PANIC IN THE BOARD­ROOM

FEAR STALKS COR­PO­RATE IN­DIA AS LEAD­ING IN­DUS­TRI­AL­ISTS COME UN­DER CBI FIRE

India Today - - COVER STORY - By M. G. Arun with Ku­mar Anshuman and Jayant Sri­ram

In Charles Dick­ens’ A Tale of Two Cities, the blood­thirsty Madame De­farge sits in the cor­ner of a wine shop, se­cretly knit­ting the names of her ri­vals to be sent to the guil­lo­tine. A Delhi- based cor­po­rate ex­ec­u­tive, still reel­ing from the shock of CBI’s ac­tions against some of In­dia’s big­gest busi­ness houses, says that In­dia’s pre­mier in­ves­ti­gat­ing agency is be­hav­ing like the char­ac­ter from the pages of the Vic­to­rian nov­el­ist, much to the horror of Cor­po­rate In­dia. “The fear is so in­tense that no one wants to start any new projects, lest their chil­dren face reper­cus­sions in fu­ture,” he says.

His ner­vous­ness is not mis­placed. On Oc­to­ber 17, a Supreme Court ( SC) bench com­pris­ing Jus­tices G. S. Singhvi and V. Gopala Gowda or­dered to in­ves­ti­gate eight con­ver­sa­tions of the 17 flagged by an sc- ap­pointed cbi team, that cor­po­rate lob­by­ist Ni­ira Ra­dia had with Gov­ern­ment of­fi­cials and pri­vate ex­ec­u­tives. Th­ese con­ver­sa­tions, ac­cord­ing to the bench, sug­gest “deep- rooted mal­ice and cor­rupt means be­ing adopted by pri­vate par­ties to ex­tract gains”. Recorded by the In­come Tax Depart­ment in 2008- 09, the con­ver­sa­tions were part of the 5,851 record­ings of ex­changes Ra­dia had with in­flu­en­tial peo­ple, about 5 per cent of which were leaked to the me­dia in 2010. The SC or­der came two days af­ter CBI named Ku­mar Man­galam Birla, 45, chair­man of the $ 40- bil­lion Aditya Birla Group, in its 14th FIR in the coal al­lo­ca­tion scam, along with for­mer coal sec­re­tary P. C. Parakh, al­leg­ing Birla- owned Hin­dalco got the Tal­abira- II coal block in Odisha as part of a crim­i­nal con­spir­acy. The group owns a mi­nor­ity stake in the com­pany that pub­lishes this mag­a­zine. Was it a case of mak­ing it dif­fi­cult for hon­est busi­ness houses? The PMO, al­ready scalded by Coalgate, was ren­dered speech­less by the tar­geted Parakh. The for­mer coal sec­re­tary said in the wake of CBI’s FIR: “I am not sure why the CBI thought that this was a con­spir­acy,” adding that if the CBI be­lieved that Birla and “my­self are con­spir­a­tors, then why did they not think of the Prime Min­is­ter as a co- con­spir­a­tor, then ev­ery­one is part of the con­spir­acy”.

CBI A shaken In­dia Inc saw it as an at­tack on it­self. In the last three years, sev­eral in­dus­trial houses, their com­bined worth al­most $ 300 bil­lion, 16 per cent of In­dia’s GDP, have been put on trial by CBI. This comes at a time when the econ­omy is in shambles. A re­cent CII sur­vey said GDP growth will not ex­ceed 5 per cent in 2013- 14. In the past 18 months, In­dia has lost at least Rs 1 lakh crore in po­ten­tial in­vest­ment, in­clud­ing two steel projects from ArcelorMit­tal and Posco, scrapped due to a mul­ti­tude of is­sues. FDI in­flows into the coun­try fell 38 per cent to $ 22.42 bil­lion in 2012- 13 com­pared to $ 35.12 bil­lion in 2011- 12.

As it is, points out Adi Go­drej, chair­man of the Go­drej Group, do­ing busi­ness in In­dia was never easy. Now, he says, “an FIR with­out a par­tic­u­lar rea­son against a re­spected busi­ness­man will in­vari­ably cre­ate a very dif­fi­cult en­vi­ron­ment for busi­ness”. Naina Lal Kid­wai, Pres­i­dent of FICCI, says, “Highly re­garded busi­ness lead­ers can­not be made scape­goats.” Min­is­ter for Cor­po­rate Af­fairs Sachin Pi­lot told IN­DIA TO­DAY that in­dus­try as­so­ci­a­tions have met him with their con­cerns. “The coun­try can grow only when both Gov­ern­ment and the pri­vate sec­tor work as part­ners,” he says. But the lat­est edi­tion of the Busi­ness To­day- C fore Busi­ness Con­fi­dence Sur­vey for the July- Septem­ber quar­ter, 2013, found that sen­ti­ment among cor­po­rate lead­ers is

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