Corruption in India means millions to USA
Corruption continues to be a way of life in India. While the Modi Sarkar may proudly claim that it has rooted out corruption from the highest levels in India, i.e from the Union Cabinet, which Rahul Gandhi vehemently challenges, the fact yet is that if the Union Cabinet is corruption free, it provides little solace or comfort to the common man. Which common man or entrepreneur, after all, is required to be in day to day touch with a union minister. On a political front, at the most, a common man may deal with a local corporator, who very often could be a politician with a criminal past, looking to the rising criminalisation of Indian politics. A common businessman, on the other hand deals with a government official on a regular basis, irrespective of the business that he may be in. With the increased number of laws and regulations, there is perhaps no business where a small entrepreneur does not face a government babu and that includes street hawkers too. This intrusion of the Indian government in our daily life is an unfortunate reality and so is the rampant corruption that we face. Corruption remains untackled and it remains one of the biggest obstacles and a drain on cashflows in the operations of a small enterprise, which anyway struggles to survive. As the government enacts one law after the other, which is wholly contrary to the BJP's promise of minimum government and maximum governance, it only increases the harassment and the curse of corruption in our daily lives.
So while India struggles with unabated corruption, the news comes that the US government has fined Walmart, the retail giant, a sum of USD 282 mn, under its Foreign Corrupt Practices Act (FCPA), on changes of indulging in corruption in China, Mexico, Brazil and India. These charges, which are admitted by Walmart are that it bribed government officials in order to expand its overseas operations in these countries, by bribing government officials, to expedite permits and approvals. It is said to have used agents and middlemen in these countries in order to bribe government functionaries, which helped Walmart to rapidly expand its overseas operations. This was one of the biggest such investigations against foreign corrupt practices by American companies, by the government of USA, wherein Walmart spent over USD 900 mn on lawyer fees etc. to investigate the problem and also bolster its compliance systems in its overseas companies. Walmart pleaded guilty and got away lightly, since the proposed penalty was likely to be about USD 1.2bn.
The charges against Walmart India in this entire enquiry were that it paid bribes to government officials totalling millions, seeking approvals, permits and other such favours. These were routed through a middleman and were accounted by Walmart India as professional fees, miscellaneous expenses, government fees etc and were done with the conscious and deliberate approval of its top officials. In fact, it was in July 2011, that Walmart USA was informed of these violations by a whistle blower, but it chose to ignore it. Walmart has often been at the centre of indulging in corruption in India and other statutory infringements. Between 2009 to 2011, it is reported to have paid crores of rupees to government officials, for store operating permits and approvals, related to its joint venture with the Bharti group. These too were hidden under different account heads in its books of account. In 2015, Walmart was accused of violating FEMA in respect of a USD 100mn FDI investment in its Indian joint venture, which shows it to be an organisation that does not hesitate in breaking the law.
Any foreign company operating in India, is subject to the curse of corruption, as much as an Indian company faces. Cognizant, the American IT giant was fined USD 28mn a few months ago, for corruption related to bribes paid for licences related to its real estate facilities in India. These bribes were reportedly paid through its contractor L&T. The irony of it all is that while such crime of corruption is committed in India and goes unpunished, it is the American government that makes millions out of these crimes, through hefty fines, while India gets none.