Business Lobbyign and Ethics

1. The concept 

Transparency International, in its Anti-Corruption Plain Language Guide , defines lobbying as : Any activity carried out to influence a government or institutions policies and decisions in favour of  a specific cause or outcome. Even when allowed by law, these acts can become distortive if  disproportionate levels of influence exist exi st  by companies, associations, organisations and  individuals.

Though used interchangeably with corruption, it can refer to a form of advocacy with the intention of influencing decisions made by legislators and officials in the government by individuals or groups. Indeed one could argue that lobbying is just a special form of corruption focused on legislative bodies or some other rule-making agency. However, there are some important differences between lobbying and corruption. They centre on the notions that corrupt practices are illegal, that corruption activities tend to involve bribes or illegal payments and, arguably the most important difference, that corrupt practices tend to directly benefit a small number of 'users' (often one individual) while lobbying activities are carried out in order to benefit a group of users that share a specific interest. The fact that lobbying is mainly aimed at policy-making institutions rather than the bureaucracy brings up another major difference thus making lobbying an activity that makes bribing irrelevant if  it succeeds in influencing policy and an activity that makes bribing easier if it succeeds in undermining law enforcement. In other words, lobbying can be a substitute for, or a complement to, corruption.

2. Lobbying and India

Gaining political influence in India was once a simple affair: You handed over a suitcase of cash.But in India, as elsewhere in the developing world, the old business of corruption is meeting a new rival: the Washington-style business of persuasion, in which companies garner influence through golf  games, planted news stories and PowerPoint presentations.

A well-oiled network of big corporate lobbyists is using money, influence and skulduggery to command public policy and attack rivals. Armed with PowerPoint presentations, inside information, sweetheart deals and a dirty tricks department, these lobbyists seem to be running the show in Delhi and Mumbai. Business is meshing with politics in the worst possible way .Business lobbying has always been aroundReliances V. Balu Balasubramanians influence in the corridors of power has almost given him a godfather-like status in the lobbyist hierarchy. While hes just about surfacing after a long exile, there are numerous other instances of lobbyists driving corporate battles in the past. But traditionally, lobbyists in India were shadow warriors, heard of  from time to time but never really seen. That has changed. Lobbyists have become public figures, freely mixing with the powers-that-be.

Legal aspect of lobbying in India Lobbying is not illegal in India. Lobbying is an acceptable practice worldwide. It has become a dirty word in the light of recent events only because boundaries seem to have been transgressed in terms of using not so above-the-board means to influence policymaking India offers no legal framework for lobbyists even though the practice is technically not illegal in the country. Perhaps the closest approximation to any kind of law governing lobbying in India, point out legal experts, is Section 7 of the Prevention of Corruption Act. But even this section is a convoluted one where the onus is on the accused public official to prove that he was not offered a gratification to influence his policy decision. The practice therefore continues to be a largely surreptitious one, a quintessentially cloak-and-dagger affair between key playerspolitical parties, bureaucrats, advocates, business interest groups and communications experts. Indian corporate lobbyists insist that they act as a bridge between companies and the government. Many even brand themselves as advocates or channels which, they say, helps their clients better understand the countrys policy environment. Many other lobbyists come in the avatar of external affairs managers and environment management experts. These usually operate via public relations outfits discreetly servicing their clients lobbying needs. In fact most sizeable Indian companies nowadays maintain dedicated teams for lobbying their cause with the authorities. 2. 2

Lobbying instances in India

There have been too many instances of the so called Not legal activity in our country. Listing out some of the major instances :

India and foreign retail Foreign companies seeking access to India's market often collaborate with government officials to outline a deregulation approach that satisfies the company without marring the government's political standing. When the Italian clothier Ermenegildo Zegna wanted to open boutiques in India, it was barred from doing so by law: India prohibits foreign investment in retailing, because of fears of undermining millions of mom-and-pop shops.

