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BW Businessworld

Plundering Political Event Managers

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Contrary to popular perception, the recently held, much acclaimed and highly successful 2011 Formula 1 Airtel Grand Prix is not a testament to India's organisational capability at all. As far as I am concerned, the seamless conclusion of the event damns us as ascorbic short sighted child-adults, incapable of understanding our true potential. It also reveals our inability to see what is wrong with us or take steps to right the wrong. Consider the facts.

At the end of the Commonwealth games in October 2010, we decided that we were incapable of organising an international sports event. Since this project had only two aspects to it—a real estate project and the management of an event—I assume this meant that we were neither capable of undertaking a complex construction project to an agreed schedule nor were we capable of orchestrating a complicated event. To my mind, both conclusions were ridiculous on the face of it.

India has organised large construction projects for as long as we have been an independent nation. Chandigarh was no colonial gift. The foundation stone was laid in 1952 and by 1965, when I lived there while a war raged at the edge of my home town on the Pakistan border, it was already substantially complete. I could add any number of large hydro projects to the list.Indeed, even a purportedly dysfunctional and much reviled government entity like Delhi Development Authority managed to build Janakpuri—that humungous city sized colony—within a decade. If India could not build venues for the Commonwealth games in the scheduled time, it wasn't for lack of skill or ability.

You could say the same for event management. In 2001, the Maha Kumbh at Allahabad was attended by 60 million people. In Jan 2007, the Ardh Kumbh at Allahabad had 70 million visitors.These weren't all ticket purchasing, beer swilling fancy car owning snooty types either: they were pilgrims and pundits, sadhus and soothsayers, shopkeepers and scallywags, crooks and creeps. India is globally recognised for its crowd management skills. So when we manage to smoothly host a motor race in India, the last thing I want to hear some party wag tell me is that global confidence in India's ability to host international events is restored. The idea is not just patronising and ludicrous, it is based on delusion. The problem lies elsewhere.

You don't need to be a contemporary political philosopher to figure out what the problem is. Check out Gurgaon. Here is a small stretch of city generating 50 per cent of the total revenue of Haryana, 71 per cent of its exports, 60 per cent of the entertainment tax and 80 per cent of the FDI in the state. It is home to 300 of the Fortune 500 companies, some 50 of them with an office within a distance of one square kilometre. Yet, its infrastructure is laughable. You find state-of-the-art buildings sticking out of roads that look like motocross race tracks, potholes that could hone your golfing skills to a fine art, sewerage main lines that discharge into open fields and electricity wires that hang like spaghetti off the ceiling fan after a minor kitchen explosion. It dawns on you: whatever is privately build is slick to the bone, whatever is built by government is dust and bones.

This is the story of much of India and it gets worse with each passing year. If you leave it to the Government to build anything these days, you are going to get screwed. This is not because the Government doesn't know how to build anything. It's because when the Government builds something, its primary purpose is not to get something built. The basic purpose is to divert funds and that necessarily means screwing the schedule. Government rules say you must have open tenders, fair bidding, objective evaluation of bids and award to the lowest bidder by whatever established criterion. You can't divert funds this way. You have to find reasons not to follow the rules. One persuasive way to do it is to plead that you haven't the time to follow rules. So don't establish the deliverables, don't take out the notice inviting tenders and don't evaluate the tender. Then say "damn, there is no time; we need to dispense with the rules". Now you can do whatever you want: procure the goods at whatever price you like, award contracts to whomever you like and rent equipment at prices higher than you would pay to buy them. The last is the best way to generate cash. Take a decision to rent, not buy, then avoid renting till the last minute and then claim to pay a fortune because you can't find it at short notice. No one is going to ever find out that you had the arrangement in place all along: you just unveiled the arrangement when time was really short. Let me put it to you plainly. It is in the interests of those who run fund generating projects to find ways to delay projects so that they can then achieve the real purpose of the project.

All this is completely obvious. It is also completely rational. There is no reason whatsoever to be outraged about this because, in the main, all this is driven by a perfectly legitimate compulsion. Let me wind back a little. In India you have two basic problems: no actually, its three basic problems.

