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Corporate Oct 26, 2012

How Gadkari and Vadra thrive at business-politics crossroads

By Venky Vembu

The investigative mills of the government grind slowly - but only when allegations of corruption are levelled against one of its own. When the charges relate to a leader of the principal Opposition party, the same leaden-footed investigative agencies begin to show extraraordinary agility and earnestness of purpose.

Witness the alacrity with which a whole battery of investigative agencies and regulators - from the Income Tax Department to the Registrar of Companies - have responded to the ongoing revelations into the web of deceit that BJP president Nitin Gadkari wove. The daily drip-drip of media investigations into Gadkari's maze of companies and their shadowy transactions with contractors clearly establish a dubious relationship that thrives at the intersection of business and politics, from which both parties derive unjust benefits.

Clearly, infrastructure companies that won contracts during Gadkari's tenure as PWD Minister in Maharashtra in the late 1990s returned the favour by investing in Gadkari's Purti Group of Companies, which - for all of Gadkari's protestations of innocence - establishes a quid pro quo relationship that taints Gadkari's political reputation, such as it is. Subsequent revelations that some of the primary investors in Gadkari's companies were shell companies with no verifiable addresses,and that Gadkari's driver and astrologer served as directors on his companies, have damned him even further.

Nitin Gadkari and Robert Vadra are emblematic of the fortunes that are made when business and politics meet.

So, yes, an investigation is certainly merited into Gadkari's affairs, given that there is enough prima facie evidence of wrongdoing.

But by the same yardstick, the revelations in respect of Sonia Gandhi's son-in-law Robert Vadra's land dealings with DLF too merit an impartial investigation. There too, the storyline is pretty similar: DLF made a capital investment in Vadra's 'businesses' and leveraged his political clout - given he is who he is - in a manner that profited both.

It's true, of course, that unlike Gadkari (who himself headed the line Ministry that favoured the contracting firm that later invested in his Purti group), Vadra never held any public office. But only the incredibly naive would believe that DLF's largesse to Vadra were unconnected with Vadra's station in life as Sonia Gandhi's son-in-law and the clout it gave him within the Congress, given the dynamics of dynastic politics in India.

Additionally, there are enough gaping holes and inconsistencies in Vadra's filings with the Registrar of Companies, and with the narratives that DLF put out, to establish that the transactions were facilitated by influence-peddling. For instance, there is the matter of a Rs 7.94 crore overdraft from Corporation Bank that's listed in the official filings of one of Vadra's companies, but which Corporation Bank says it never extended. The question then arises: From where did the money come?

In other instances, such as for instance Vadra's land purchases in Bikaner, he profited from asymmetry of information - by buying large tracts of land where development projects were later announced by Congress governments, causing the value of his holdings to shoot up by some 40 times. That too amounts to unjust enrichment, derived from proximity to political power.

Yet, this selfsame government has for the past three weeks been batting for Vadra, with an entire phalanx of Union ministers issuing him clean chits and pre-emptively signalling to investigative agencies and regulators that they should steer clear of Vadra's affairs. Only now has, according to media reports, the Registrar of Companies begun an investigation into the allegations against Vadra. It still doesn't amount to an independent investigation, so it's hard to see anything incriminating coming out of it.

But beyond the specifics of the individual cases, both Gadkari's and Vadra's business transactions point to the treasures that continue to be harvested at the intersection of business and politics. It is nobody's case that business and politics should never intersect, or that businesses in their entirety are worthy of criticism for looking to make a profit. But the brazenness with which both businesses and politicians have begun to operate in tandem, with both making unjust 'profits' from open-and-shut cases of influence peddling with not the faintest effort at declaring their conflict of interest, is galling.

For sure, this problem isn't peculiar to India. Today's New York Times has a sensational expose of how Chinese Premier Wen Jiabao's family members have built business empires worth billions of dollars by leveraging their access to political power (read it here). It mirrors Vadra's own experience of having amassed fortunes in double-quick time, purely on the strength of his status as Sonia Gandhi's son-in-law.

Of course, there's nothing new about what "crony capitalism", as it is erroneously called. (Erroneous because it's just a case of "cronyism", with none of the distinguishing characteristics of "capitalism" in its purest form.) But today, businessmen have begun entering electoral politics - and routinely go on to serve on parliamentary committees that determine policy in respect of the sectors in which their businesses operate. There couldn't be a more open-and-shut case of conflict of interest, yet it continues.

Equally, today, career politicians - and their family members - are expanding into business ventures and leveraging their political clout for unjust riches. Again, no one seems appalled by the blatant influence-peddling for personal gain.

The curious cases of both Gadkari and Vadra only illustrate the fortunes that both politicians and businessmen make unjustly when their orbits increasingly get aligned. Their worlds are gradually becoming congruent, which bodes ill for the country as a whole.

by Venky Vembu

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