[Text of speech delivered by Supreme Court advocate Prashant Bhushan at the Deshbhakt Yadgar Hall, Jalandhar, on ‘The Indian State and the Cancer of Corruption’ on 14 February.]

Corruption is corroding Indian democracy, and massive scams are being discovered all around. Corruption is commonly understood as bribe-taking, but that is not really the case. Rather, corruption in any instance in which a person in public office takes a decision, due to any factors, against impartial public interest.

The worst and most serious form of corruption is the loot of natural resources which are being handed over to huge corporations. These super rich corporations, for instance, have lakhs of acres of land which have been forcibly snatched from the poorest adivasis and handed over to them in the name of SEZs, mining, or steel plants and other industries. After land, the other major loot of resources is taking place in the country’s mineral wealth. Oil, gas, iron, copper – every kind of minerals are being gifted to these companies to the tune of lakhs of crores of rupees. You all have heard of the spectrum scam being worth around Rs 1.76 lakh crores and the ISRO S-Band spectrum scam worth Rs. 2 lakh crore. But the loot of other natural resources like land and minerals - for instance the natural oil and gas fields given to companies like Reliance - is to the tune of many lakh crores every year.

Every year, a single company, Reliance, earns around Rs 1 lakh crore from the oil and gas fields, which is a precious natural resource of the country, but which the Government has sold to Reliance for peanuts. The Government then proceeded to double the price of natural gas produced by PSUs from USD 1.8 per unit to USD 4.2 per unit to bring it in line with the price approved by the government for the gas produced by Reliance and swell the latter’s profits. [If the Govt. had not done so, lower-priced gas produced by PSUs would have been preferred by power and fertilizer producers to gas produced by RIL. By hiking the prices, the Govt. not only protected RIL’s market, it also increased the burden on consumers of power and fertilisers. –Ed.] Not only that, Pranab Mukherjee got a Bill passed in Parliament introducing tax concessions on gas production that would be applicable retrospectively- something that would benefit Reliance hugely! On the Radia tapes we can hear how, when this Bill was to be debated in Parliament, former Revenue Secretary and now MP N K Singh tells Mukesh Ambani’s lobbyist Niira Radia that Pranab Mukherjee is planning a Bill to ensure thousands of crores of tax concessions for Reliance (which Singh refers to as “our company”). But Singh warns that if BJP were to speak strongly against the Bill in Parliament then it might not be easy to pass. Apprehending that BJP MP Arun Shourie who was to be the lead Opposition speaker in Parliament might be “very critical” of the Bill, Singh suggests that he can persuade BJP to replace Shourie with Venkaiah Naidu who is close to Mukesh Ambani. And that is exactly what happened in Parliament – Shourie was scheduled to speak but was replaced by Naidu, who supported the Bill which was passed. A Reliance representative was flown down by chartered flight to brief Naidu before this debate.

So in every way, not only are natural resources being looted, the entire government – and not just the government but the entire system of the country - is working overtime to ensure the highest profits for these private corporations. The Radia tapes have given the citizens of this country a glimpse for the first time of how the government’s decisions, policies, laws passed by Parliament, decisions of regulatory authorities as well as media stories are being decided by corporations through their lobbyists. Privatisation has now gone to the extent that monopolies – such as electricity supply (there is never any competitive market for electricity supply; you have no choice but to buy electricity from a single company) – have been privatized. Similar is the case with monopolies like airports and roads, and natural resources – all are being handed over to private companies.