But India's commerce minister, Kamal Nath, wanted to help Zegna. So Zegna's chief executive, Paulo Zegna, began discussing with Nath creative ways to alter the rules. The two traded frequent faxes and e-mail messages with various ideas, Prasad said. Then, in a letter to the government, Zegna suggested a compromise: Why not admit foreign retailers selling only a single brand - approving firms like Zegna and Gap, but excluding hypermarkets that would compete with small retailers? Later, the government opened retailing to foreign capital for the first time - and solely for single brands. Coca cola and environmental issues

Deepak Talwar, a prominent Delhi lobbyist, represented Coca-Cola, which had been accused of  harming the environment. The company, which declined to comment for this article, has denied the charges. Talwar's lobbying approach was to ensure, among other things, that every government or private study accusing the company of environmental harm was challenged by another study. In addition, Talwar said during an interview, he lobbied high-ranking government officials to support the company's cause, in the hope that their influence - in addition to the conflicting studies - might dissuade government scientists from making a clear-cut judgment against the company .

The Nira Radia Controversy The Radia tapes controversy relates to the taped and released telephonic conversations between Radia, a professional lobbyist and politicians, corporates and industrialists, officials, bureaucrats, aides and journalists that were taped by the Indian Income Tax Department in 200809. The tapes reveal that Radia was instrumental in ensuring a cabinet berth for the DMKs A. Raja when the ministerial portfolios for UPAs second term were being decided. She lobbied with the Congress leadership to get him the telecom portfolioagainst the other contender, the DMKs Dayanidhi Maran. But there was another game at play. Tata Group head Ratan Tata had allegedly put his weight behind Raja and wanted Maran out of the scene at any cost. In fact, he had in a handwritten letter to Tamil Nadu CM M. Karunanidhi in December 2007 reportedly praised Rajas rational, fair and action-oriented leadership. To put the corporate battle in perspective, Airtels Sunil Mittal was unhappy with Raja in the seat. Also, by getting the PR mandate of Mukesh Ambanis business empire in 2008, Radia would have found herself on the hitlist of Anil Ambani, who incidentally is also Tatas competitor in telecom. Whats worse is that the transcripts show Radias alleged involvement in the much-debated 2G spectrum and licence scam where she is said to have helped some of the new telecom companies obtain their licences. The government, at that time, had maintained a stoic silence for retaining a price of Rs 1,650 crore for a pan-India licencea price set way back in 2001, when, even by the admission of the regulator, it should have been in the range of Rs 10,000 crore. Within weeks of  getting their licences, two new licencees sold out at a much higher valuethe size of the scam is estimated at Rs 50,000 crore.

2.3

Lobbyists in India

Niira Radia, Vaishnavi, Neucom, Noesis Though she lobbies for a few percentage points of Indias GDP, it took 15 years for the mystique around Niira Radia to unravel. For someone whose strengths are described as commitment levels, an excellent network of contacts and knowing which button to press, thats no mean achievement. Till the phone-tapping controversy, Radia had always been behind the scenesbarring the lavish annual bash at her farmhouse in Delhi, where cherry-picked invitees from bureaucracy and media are present. Generous to a fault, this British passport-holder assiduously built relationships with top print and TV editors and political parties, particularly the Congress and the DMK. Earlier, she was known to be extremely close to the BJPs Ananth Kumar and built up an interest in aviation. It wasnt enough, however, for her low-cost airline Magic Air to take off in 2005. The stakes became bigger when she brokered Mukesh Ambanis open support for Tata in the Singur controversy. Apart from Reliance, she also has clients from the Vedanta group and some of the new telecom licensees.

Deepak Talwar, DTA Associates & Integral PR This son of a former bureaucrat has top bureaucrats, and the whos who of Delhi, attending his parties. Operating out of White House in Delhi, Deepak Talwar is the king of the tribe, the lobbyist who has been in business since 1979and has an almost magical knack of tabling deals wherever they are, broking for everything. He came into his own in the early 1990s, using his proximity to top bureaucrat A.N. Varma to facilitate FDI approvals in the early flush of liberalisation. Using a tremendous network of connections, he has opened doors everywherefamously for CocaCola while dumping Britannias Rajan Pillai in the early 1990sand attracted a rash of MNC clients. He has also got his fingers in various other pies, from defence (with Davinder Dogras Hexxcom) to a stake in mobile-number portability JV with Telcordia, which has been facing regulatory issues

Dilip Cherian, Perfect Relations The Page 3 celeb who networks with political heavyweights, policymakers, the media, industry associations and embassies for clients like Coca-Cola, POSCO and Diageo, among others. Cherian is seen as an influencer, one who opens the right doors for his clients Cherians initial stint of working as consultant to the government, followed by over a decades association with CEOs as business editor of the then all-powerful Business India, have helped him work through the pulls and pressures of policymaking.

