Posted by: John Elliott | December 28, 2011

Is the Lok Pal Bill, and Ambani brotherly love, for real or just for the numbers?

India has a government that cannot govern

Dec 30: Once again, as has happened many times since the 1960s, politicians have blocked the introduction of a Lok Pal anti-corruption ombudsman.

The Lok Pal Bill floundered at midnight last night when a day-long debate in Parliament’s Rajya Sabha (upper house) ended in chaos and uproar as MPs on all sides shouted and argued about what to do with 180 amendments that had been tabled.

The Congress-led coalition government is being accused of orchestrating the chaos to stop voting taking place, fearing defeat on key issues such as government on control of the CBI and the impact on states (see below) because it does not have a majority in the Rajya Sabha.  The Bharatiya Janata Party-led opposition is accused of scuppering the legislation by proposing amendments unacceptable to the government. Parliament is now in recess till the Budget session starts in late February or early March, when the government says it will re-present the Bill after studying the amendments.

Last night’s debacle showed, once again, that India currently has a government that cannot govern.

__________________________________________________________________________

Dec 28: It’s always best in India, when assessing events, to turn them upside down and see what they then look like, rather than accepting them at face value. So applying that test to headlines that dominated this morning’s newspapers, do politicians really intend to make sure that the Lok Pal (anti-corruption ombudsman) legalisation currently passing through Parliament actually does curb extortion and fraud, and do Mukesh and Anil Ambani, who control rival business both carrying the Reliance name tag, really intend to become friends after a high profile family love-in yesterday?

It would be good if both events were for real, and were not just manoeuvres aimed at quite different goals. India desperately needs governments at both the national and state level that seriously try to curb endemic corruption, and both India and the Ambani family would benefit if the brothers, who head two of the country’s largest conglomerates, co-operated.

Anil (left) and Mukesh Ambani

It seems likely however that the Congress Party, which heads the governing coalition, is more  interested in improving its overall anti-corruption image and in boosting the number of seats that it can win in February’s key Uttar Pradesh state elections than in tackling graft.

The Ambani brothers (left), especially Anil, undoubtedly hope that the pictures of a colourful family get-together yesterday will improve the numbers on their stock prices, their banking viability and, ultimately, their bottom lines, as well as protecting their fading image.

The Lok Pal legislation was passed by the Lok Sabha (lower house of parliament) late last night and will be debated – after extensive politicking today – in the Rajya Sabha (upper house) tomorrow where it could still be defeated by opposition parties. It has been on governments’ legislative agendas since the late 1960s, but has been constantly delayed by objections from MPs and others who feared they would be subject to ombudsman investigations.

.

The government has been forced to introduce the legislation now by a mass campaign led by Anna Hazare (right), a populist Mahatma Gandhi look-alike, who has built up the pressure with massive middle-class support since April when he staged a fast in Delhi.

Hazare has humiliated the government into a rare frenzy of activity and concessions, but virtually all politicians still want to curtail and control its independence and impact, and there are also genuine concerns about a loss of parliamentary authority.

Consequently, Hazare and his team of social activists and hangers-on have not won all that they have wanted – for example the extent of the Lok Pal’s investigatory powers and its authority over the prime minister and the Central Bureau of Investigation (CBI), and coverage of companies. Now there are demands from opposition leaders and individual states that the requirements for state level ombudsmen (Lokayukta) should not be binding.

Hazare’s campaign seems to be losing its impact now that parliament is debating legislation. A rally and fast in Mumbai has been abandoned today along with other planned protests, and 74-year old Hazare’s health is not good. This switches the focus to the government and how it introduces the Lok Pal (assuming it gets through parliament tomorrow) and backs it up with other anti-corruption measures. Many critics – in addition to questioning the government’s real commitment – fear that the Lok Pal will merely become another overstaffed and cumbersome part of a basically corrupt bureaucracy.  

.

As for the Ambanis’ love-in, there is heavy scepticism about how genuine and far-reaching this morning’s news really is. The brothers fell out after the death in 2002 of their father, Dhirubhai, who had founded the textiles to oil and telecoms group. They split the business in 2005, and then signed a peace pact last year after a bitter public fight. Since then Mukesh Ambani’s RIL group, though one of the two biggest in the country, has lost its aura of invincibility – and its shares have fallen nearly 30% over the past year. Anil Ambani’s ADAG group has built up massive debt and other problems, mainly in its telecom businesses which have some $6.5bn debt – an unsustainable figure – and its share prices have halved, though there has been some recovery in recent days on speculation of the better relations.

Both groups are the subject of official inquiries into business practices and the Ambani and Reliance names are losing their sheen. So a make-over is needed, especially by Anil Ambani. The Economic Times, which is renowned for displaying stories that please corporate friends, triggered that when it splashed the family’s party across its front page this morning, headlined Ambani Family Drama ends with Dandiya (folk dance). There were more pictures inside the paper, one of which showed the brothers talking to each other.

The party (above) took place in the family’s original Gujarat home town on the eve of Dhirubhai Ambani’s 80th birth anniversary today. The family usually get together on the anniversary but this event was carefully orchestrated and even choreographed. It started with Dhirubhai’s widow, Kokilaben, who has tried since her husband’s death to minimise the conflict between her sons and encourage them to co-operate, making an  unprecedented television statement on Monday night . She said that there is still “love among the brothers” and that her family were “all united”.

It has been known for some months that the brothers have been liaising on how to handle negative publicity and events. There has also been extensive speculation, which is widely believed to be correct, that Mukesh Ambani, who is building up an internet telecoms business, is negotiating to use telecom transmission towers belonging to his brother’s business, instead of hiring facilities from other companies. There are also reports that Carlyle and Blackstone, two US private equity groups, might buy into the towers business – presumably as part of a deal that could include Mukesh Ambani. But I have not found anyone in Mumbai who expects deals between the two men to go much further.

So, as with the Lok Pal legislation, one should not expect too much from the Ambani’s party publicity splurge that continued on television this evening. However, as with all families, it is good when the warring stops, and that does seem to have happened – just as it is good when the need to attack corruption becomes a national issue, even if governments are loath to act.


Responses

  1. Hey! Fine post! Please keep us posted when we could see a follow up!


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

Categories

%d bloggers like this: