Middlemen taboo in India

By Biswajit Choudhury

While middlemen, in the spotlight again owing to the AgustaWestland helicopter deal, might be taboo in India, they are an essential factor in doing business in the developed world, according to an EU expert.

The ambiguity around them hinges around what the Council of Europe’s Crimil Convention on Corruption terms as trading in influence — a term that includes the work of middlemen — and calls for its crimilising.

At the same time, over a fourth of the 28 EU states have voiced reservations about crimilising trading in influence on the grounds that “it could affect acknowledged lobbying activities”, explained Willeke Slingerland, researcher at the Netherlands’ Saxion University of Applied Sciences.

Slingerland, who was attending a conference here hosted by O.P. Jindal Global University, elaborated on this paradox to IANS, saying that most EU states try to deal with the act of influence peddling via crimilisation of other offences like bribery.

“The role of influence is not to be banned because it is at the foundation of the political and economic competition of European democracies and economies,” she said.

Slingerland described the changes in European society, pointing to the “network character of corruption” that has its roots in the wider cultural context.

“Many European societies with developed democracies and market economies have become network societies in which social and other networks shape the organization of society and its structures.

“The systemic character of trading in influence means that it is deeply embedded in society and its development,” she said.

More than single acts taking place in corrupt trilateral relationships, this form of corruption revolves around access to and advantages within institutions rather than deals and connections.

For a better understanding of “network-like corruption”, Slingerland says one must consider that “in these systems, all influencing practices are interrelated to one another, and these unfair and immoral ways to influence decision-making have far-reaching consequences.”

Allegations of trading in influence and unjustified influencing are omnipresent in western media coverage, she pointed out.

“Trading in influence cases reflect a particular corruptness because they have become a corrupt system,” she said.

“It is the complex network of interrelated actors and their features and characteristics which create a trading in influence environment. We need to understand which components of the liberal democracies and market economies influence one another and form an incentive for trading in influence,” she added.

As examples of the “network character of corruption”, Slingerland cited the bribery case related to world soccer body FIFA and the phone hacking scandal in the UK involving police and jourlists.

Last year, the US Justice Department brought a 47-count indictment against 14 defendants, including top FIFA executives, sports marketing executives, and the owner of a

broadcasting corporation, on charges of racketeering, wire fraud and money laundering.

The phone-hacking scandal, which broke in the mid-2000s, involved employees of British newspapers published by News Intertiol, a subsidiary of Rupert Murdoch-owned News Corp., who were accused of engaging in phone hacking, bribing the police and exercising improper influence in the pursuit of stories.

The resulting public outcry led to several high-profile resigtions, including that of Murdoch himself as News Corp. director and of his son James Murdoch as executive chairman.

In this connection, the most celebrated case of conflict of interest in the Western world comes in recent times from where the latest AgustaWestland revelations origite - Italy - which historian Aijaz Ahmad says has an “uncanny resemblance” with India, in the way the former is different from other European tions in being home to both a “classical civilisation” and an empire of continental proportions, and in the way this legacy has shaped the trajectory to modernity for both countries.

The case is of three-time Italian prime minister Silvio Berlusconi, who remains one of the country’s richest, having built a fortune that Forbes magazine estimated at $6.2 billion. His holding company - Fininvest - controls a media empire, the AC Milan football club and has dozens of other companies under its umbrella.

After years of battling allegations of conflict of interest - and corruption - Berlusconi was filly convicted of tax fraud in 2013, sentenced to four years in prison and ejected from the Italian Sete. The prison term was converted into a year of community service because of his advanced age.

“India is such a vast and culturally diverse country that the kind of anti-corruption protocols devised in the West may not necessarily be effective here because the philosophy behind these are shaped by a different culture and society,” said Philip Nichols, associate professor of law at the Wharton School of the University of Pennsylvania in the US, where lobbying is permitted, unlike in India.

A study by The Economist published this week ranked India at ninth in a crony-capitalism index, with crony sector wealth accounting for 3.4 percent of the country’s GDP.