Why China's Iron Fist Hesitates in Hong Kong

There are complex reasons why the pro-democracy demonstrations in Hong Kong have not provoked a Tienanmen type response from Beijing.

Perhaps the most important of them are (1) Hong Kong’s important role in facilitating official corruption in China; and (2) The possibility that harsh action could cascade into a tidal wave of protests on the mainland and bring to the fore the serious rifts that exist within the political elite.

The role of a laissez faire Hong Kong in laundering the money of corrupt Chinese officials was Margaret Thatcher’s primary – if undeclared – argument for the “one country two systems” arrangement under which Britain transferred control of the city to Beijing in 1997.

The city has also been the conduit of major flows of laundered money from other parts of the world into the Chinese economy, a key factor in its so-called miraculous growth over the last two decades. Investments have accounted for more than 50 per cent of China’s GDP growth in recent years, a proportion unprecedented in history.

At a time when the Chinese banking sector is on the verge of collapse because so much of it is a vehicle for corruption and a long-running real estate bubble seems headed into what could be a precipitous bust, Beijing dare not send out the tanks in Hong Kong.

It could upset the larger apple carts of international corruption on which the regime depends for security and sustenance.

This explains why Beijing has been reduced to mobilizing a goonda army ostensibly in the pay of Hong Kong retailers irate at losing business.

Whether that will succeed in dealing with the problems remains to be seen.

The protesters include thousands of people employed in Hong Kong’s money-laundering industry, and they could wreak major economic havoc, setting off a larger political unwinding.

The next few weeks could be crucial to the future of China – and the world.

Britain and Hinduism 7: Ending the Empire

A British correspondent once said to me after the daily noon briefing at the UN, “You’re the only Indian journalist I’ve ever met who asks about anything other than Kashmir.” Then he added. “Actually, only English journalists ask about everything. Everyone else sticks to their own national issues.” When I pointed out that American journalists asked about all issues, he laughed: “Yeah, but the Americans don’t know what to ask until we tell them.”

China: Impending Disaster or Hope of the World?

China has the world’s oldest written record of national governance.

Unfortunately, its leaders also have the longest record of inability to learn from the past.

Consider the abuse of intellectuals.

It began with Shi Huangdi, the First Emperor who united the warring kingdoms at the north-eastern edge of what is now China. He had 800 Confucian scholars buried alive. Those he did not kill he drove into exile. Their books he burned.

Fast forward more than two millennia to the last of the monarchic dynasties, the Manchu: it too burned books, jailed intellectuals, tortured and executed them.

The dynasty Mao Zedong established in 1949 has burned more books and tortured/oppressed/murdered more intellectuals than all others over two millennia.

Three decades of Westernizing post-Mao “reforms” have not ended that record of oppression. Intellectuals who dare to oppose the regime are still being buried alive (in prisons instead of graves), tortured, killed on the sly and driven out of the country.

The rulers of China have been unable to see in all their long history that dissent has a valuable role in society, that those who combine intellect, integrity and courage are the treasures of their race.

Another issue on which experience has made no dent on the attitudes of Chinese rulers is national security.

From early days the Han people, who constitute about 90 percent of the Chinese population, have spent enormous treasure and labor to build walls to keep out marauding Mongol nomads. The walls never stopped the invasions but successive generations continued to build them until there was a single enormous structure stretching some 1500 kilometers. That did not stop the Mongols either; in the 17th Century they not only conquered the whole Han heartland but continued far beyond it to Taiwan in the south and Tibet in the west. (Tibet was made to pay tribute, which it did for less than 50 years; on that flimsy ground Mao claimed sovereignty over a land Beijing had never ruled directly.)

Despite the overwhelming evidence that walls do not ensure security China’s rulers still continue to build them: today they have the Great Chinese Firewall to keep out the Internet and the Worldwide Web.

Another critically important lesson repeatedly borne in by experience is that Chinese society needs a procedure for orderly political change; but it has not made a dent in the thinking of the country’s ruling elites. Fearful of the alien, idolizing the imagined gold standard of Confucian stability, every Chinese dynasty has ruled until unseated with brutal violence.

The country’s response to Western dominance and oppression was typically unreflective. Unlike India, where there has been a continuing effort to understand the nature of the Western challenge and meet it through imitation, adaptation, reform and peaceful opposition, China has never understood that it must mobilize its own genius. The mandarins of the Manchu dynasty hoped to transplant Europe's superior technology into an unchanged Chinese society; they considered social reform both unnecessary and dangerous. When that failed, Mao Zedong went to the opposite extreme and tried to rebuild Chinese society according to the ideology of a long dead German ideologue.

