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Secrets and spies

More openness, not more monitoring, is the answer to corporate espionage.

Written by Shaji Vikraman | Updated: March 17, 2015 12:00:21 am
corporate espionage, petroleum ministry, Forest ministry, UPSC member, petroleum ministry leak, oil ministry leak, oil ministry documents leak, petroleum ministry leak, official documents leak, oil ministry accused arrested, petroleum ministry accused Accused in Petroleum In advanced economies, worries about espionage or leakage of information pertain more to military and strategic affairs. (Source: PTI Photo)

Over the past month, the Central Bureau of Investigation and Delhi Police have been conducting searches at government offices in Lutyens’ Delhi. Their aim is to bust alleged attempts by certain corporates and their intermediaries to access classified documents and information in various government departments, ranging from oil, coal and power to commerce and finance. The probes have led to arrests and the questioning of people, including low-level government employees, chartered accountants, consultants as well as fairly senior corporate executives. These men are said to have been part of insidious rackets to leak files and draft cabinet notes on policy matters relevant to the operations of the companies concerned.

The striking thing in all this is the names of some of the corporates involved — largely the same lot that operated in the pre-liberalisation era and built fortunes in the protected licence raj environment that was supposedly dismantled nearly 25 years ago. This, despite the significant “churn” within the ranks of top business houses in the post-reform period.

If one were to look at the 10 big names today, only three (Tata, Ambani and Birla) figured in the top 10 list of 1990. Of the remaining seven, two featured in the top-50 names of 1990 (Essar and Mahindra), while five were either non-existent or insignificant players when the reforms started (Vedanta, Adani, Jindal, Bharti and Infosys). Even if a larger top-50 ranking of groups by sales is considered, as many as 33 names — covering a wide swathe of industries, from pharma (Sun Pharma, Lupin), IT (Wipro, HCL) and media (Sun Network, Zee) to auto ancilliaries/ forging (Motherson Sumi, Kalyani) and infrastructure (GVK, GMR, Jaypee) — were not part of this league in 1990.

It says a lot about the way business takes place in India that even after 25 years of liberalisation, and the sizeable churn with the entry of new players and the growth of new industries, success is still a function of groups arbitraging on privileged information, influencing policymaking or “managing” the politico-bureaucratic environment. And some groups particularly have been past masters in this practice, refusing to change even with reforms that have ostensibly redefined business to mean genuine risk-taking and innovation rather than having the right connections to obtain licences or land contracts.

Of course, it is not just slimy and venal corporates who are to blame here. In advanced economies, worries about espionage or leakage of information pertain more to military and strategic affairs, nuclear programme secrets or cyber attacks. Rarely do you read about the disappearance of confidential files on foreign investment proposals or hydrocarbon pricing policy. What this essentially highlights is the reluctance of the state to let go of discretionary policymaking powers in key economic sectors, including energy, which is still partially de-regulated, ensuring that the stakes remain high for some business groups. There is a convergence of interests here between entrenched corporates and framers of policy to keep decision-making processes opaque. In the process, access to confidential information itself becomes a source of money-making and a way to keep rivals out.

The current government seems to be keen on sending out a message of being tough against those engaged in corporate espionage. So now we have CCTV cameras installed in the corridors of all the bhawans, along with close monitoring, if not restriction, of movements of visitors. It has also sought to project a commitment to transparent decision-making when it comes to the allocation of coal or telecom spectrum — auctions have clearly replaced the old regime of screening committees and first-come-first-serve. But the proposed land bill amendments, allowing the government to acquire land for industry without being bound to seek the consent of at least a majority of owners, is hardly a model of transparency. If anything, it reeks of the same old crony capitalism model, encouraging state grabbing of land to favour select houses in the name of developing industrial corridors.

The answer to corporate espionage and the theft of documents from sundry government departments or ministries cannot just be heightened surveillance or electronic locks. To start with, many of the secret papers are of little consequence to national security; they have been rendered secret simply because of those who stand to gain by trading on what should ordinarily be publicly available information.

The world over, policy or rule-making is increasingly the outcome of wide public consultations, which is how it should be with liberalisation. One has, in fact, seen this approach being adopted in India by financial sector regulators. Many of their regulations — for instance, on private bank licences or on insider trading and primary market reforms — were made after they received comments from stakeholders and the public on draft proposals. As a result, the adoption of the final policy produced hardly any surprise.

Such an approach, which aims at the wide sharing of information and making secrecy exceptional, would cut policy-discretion to suit particular groups and level the playing field for all. The winners, in this case, would be those with genuinely superior business judgement or risk-taking ability, instead of those used to gaming the system.

The government and many of its arms first need to be nudged to make this transition. Almost 25 years after India first started divesting the shares of state-owned companies, the pricing of a share sale still has to be top secret, requiring cabinet approval. In all other listed companies, the board and management would take such calls.

Yes, we need to punish those reaping benefits by indulging in corporate espionage and stealing classified documents. And yes, many corporates also need to make the transition if they are to remain relevant in years to come. But it would also help if the government used the present circumstances to open up more, rather than shutting the door.

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