Tony Jesudasan, Reliance ADAG Known as Anils man in Delhi, he knows everyone, from cabinet ministers to bureaucrats to editor. Jesudasan is involved in affairs related to power and gas for ADAG, the K-G Basin gas case in particular.

3. Lobbying  United Stated of America Lobbying in the United States targets the United States Senate, the United States House of  Representatives, and state legislatures. Lobbyists may also represent their clients' or organizations' interests in dealings with federal, state, or local executive branch agencies or the courts. As of 2010 there are over 17,500 federal lobbyists based in Washington, DC. While many of these lobbyists are employed by lobbying and law firms and retain outside clients, others are employed by trade associations, companies, and state and local governments. The top sectors and their total spending between 1998 and 2010 in US were: Client

Amount Spent Percentage of Total

1

Finance, Insurance & Real Estate $4,274,060,331 14.53%

2

Health

$4,222,427,808 14.53%

3

Misc Business

$4,149,842,571 14.11%

4

Communications/Electronics

$3,497,881,399 11.89%

5

Energy & Natural Resources

$3,104,104,518 10.55%

6

Transportation

$2,245,118,222 7.63%

7

Other

$2,207,772,363 7.50%

8

Ideological/Single-Issue

$1,477,294,241 5.02%

9

Agribusiness

$1,280,824,983 4.12%

10 Defense

$1,216,469,173 4.13%

11 Construction

$480,363,108

1.63%

12 Labor

$427,355,408

1.45%

13 Lawyers & Lobbyists

$336,170,306

1.14%

Note: These amounts do not include campaign contributions. Ref: http://www.opensecrets.org/lobby/index.php

Legal aspect of lobbying in US In America, unlike India, lobbying is a legal and well-established practice. The country has statutory rules and regulations for lobbyists who are governed by the Lobbying Disclosure Act of 1995. The act defines and requires professional lobbyists to register with the Clerk of the House and the Secretary of the Senate. Lobbyists are also required to submit a detailed report of their activities in the US Congress and other state legislatures, including whom they met and how many times, once every six months. To further strengthen the ethics code for lobbyists, the US Congress also introduced the Honest Leadership and Open Government Act in 2007, which contains a comprehensive lobbying code. Last year, President Barack Obama also signed two executive orders to downsize the influence of  lobbyists at Capitol Hill. The orders ban lobbyists from giving gifts to lawmakers or even pay for their meals. Any lawmaker or lobbyist found violating the Lobbying Disclosure Act faces a stringent fine of  up to $200,000 and/or a jail term of up to five years. In U.S., lobbying is a huge, established industry unlike India which lack legitimate lobbies and is ravished by corruption scandals like 2G scams. The ability of individuals, groups, and corporations to lobby the government is protected by the right to petition in the First Amendment to the United States Constitution and the lobbying market is worth $3.5 billion. Every year the U.S. govt. allows about 2000 lobbyists based on their expertise. Interestingly, since 1998, 43 percent of the 198 members of Congress who left government to join the private sector have registered to lobby using the 'revolving door of influence'. There are now an estimated 15,000 lobbyists who have put down their roots in Brussels, striving for their voice to be heard by the EU.

Ethical aspect of lobbying in US To help preserve and advance public trust and confidence in the democratic institutions and the public policy advocacy process, professional lobbyists have a strong obligation to act always in the highest ethical and moral manner in their dealings with all parties in US. The American League of Lobbyists ("ALL"), accordingly, has adopted the following "Code of Lobbying Ethics" to provide basic guidelines and standards for lobbyists' conduct. In general, this Code is intended to apply to independent lobbyists who are retained to represent third party clients' interests and to lobbyists employed on the staff of corporations, labor organizations, associations and other entities where their employer is in effect their "client." ARTICLE I - HONESTY & INTEGRITY: A lobbyist should conduct lobbying activities with honesty and

integrity. ARTICLE II - COMPLIANCE WITH APPLICABLE LAWS, REGULATIONS & RULES: A lobbyist should be

familiar with laws, regulations and rules applicable to the lobbying profession and should not engage in any violation of such laws, regulations and rules. ARTICLE III  PROFESSIONALISM: A lobbyist should have a basic understanding of the legislative and

governmental process and such specialized knowledge as is necessary to represent clients or an employer in a competent, professional manner.