That long record of boneheaded elite attitudes to change played out again last week as China’s Communist Party transferred power to a new set of leaders. After a year of murky horse-trading, paranoia and intrigue, amidst the lurid fall from grace of Bo Xilai, the top “Leftist” contender for a share of power, Xi Jinping, replaced Hu Jintao as the head of the Party’s apex Standing Committee.

Despite strident calls for political reform from the departing Hu the new composition of the Standing Committee was solidly stick-in-the-mud. Four of its members, including Xi, are privileged “Princelings,” sons of Mao’s close cohort. One is a propagandist who helped shape the Great Chinese Firewall. Another brings to governance an economics degree from North Korea. A third is best known for not acknowledging an outbreak of SARS that killed thousands. Another worthy, considered a reformer, led the campaign to hide the spread of HIV infection to a million people by official blood banks.

This sorry team is now in charge of a country increasingly incensed by the corruption and arrogant anti-people policies of a Party that has little popular support. Land grabs by government functionaries, imposition of poisonous industries on populous areas, the impunity of corrupt officials and rampant abuse of power have provoked even the stoic steel of China’s people to mounting protest. The number of “mass incidents” (as the regime terms public protests) has increased rapidly in recent years; in 2010 there were 180,000. China Daily, an official paper, has reported that environmental protests are increasing 29 percent yearly.

To prevent any of this outrage from becoming visible during the carefully stage-managed political transition the Beijing regime went to great lengths. Stores were ordered to put away kitchen knives. Ping pong balls that could be imprinted with anti-Party slogans also became hard to buy. Cab drivers were told to remove the roll-down handles of rear windows to prevent passengers from throwing out protest pamphlets. Access to the Internet slowed glacially in Beijing. Hundreds of foreign reporters who congregated in Beijing for the event found themselves in a strange limbo, prevented from asking questions at many Press conferences and often left with no official guidance about events. A thousand of them who gathered to witness the formal introduction of the new Standing Committee were kept waiting in a long corridor until the whole function was over. Multiple security cordons stalled access to the official celebrations in Tiananmen Square; ordinary Chinese were told to go back home and watch on television.

President Hu Jintao in his farewell speeches identified corruption as the primary danger to the State and Party but did not say how exactly they should be addressed. There is little chance of effective action for things are too far gone, and the entire system now facilitates corruption. The Banking sector is an example. Interest rates are kept much lower than the real cost of credit, ostensibly to promote domestic consumption; but all it has done is allow those with privileged access, including bank staff, to take out cheap loans and either lend out the money themselves at market rates or speculate in real estate. The result is an entirely unregulated alternative banking system that undermines the formal sector; it has inflated apartment prices far beyond the reach of most ordinary Chinese and millions of units now lie unoccupied.

Undetermined billions of Yuan embezzled from public institutions are also being used by corrupt officials for real estate speculation, so any sharp fall in prices will throw many local governments into crisis and wreck pension funds and insurance companies. The rapidly slowing economy is making the mess increasingly difficult to hide.

The new Standing Committee has few options to revive the economy. The banks have gone through two rounds of massive recapitalization to optically reduce their holdings of non-performing loans, and no one knows what their real situation is. China’s massive foreign reserves could be used to further shore up its banks but that would ignite an unwelcome level of inflation. Chinese manufacturers are suffering from a deadly combination of recession in their main foreign markets and growing labour militancy. Millions of migrant workers without residential permits in major cities are facing unemployment and have no social security. Educated unemployed youth are now again a major problem after years of booming economic growth, and there is intense competition among over-qualified candidates for low level but secure government jobs.

Foreign investment continues to be high (over $100 billion in 2012), but is down from last year. The continued high level of investment, both foreign and domestic, is not a positive factor when it is too high a proportion of GDP and at a time of falling manufacturing and exports; the result is inescapably inflationary. A broad effort to increase domestic consumption by increasing the minimum wage has also been inflationary and any large-scale government spending now, no matter what the aim, could send the cost of living into an irretrievable danger zone.

China has faced hard economic crises before. Mao initiated the Great Leap in an effort to cope with one. It caused a famine that killed between 30 and 46 million Chinese. There was no breakdown in political order then because the People’s Liberation Army, which serves the CPC not the nation, was firmly under Mao’s control. That control is long gone. Hu reportedly faced overt discontent at some meetings of the Military Commission, and the Party leadership now cannot take the PLA for granted. Reports say there is talk within the officer cadre of the need to “nationalize” the PLA – i.e. remove it from the authority of the Party and put it under the umbrella of the State. A move in that direction would be a political coup and signify the end of the current regime in all but name.

