August 16, 2011

"Entrepreneurs against Corruption?" - Article by Sanjay Anandaram

“I had to apply for a new passport booklet as I had run out of pages. Having applied online – an altogether different experience - under the tatkal scheme, I was hoping to receive the passport in under a week as I intended to travel for a conference soon. I then was confronted by this uniquely Indian phenomenon of a “police verification”. There was a change in my address since the last passport and my new address had to be verified by the police. I was therefore visited by a constable from the local thana. A few days later, upon enquiry, I was informed that the police verification process was still underway. Surprised, I visited the local thana. To cut a long story short, I was told by the constable that it would help if I paid some “speed money”. I refused and demanded to see the officer who, I was told, wasn’t available. I waited for some time and left. I returned much later in the evening and met the officer and complained. The officer immediately called for the constables and admonished them asking them to clear my “case” and how could they not see what kind of a person I was!”

This was the tale recently narrated to me by an entrepreneur. There are myriad such cases that all of us have to deal with on a daily basis. The issue of corruption isn’t limited to any one government department alone. There are an immense number of cases of corruption involving various functions in the private sector as well. For example, kickbacks in functions such as purchase, administration, finance and recruitment are not unheard of. Fudging of travel bills, using company resources for personal work, taking advantage of say, the largesse of a channel partner are other examples. In fact, award conferences too have their versions of such corruption. Satyam Computers was the recipient of the 2008 Golden Peacock Global Award for corporate governance. Lobbying, influencing of judges and the like are after all “legitimate” and “pragmatic” business practices. It is not unusual to see unknown companies with less than stellar credentials claim via loud media advertisements how they’re better and bigger than everybody else. The media doesn’t expose any of these companies lest they lose the big advertising bucks that these companies spend via their channels.

The last thing an entrepreneur should be is be idealistic – right? An entrepreneur should be pragmatic, no? How else will he able to negotiate the maze of Indian laws, bureaucracy and ethics? Idealism? That’s reserved for the NGO-social activist sector, isn’t it? An entrepreneur has enough on his plate, struggling to build a business in the best way he knows, frustrated with having to deal with several road blocks and we expect him to be idealistic? Idealism is meant for those who can afford it or those who have nothing to lose. Or so goes the dominant logic. So is it acceptable to inflate expenses to save on taxes? After all, the entrepreneur is focused on creating shareholder value and higher profits are what shareholders want. Is it OK to take money out of the company via inflated invoices to a friendly contractor? The list goes on.

We live in a world of declining ethical standards where making money – somehow, anyhow – is the new standard of social acceptability. The standard therefore tends to settle at the level of the lowest common denominator and that’s perfectly understandable for all of us who unquestioningly embrace the dominant logic. Of course, we can all rationalize and explain away our situation as a special case. Of course, we all love to complain and blame the other person, the system for the state of affairs. But as entrepreneurs and those interested in it, are we not supposed to question the status quo, the dominant logic. Isn’t that what entrepreneurs do? Don’t entrepreneurs take matters into their own hands and decide to upset the apple cart because they’re unhappy with the status quo and because they believe there’s a better, faster, cheaper way ahead for everyone? Don’t entrepreneurs work hard everyday to make their ideal, their vision for how things should be come true?

No - successful or otherwise - entrepreneur ever admits to paying a bribe! They’ve all built their businesses the straight and narrow way. Is this true?

So would it be idealistic to ask every one of us to introspect and make deep personal commitments to fighting corruption? Or would it be pragmatic to just go along with the way things are?

But that wouldn’t be the way of the entrepreneur, would it?

Sanjay Anandaram is a passionate advocate of entrepreneurship in India; He brings close to two decades of experience as an entrepreneur, corporate executive, venture investor, faculty member, advisor and mentor. He’s involved with Nasscom, TiE, IIM-Bangalore, and INSEAD business school in driving entrepreneurship. He can be reached at sanjay@jumpstartup.net. The views expressed here are his own.