Corporations even control the regulatory mechanisms. You remember that there was a debate recently over whether or Bt Brinjal should be introduced. That decision was to be based on the recommendations of the Genetic Engineering Approval Committee (GEAC) set up by the Government. When we looked at who were the members of this Committee we found that the Co-Chairman was a bio-scientist called C D Mayee who is on the Board of Directors of an international organization International Service for the Acquisition of Agri-Biotech Applications (ISAAA) which is funded b y Monsanto, the very same company that has the patent for Bt Brinjal and had applied for approval! [Mayee was the Co-Chair of the GEAC that approved Bt Cotton in 2001 and four years later he was appointed to the Board of the ISAAA.- Ed] How can such a committee take an impartial decision on approval, when its Co-Chairman himself is a part of an institution with a commercial interest in pushing genetically modified crops in the third world and countries like India? In our country such conflicts of interest have been created in every regulatory body. Take the instance of our case in the Supreme Court against poisons in Coke, Pepsi and other soft drinks. Pesticides are present in water and therefore make their way into soft drinks – but apart from these, various poisonous substances like phosphoric acid, ethylene, chemical colours and flavours and other poisonous chemical substances are deliberately introduced by the companies into these drinks. The Government says there is a Food Safety Authority which has various panels to look into these matters. When we investigated we found that on these panels were people of Pepsi, Coca Cola, Nestle – the very same companies which the Committee is supposed to regulate! When we brought these to the attention of the Supreme Court, the Bench finally passed an order that the regulatory panels be reconstituted and all names associated with soft drink companies removed. [The SC Bench observed, “the panel does not consist of independent persons; it is contrary to the (Food Security) Act. What kind of recommendations do you expect from the panel?” – ed.]

Our economic policies are formulated by the Planning Commission. Montek Singh Ahluwalia is Deputy Chairman of the Planning Commission – where has he come from? He worked for 15 years at the World Bank, after which he was brought to India, first as economic adviser, then revenue secretary, then finance secretary, and then he became Director of the IMF for three years where his salary was Rs 2 crore a year. Then he became Deputy Chairman, Planning Commission, and it is said that from here he will become IMF Chairman! What, after all, is International Monetary Fund? It is an institution which is controlled by USA and some Western European countries. Nobel Prize-winning economist Joseph Stiglitz held that WB and IMF are totally in the grip of the MNCs, especially financial MNCs, of USA and Western Europe. Former West Bengal Finance Minister Ashok Mitra has written in his autobiography about how Manmohan Singh became Finance Minister. In 1991, when Narasimha Rao became PM, India’s foreign exchange reserves were over and India badly needed a loan from IMF or WB. IMF-WB placed two conditions for the loan – first, India must adopt the ‘structural adjustment’ policies of liberalization-privatisation-globalisation (LPG); and second, they made the explicit condition that the Finance Minister must be of their choosing. Rao agreed. IMF first nominated IG Patel as the Finance Minister; Patel turned it down due to prior engagements. IMF then nominated Manmohan Singh – and that is how our PM today became India’s Finance Minister in 1991!

Today Manmohan Singh blows his trumpet that these policies have increased the GDP growth rate from 4% to 9%. Well, if you sell off all the country’s natural resources, you can easily increase GDP to even 2O%! And this is what is happening – natural resources have been distributed at a great rate amongst private companies for peanuts. These companies are exporting minerals to other countries like China to earn massive profits – and India is not getting anything in return, though it all goes to swell the GDP figures of the country. The Lokayukta of Karnataka Santosh Hegde has prepared a big report on the economics of Karnataka’s mines. The Reddy brothers – Bellary’s mining mafia and also Ministers who command great clout in the BJP Government - are exporting iron ore at Rs 5000 a ton, mainly to China. 2/3rds of the iron ore mined in India is being exported, in which the private companies earn Rs 5000 a ton. The cost of extracting the ore is Rs 250 a ton; transporting it to the ports costs another Rs 250 per ton! The company earns a 90% profit of Rs 4500 a ton and the Government gets a royalty of half per cent - Rs 27 a ton (now it has been raised to Rs 60 a ton). Moreover the land for mining is snatched from poor adivasis and handed over to the private companies. This is the root of the Maoist problem which the PM claims is the biggest security threat to the country. Most adivasis are dying of hunger as a result of their means of survival being snatched – some are taking up guns in desperation. India’s natural wealth is being extracted at a huge rate (30 years later these resources will be depleted), water and jungles ruined, and adivasis robbed of their survival – all for a puny royalty earned by the government and enormous profits for private players! Yet the PM claims daily that he is ‘increasing GDP rate’ as though it were a great achievement.