Complicating the picture within China is the grossly warped economic relationship the country has developed with the world since the 1997 “two systems one country” deal for the return of Hong Kong after its 99 year development under the British. With that deal China’s leaders bought into the empire of corruption Britain has built as its formal imperial structures were dismantled. Having Hong Kong as a sluice for the proceeds of corruption has gutted the Chinese regime in a weird replay of what happened in the 19th Century as Britain foisted the opium trade on the country. According to Washington-based Global Financial Integrity the country has lost an estimated $3.7 trillion in outflows to the global black market since 2001. That staggering figure indicates more than economic loss; it means key players in the Chinese power structure are in league with the most unscrupulous and manipulative of foreign interests.

The level of their cooperation can perhaps be seen in the murky downfall of Bo Xilai, a “Princeling” whose vocal campaign against corruption had made him a popular candidate for inclusion in the Standing Committee. The timing of his fall and its cause – the murder of a “British businessman” who was both an MI6 operative and a money-launderer – suggest a set up. Was the murder provoked by a blatant effort to cheat Bo and his wife of their foreign holdings? What led the local Police Chief (now given amnesty) to advertise the murder internationally by fleeing for asylum to the American consulate in Chengdu?

Such questions will surely be exercising the minds of the 25 members of political Bureau to which Xi’s 7-member Standing Committee reports. Unlike its apex body the Bureau is not dominated by conservatives and it could rehabilitate Bo Xilai much as it did Deng Xiaoping, who Mao tried to discredit and destroy. We can read that possibility into the unexplained decision to select only seven of the nine members of the Standing Committee. If Bo’s supposed show-trial exonerates him the cat would be among the pigeons, especially if he is inducted into the Standing Committee along with another reform candidate who was excluded. Xi himself could easily swing into the reform camp, for he has shown himself to be pragmatist. (It is possible his mysterious two-week disappearance from public view in September was spent reassuring last-minute doubters in the conservative camp and ensuring that he could take over chairmanship of the Military Commission at the same time as the top Party job.)

No matter how these circumstances play out, the anti-reform cast of the Standing Committee might be short-lived, for five members will reach the mandatory retirement age of 70 in the next few years; it is unlikely that 86-year old former president Jiang Zemin, who marshaled the conservatives this time around, will be able to decide on replacements. However, such prognostications could be immaterial, for the Chinese economy faces a disastrous prospect. If it suffers a crash the effects will be global and could easily tip the region, and indeed, the world, into war.

If ever there was a time for Chinese leaders to internalize the lessons of their national history it is now. Those lessons are clear. Security lies not in walls but in promoting the creativity and genius of their own valiant people. Dissent is not a weakness but an invaluable good in any society. The strength of a nation is not in the oppression of the weak but in their happiness and wellbeing. The corruption and criminality of the outside world are indeed dangerous but they are counterbalanced by a great fund of goodwill that China can mobilize if it changes policies founded in arrogance and dishonesty.

The normal run of State policies will not allow such a change in mindset; it will require a fundamental reassessment of the country’s existential situation and a decision to change it. Fortunately, the rich spiritual tradition of Chinese Buddhism offers the basis for such a change. To suggest that the regime allow the revival of that tradition might seem unrealistic but it is no more than a reversal of the ugly change that Mao Zedong engineered. It would transform the scene within the country and recast all problems in a hopeful light. It could save not just China but the world from disaster.

Bo Xilai, China and Media Hypocrisy

The story of Chinese "princeling" Bo Xilai, his "Jackie Kennedy wife" Gu Kailai, and murdered "British businessman" Neil Heywood is a textbook case of mass media hypocrisy in covering international affairs.

Consider for example the Letter from China headlined "Corruption Nation: Why Bo Xilai Matters" in the latest New Yorker, and last week's investigative piece by Bloomberg on Gu's four sisters who "controlled a web of businesses from Beijing to Hong Kong to the Caribbean worth at least $126 million.”

In both articles, as in the general flow of news agency reporting of the matter, the focus is firmly on Chinese corruption. The cesspool  represented by Neil Heywood, who Reuters reported was "poisoned after he threatened to expose a plan by a Chinese leader’s wife to move money abroad,” remains firmly in the shadows.

