Arcelor Mittal, the world’s largest private steel company and also one of the biggest Co2 polluters, has a windfall coming. The ‘biggest carbon fat cat,’ as it is described by climate activists, is sitting on surplus carbon allowances worth an estimated e1.4 billion under the EU Emissions Trading Scheme.
These allowances that allow companies some emissions are given free by the government — unutilised allowances, like in the case of Arcelor Mittal, can be sold for profit.
In the US too, corporations have been expending considerable amounts of time and money in securing their interests. Matt Miller, a researcher at the Center for American Progress, speaks of Return on Political Investments (ROPI) in this context.
He cites the example of Lockheed Martin, which in the early years of this decade, spent $ 55 million to bag defence contracts worth $90 billion for a ROPI of 163,536%. Boeing spent $57 million for contracts of $81 billion. ROPI: 142,000%. Matt, a former White House insider, says it’s almost impossible to bag contracts of this size without a ‘political sales force’.
On home turf, the 2G spectrum scam, intertwined with the continually spooling Niira Radia tapes, has brought a host of telecom companies, respectable CEOs, ministers, bureaucrats, media and sundry players, under the scanner. The operative word to describe all three examples is lobbying.
And whenever the word is used, the imagery it brings is seldom black or white. As the Radia tapes have shown, the grey is always overwhelming in the practice of lobbying.
Lobbying is also referred to in respectable terms as public affairs, government relations or even advocacy. The examples portray the benefits accrued by lobbying government, policy makers and those who wield influence. More often than not, much of the gains extracted are inimical to public interest. And so are the means used.
Yet, in India, this activity is rarely talked about and little has been done by the government, companies, individual practitioners, public affairs companies and even civil society organisations to bring it out of the shadows, monitor, and regulate it. Many are not even sure whether it is a legitimate activity.
“One can take a moralistic position and say there should be no lobbying and lobbyists,” says CV Madhukar of PRS Legislative Research. But the fact is, for good or bad, they have always existed.
“In a riotous democracy, lobbying is a necessary corollary of multiple interests at play,” says Dilip Cherian, founder and partner, Perfect Relations, a communication and lobby firm. “It should be considered a legitimate activity, although it has acquired a bad name lately.”
Opinion is veering towards giving lobbyists and lobbying an order of acceptance. “The more we deny lobbying happens and that it influences public policy and decision making, the more difficult will it be to fix it,” says Madhukar.
Lobbying has to be coaxed out of the dungeons. In an emerging economy like ours it is imperative that lobbying doesn’t take away the fruits of development into private parlours.
“Even if considered legitimate, when it comes to public resources like spectrum or gas, some equity principles ought to be in place and any lobbying that distorts this is unacceptable,” says Shankar Venkateswaran, India director, SustainAbility, a UK-based think tank and consultancy that is working to put lobbying squarely on to the corporate responsibility agenda.
‘Equity of access’ and ‘transparency’ of the entire lobbying process are key issues to be debated. “The act of reaching out per se is not a problem,” Madhukar explains.
He cites numerous examples of government-stakeholder interactions: the budget-making process, the tradition of expert opinions often invited by standing committees of parliament or even the stakeholder comments invited during the drafting of various legislations — the tribal bill, the right to education bill, et al.
Nasscom, the apex body of the IT sector, due to its stellar role in contributing to Brand India is often invited to the high table of government and is an example of vibrant government-business partnership. The government regularly seeks out Nasscom for inputs. During the recent visit of President Obama, Nasscom briefed the establishment on the nuances of protectionism.
“We are not always in the ‘ask’ mode and also work with the government on strategic issues, for instance, on pushing China to buy IT from us and alter the adverse balance of trade,” says Som Mittal, president of Nasscom. Has Nasscom utilised this privileged access to government for narrow sectoral gains: For instance, the two-year extension of the 10-year tax break given to the IT sector?
“The big boys like Infosys and Wipro et al may not need the break, but I have to protect the interests of small IT companies,” insists Mittal.
Again, it’s a misconception that it is only corporations who are engaged in lobbying the government. Civil society organisations and NGO coalitions too do it all the time. But for the manner in which civil society organisations, independent scientists and concerned citizens engaged with Jairam Ramesh, Minister of Environment and Forests, Indians would be now eating genetically modified brinjal.
International NGOs like Greenpeace, ActionAid and Oxfam are masters at lobbying and have been highly effective. But, their lobbying, transparent and loud, is condoned as it is seen to be in the public interest while secretive corporate lobbying is suspect. “Lobbying as a garb for corruption is the problem,” says Mittal.