ARTICLE IV - CONFLICTS OF INTEREST: A lobbyist should not continue or undertake representations

that may create conflicts of interest without the informed consent of the client or potential client involved. ARTICLE V - DUE DILIGENCE & BEST EFFORTS: A lobbyist should vigorously and diligently advance

and advocate the client's or employer's interests. ARTICLE VI - COMPENSATION AND ENGAGEMENT TERMS: An independent lobbyist who is retained

by a client should have a written agreement with the client regarding the terms and conditions for the lobbyist's services, including the amount of and basis for compensation. ARTICLE VII  CONFIDENTIALITY: A lobbyist should maintain appropriate confidentiality of client or

employer information ARTICLE VIII - PUBLIC EDUCATION : A lobbyist should seek to ensure better public understanding

and appreciation of the nature, legitimacy and necessity of lobbying in our democratic governmental process. ARTICLE IX - DUTY TO GOVERNMENTAL INSTITUTION: In addition to fulfilling duties and

responsibilities to the client or employer, a lobbyist should exhibit proper respect for the governmental institutions before which the lobbyist represents and advocates clients' interests.

Lobbying Instances in US Finance, insurance and real estate firms spend more money lobbying officials in Washington than any other sector of the U.S. economy. Bank of America Corp. spent $2 million, up 33 percent from $1.5 million spent during the first six months of 2009. Wells Fargo & Co.s spending rose to $2.3 million from $1.4 million in 2009.Morgan Stanley spent $1.6 million, compared with $1.4 million a year earlier, though its second-quarter lobbying expenses were lower than a year ago. The banks trade group, the Washington-based American Bankers Association, spent $4.2 million, up from $3.9 million. Within this sector, Goldman is a powerhouse. Since 1989 its employees, their family members and political action committees have donated $31.2 million to U.S. political candidates -- topping all other banks and financial firms The firm closely monitors issues including economic policy, trade and nearly all legislation that governs the financial sector. It has been a major proponent of privatizing Social Security as well as legislation that would essentially deregulate the investment banking/securities industry. The firm tends to give most of its money to Democrats. A number of high-ranking government officials in recent years have spent part of their careers at Goldman Sachs. Goldman Sachs' lobbying spending rose by roughly 37 percent in the second quarter of 2010, as the company dealt with the fallout of a Securities and Exchange Commission lawsuit and lobbying over an overhaul of the financial services regulatory system.

4. Does India need

Lobbying ?

Lobbying, argue its advocates, is an essential part of the democratic process. In order to engage with policy makers, organized interests need to undertake advocacy campaigns to explain their positions to lawmakers and government through credible third parties, they say. The exponentially growing Indian economy  expected to touch 10 to 11 per cent growth in the next two yearsand a rapidly burgeoning domestic market present mouth-watering opportunities for global businesses to do commerce with India. They are all eyeing the great India growth story with considerable interest. This scenario will push more and more companies to engage lobbyists who can directly interface with politicians and bureaucrats and push their agendas. Companies will get them by corrupt means, covering their tracks with middlemen, as some foreign managers acknowledge in private and as high-profile Indian media investigations have alleged. In other words, lobbying will always remain integral to Indian businesses and politicslegal or not. Ergo, doing away with it or making it illegal is not an option. This subversion can lead to skewed policies, especially in a country like India which is in the process of establishing a larger institutional framework for which the government needs creative inputs from various experts. As long as lobbying does not lead to policy or regulatory capture, climaxing in the government or regulators getting so influenced by lobbyists that it results in an iniquitous regulatory framework, it should be allowed.