Heywood was no ordinary "British businessman." He was a fixer for the global black market centered on and run from The City, London's financial center. His main job seems to have been helping corrupt Chinese officials move hot money into safe havens abroad. On the side he reported to MI6, Britain's nefarious spy agency (a link he advertised in a pathetically juvenile manner by incorporating 007 on his car license plate).

Why is China "corruption nation" and not Britain?

The New Yorker piece sins by omission; the Bloomberg article engages in active distortion. Noting the use of offshore tax havens by Gua's sisters, it says that is "not unusual: P.O. boxes in jurisdictions such as the Cayman Islands and British Virgin Islands can serve as the address for thousands of companies. While the majority of tax haven-based companies are set up for legitimate reasons, offshore jurisdictions have been linked to multiple frauds and corruption cases...".

The Bloomberg authors do not say what "legitimate reasons" are served by accounts and shell companies with untraceable owners in off-shore tax havens (of which there are now over 70, most of them in tiny former British colonies). I can see none; those who use tax havens want to avoid taxes, evade legal responsibility, and stash the proceeds of crime.

Illicit outflows from China are the largest of any country in the world. Sarah Freitas notes in her blog at Washington-based Global Financial Integrity that the country lost $2.74 trillion over the past decade. Partial estimates from a number of sources including the IMF and the World Bank indicate that global black market assets amount to over $30 trillion.

Assets in the trillions of dollars cannot be managed by hoods carrying around suitcases filled with high denomination currency notes. Major financial institutions are involved, and they operate in a coherent system that drains an estimated $1 trillion from developing countries every year. 

Mainstream media have been incurious about such numbers, and especially in the mechanisms used to move and manage the money. The growth of a global black market that Britain developed as its Empire dwindled in the 1960s is perhaps the most uncovered international story of our time.  

The corruption represented by that enterprise is not just victimless "white collar" crime. The global black market sustains terrorist organizations, drug traffickers, civil wars, coups against elected governments, trafficking of women and children for the sex trade, and a host of other organized criminal activities. It feeds the huge speculative "hedge funds" that have driven oil prices beyond $100 a barrel during a global recession. It kills democracies.  

To bring the current situation into political focus it is necessary to see it as a second British Empire, one that employs drug mafias and "Islamic terrorists" instead of conquering armies and rewards its primary agents -- bankers -- not with titles and tiaras but with munificent "bonuses" even as their above-ground organizations wallow in public funds to avoid bankruptcy.

Public outrage about those bonuses is often reported in the mass media, but strangely, there has never been an investigation into the rationale for them. The halfhearted excuse that the bonuses are necessary to ensure the integrity of those who deal with billion dollar flows is not valid; there are thickets of safeguard procedures and special oversight and audit arrangements to impose honesty.

As we move into a period of individual connectivity rich with democratic promise it is critically important for people everywhere to recognize that corruption at the national level is sustained by a global system run by a violent and unprincipled elite. Unless we dismantle that system the world will continue to be in a state of perennial violent disorder.

Corruption in India - 4

There is a tendency among elitist Westernized Indians to think of corruption as an obstacle to the coming of the corporate Promised Land where “People Like Us (PLU)” enjoy the benefits of the free market untroubled by government gnats.

There seems to be no awareness that the joint-stock corporation has been the greatest fount of corruption in human history.

Since 1600, when a group of merchants in London founded the first one, the East India Company, corporations have been the primary vehicles of colonialism, the transatlantic slave trade, and the production of increasingly deadly weaponry used to kill some 250 million people in the wars of the 20th Century. They have poisoned air, land and water, promoted the widespread use of carcinogens, and trafficked in opiate drugs that ruined the lives of millions of people, mostly young. (“Heroin” was a Bayer trademarked drug promoted as a treatment for menstrual cramp and colic in babies.) The giant “scams” that have kept us entertained in India over the last few years, from the Satyam boondoggle to the 2-G auction shell game, have all centered on corporate interests.

The reasons for the inherent tendency of corporations to generate corruption are set out in Adam Smith’s classic work on the operation of free markets, The Wealth of Nations. Published in 1776, the year of the American Revolution, it noted two reasons.

One was the corporate tendency to establish selfish monopolies regardless of the cost to society. In making that point, Smith pointed out how the enormous economic potential of the Americas and Asia had, by the “savage injustice of the Europeans” been rendered “ruinous and destructive,” how “all the benefits which could have resulted” from free trade had “been sunk and lost in the dreadful misfortunes” visited on the native populations. Only the imperial monopolists profited from such policy; the British people certainly did not, for they not only paid for the products of the colonies but bore “the whole expense of maintaining and defending the empire.” Just the interest on the debt incurred by the government to retain the American colonies by force, Smith argued, was “greater than the whole extraordinary profit, which it ever could be pretended, was made by the monopoly of the colony trade.”