Now that it is agreed lobbying is integral to the democratic process, the attempt has to be to move towards better disclosures and transparency and, of course, some form of regulation. What does it take to reach there?
For starters, identifying who is lobbying, for whom, on what issues, and at what cost, would be ideal. Shankar is clear it’s about time India worked on norms around responsible lobbying, one of the principal reasons being the deep inconsistency we witness on stated positions and what corporates actually do behind doors.
This corporate schizophrenia is quite evident. Georg Kell, Executive Head of the United Nations Global Compact (UNGC), a global coalition focused on corporate sustainability, is dismayed by the huge disconnect between business aspirations towards responsible corporate citizenship and their own lobbying efforts. “This lack of consistency undermines the very credibility of corporate responsibility.”
ITC is an example. It is seen as a corporate sustainability icon, but it is also obfuscating issues on tobacco control and how warning pictorials ought to be put on cigarette packs. Such inconsistencies can undo all the good done by corporations, Kofi Annan, former secretary general of the UN, wrote in an UNGC report on lobbying. Again, Shankar wonders why Ratan Tata had to use the services of lobbyist Niira Radia.
Was it because of a realisation that being good is beginning to be detrimental to business interests and that, if the Tatas had to ‘play the game’, why not do it through an external agency?
“The Tata stand has been a disappointment,” says Shankar. “Being complicit is as important as doing it yourself.” Shankar, as member of the expert group helping the Ministry of Corporate Affairs draft guidelines on corporate responsibility, unsuccessfully pushed for the inclusion of lobbying.
The present crisis of confidence dogging corporate India can be an opportunity to reform. Som Mittal agrees that a crisis is too good a thing to be wasted. Tonusree Basu of PRS Legislative Research sees merit in a codified, transparent, lobbying process to be put in place. For Shankar, some sort of a mechanism to regulate lobbying would be a logical progression of the Right to Information Act.
Cherian too agrees but would like self-regulation and voluntary codes of conduct to start with. Excessive or ill-thought out regulation can only drive the practice further underground. “That’s the nature of the beast,” he says, “and will lead to the emergence of a whole new lot of non-regulated players in lobbying.”
Voluntary codes and mechanisms haven’t worked, here or elsewhere. The EU has a voluntary lobby register where companies are expected to disclose various aspects of their lobbying activities. An investigation by the NGO, Friends of the Earth Europe, early this year, indicates that the register is in tatters.
In 2008, 20 of the 50 largest European companies, including Vodafone, Nestle and Deutsche Bank, were absent from the register. Does it mean Vodafone didn’t lobby at all during the year, especially when the European Commission was working on new regulation to harmonise call charges in the EU?
According to the EU register, only seven companies spent more than a million euro on lobbying in 2008. Large multinationals like Shell, BP, Arcelor Mittal, EADS and Peugot declare lower lobbying budgets than even municipal type NGOs like Friends of the Countryside!
For the period, Shell and BP are listed amongst the top five spenders — 2.5 and 8.1 million euro respectively — on lobbying in the US Register, mandated by a lobbying disclosure Act.
There is also a serious time lag in the European model. For instance, disclosures on ‘who is lobbying in the first quarter of 2010 will be available only in mid-2011 at the earliest.’ In the US, companies and lobby firms have to file online, every quarter, and the data is available to citizens almost instantaneously.
Canada is a step ahead. The new Federal ‘Lobbyists Registration Act,’ requires a monthly filing; reporting is more detailed — date of the communication and the name and position of the public official lobbied has to be mentioned, in addition to names of former public officials on the payrolls of companies.
Penalties for violations are more aggressive; $50,000 to $200,000. The principal difference between the Canadian and the US law is that in Canada there is no need to disclose expenditure on lobbying activity.
An example will bare the contours of the US Register. Take Google Inc. In the second quarter of 2009, Google, in its 12-page filing, reveals an expenditure of $950,000 on lobbying during the period. Google also lists the various persons; Google employees who lobbied, and the institutions/individuals that lobbied.
For instance, while lobbying on the issue of international freedom of expression and censorship, the Global Online Freedom Act of 2009, Google lobbied the House of Representatives, Senate, the US Trade Representative, the Department of Commerce and the Executive Office of the President. Public Affairs companies are also expected to file on similar lines.
Should India too have a register on
Lobbying and if so, should we draw upon the best of the US and Canadian models? The reason for regulation on lobbying and the need to bring it out in the open is indeed compelling.
