Showing posts with label Bribery. Show all posts
Showing posts with label Bribery. Show all posts

Wednesday, May 11, 2016

Cutting out the Middleman


A few years ago, Janagraha, a Bangalore-based NGO, started a website called "I Paid a Bribe". It was a hugely popular initiative with thousands of people logging in to report the bribes they had to pay to get work done at government offices across India.

Thanks to this initiative, finally some real data was being generated on how speed money was changing hands. However, limited awareness of the existence of such a portal, and, limited faith in its ability to curb the menace gives us a picture that may not reflect ground realities. For instance, it is difficult to believe that an overwhelming cases of bribery happen in Bangalore city (8300 cases; 10%), and that it is rare in North Indian cities.

A recent op-ed in the Indian Express by Philip Oldenberg has brought out an aspect which is overlooked in the hitherto black-and-white narratives of bribery and corruption. According to Oldenberg, even if an official is honest, all it takes is a the perception of fallibility, for middlemeen to makes piles of money.

Oldenberg gives the example of semi-literate villages who need to get their land valued by government officials. In the face of paperwork that looks formidable, they turn to the friendly neighborhood "dalal" (middleman) who  offered the farmer knowledge, access, and the willingness to dirty his hands, all for a modest commission, with a money-back guarantee.

"...When the officers of the land consolidation department come on their visits, the dalals would approach them in a semi-public way (with farmers watching), whispering perhaps some innocuous something, to give the impression of having a close relationship."

Then, after taking his "processing fees" from the farmers, he would just run the applications through the normal procedures and get the work done. So even when an honest official does not take bribes, the middleman walks away with all the money, reinforcing the public impression that nothing gets done unless you pay bribes!

Which is the most efficient way to cut the middleman out of the system, and prevent him from muddying the waters?

Perhaps it is worth replicating the models followed by MEA's Passport Offices and the Motor Licensing Offices in Delhi. In 1994, when I submitted my first application for a passport to the Regional Passport Office (RPO) at Bhikaji Cama Place, the whole building was teeming with middlemen. At every step, you would be urged to hire "facilitation services" for speeding your application through the red-tape. And sure enough, those who did not pay up would have their applications rejected for the flimsiest excuses. The cost of not paying a bribe would be widely offset by the time and money spent on making multiple trips to the RPO.

Then, in 2006, MEA brought in Tata Consultancy Services (TCS) to revamp the entire RPO system. And what a transformation it turned out to be! Now TCS manages more than 77 passport centres, and has created an efficient online system that handles 40,000+ applications everyday, and has already issued more than 13 million passports to citizens who never encountered either a venal passport official, or the hazards of dealing with a middleman.

What does it take to build similar, transparent systems for all citizen-state transactions?

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LINKS & REFERENCES

* Oldenberg, Philip (2016): Why the AgustaWestland bribery scandal reminds me of Miss Marple, Indian Express, 9May16 - http://indianexpress.com/article/opinion/columns/agustawestland-vvip-chopper-scam-agatha-christie-a-crime-and-a-puzzle-2790835/

* TCS Transforms India's Passport Offices - http://www.tcs.com/resources/case_studies/Pages/TCS-Indian-Passport-Office-Ovum.aspx


Wednesday, October 08, 2014

Delhi Metro Kickbacks - Whudunit?

Another corruption scandal has come to light. Once again it is a foreign court that informs us that bribes were paid to Indian officials for a project in India.

This time, unfortunately, it is Delhi Metro that stands on the dock. According to UK's Serious Frauds Office, Alstom-France paid Rs 52 crore over six years to win transport contracts in India, Poland and Tunisia. Between the period 2001-2006, Alstom had won  a Rs 255-crore signalling contract for the Delhi Metro Rail Corporation (DMRC).

Details of this scam have been trickling down slowly over the past couple of months. Yesterday, we finally got a  rebuttal from DMRC. The venerable Dr. Sreedharan stated unequivocally that the "Bribery story hold no water". His point was that in his time, DMRC had sufficient checks and balances in place. "If at all bribe has been paid" Dr. Sreedharan pointed out, "It must have been to individuals outside DMRC with a view to siphon back the amount to individuals of Alstom Network, UK".

So who got the moolah?

Outside DMRC, there were two other key players involved - a consulting firm called Pacific Consultants International (PCI) and JBIC (now JICA). It is interesting to note that around the same period (200-2006), PCI has been indulging in activities that did little to enhance company credibility.

Consider the following -

* Viet Nam, 2003: In 2008, Huynh Ngoc Si, former deputy director of the Ho Chi Minh City’s transport department and head of a major Japanese ODA-backed highway project, was convicted of taking bribes in 2003 by receiving $262,000 from executives of Pacific Consultants International, which was hired as the project consultant.
* India, 2004: PCI lost a case to the Joint Commisioner of Income Tax who held it liable deduct tax to the tune of Rs. 3,26,99,128 for various financial years involved. PCI had been claiming tax-exemption for its expat employees in India without any legal basis.
* Japan, 2008: PCI was fined JPY 70 million (approximately USD 680,000) by the Tokyo District Court, and three former PCI executives were given suspended sentences of imprisonment for 18 months, 20 months, and 2 years, respectively, for paying bribes to Vietnamese government officials in order to obtain consulting contracts for a highway project also funded by ODA and distributed by JICA.

India is now sending its officials to SFO-UK to collect details on the kickbacks.

For the sake of Delhi Metro, let us hope that DMRC officials come out squeaky clean!

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REFERENCES:

* (ToI, ) -- Bribery Story Hold No Water -- http://timesofindia.indiatimes.com/city/delhi/Bribery-story-holds-no-water-Sreedharan/articleshow/44635674.cms

* http://www.talkvietnam.com/2014/04/rethinking-aid-and-corruption-in-vietnam/

* Soni, Anusha (BS-11Sep) - Bribe charges link Alstom to firms from Singapore, Hong Kong --  http://www.business-standard.com/article/companies/bribe-charges-link-alstom-to-firms-from-singapore-hong-kong-114091100996_1.html
- Indo European Ventures Pte Ltd, Singapore and  Global King Technology Ltd, Hong Kong

* http://indiankanoon.org/doc/1477231/