Corruption
1. Each factor and its probable consequences for the pattern of corruption is explored in this article wherein it refers kinship, friendship, and ethnicity . In Indian situation caste as notion+institution gives more shape to kinship, friendship, and ethnicity than anything else. Here ‘Parochial Corruption is seperated from Market ‘ Corruption with following understanding-
As ideal types, ‘parochial’ corruption represents a situation where only ties of kinship, affection, caste, and so forth determine access to the favors of power-holders while ‘market’ corruption signifies a virtually impersonal process in which influence is accorded those who can ‘pay’ the most, regardless of who they are. The real world, of course, rarely if ever contains such pure cases; one is more likely to encounter mixed cases in which, say, a politician will do illegal favors only for members of his ethnic group but nonetheless extracts from them what he can in cash, goods, or services. To the extent that parochial considerations predominate, however, the beneficiaries will be those with ‘connections’ such as kinship, friendship, and ethnicity(->caste). Where market considerations prevail, on the other hand, wealth elites will most likely benefit more since they are in a position to make the most lucrative bids. The proportion of market to parochial corruption, and hence the pattern of beneficiaries, varies widely among developing nations. In Southeast Asia, for example, corruption in the Philippines seems to involve a high component of straightforward bidding procedures (or ’side payments’) that are fixed for all who seek an identical favor.
Please read more (Title-Analysis of Corruption in Developing Nations)
2. Another research article states associational forms like caste system having inherent characterstic of a close group can lethal ground for corruption..
The reasons for corruption in developing countries, however, go much deeper than the factors suggested above. In these countries primary associations are still dominant; family, kinship, caste, neighborhood, village, ethnic origin, and religious affiliations are the associational forms that have the first and the greatest call on individual loyalties.
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3. Following is quite interesting case study gives small insight that Mr Gandhi’s romanticism of villages and Panchayati RAj is just a farce used merely to fool civil society and create goody-goody picture of Indian rural setting…..
In these accounts, dominant castes are shown to be fairly (but not often wholly) successful in manipulatingthe local police force and judiciary through bribery, influence and intimidation. In studies of panchayats and the police, local government institutions appear to be deeply implicated in the social reproduction of a dominant rural class.
Please read more (Title-Panel19_Jeffrey)
4. A direct case made of bribe discounting caste.
Sometimes the discussion dealt with how someone had managed to outwit an official who wanted to collect a bribe; at other times with “the going price” to get an electrical connection for a new tubewell or to obtain a loan to buy a buffalo; at still other times with which official had been transferred or who was likely to be appointed to a certain position and who replaced, with who had willingly helped his caste members or relatives without taking a bribe, and so on. Sections of the penal code were cited and discussed in great detail, the legality of certain actions to circumvent normal procedure were hotly debated, the pronouncements ot district officials discussed at length.
Banwari, a scheduled caste resident of Ashanwad hamlet, 25 kms. from Jaipur said, “I haven’t seen the vidhan sabha or the Lok Sabha.sl The only part of the government I see is the police station four kms. from my house. And that is corrupt. The police demand bribes and don’t register complaints of scheduled caste people like me.” [Timesof lndia 1989:7]
Read More (Title-Blurrred Boundaries)
5. This paper observes further the process of individual loyalties infiltrating due to caste virus in general but in practice the caste-virus is much deadlier than any other associational factor. All other factors are natural in their genesis but Caste is a religious design that has features of a mental virus operating even at subconscious level even in conditions change it alters and exports easily. Though inhuman, caste-virus is observed dogmatically by in-trusting faith into Gods facing backwards.
The reasons for corruption in developing countries, however, go much deeper than the factors suggested above. In these countries primary associations are still dominant; family, kinship, caste, neighborhood, village,ethnic origin, and religious affiliations are the associational forms that have the first and the greatest call on individual loyalties.
“An administrative system influenced by such traditional loyalties will tend toward an ascriptive rather than achievement-oriented pattern of recruitment. And that is why a person who asks favors from officers belonging to his castedoes not consider his act unethical. Similarly when a government official”fixes” applications and licenses in utter disregard to merit but in accordancewith family and caste loyalties “he is obeying a law of social conductmore ancient than that of the upstart” .