The rationale put forth by the Americans holds true for India too and it states: ‘ without this public information, the voice of the people may all too easily be drowned out by the voice of special interest groups seeking favoured treatment while masquerading as proponents of the public well being.’
“If the Indian government is proactive, it should formulate some guidelines or a legislative framework immediately. It would mean it is taking the right cues from the present crisis,” says Basu.
From the experiences abroad, it is now clear that the success of a lobbying act depends on the precision of definitions. For instance, after many iterations, the US law defines a ‘lobbying contact’ thus : “a lobbying contact is any direct communication — written, oral or in person — to a covered official intended to influence legislation or public policy, awarding government contracts, or affecting government appointments.”
Definitions therefore are critical. “Is NK Singh, former bureaucrat and Rajya Sabha member, who figures in the Radia tapes, a lobbyist,” asks Cherian. Mittal also has queries. “I have two meetings with government everyday. How much can you reveal,” he asks. “Moreover, are you going to place an industry entity like ours on the same level as in-house lobbyists of companies and public affairs companies?”
Mittal has hired lobbying firms in the US and the UK. He spent $340,000 lobbying the US establishment last year. He insists lobbying can be a force for good too. He cites his engagement with numerous state governments, trying to bring several tier II and III cities into the IT fold.
Although, transparency in lobbying is seen as an imperative in the present circumstances, it is also being recognised that it cannot be done in isolation. An entire ‘transparency ecosystem’ has to emerge, right from comprehensive electoral reforms, transparency in political contributions — the most powerful form of lobbying — and openness in government functioning itself. In the UK, gifts to public officials over £140 become government property.
Madhukar recently tried to access a little-known parliament Register, similar to the one in UK, in which MPs are expected to make disclosures of their interests but was shown the door. In Britain, ministers and MPs who accept hospitality are expected to declare it in the Register of Members and Peers Interests.
“Lobbying can be transparent only if we can influence the rest of the governance ecosystem,” says Mittal. Shankar alludes to the responsibility of the media, which is often used by lobbying interests.
Interestingly, the US has ratcheted the disclosures act to a higher philosophical plane, which embraces the need for transparency and probity across the board. The title of the new law of 2007, of which lobbying is only a subset: Honest Leadership and Open Government Act.
These allowances that allow companies some emissions are given free by the government — unutilised allowances, like in the case of Arcelor Mittal, can be sold for profit.
But when the European Commission (EC) attempted to set up an auction to charge for the allowances rather than give it free, Arcelor Mittal tried hard to retain the present generous system, according to a November 2010 briefing note by Oxfam, an international NGO alliance.
In the US too, corporations have been expending considerable amounts of time and money in securing their interests. Matt Miller, a researcher at the Center for American Progress, speaks of Return on Political Investments (ROPI) in this context.
He cites the example of Lockheed Martin, which in the early years of this decade, spent $ 55 million to bag defence contracts worth $90 billion for a ROPI of 163,536%. Boeing spent $57 million for contracts of $81 billion. ROPI: 142,000%. Matt, a former White House insider, says it’s almost impossible to bag contracts of this size without a ‘political sales force’.
On home turf, the 2G spectrum scam, intertwined with the continually spooling Niira Radia tapes, has brought a host of telecom companies, respectable CEOs, ministers, bureaucrats, media and sundry players, under the scanner. The operative word to describe all three examples is lobbying.
And whenever the word is used, the imagery it brings is seldom black or white. As the Radia tapes have shown, the grey is always overwhelming in the practice of lobbying.
Lobbying is also referred to in respectable terms as public affairs, government relations or even advocacy. The examples portray the benefits accrued by lobbying government, policy makers and those who wield influence. More often than not, much of the gains extracted are inimical to public interest. And so are the means used.
Yet, in India, this activity is rarely talked about and little has been done by the government, companies, individual practitioners, public affairs companies and even civil society organisations to bring it out of the shadows, monitor, and regulate it. Many are not even sure whether it is a legitimate activity.
“One can take a moralistic position and say there should be no lobbying and lobbyists,” says CV Madhukar of PRS Legislative Research. But the fact is, for good or bad, they have always existed.
“In a riotous democracy, lobbying is a necessary corollary of multiple interests at play,” says Dilip Cherian, founder and partner, Perfect Relations, a communication and lobby firm. “It should be considered a legitimate activity, although it has acquired a bad name lately.”