First you have no legitimate way to fund India's democracy. I have discussed this at length in previous Fineprints (see Systemic Scamming). If we want to run a democracy, we have to find a way to fund elections. We simply can't seem to accept the idea that perhaps we should have benefit dinners for politicians where we can sell table space at a couple of lakhs a plate. Given our love for probity in form, though not in substance I hasten to add, this one is a hard sell. We have not been able to put any other acceptable system in its place. Politicians need money to persuade us to put them in power and we won't give it to them. They have no choice but to milk projects.

Second, a very great many government servants have purchased their jobs. If you find this surprising, we do not live on the same planet, leave alone country. People who have purchased their jobs are entitled to get back a little return on equity and the salary is certainly not enough. Bureaucrats will dip into project cash and they feel entitled to do so.

Third, when any lucrative cash generating job vacancy comes along, like the station house officer of a police station along the border of a drug distribution corridor, the posting is purchased. So it is with toll tax collecting posts, or large construction projects. I hear you need contacts to get these jobs but shorn of the sugar coating, it's pretty much an open auction: the highest bidder gets the job for a while. In this time, having purchased the posting, the winning bidder has to turn a profit too. I don't find anything extraordinary about this. It's a BOT contract like any other and the successful bidder needs to make his money. The difference between the management of a government construction project and a private BOT contract is in two pieces of fine print. First you can't legitimately turn over a profit to yourself so you need to slick cash off the till and second, you have to find a way to circumvent millions of rules which prevent you from turning a profit in the first place.

Obviously, unless we are going to look yourself squarely in the face and say "this country needs to find a way to legitimately fund the huge cost of an election", we will continue to lie to ourselves and mouth meaningless platitudes about rectitude and honour. I suggest we stop this pussy footing hypocrisy immediately.

Before I move on, I have two riders to make. First, not everyone executing a government contract is a crook, not by a long shot, and heaven's forbid if that be the insinuation. Every group of people is a mixed bag, a bit of each of acquisitive and self-abnegation type, some good, some not. That said, I would be delighted but not a little surprised if Kalmadi turned out to be show white. Second, not everyone who is a crook has purchased his job. The world is full of honest bureaucrats doing their honest jobs to the best of their ability. Third, not everyone on the take has been told by his political superiors to find ways to fund the democracy machine. The world is also full of people who have a piece of the action through dumb lucky. That is the kind of guy who is on everyone's potential son-in-law list. I'm not kidding. Back home, I attended a village wedding where the bride's family was jubilant because the guy worked in a state toll plaza collecting taxes from passing truckers. The loot it seems ran thick.

So what is the moral of this story? Governments ought not to build anything, run anything, manage anything, buy anything or sell anything?No buildings, no dams, no canals, no tourism departments, no factories, no airlines and by heavens, no events, be they industrial fairs or athletic meets? There is logic to this extreme view. In this day and age, everything, even village dangals and kabaddi contests can find corporate sponsors. You can legitimately argue that a government's job is to govern and if it does that effectively, we should all heave a sigh of relief and say 108 gayatri mantras in the morning. But this kind of extreme position is always disconcerting.

There are jobs you can't or shouldn't be outsourcing. I'd rather the government ran the defence services, the nuclear power plants, the fire brigade, the police… Besides, Government servants can extract money from award of contracts to private parties just as well as they can extract money from executing those contracts. This is just not anallopathic type of situation where you cut off this limb, create that antibiotic law to counter that crime virus and ban that element of the life style to eliminate vulnerability. You need holistic medicine: attacking the problem at the root. And the root is legitimizing election funding. So now ladies and gentlemen, can we please stop diverting attention about F1 and event management. Let's get to the point and address the issue of election funding, and then, either put up or shut up.Your call.

The author is managing partner of the Gurgaon-based corporate law firm N South and author of the pioneering business book Winning Legal Wars. He can be contacted at rcd at nsouthlaw dot com