The second reason was that the ease with which investors could buy and sell stock and their limited exposure to the liabilities of the company resulted in its directors having command of very large sums of money. Smith held out the example of the South Sea Company, established to carry on the slave trade. Its trading stock at one point amounted to over £33,800,000, some three times the entire capital of the Bank of England, which at the time was £10,780,000. With “an immense capital divided among an immense number of proprietors” the company had been run into the ground by the “folly, negligence, and profusion” of its managers and the “knavery and extravagance … the profusion and depredations” of their “factors and agents; some of whom are said to have acquired great fortunes.”

Such profligate corruption was the rule, not the exception. The “managers of other people’s money” did not exercise “the same anxious vigilance” with which private partnerships “frequently watch over their own,” Smith wrote. “Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company.” He cited as another example the East India Company, also a behemoth. In telling its story, Smith noted that after the acquisition of Bengal in 1757 the Company had an income of over £3 million a year (about £3 billion now). Despite those “splendid earnings” it “was sunk in debt” by 1773, and had to be bailed out with a government loan. Its story of incompetence, greed and arrogance continued long after Smith's time; it culminated in precipitating the Indian revolt of 1857, a disaster too large even for the profiteers of London to ignore, who finally put it out of business.

On average, over the 400 years that joint-stock corporations have been around, they have been involved in major financial and/or moral scandals once every two years. Smith listed 55 for the first 165 years, and they have grown in frequency as corporations have grown into transnational giants outside the control of any government.

Why haven't governments done more to control them? For one simple reason: the corporation is the most efficient form of wealth creation yet invented. It allows a small group of people to package capital, technology and labour to profit from available resources. This is the reason a country like India or China, with huge and growing populations, cannot afford to turn away from the corporate economy. But we might be approaching a situation where the choice is between growing rich faster and national self-destruction.

To see why, we have to look at a factor that Smith did not note in his analysis of the negative aspects of corporations: the concept of “limited liability.” It had originated in the corporate guilds of medieval Europe in which each individual was responsible only for his own business. With the joint-stock company, that limitation of liability took on an altogether new and sinister meaning. Limited financial liability became moral impunity.

That change occurred initially as corporations dealt with distant lands and “lesser breeds without the law,” but with the Industrial Revolution, European society too became a victim. Investors who had remained untroubled by the miseries of far off peoples were equally unperturbed as workers, including children, were subjected to inhuman conditions in mines and factories; they even remained quiescent as industries poisoned the air, water and land around them.

Today, as that assault on Nature expands in scope and seriousness, as we watch the atmosphere heat up and the polar ice caps melt, as species go extinct at a rate faster than at any time since the dinosaurs disappeared, investors still continue pouring money into "development."

Although social activists and trade unions have managed over four centuries to improve working conditions gradually and put in place some environmental standards, the stockholder tendency to ignore everything but the bottom line has only grown stronger through the 20th century.

As corporations grew into gigantic transnational concerns, they became ever less sensitive to ethical, social and environmental considerations. They took control of the mass media and clothed themselves in a “free market” theology founded on the preposterous claim that The Wealth of Nations commanded the pure pursuit of profit in disregard of the social good. The separation is actually a legacy of the time when the emerging entrepreneurial class of Europe had to fend off feudal authorities; it has stayed in place long after the roles reversed and governments became instruments of the corporate elite.

During the Great Depression of the 1930s when corporations themselves felt the need for government help, a distinction was made between “macroeconomics” and the “microeconomics.” Governments were accorded a continuing macroeconomic “pump priming” role, managing the money supply, keeping a weather eye on business cycles and ensuring a policy framework supportive of business; but they were not to interfere with the running of individual enterprises.

The net result of all this has been the emergence of a global corporate elite that effectively controls what governments can and cannot do. The power of sovereignty thus constrained has been further hobbled by the post-Cold War dispensation of the World Trade Organization that promoted a wide range of corporate freedoms masquerading as “free trade” between hugely unequal participants.

Developing countries have fought a rear-guard action to keep themselves from the tender mercies of giant corporations that have revenues dwarfing the GDP of many of them. India has been one of the leaders of that struggle, but as its own corporations buy into the global network, there are privileged and powerful people within its borders now arguing for seamless integration into a system that is killing the planet. The voices in opposition are a jangle of confused interests ranging from doctrinaire Marxists to tree-hugging environmentalists and farmers desperately fighting to hold onto their land.