“This is not to argue that India should give up her merit system for recruitment into the administrative services or colleges and universities but only to suggest that patronage-and even corruption when widely applied and involving many individuals from many communities-may facilitate an adjustment to democratic institutions”~~Of course there will be difficulties in applying such an approach in adeveloping country, butPakistan would seem to have solved this problem to some extent by using an ascriptive-cum-achievement system of civil service recruitment under which 80% of the vacancies in the administration are divided equally among East and West Pakistan and the remaining 20% are filled on merit basis. This problem of regional or communal representation in the public services exists in almost all developing countries the case of Nigeria is one of several examples. Unless the present recruitment and selection system is overhauled, the fears entertained by backward and minority groups and regions will continue. Changes in the existing system can be effected in such a way that each community and region is guaranteed adequate representation in the administration by means of a recruitment program that is based equally on merit and ascriptive considerations.
Any prescription for its (corruption)cure should take into account the social, economic, political and cultural environments. I would like to conclude by summarizing the main point in this article. Charges of corruption generally originate from the modernizing elites-the group to whom the responsibility for political, economic and social development has been entrusted. Trained mostly in Western norms but brought up in a traditional environment, these people abhore the increase in corruption.The modernizing elites should be induced to accept an altered perception of the nature of bureaucratic corruption. The transitional stage of these developing countries would seem to require that, as Herbert Spiro has argued: “. . . instead of the impersonal, machine-like honesty and efficiency of the ideal type of Western civil servant, they may prefer public officials who are more ‘human,’ approachable, amenable to influence, and leisurely than European civil servants under the conditions of highly industrialized, densely populated, and intensively bureaucratized societies.”
Please read more (Title-Bureaucratic Curruption in Developing Countries)
humanhorizons said
The Caste of a Scam: A Thousand Satyams in the Making
Guest post by D.PARTHASARATHY
http://tinyurl.com/dyx84z
Industry leaders, CEOs, and Corporate big-wigs have been falling over each other to portray the Satyam scam as an isolated case, as a simple failure of corporate governance. On the other hand critics from the left once again have had a field day with their “I told you so” condemnation of capitalist free market economies. There is also a moralistic middle class which blames it on greed pure and simple. The fact that the Indian private sector is largely dominated by family owned and controlled businesses of sundry sizes, that caste, community, gender, and social networks play a significant role in who gets nominated to top positions within the companies, and how businesses are run, that these have significant implications for corporate governance as well as corporate loot – these are issues that are too dangerous and embarrassing at the same time, and so are conveniently ignored.
An editor of a leading newspaper once remarked that corporate leaders usually came up to him for names to fill top positions in their companies. Their requirements were minimal – that the candidate should preferably be male, not be a Muslim, and should as far as possible be a twice-born. The real reason for corporate India’s opposition to reservations in the private sector is not any great appreciation of merit and efficiency. It is rather the urgent imperative to protect their family inheritances (baap ka maal) and positions (baap ka kursi), so that their incompetence in facing competition in liberalized markets are not exposed. Even as they have opposed reservations, they have revelled in reserving top positions for their own sons, nephews, brothers, and increasingly sons in law (rarely daughters, sisters, or mothers). However much family and fellow caste members may be groomed and be educationally qualified, the implication of family control for good corporate governance is rarely recognized or acknowledged. India’s business leaders are quick to brush aside such concerns suddenly developing a concern for protecting India’s ‘culturally different and unique business tradition’. This despite the fact that even when the ‘culturally unique’ great Indian business family splits, the businesses are divided among male (usually male) family members, with no concern for the interests of the business or that of the shareholders who are not even consulted, all presided over and mediated by other business leaders supposedly known for their honesty and integrity.
Not just top executive positions but directorships – including so-called independent ones, are also based on kinship, caste, and community. No one has bothered to ask how so many of Satyam and other companies floated by the family have directors who are Rajus – related by kinship and caste. How qualified are they to assume these directorships? Immediate and extended family members assuming director positions is widespread among most large corporates in India. Gender does not seem an issue here, as the same men who deny positions in their companies to women from the family, miraculously discover a great deal of merit in them when it comes to appointing them to directorships in various companies. Also, it is interesting as to how many of these independent directors and vice-presidents are ex-bureaucrats usually from twice born castes. The same private sector which criticizes the babudom for lethargy and inefficiency finds dynamism, efficiency and merit once the bureaucrats retire. After all is it not easier to thrive on government contracts than compete in the free market, and expose one’s inefficiencies? And what better way to liaise with the government than to have ex-bureaucrats as directors? Independent directors are also recruited from the academia – from the merit conscious IITs and IIMs, and other business schools. In return for the prestige, sitting fees, and retainerships, vice-chancellors, deans and directors only have to look the other way when corporate illegalities are committed, and occasionally call upon these CEO to deliver convocation addresses. For all their adulation of American style free market economy, most industry leaders in India are not just reluctant but strongly oppose corporate governance reforms which would put in place independent boards and CEOs who will have the interests of business, employees and shareholders in mind, and not the interests of founder and promoter families.