But if thought from a contrary point, replacing one evil with another is not a perfect solution. Lobbying itself is heavily regulated as it is very easy for a lobbyist to stray into bribery, the most direct way to influence legislation, obviously, is to bribe enough law makers to ensure that the bill you support passes. It is of inconspicuous harm to both private and public sectors but yet better compared to grass root corruption. What India needs is a law that recognises the local issues and limitations. India should not ape the LDA as the US is a mature democracy where it is not as easy to subvert the systems as it is in our country. Legalizing lobbying will benefit no one except for politicians and corporations. The country will merely suffer.

India is still among the top 70 countries corruption list and when reality calls, we have to answer either lobbying or the resident evil - corruption. Public opinion always makes the difference.

5. Lobbying and ethical dilemmas

Sometimes lobbyists attempt to influence policy in luxurious locations. Sometimes lobbyists make campaign contributions and then ask their clients and friends to also make campaign contributions. The ethical problem is that most people view the involvement of money in the system as inherently corrupt. Further, most of the time the relationship between lobbyists and elected officials is clouded. We have a murky system where money changes hands and decisions are made. Because of the lack of transparency, people tend to believe that corruption exists and that no one in the political system is working for the good of the people. Ethical dilemmas related to lobbying tend to arise when various behaviours by lobbyists and lawmakers undermine the fairness and transparency of that process and do not contribute to the common good

Fairness The most obviously unethical (and illegal) practice associated with lobbying is paying a policy maker to vote in a favourable way or rewarding him or her after a vote with valuable considerations. If this practice were allowed, people and organizations with money would always win the day Fairness questions also arise when some lobbyists have easier access to lawmakers than others. Frequently discussed is the problem of revolving door lobbyists-those people who once served as public officials who then go into the private sector and work to influence their former colleagues.

Transparency One way to improve the fairness of the lobbying process is to make sure that possible sources of  influence are visible to the public. This goal is behind various state and federal requirements that lobbyists register and file reports on the issues they have discussed with lawmakers. On the local level, some groups are calling for access to lawmakers' appointment books so that the public can see who they met with and what they discussed. Common

Good

Lobbyists are advocates. That means they represent a particular side of an issue. But what is the lobbyist's obligation to be fair to the other side? An ethical approach to lobbying must ensure that someone stands up for the common good. Lawmakers have an obligation to solicit the views of those who are not represented by powerful lobbying groups.

6.

Lobbying is self regulatory!

Until the government makes up its mind on a law on lobbying, self-regulation may be the way forward. There is talk of getting companies to voluntarily disclose their lobbying activities. But all this works only where lobbying is recognised as a legitimate part of the democratic process Based on research, following can be some steps for responsible lobbying: 1) Lobbying should based on real evidence from independent, credible sources 2) Transparency is vital. Lobbying positions should be clear, and obviously consistent with the values, aims and intentions of the company 3) Lobbying should not be outsourced to third parties (relates to my above point about nefarious activities that public affairs consultants can undertake on a company's behalf) 4) Lobbying should not be against the public interest 5) It should persuade by the force of argument rather than with money 6) Positions taken should be those any company would be happy standing up for in public 7) Responsible lobbying should not utilise inappropriate (favourable) access to politicians 8) It should not seek to persuade public servants to act outside their area of public duty 9) The motives for lobbying on a particular issue should be made clear at all times 10) Timeframes are important to consider. A short gain enabled by intense lobbying on an issue, for example, may not be to the medium or long term corporate advantage.

http://www.peerpower.com/et/debate/99/Should-lobbying-be-legalisedhttp://www.outlookindia.com/article.aspx?265345  Used a lot http://www.scu.edu/ethics/practicing/focusareas/government_ethics/introduction/lobbying.html Ethical dilemma and lobbying http://www.associatedcontent.com/article/1431525/is_lobbying_ethical.html - chk out .. http://ethicalcorp.blogspot.com/2009/12/what-is-responsible-lobbying-ten-ideas.html http://www.nytimes.com/2006/05/18/business/worldbusiness/18ihtlobby.1778893.html?pagewanted=2&_r=1

http://www.opensecrets.org/orgs/lobby.php?id=d000000085  Good lobbying stats http://www.alldc.org/ethicscode.cfm- Ethical code of conduct in US Not used : Lobbying done by Indian companies in Us http://www.hindu.com/2009/05/04/stories/2009050456521800.htm http://www.telegraphindia.com/1090727/jsp/nation/story_11285441.jsp