Opinion is veering towards giving lobbyists and lobbying an order of acceptance. “The more we deny lobbying happens and that it influences public policy and decision making, the more difficult will it be to fix it,” says Madhukar.
Lobbying has to be coaxed out of the dungeons. In an emerging economy like ours it is imperative that lobbying doesn’t take away the fruits of development into private parlours.
“Even if considered legitimate, when it comes to public resources like spectrum or gas, some equity principles ought to be in place and any lobbying that distorts this is unacceptable,” says Shankar Venkateswaran, India director, SustainAbility, a UK-based think tank and consultancy that is working to put lobbying squarely on to the corporate responsibility agenda.
‘Equity of access’ and ‘transparency’ of the entire lobbying process are key issues to be debated. “The act of reaching out per se is not a problem,” Madhukar explains.
He cites numerous examples of government-stakeholder interactions: the budget-making process, the tradition of expert opinions often invited by standing committees of parliament or even the stakeholder comments invited during the drafting of various legislations — the tribal bill, the right to education bill, et al.
Nasscom, the apex body of the IT sector, due to its stellar role in contributing to Brand India is often invited to the high table of government and is an example of vibrant government-business partnership. The government regularly seeks out Nasscom for inputs. During the recent visit of President Obama, Nasscom briefed the establishment on the nuances of protectionism.
“We are not always in the ‘ask’ mode and also work with the government on strategic issues, for instance, on pushing China to buy IT from us and alter the adverse balance of trade,” says Som Mittal, president of Nasscom. Has Nasscom utilised this privileged access to government for narrow sectoral gains: For instance, the two-year extension of the 10-year tax break given to the IT sector?
“The big boys like Infosys and Wipro et al may not need the break, but I have to protect the interests of small IT companies,” insists Mittal.
Again, it’s a misconception that it is only corporations who are engaged in lobbying the government. Civil society organisations and NGO coalitions too do it all the time. But for the manner in which civil society organisations, independent scientists and concerned citizens engaged with Jairam Ramesh, Minister of Environment and Forests, Indians would be now eating genetically modified brinjal.
International NGOs like Greenpeace, ActionAid and Oxfam are masters at lobbying and have been highly effective. But, their lobbying, transparent and loud, is condoned as it is seen to be in the public interest while secretive corporate lobbying is suspect. “Lobbying as a garb for corruption is the problem,” says Mittal.
Now that it is agreed lobbying is integral to the democratic process, the attempt has to be to move towards better disclosures and transparency and, of course, some form of regulation. What does it take to reach there?
For starters, identifying who is lobbying, for whom, on what issues, and at what cost, would be ideal. Shankar is clear it’s about time India worked on norms around responsible lobbying, one of the principal reasons being the deep inconsistency we witness on stated positions and what corporates actually do behind doors.
This corporate schizophrenia is quite evident. Georg Kell, Executive Head of the United Nations Global Compact (UNGC), a global coalition focused on corporate sustainability, is dismayed by the huge disconnect between business aspirations towards responsible corporate citizenship and their own lobbying efforts. “This lack of consistency undermines the very credibility of corporate responsibility.”
ITC is an example. It is seen as a corporate sustainability icon, but it is also obfuscating issues on tobacco control and how warning pictorials ought to be put on cigarette packs. Such inconsistencies can undo all the good done by corporations, Kofi Annan, former secretary general of the UN, wrote in an UNGC report on lobbying. Again, Shankar wonders why Ratan Tata had to use the services of lobbyist Niira Radia.
Was it because of a realisation that being good is beginning to be detrimental to business interests and that, if the Tatas had to ‘play the game’, why not do it through an external agency?
“The Tata stand has been a disappointment,” says Shankar. “Being complicit is as important as doing it yourself.” Shankar, as member of the expert group helping the Ministry of Corporate Affairs draft guidelines on corporate responsibility, unsuccessfully pushed for the inclusion of lobbying.
The present crisis of confidence dogging corporate India can be an opportunity to reform. Som Mittal agrees that a crisis is too good a thing to be wasted. Tonusree Basu of PRS Legislative Research sees merit in a codified, transparent, lobbying process to be put in place. For Shankar, some sort of a mechanism to regulate lobbying would be a logical progression of the Right to Information Act.
Cherian too agrees but would like self-regulation and voluntary codes of conduct to start with. Excessive or ill-thought out regulation can only drive the practice further underground. “That’s the nature of the beast,” he says, “and will lead to the emergence of a whole new lot of non-regulated players in lobbying.”
