Tag Archives: Economic Times

Big Claims and Baby Steps for Corporate Social Responsibility in India

CSR wall painting at Xavier Institute of Engineering

Mumbai    A week ago in Delhi I read an interesting argument on the op-ed page of the Economic Times by Kiran Karnik in which he argued that businesses in Indian needed to start going beyond the simple limits of corporate social responsibility (CSR) and begin a direct “engagement with the government and, importantly, civil society organizations on matters of social consequence – going beyond the narrow interests of business.”  He mentioned examples including land acquisition (development), environment, mining, and water, but the list could also include sanitation, education, housing, poverty, and more.  Such engagement he reasoned was superior to the simple (and sometimes simple-minded) rupee-based “philanthropy” of CSR because he called on corporations to use the full range of their power and influence, including on issues like human rights, corruption, governance, and even accept “a duty to promote the welfare of all citizens, to democratic and egalitarian values, and to the country….”

Part of the backdrop for such a high-minded call arises from an increasing consensus in many sectors of Indian society that holds that solving some of India’s more intractable problems requires a different level of CSR for its companies.  There is discussion about making CSR a mandatory expenditure for all companies.  As Karnik indicated, “The new Companies Bill may well include a clause on this [CSR] – probably a ‘comply or explain’ provision.”  Heady stuff!

On the ground level we are ready for a lot more CSR to meet the huge needs for support for ACORN’s organizing in Dharavi and elsewhere in India, but our experience with the reality is often with baby steps from smaller outfits, rather than the big claims made by Karnik.  Many of our partners have developed relationships with us that are remarkable, like the Blue Frog jazz club, the Xavier Institute of Engineering, the American School and others.  Sometimes the lessons of CSR are harder.  A bank with 125 volunteers wanting to paint classrooms ended up making the wall around Xavier more lively, but having their eyes larger than their stomachs, we ended up scrambling to pay for the paint!  In other cases companies have met our desperate needs for space by offering to build sheds next to temples, not realizing that a significant percentage of our wastepickers are Muslim!   We hope we’ll get there certainly, but the learning curve is steep and requires a lot of bridge building.

It would be interesting to see if India made CSR mandatory or at least a default that had to be addressed.  The gap between common or community interest proposed by Karnik and the more common first impulses of many business here “to build their brand” or claim they are “doing good” in some marginal way, regardless of the practice, are still mostly “business as usual” for CSR in India.   Of course that’s not surprising really, since that is also the way CSR works in the USA, Canada, and most of the rest of the world as well.

discarded books donated by the American School

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Walmart Concedes Involvement with Bribes in India, Too

Bharti Walmart

Mumbai    Some things are meant to be it seems.  Sitting in the Bengaluru airport before 6 AM in the morning waiting for a flight to Mumbai there was a rack of papers offered for free.  Failing to find the Times of India, I settled on Economic Times, another more business oriented daily I often read.  There on page 3 finally was the news that I knew had to be coming:  a virtual confession from Walmart that its partnership with Bharti in India is likely as knee deep in bribes as the revelations in Mexico have shown.

When I say that they have “conceded” that their joint venture with Bharti is also rife with corruption, of course I don’t mean that Walmart has come right out and plainly admitted that bribery is basic to their business model in India.  The boys in Arkansas are much too slick for any standard confession!  No, this is a spinning, misdirection play more often seen by the Miami Heat’s Dwyane Wade, than the smiley-face of Walmart.

First, they are pointing the fingers at their suppliers.  They engaged KPMG for the second time here in India after the Mexico mess broke.  The first was to educate their employees about anti-corrupt practices, including the concession that as an American-based multinational that Walmart’s operations here are covered by the US Foreign Corrupt Practices Act.  Now, they are targeting their suppliers and having the consulting firm KPMG investigate the vendors and rate them as Red (dirty as the day is long), Amber (somewhere in the middle though unclear how you can only sometimes be bribing?), and Green (good to go).  Supposedly the “red” group will no longer be able to supply Bharti Walmart, “amber” is a discretionary call for the company (I hope no bribery is allowed to affect the decision), and “green” is no problems, full steam ahead.

The Economic Times was a good venue in India to break this story.  In a classic sentence, they painted with a very light brush the problem of corrupt business practices in India:

As companies in India, like in Mexico, are susceptible to pay bribes at various levels to get reams of licenses required to start and operate businesses, Walmart wants to make sure they do business with only those vendors who don’t indulge in such activities.

Reading this you would think that somehow Walmart was a simple bystander in the bribery business both in India and Mexico, as opposed to having paid over $20 million USD in bribes to get its way in Mexico, and an unknown amount in India.  The Economic Times and reporter Rasul Bailay are being disingenuous here.  When they say “companies in India…are susceptible to pay bribes…to get licenses…to start and operate businesses…” they have to know that this is likely what Bharti Walmart itself was doing and not simply suppliers.  Furthermore, If the suppliers were paying bribes to advance their businesses, the bribes would be finding their way into the pockets of Bharti Walmart buyers and executives.

Spin it however you want.  It’s clear that Walmart knows way more than it is saying, and is likely to be anything but transparent in how it releases (if at all) any results of KMPG’s supposed investigation.   Indirectly they are conceding that their business model here is as thoroughly corrupt as it was in Mexico and are trying to infer that they “went native” and in a country where bribery was the norm, they just went along to get along.

If so, Walmart’s corrupt business model found fertile soil, but that doesn’t exonerate the company nor does it make them any less guilty of violating the FCPA, no matter how many millions they pay KMPG and others to clean up their mess in India while it is still somehow escaping the radar of the Western business press in the glare of the light shining on Mexico.

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