It is not by accident that independent directors, auditors, and CFOs associated with the Satyam scam have pleaded guilty to the lesser but more ignominious charge of incompetence than be arraigned for the higher crime of complicity in financial irregularities. The CFO of Satyam – Vadlamani Srinivas has confessed that he does “not pay much attention to the details of the balance sheet”, and that he just passes the balance sheets and accounts statements prepared by his assistants. Perhaps the CFO was recruited on the basis of reservation and hence was incompetent and inefficient? He has also stated that PricewaterhouseCoopers – the auditors of Satyam – “never pointed out any ‘deficiencies’ during their discussions with me”. PricewaterhouseCoopers is known for recruiting from the IIMs and other reputed business schools. Is it the IIMs and other business schools that have produced the incompetent auditors employed by the company? Or perhaps PricewaterhouseCoopers recruited candidates through reservations? One of the independent directors of Satyam was the Dean of the prestigious Indian School of Business which only recruits on the basis of merit. He has been reported as being ‘stunned’ by the revelations of Ramalinga Raju, and in his resignation statement said that he had “absolutely no prior knowledge” of the scam. What was he doing then on Satyam’s board as an independent director? Clearly, owning up to incompetence and ignorance seems a safer step than disturbing the family based governance structures of Indian companies. How else can private business schools make money through “family owned business” MDPs?
Satyam, Maytas, and Nagarjuna Finance – the three companies that have been involved in financial irregularities and are on the verge of collapse, are not only run and controlled by members of the Raju clan, but also have several other ‘professional’ employees and directors who have or have had links with other Raju owned companies and government institutions. Such linkages are not uncommon in the capitalist west, nor is it uncommon in western capitalist countries for such companies to survive or even thrive on government contracts. What is different is that for a company like Maytas with little infrastructure expertise to get huge government contracts, to get these contracts implemented through sub-contractors over a long period, to obtain land at a fraction of the market cost, all these require the building up of intricately linked caste and political networks over a long period of time. Despite being numerically small, the Rajus have been financially and politically powerful enough to influence whichever government has been in power in Andhra Pradesh. It is not surprising to read newspaper reports talking about “members of the Raju community” being “in despair”, or that Ramalinga Raju had a meeting with members of his caste community before confessing to his role in the scam, or even that his caste fellows have pledged financial support for his legal battles.
Newspapers have also reported on the support for Ramalinga Raju among the ‘villagers’ who have ‘benefited’ from the development works undertaken by Satyam’s philanthropic and charitable arm – the Byrraju Foundation. The enthusiasm of India’s big companies for corporate social responsibility in the form of rural development works belies its criticism even by neo-liberal enthusiasts. On the one hand free market fundamentalists such as Milton Friedman have questioned the ethics of diverting shareholder money for social purposes – a criticism that cannot be easily brushed aside. On the other hand, corporate leaders wishing to attain the status, prestige and power of erstwhile zamindars, have started sundry foundations with shareholder wealth ostensibly in the name of carrying out rural development activities, but also with the additional objective of finding sinecures for spouses, siblings, children, in-laws and other kin group members. It would be an interesting exercise to find out how many of these foundations are headed and run by spouses and other relatives of CEOs, and how many of them went through a proper process of recruitment, and were selected on the basis of ‘merit’. The ethics of using public money in the form of shareholder wealth for family benefit is not something that concerns even the most ‘progressive’ of our CEOs and managing directors.
For that matter, how are CEOs and managing directors recruited in Indian companies? Was Ramalinga Raju appointed as CEO of Satyam after a rigorous search, selection, vetting, and recruitment process? Was his son Teja Raju appointed to Maytas on the basis of being the best from among a pool of candidates? Did he have the requisite qualifications and experience in the infrastructure sector to head Maytas?
So long as companies are controlled and run by people occupying top positions and linked through caste, community and social networks, even the best of corporate governance regulations and practices cannot prevent scams and financial regularities. So long as corporate boards are occupied by family members and caste fellows who have little or no responsibility to shareholders and whose interests are restricted to wealth maximization and retaining positions solely for family members, a thousand, or maybe even a million Satyams will be played out across the country.