Voluntary codes and mechanisms haven’t worked, here or elsewhere. The EU has a voluntary lobby register where companies are expected to disclose various aspects of their lobbying activities. An investigation by the NGO, Friends of the Earth Europe, early this year, indicates that the register is in tatters.
In 2008, 20 of the 50 largest European companies, including Vodafone, Nestle and Deutsche Bank, were absent from the register. Does it mean Vodafone didn’t lobby at all during the year, especially when the European Commission was working on new regulation to harmonise call charges in the EU?
According to the EU register, only seven companies spent more than a million euro on lobbying in 2008. Large multinationals like Shell, BP, Arcelor Mittal, EADS and Peugot declare lower lobbying budgets than even municipal type NGOs like Friends of the Countryside!
For the period, Shell and BP are listed amongst the top five spenders — 2.5 and 8.1 million euro respectively — on lobbying in the US Register, mandated by a lobbying disclosure Act.
There is also a serious time lag in the European model. For instance, disclosures on ‘who is lobbying in the first quarter of 2010 will be available only in mid-2011 at the earliest.’ In the US, companies and lobby firms have to file online, every quarter, and the data is available to citizens almost instantaneously.
Canada is a step ahead. The new Federal ‘Lobbyists Registration Act,’ requires a monthly filing; reporting is more detailed — date of the communication and the name and position of the public official lobbied has to be mentioned, in addition to names of former public officials on the payrolls of companies.
Penalties for violations are more aggressive; $50,000 to $200,000. The principal difference between the Canadian and the US law is that in Canada there is no need to disclose expenditure on lobbying activity.
An example will bare the contours of the US Register. Take Google Inc. In the second quarter of 2009, Google, in its 12-page filing, reveals an expenditure of $950,000 on lobbying during the period. Google also lists the various persons; Google employees who lobbied, and the institutions/individuals that lobbied.
For instance, while lobbying on the issue of international freedom of expression and censorship, the Global Online Freedom Act of 2009, Google lobbied the House of Representatives, Senate, the US Trade Representative, the Department of Commerce and the Executive Office of the President. Public Affairs companies are also expected to file on similar lines.
Should India too have a register on
Lobbying and if so, should we draw upon the best of the US and Canadian models? The reason for regulation on lobbying and the need to bring it out in the open is indeed compelling.
The rationale put forth by the Americans holds true for India too and it states: ‘ without this public information, the voice of the people may all too easily be drowned out by the voice of special interest groups seeking favoured treatment while masquerading as proponents of the public well being.’
“If the Indian government is proactive, it should formulate some guidelines or a legislative framework immediately. It would mean it is taking the right cues from the present crisis,” says Basu.
From the experiences abroad, it is now clear that the success of a lobbying act depends on the precision of definitions. For instance, after many iterations, the US law defines a ‘lobbying contact’ thus : “a lobbying contact is any direct communication — written, oral or in person — to a covered official intended to influence legislation or public policy, awarding government contracts, or affecting government appointments.”
Definitions therefore are critical. “Is NK Singh, former bureaucrat and Rajya Sabha member, who figures in the Radia tapes, a lobbyist,” asks Cherian. Mittal also has queries. “I have two meetings with government everyday. How much can you reveal,” he asks. “Moreover, are you going to place an industry entity like ours on the same level as in-house lobbyists of companies and public affairs companies?”
Mittal has hired lobbying firms in the US and the UK. He spent $340,000 lobbying the US establishment last year. He insists lobbying can be a force for good too. He cites his engagement with numerous state governments, trying to bring several tier II and III cities into the IT fold.
Although, transparency in lobbying is seen as an imperative in the present circumstances, it is also being recognised that it cannot be done in isolation. An entire ‘transparency ecosystem’ has to emerge, right from comprehensive electoral reforms, transparency in political contributions — the most powerful form of lobbying — and openness in government functioning itself. In the UK, gifts to public officials over £140 become government property.
Madhukar recently tried to access a little-known parliament Register, similar to the one in UK, in which MPs are expected to make disclosures of their interests but was shown the door. In Britain, ministers and MPs who accept hospitality are expected to declare it in the Register of Members and Peers Interests.
“Lobbying can be transparent only if we can influence the rest of the governance ecosystem,” says Mittal. Shankar alludes to the responsibility of the media, which is often used by lobbying interests.
Interestingly, the US has ratcheted the disclosures act to a higher philosophical plane, which embraces the need for transparency and probity across the board. The title of the new law of 2007, of which lobbying is only a subset: Honest Leadership and Open Government Act.
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