How that situation will play out depends very much on how India fares in the current global crisis, now building to an unpredictable climax. (China is already completely at the mercy of foreign corporations and cannot be a factor; other countries do not have the necessary heft to make a difference.) And how India fares will be decided by the efficacy with which we deal with the massive corruptions rooted in the immoral pursuit of corporate interests.

The Lokpal debate is thus actually about much more than the criminal malfeasance of those in power. It brings into focus a set of issues that will determine how creatively India engages with the world, and thus the future of our civilization.

More on that in Part – 5.

Corruption in India -2

The confused controversies surrounding Anna Hazare and Baba Ramdev have made clear the low level of public understanding of corruption.

Ramdev’s fatuous proposal to force Indian “black money” to return from foreign banks should have won him instant expulsion from serious public discourse but that came only after his comic descent into infamy. “Team Hazare’s” proposal for a new supra-investigative body seems more sophisticated but its premise – that government malfeasance is central to corruption – does not bear close examination.

Corrupt politicians/judges/bureaucrats are indeed a key element of one aspect of the problem but they are more symptom than cause. Subjecting them to an independent public watchdog is unlikely to have much effect because the social dementia of which they are victims remains undiagnosed. To find a remedy we must identify the common denominators in the multiplicity of corruptions afflicting India (see list in the last posting).

The most obvious common denominator is the sense of impunity shared by the corrupt: the belief they can get away with crime. However, the reasons they think so fall into three categories.

Underlying the criminal manifestations of male and caste dominance, the use of child labour and the abortion of female fetuses, is the belief that State mechanisms will not or cannot implement the law. In contrast, gangsters and other low-life know very well that the State will actively pursue and punish them; their sense of impunity reflects the learned lessons of harsh predatory lives in which violence and bribery buy security. The calculus of the third category -- which now dominates our attentions -- is  altogether different: top politicians, bureaucrats and business figures believe their power and privilege will insulate them from detection and punishment. Their corruptions spring from cold-blooded decisions to betray the collective interest in pursuit of private profit. In key sectors such as energy, policing and defence, the injury they inflict is not primarily financial or social; they strike at the safety and security of the State.

These very different sources of impunity underlie different genres of corruption and a Lokpal would be largely ineffective in dealing with two of them, the massive social crimes that flow out of our history and modern organized crime. Even in dealing with crimes within the structure of government, the Lokpal cannot be, in that popular expression, a “watchdog;” for a dog can prevent crime and is immune from corruption itself.

The only preventive element in Team Hazare’s version of the Lokpal Bill is the severity of punishment: initially it required the death penalty for high-level offenders, now toned down to life imprisonment. (The government draft calls for a 7-year prison term.) Both versions of the Bill deal with corruption as individual malfeasance; they ignore its existence as a systemic disease with social, economic and political dimensions.

The next post will take up the social aspect, focusing especially on the genesis and coruptions of the caste system.

Corruption in India - 1

Does anyone expect the Lokpal to make any real difference?

Suppose Civil Society gets its entire wishlist and we end up with an unaccountable supra-governmental body with wide-ranging powers to accuse, investigate, prosecute and more or less prescribe punishment for the people it decides are corrupt.

In which of the following situations (all in the headlines in the last few days) will it be able to make a dent?

1.      Widespread smuggling and sale of rice meant for distribution to the poor.

2.     “Ghost workers” receiving funds from the National Rural Employment Guarantee scheme.

3.     The hundreds of illegal mining operations under way in a number of states.

4.      The widespread illegal quarrying of rock, with some operations threatening archeological heritage sites.

5.      The widespread illlegal "sand mining"  from beaches and watercourses.

6.      Widespread use of child labour

7.      The resort to gender-related abortions by educated, middleclass people that is causing an increasing tilt in the male/female ratio of the Indian population.

8.      The private theft and public "seizure" of land belonging to the poor in all parts of the country. While private gangsters make no bones about their motive -- profit -- public officials make a grand pretence: the POSCO steel mill on tribal land in Orissa, the nuclear power station on tribal land in Maharashtra, and the Delhi-Agra highway in UP, are all for that distant god, "Development." .

9.      The bribery of voters by political parties. According to the Chief Election Commissioner all political parties tried to corrupt voters during the recent state elections, using  clandestine contributions from corporations.

