Private sector corruption
Ravi PERERA
While everybody loves to talk about corruption in the government
sector, they for some reason lose this enthusiasm when it comes to the
goings on in our large and vocal private sector
When confronted with the evidently outrageous incidents of bribery
taking place during his short-lived premiership, Ranil Wickremesinghe,
that most resigned of political leaders, famously observed “ for there
to be bribe takers there has to be bribe givers”. This superior sounding
statement is of course not replete with hitherto unknown insights.
Even a first year law student would point out that bribery is an
offence that requires two participants. Because we are in the habit of
cheering even the most commonplace statements of our politicians perhaps
they have decided that no intellectual effort is required when
addressing the Sri Lankan public.
Wickremesinghe made the above observation when addressing some
high-ranking business leaders sometimes referred to as captains of
industry in this country.
Strangely, even these men of the world were perturbed by the
persistent demands made on them by the politicians running the country
when Ranil, the self proclaimed advocate of clean politics was Prime
Minister and turned to him for protection.
Community of interests
Despite the haughty tone and manner of his response, Wickremesinghe
could not have found a more friendly audience in Colombo. There is
hardly any difference in the ideal scenario for this much-wronged
country between the movers and shakers of the city and that of
Wickremesinghe.
But this community of interests between the business magnates and
their preferred political leader has to accommodate the greedy snouts in
the trough. Ranil’s blithe observation, while diverting attention from
the grubby fingers of his ministers to the slick private sector
operatives, leaves no doubt as to on whose side he will ultimately be if
pushed to take a position.
Those little politico boys are demanding candy only because you bad
grown-ups are laying them in front of them.
This put-down by their favourite politician perhaps reveals more
about our private sector ethos than was actually intended to by him. It
could well be that in the final analysis the prevalent corruption in
this society emanated from our business world. An under-developed system
provides businessmen plenty of dark spaces to operate in.
Taking advantage of a weak system they can make windfall profits in
all kinds of manner. It may just be a matter of importing an item like
cars and then dumping them on a government department with the active
cooperation of the political/department leadership.
Another common method is to win a contract for building a public
utility like a road to certain specifications/material, and then end up
doing it with inferior material. Whatever the method chosen, the path to
riches is through the patronage of politicians and officials.
In this situation it is a simple matter of common sense that the
businessmen begin to “look after” their patrons. They both seem to
operate on the basis of self-interest at any cost and it is only a
natural conclusion that by joining hands there is more to gain.
But not all private sector corruption is connected to public
officials. Even if there is no public servant in sight corruption seems
to be rampant in this sector. It is now considered the standard practice
for those in the construction business to offer kickbacks to directors
of companies with whom they have contracts of work.
As we know an incorporated entity like a company is a complex
institution with varied stakeholders. When an official of a company is
receiving money under the table from a contractor, whose interests is he
upholding? Certainly, it cannot be the interests of those stakeholders.
Gifts and commissions
It is commonly believed that gifts and commissions lubricate almost
every activity of our private sector. When a company buys furniture,
both the purchasing officer and the director approving payment will
receive at least a double bed from Moratuwa. When the company books a
sea-side resort for their annual outing the director concerned will get
a weekend for the family with the compliments of the hotel.
We are supposed to be a hospitable race and this kind of generosity
may warm the hearts of those preaching the virtues of giving and
gifting.
At the time of receiving the favour that official was acting in the
name of an incorporated body. Had he declared the gift to his peers in
whose opinion there is minimal conflict of interest and in any event the
matter so trivial, all’s well. But we know there is very little of this
kind if transparency in our systems.
At even a higher level, there are suspicions that the big players and
insiders manipulate our tiny stock market to the detriment of the small
investors. The standards expected from insiders in these matters can be
illustrated by the famous Martha Stewart case in the USA. Martha Stewart
built up a large fortune as a life-style brand leader.
Second in a family of six children she displayed her commitment and
entrepreneurship from a young age, organizing neighbourhood parties and
gatherings at the age of ten. After graduating with a degree in Art
History, Martha became a Wall Street stockbroker.
Later she began a catering service, which was soon diversified in to
range of kitchen and garden services eventually making her name
synonymous with stylish living. Martha Stewart was legendry for her
attention to detail even fretting about things like the shape of the
coffee pot on her televised shows. She undoubtedly worked very hard for
her success.
One of Martha’s good friends was Samuel Waksal, the CEO of the
Biotech company Imclone Systems. Waksal was arrested for insider dealing
on the allegation that he tipped his family and friends of the Federal
Drug Administration’s (FDA) refusal to review Imclone’s application for
the cancer treatment drug, Erbitux.
The troubles
Waksal had sold 200.000 shares of the company held by him. Martha had
only about 4000 shares, which she sold. When questioned she pointed out
that she had left instructions with her stockbroker to sell these shares
if they went below US$ 60.
The value of shares held by Martha Stewart in Imclone was only a
fraction of her total assets. Despite her explanation the troubles that
began for her did not go away. Martha eventually had to serve a term of
imprisonment.
Although free now, her image as an American icon has suffered
grievously. If we were to adopt these standards in assessing insider
influence in our stock market we will probably find armies of Waksals
and Marthas.
Such is the image of our private sector even in the mind of a person
like Ranil Wickremesinghe.
We can perhaps agree with him when he says that on the balance, the
economically powerful giver is more culpable than the financially
hard-pressed receiver. Whether we have the political will and the
personal qualities required to fight the scourge of corruption remains
to be seen.
But if we are serious about it, corruption has to be fought in all
sectors and against both the receiver as well as the giver. |