal-Mart is today. In 1993, when the Congress was in power in Maharashtra, Enron had managed to sign an agreement for the Dabhol project, but the BJP-Shiv Sena (which had then been in the Opposition) had threatened to "throw the project into the Arabian Sea" if it came to power because it was weighted in favour of Enron.

So when the Shiv Sena-BJP stormed to power, the Dabhol project was in jeopardy - until Mark (and her miniskirt) waltzed into town.

Enron had by then done its homework: it had got the White House (then occupied by Bill Clinton) to issue written orders to promote Dabhol, and its US ambassador to India Frank G Wisner II directed the negotiations. (In 1997, upon retiring from the foreign service, Wisner joined the board of an Enron subsidiary, formally cementing the 'crony capitalist' nexus.)

But Enron didn't just wield political influence: it wielded a wad of notes as well. By Enron's own admission, it spent $20 million in "educating" Indians, which is euphemism for "greasing the tracks" to overcome political opposition.

And Enron's fortunes changed overnight. During the 13 days that the BJP government headed by AB Vajpayee was in power in 1996, it offered a "sovereign" counter-guarantee to the improper clearance of the project - an extraordinary fast-tracking of a project by a government that must surely have had other things on its mind.

That's the back story to the political lobbying that facilitated a cost-inflated project to be pushed through without competitive bidding; given the high return that the Maharashtra State Electricity Board was required to pay Dabhol Power Corporation, the utility went into the red, and finally defaulted.

* * *

Which is why, one surmises, the BJP knows a thing or two when it claims that the money that Wal-Mart disclosed as expenditure on lobbying was, in fact, a "benign form of bribery" to grease the tracks to allow the FDI-in-retail provision to sail through.

The most vociferous defence of Wal-Mart, following disclosures that the big-box retailer lobbied US politicians on, among other things, securing access to the Indian market has come from lobbyists in India who seem to be deficient in irony.

Lobbying isn't dirty business, suggests Dilip Cherian, universally acclaimed as a PR-and-branding guru who also does liaison work with governments on behalf of his clients to influence policy. In any case, he adds, it is perfectly legitimate activity in the US, where there is also a strong Foreign Corrupt Practices Act (FCPA), which holds US corporates liable for criminal prosection if they bribe foreign officials.

But the irony, which is wholly lost on Cherian, is that Wal-Mart has actually violated the FCPA in Mexico, where it face allegations of bribery, and - more brazenly - has been lobbying US politicians to amend and water down the anti-bribery law! Curiously, that found no mention from the apologists for Wal-Mart.

If Wal-Mart is distrusted today, the retail giant has only itself to blame. As this New York Times investigative report established, when faced with allegations of bribery in Mexico to win market dominance, Wal-Mart shut down an investigation and hushed up the matter

More egregiously, Wal-Mart has been part of an effort by large US companies and trade groups to water down the provisions of the 1977 law, which prohibits US companies from offering fees or gifts to foreign officials to advance corporate interest. (More on Wal-Mart's efforts here.)

But 'lobbying', or 'educating Indians', in the way that Wal-Mart and Enron work the system, isn't always about just paying off politicians. As Caravan magazine's Vinod K Jose observes in this essay, it also finds expression in swaying public opinion on matters of public policy in a way that brings pressure to bear on government by amplifying the volume of media megaphones.

Jose narrates an interesting experience of being seated next to a "lobbyist" who fronts as a public relations man, during a recent public event. And during a desultory speech by a Minister, the lobbyist (whom Jose never names, but who is easily identifiable) whips out his Blackberry and texts a message, which Jose manages to espy:
"yes, yes. Met the min in the morning. He says he's with you on this. But a moment later, he says the difficulties that he faces. Totally a chameleon. Yes, chameleon. Can't trust him. I missed you being there!"
A little later, Jose catches the lobbyist checking his calendar, which read: "1030 am-briefing the NDTV reporter."

Jose writes:
"My mind reeled. On what subject would he be briefing the reporter? Was it connected to his meeting with the chameleon minister? Was he hoping to influence the channel's coverage of an issue for one of his clients-or trying to plant a story on their behalf? And if he succeeded in doing so, would the resulting story disclose the involvement of the lobbyist? How would I know, if I were watching TV later in the week, which story bore his fingerprints? How often was he able to plant stories, or influence coverage?"

As the essay points out, of course, the lobbyist was merely doing his job, and wasn't breaking any laws. But, it adds, the increasing role of people like the lobbyist in the production of news content today-and about how content designed to advance certain interests gets dressed up as "news" and presented to the public - is a matter for grave concern.

It is in this context that Wal-Mart's disclosures of money spent on lobbying US politicians in order to gain access to the Indian market assumes significance. As the Enron episode revealed, everyone from the US President's office to the then US ambassador came batting on behalf of a multinational when it was seeking a foothold in the Indian market. And as other instances of lobbying closer home show, lobbyists have enviable access to politicians - and the capacity to direct the course of media narratives on public policy.

In Niira Radia's case, she could even get star journalists to intermediate with politicians in order to get A Raja in the Telecom Ministry, from which her clients benefited.

And the same lobbyists appear on prime-time television - this time wearing the hat of 'commentator' - to push their clients' agenda, without so much as a disclaimer of their interests.

If politicians are being paid off to allow Wal-Mart in, as the BJP insinuates today, it is of course scandalous. But even when there is no proof of such payoffs, it is easy to believe the worst about the Wal-Marts of the world because virtually every pillar of society - from politicians to corporate houses to lobbyists to the media - has allowed itself to become a player in the business of lobbying.

by Venky Vembu

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