10.  The thievery of public goods by the wealthy curled darlings of the nation. The government's auditor, the Comptroller and Accountant General (CAG), has just reported that when Murli Deora was Minister for Petroleum, he did all kinds of favours for Mukesh Ambani's Reliance Industries Ltd (RIL), causing massive but unquantifiable losses to the public exchequer. (Younger brother Anil Ambani, is already neck-deep in the 2G auction scam and has two of his senior aides cooling their heels in Tihar Jail.) The CAG noted that the Ministry had allowed Reliance (and Cairn India, the subsidiary of a well connected British firm extracting oil in Rajasthan), to hold onto areas they should have forfeited because of failure to drill. That prevented the government from re-auctioning the areas, depriving it of potentially massive revenues.

11. The $7.2 billion deal Reliance Industries made in February to sell a 30 percent stake in its offshore gas fields (acquired under the abovementioned questionable contract) to BP, the British oil giant. In June, the Home Ministry issued a terse one-page security clearance  necessary for BP to proceed with the purchase. The Ministry noted that BP was already in the Indian market, selling lubricants. Selling grease is significantly different from owning a sizeable chunk of the country's strategically important energy sector, but that didn't seem to count with the biggies at Home. Nor did it seem to matter that BP has the worst safety and environmental records of any of the oil majors. Or even that it has a long history as an imperial arm of the British government, and had a notorious role in destroying Iran's homegrown democracy and manipulating it into its current miseries. (Would the Lokpal be able to take cognizance of the fact that the current Home Minister, P. Chidambaram, was in charge of the Finance Ministry when it cleared the contracts the CAG has faulted? Or that he is a former corporate lawyer who represented Enron in India and sat on the board of Vedanta, the company owned by the predatory Anil Agarwal, a Mumbai scrap metals trader who morphed into a British billionaire with a stinking human rights record?)

12.  The reported oversize loans the State Bank of India made in contravention of ReserveBank rules to Reliance Industries, Indian Oil Company and BHEL.

13.  The reported provision of an entire telephone exchange of unlisted high-speed lines by BSNL Chennai ,to benefit the television station run by the brother of Dayanidhi Maran, who held the Telecommunications portfolio in the central cabinet before A. Raja, who emceed the 2G spectrum auction.

14.  The reported routine use of torture by Police all over the country to extract information from suspects.

15. The brazen daylight murder of a prominent investigative journalist in Mumbai, and the revelation of connections among foreign-controlled gangsters, high level Police officers and Mumbai businessmen.

16.  The rotting of hundreds of thousands of tons of food grains lying exposed to monsoon rains in states across India because storage facilities were inadequate for a bumper crop.

17.  The involvement of some top Army officers in the illegal construction of a multistory residential building on property owned by the Defence Department in Mumbai.

18.  The flow of foreign institutional investment into Indian stock markets primarily from “tax havens” where “shell companies” hide the identity of the real owners of the money. Over 40 per cent of the flow comes from a single source, Mauritius, with which India has a three-decade old treaty preventing double-taxation. Negotiated to encourage bilateral economic ties before Mauritius became a tax haven, the treaty now serves as a cover for “black money” to enter the Indian economy.

19.  The tax avoidance of Vodafone, the British telecommunications giant, which moved funds from a Caribbean tax haven in 2007 to buy the Indian interests of Hong Kong-based Hutchinson Whampoa (then in partnership with the Essar Group in India). Vodafone is contesting the Indian government’s demand for over $2.5 billion in taxes on that deal, arguing that it was between two off shore entities (itself and Hutchinson Whampoa) and thus outside Indian jurisdiction!

20.  The gullibility of millions of people from whom the late lamented “Sathya” Sai Baba extracted the treasure trove he left behind in his private room and in his fabulously wealthy "Trust."  

That list does not include India’s enormous burden of preventable infant and maternal deaths that results from grossly disordered political priorities and multi-layered negligence. It omits the massive toll of misery exacted by discrimination and violence from poor women, the cases of child marriage, payment of dowry, and of blatant and even murderous caste prejudice that are all deep-rooted social corruptions not even acknowledged in the current debate. Even with those exclusions, the list makes clear that “corruption” in India is not a simple phenomenon centred on the culpability of bureaucrats and politicians. It has strong social, economic and political components, and we must understand them in order to take effective action. Without a strategic sense of the nature and origin of corruption in Indian society (to be taken up in the next posting), it is futile to think a watchdog body will make the slightest bit of difference.

(By the way, shouldn't it be Logpal? Lokpal makes it sound as if the institution is out to save the world.)

The Hindu's N. Ram Explains

Late on Thursday (17 March) The Hindu's top editor N. Ram was on Headlines Today defending the shoddy story his paper carried about the "Wikileaked" allegation of parliamentary vote-buying in 2008 (see the blog post below).

