Opinion Business,not as usual

Why we will all eventually thank the CWG organisers for their inept and inefficient corruption.

October 2, 2010 03:42 AM IST First published on: Oct 2, 2010 at 03:42 AM IST

Nine-Eleven marked the peak in world terrorism. There is every indication that the Commonwealth Games being held in India will mark the peak in Indian corruption. How so? Ask any investor in financial markets the blowout phase,a period when all norms,and rationality,are substituted by irrational exuberance,or despair. After the crisis,a new era begins. In a decade from now,if not considerably sooner,we will thank the CWG episode for changing the Indian corruption landscape. If it hadnt been for the most brazen in-your-face corruption,and corruption that did not produce any efficient results,the media and the middle class (or should it be the other way around?) would not have become hysterical and thus helped change the face of accountability.

That is a bit in the future. Herewith,some lessons from the past,lessons from all countries,developed and developing. First lesson: corruption is a fact of life,but especially so when a country is transiting from a low to a middle income country. It is true that developed economies have considerably less corruption than developing economies. But let us not forget that Spiro Agnew,former US president Richard Nixons first vice president,had to resign in 1971 on grounds of corruption he had taken a $25,000 bribe in the award of a construction contract!

Second lesson: there are differences in corruption. The India of the 50s,60s,70s and 80s also had corruption,but it was mostly of the inefficient sort. You bribed,but things still did not happen. With the advent of economic reforms,and most importantly globalisation,we have moved to an era of increasing,but increasingly efficient,corruption. So how does this bad movie end when the middle class says it cannot take it anymore. And for that,you needed the CWG,and a villain like Suresh Kalmadi. After all,what was his crime? That he did not deliver. There were cost overruns,misguided charging for toilets,all in the family affair in terms of hiring etc. Name me one organisation where some of these unfortunate corruptions do not happen. Okay,okay,there are some,but you get my drift. The simple point is that we ignore these drawbacks because there is an efficient outcome at the end. No matter how well the Games go,the stench of misorganisation will not go away for a long time.

The middle class,the NGOs,the civil society,and the media all smell blood,and more power to their noses. It is really doubtful whether another incident like this can occur. After all,what was Kalmadis alleged crime? Is it the case that the Beijing Olympics did not involve non-minor corruption? Was South Africa able to jump over the historical process by not having a reasonable amount of corruption? Perhaps the answer to both questions is yes. Then pigs do fly and these non-corrupt nations have citizens with not red,but blue blood.

Good governance,or less corruption,is a luxury service as countries become more educated,more developed,more middle class,they demand less corruption,and they demand more efficient corruption. In the past,this was a slow historical process; today,we in India,and other emerging economies,should consider ourselves lucky that we are living in the age of the Internet. There is literally no place to hide anymore. Non-recognition of this simple reality helps explain the seemingly bizarre actions of the CWG. They,oldies mostly,were brought up in a different era. They came to power and influence in an age where checks and balances either did not exist or were difficult to implement. They had gotten away with corruption and non-production many times before. Why,they thought,was today any different? So they continued,but business is not usual anymore. The Internet and the mobile and the TV allow for instant communication,checking,and transmission. Further compounding the problem for the do-badders is that news is entertainment. And catching corruption in high places is news and entertainment!

And while we indulge in openly criticising ourselves and our society (and thank God we do that),here is something else Indians (and especially the oh-so-moral and upright lecturers from abroad) should take note of. Simultaneous with the CWG fiasco,and reinforcing my blowout theory,is another momentous Indian moment in the fight against corruption the father-son lawyer duo of Shanti and Prashant Bhushan have alleged,with evidence,that eight of the 16 Supreme Court chief justices in India have been corrupt,where being corrupt is defined as being of doubtful integrity. I cannot say for sure,but it is likely that such a charge is unprecedented in the world. If there are other instances in world history,there cannot be more than a handful. It is for our system to decide whether the Supreme Court justices are guilty or the Bhushans. My bet is that truth and justice will prevail the middle class champions will be proven right. And when the process of determination begins,the corrupt in India,and the world (Internet again!) will begin to have more difficulty in sleeping.

All in all,this is a moment to rejoice. There is pain today,but it almost guarantees a better tomorrow.

Introducing a fortnightly column by Surjit S. Bhalla,chairman of Oxus Investments,an emerging market advisory and fund management firm.