Those who made him Finance Minister and PM are directing him to privatise all natural resources and monopolies – and yet he claims he is an honest man who takes no bribes. Not taking a bribe – is this the only criterion of honesty?! Virtually each Minister in your Cabinet is corrupt and taking thousands of crores in bribes; you knew Raja was corrupt and yet you did not remove him from the Cabinet and in fact made him Minister a second term under pressure from private companies as revealed on the Radia tapes – and yet you say you are very honest! The Vigilance Commission is the country’s topmost anti-corruption agency – the PM hand-picked a man – Thomas – who is himself being prosecuted in a corruption case. I have heard that Thomas too takes no bribes – but he is being prosecuted for having, as Food Secretary of Kerala, facilitated Kerala Chief Minister Karunakaran in taking a bribe in the palmolein export matter, preparing fake letters and so on so as to remain in his seat and get plum posts in future. And sure enough he has landed a plum post of CVC now. As Raja’s Telecom Secretary, Thomas did Raja’s bidding in every way. Raja asked him to get a suitable opinion from the Law Ministry to the effect that the CAG has no authority to interfere in the 2G scam matter; and he procured such an opinion. If someone, even if he does not take a bribe himself but allows others to do so, allows corrupt policies to be made and corrupt decisions to be taken and does nothing to stop these, in order to hold on to his post or to secure a promotion, then will we call him honest? The PM says he is helpless because if a coalition partner like DMK calls the shots he can do nothing; in other words he is tolerating corruption in order to remain in power – can we call him honest?

None of the MNCs in India – in any sector be it oil or mining or stock market – is paying taxes. And why not? Because the government has left a loophole open for them. They have only to show that their company is based in Mauritius. Since India’s tax treaty with Mauritius is different from that with other countries, companies based in Mauritius will not have to pay any tax in India. It is international practice that at least capital gains tax is paid to the host country; all these companies are making huge capital gains in India and would, by any treaty, have had to pay capital gains tax to India. But thanks to the Mauritius loophole, these companies are getting total exemption. Mauritius has passed a law called the Mauritius Offshore Business Activities Act; any company from any country can come and register itself as an offshore company there, but by law it can do no business activity or employ any person in Mauritius. All MNCs in India are registered as offshore businesses in Mauritius and many Indian companies like Essar too have done likewise to evade taxes! Some 1.5 trillion dollars of Indian money is stashed in Swiss banks – the Government is talking of bringing it back to the country. Far from bringing it back, today they have left this ‘Mauritius’ route wide open for money be siphoned off every day, because the Government is in the pockets of the corporations.

Not only the government but even the judiciary today is mired in corruption. The Radia tapes conversation with Prabhu Chawla reveal that the Reliance case in the Supreme Court was managed. You may have heard of a recent contempt case against me in the Supreme Court, because I said in an interview that at least half of the last 16-17 Supreme Court Chief Justices were corrupt. I said what I did after having given it much thought; of the last 17 Chief Justices, in my assessment at least 9 were corrupt. (applause) I said this quite deliberately because there is an illusion that is fostered that there is corruption in the lower rungs of the judiciary but not at the top, not in the HC and SC. Now there are many revelations of corruption against SC Chief Justices including the last one, Justice Balakrishnan.

The Radia tapes also revealed that the media will not only write what is dictated to it by corporate lobbyists but media persons too will act as willing agents and couriers for these corporate houses.

Who benefits most from the corruption that has spread throughout the entire system? It is said that politicians, Ministers etc are responsible. Yes, they are responsible because they head this system. But in corruption there is always a demand and supply. Today the all-pervasive privatization had created an unprecedented demand for corruption. Because for the private companies, the easiest way to multiply their profits a hundred-fold is to bribe a Minister and get the rights over an oil field or a mine for a throwaway price – and thereby loot lakhs of crores worth of natural wealth. You can get assets worth one lakh crore for a 1000 crore, pay the Minister a 10% bribe of Rs 10,000 crore and still enjoy a fat profit. The policy regime of privatization has created a system where it is possible to earn lakhs of crores by bribing the policy makers.