What had he done to verify the cable was authentic? Nothing, of course, but he blustered that no one had challenged their veracity and that the United States had confirmed their authenticity (it has not). Somewhat rattled by the question, he went on for a bit about how it could be verified, addressing the issue as if it were not a direct criticism of his paper's front-page sensationalism.

Had The Hindu checked with any of the people mentioned in the cable? Well, his reporter had called Nachiketa Kapur (who has emphatically denied having anything to do with the vote buying), but had not asked him about the issue. Headlines Today being what it is, Ram was not asked why that was so. But he added that the Congress Spokesman had called back to ask what the paper was about to publish. "You see, they were nervous!" he said triumphantly.

As with the allegations about the "Bofors scandal" 25 years ago, which were "leaked" to The Hindu and carried with no verification whatever, the current charges come at a critical time for the Indian economy.

The smoke and mirrors scandal about Bofors coincided with the Indian government's first effort at major economic reforms. Because of the huge ruckus in parliament over the entirely unsubstantiated charges, the effort at economic reforms failed. For two years India floundered with a weak and unstable coalitions in Delhi.

The current allegations come at a time when the world economy is headed for a major upheaval, and a weak visionless central government would be a disaster for the country. Vultures like BP, Vedanta, Vodaphone, and HSBC are circling, hoping for a weak and malleable government in Delhi.

Ram pontificated on television about the level of political corruption in India. He should take a hard look in the mirror.

UN Posts for Sale?

In the infamous days when Kurt Waldheim was Secretary-General of the United Nations I was a staff member there, still very much an innocent in the ways of the world. So when an Arab colleague came into my office one morning and, after a few preliminaries, asked if I would co-sign a loan from the UN Credit Union, I assumed he faced some family emergency, and agreed without thought or question.

It was a small sum he wanted, $15,000 if I remember right. After the formalities we went down to the cafeteria for coffee. I thought he might unburden himself of whatever problems faced him, but the conversation was all about in-house politics. Then, as we prepared to leave, he said casually: "You know, I needed the loan to get a promotion." My blank stare prompted an explanation. The Assistant-Secretary-General for Personnel would arrange for a promotion if he was paid; there was a set scale, depending on the level of the job. His promotion would take $14,000. (What the extra $1,000 was for, I never found out.)

The confession left me speechless and wondering about the United Nations, which till then I had considered in the fuzzy light of its own propaganda and my idealism. My colleague got his promotion within a few months, and we never talked about the matter again, not even when the Assistant-Secretary-General in question became the subject of a very hush-hush official investigation and was quietly allowed to resign.

I bring all this up because of what has happened with the the appointment of the Executive Director of the UN Development Fund for Women (UNIFEM).

Last year, after UNIFEM Executive Director Noeleen Heyzer (Singapore) was appointed to head the Economic and Social Commission for Asia and the Pacific (ESCAP) in Bangkok, her old post in New York was advertised. Some 150 applications were received. The UN Development Programme (UNDP), the parent organization of UNIFEM, convened a panel to go through the applications, and after much labor it short-listed six. The six were interviewed, and the panel agreed unanimously to recommend Gita Sen of India, who has a sterling background in public policy (she teaches at the Indian Institute of Management at Bangalore and at Harvard), and as an activist on women's issues.

The panel made its recommendation in November 2007, but nothing happened. Then after UN Secretary-General Ban Ki-moon had attended the Ibero-American Summit in Santiago, Chile (where Spanish Prime Minister Rodríguez Zapatero got into his famous exchange with Venezuela's Hugo Chavez), it was given out that he would initiate a fresh review of the short-listed candidates. After interviewing four of the candidates himself in February, Ban did not act on the appointment till after Prime Minister Zapatero was re-elected in March. Then he announced on April 8 that the UNIFEM job would go to Inés Alberdi of Spain.

Non-governmental activists who had been looking forward to having a live wire at UNIFEM were bitterly disappointed, and have issued a stream of statements complaining about the manner in which the formal and rigorous appointments process had been nullified. High-level UNDP staff are also reported to be not too happy with the outcome. "There's no doubt about it" one NGO representative told me. "The Spaniards have just bought themselves a UN job. It's clear what happened. Even the timing; Ban just waited to see if Zapatero would be re-elected and would pay up."

No one is saying that Ban was personally paid off; the presumption is that additional Spanish funds will go to UNIFEM. But it still leaves the impression of corruption. UN jobs should go to the best qualified, not to those whose governments offer money.