Davos 2013: tackling corruption the unconventional way

How do you tackle corruption? To that age-old question, Rahul Bajaj, the Indian billionaire businessman, has some unconventional answers: “Stop prosecuting givers of small bribes, ban criminals from standing for election, and use the e-ID to transfer benefits directly from the government to the receiver.”

Bajaj was addressing a meeting at the World Economic Forum on how to achieve EM growth in a global slowdown. Corruption was the biggest issue singled out – and the Indian subcontinent figured large.

Indicative of the problem was a private aside from an executive at a large European car manufacturer. “We’d be interested in becoming active in Pakistan,” the executive, who preferred to stay anonymous, told beyondbrics. “But there’s no way we’ll do it. Corruption is too widespread.”

That was reflected in the debate. “Sixty per cent of what people said was about corruption,” Huguette Labelle, chair of Transparency International and panelist in the discussion, told beyondbrics. “Yet I find that very encouraging. It shows people take corruption increasingly serious, understanding that it impacts growth.”

The problem is particularly acute in India, where corruption is a part of life for many citizens, used to paying small bribes even for the most essential transactions of life: to get a birth certificate, a driver’s licence or a passport.

Bajaj, a Davos all-star – he’s attended the conference for 34 straight years – outlined his anti-corruption ideas:

“I’m expecting a lot of the Aadhaar e-ID project,” Bajaj told beyondbrics after the session, which was closed to the press. Bajaj said the electronic ID, which most Indians will receive by the end of this year, could be used to give the poor in India access to a bank account, so government aid could be wired directly to beneficiaries, avoiding intermediaries. (A similar project has been successfully implemented in Afghanistan, where police officers are paid their salaries through a mobile account.)

Bajaj proposed banning people convicted of corruption from running for public office. “Over a fourth of India’s MPs have cases for corruption running against them. That’s scandalous and it should be forbidden,” he said.

And he said people found to have paid bribes of up to $100 should go unpunished, as long as no undue benefit was received in return. “For many poor people, bribing is a necessity,” Bajaj said. “They should not be prosecuted for doing something they need to do to survive. It may be immoral, but in these cases bribes should not be pursued.”

The WEF proposed measures of its own to combat corruption. It asked governments to align their salaries to officials with those in the private sector, so the inclination to ask for bribes would be smaller.

Anand Sharma, India’s trade and industry minister, rejected the idea that corruption was a particularly Indian problem, saying it existed all over the world. “India has an assertive judiciary and well established institutions to investigate instances of corruption,” he said.

Be that as it may, Bajaj was pragmatic about the chances of tackling corruption. “I’m an optimist in general,” he said. “But as a businessman, I’m also a realist, with my two feet on the ground. It’s like Gandhi said: there’s enough in the world to meet everyone’s need, but there is not enough to meet everyone’s greed. And unfortunately, greed will never disappear.”

Further reading:
Davos 2013: WEF report urges Russia to tackle corruption and step up reform, beyondbrics
Brazilian corruption: far from over, beyondbrics
Hello 2013: to fight corruption, China must fight the causes of corruption, beyondbrics
India: a primer on “black money”, beyondbrics
Illicit flows: the biggest losers, beyondbrics