In earlier times, natural resources were not privatized and available for loot. There was corruption in the public sector mining corporations, no doubt, but it was not possible to acquire lakhs of crores worth of assets for peanuts and then sell them for a profit. The argument in favour of privatization was that government agencies are corrupt, and if the mining etc is taken out of the government’s hands and given to private players, it would reduce corruption. But the opposite happened. And that is what one distinguished economist Joseph Stiglitz wrote eight years back in his book Globalisation and Its Discontents, in a chapter titled ‘Who Lost Russia’ said that neo-liberal reform and the transition from communism to capitalism in the 1990s, involving the privatization of public sector assets and natural resources, had resulted in corruption of such proportions that Russia had become a failed state, a banana republic. In an article in the Hindu in January 2011 titled ‘Chilling picture of crime and corruption’, Vladimir Radyuhin observes that Russia has become a mafia state. The same corporate mafias and the “crime syndicates born out of the corruption-ridden privatisation of the 1990s have not only survived but also developed close ties with the law-enforcement agencies.” If anyone in the police tries to stop them these mafia powers promptly kill them, and even Russia’s PM or President are helpless before these mafias. If unbridled privatisation continues in India, then India too will meet the same fate.

In keeping with the demand for corruption, the supply has grown because there is no check over the Ministers etc who are the suppliers and over the system as a whole. The anti-corruption agencies – CVC, CBI and judiciary – are all so corrupt and weak themselves that they are able to act effectively only on very rare occasions. In the present 2G Scam case, the SC Bench has forced CBI to go after at least some Ministers and CEOs; but the CBI is yet to pursue several industrialists. Heads of ADAG, Essar, Tata and Ruia – all are involved in this and by rights they should all be pursued and booked but that is yet to happen and it remains to be seen if it will happen in the future.

The question now is – how to fight this all-pervasive corruption? To begin with, we must struggle to change these policies, and reverse the rampant privatization and prevent the future plans to privatise even the remaining avenues like water supply.

Anti corruption agencies need to be reformed – the judiciary, CVC and CBI – and a new anti-corruption agency needs to be created, call it Lokpal or what you will, that should be completely free from Government control and in whose selection the Government should have no hand. We have proposed a Bill with a transparent method of selection of the Lokpals, in stark contrast to the complete lack of transparent criteria in the selection of the CVC. The Lokpal should have full freedom to investigate any complaint of corruption and CBI should be under the Lokpal, not the Government, as should vigilance departments. The Lokpal should also have the power to prosecute. The Government’s Lokpal Bill is toothless and an eyewash. We also need judicial reforms and an independent commission to which the judiciary should be accountable – but Governments and judiciary alike have an interest in resisting this.

We also need political reforms. Elections as of now are an extremely unfair laying ground for genuine pro-people activists and forces. Democracy should not mean only voting to elect a Government. We need to move from representative democracy towards participatory democracy or direct democracy. People, be it at the village level or on national policy questions, should be enabled to vote directly on the decisions to be made, through a referendum of sorts, using technology such as the internet. Take the question of the Nuke Deal – such an enormous decision was taken by the Government, not even by Parliament! Why could such an important issue not be decided by the people themselves through a referendum?

To sum up, we need to put an end to the policies of privatization which is the root of the worst corruption; we need to reform the anti-corruption agencies and create an effective Lokpal institution; we need judicial reforms; and we need to move towards direct democracy. But who will do this? The Government, which is a puppet in the hands of corporations, will not do so. The only way is for the people of the country to come out on the streets to demand these changes through a mass movement – and in the mood of the people today, there is certainly the potential for such a movement.