Foreign Dacoit's Invasion (FDI) in retail......FROM NEW INDIAN EXPRESS

from The New Indian Expresss

By Ram Jethmalani

14th December 2012 11:51 PM

Walmart will be permitted by the UPA government to do in India what it has not been permitted to do in New York. Opposition to Walmart in New York is much like the opposition voiced in India — its history of low wages, poor employee benefits, cannabalising small businesses and endangering existing jobs. The machinations and subversion in obtaining Parliament’s numbers through UPA’S CBI prone allies have been witnessed by the nation.

Despite being heralded by this questionable and highly unethical red carpet, the timing couldn’t have been worse. In November, there were reports that several high level Walmart employees in India were suspended because of a bribery scandal in India, Mexico and China. Easy Day, owned by Bharti Walmart, has been accused of having received illegal investments of $100 million in violation of India’s FDI laws, via its joint venture partner Bharti, into which the Reserve Bank of India is reported to be enquiring.

The day after the dubious unparliamentary approval for FDI in retail, reports appeared that as per the lobbying disclosure reports filed by Walmart with the US Senate, the company has spent close to $25 million (about `125 crore) since 2008 on its various lobbying activities, including on issues related to ‘enhanced market access for investment in India’.

Not a very nice way to make a debut in any country. With this background, naturally, questions are being asked. What was this lobbying money spent for? Was it spent in the US or in India? Who were the Indians who were the lobbyist’s targets? What were the lobbying activities, even if they happened in the US? Does this imply that Indian law-makers were lobbied in the US, and legislate in response to US lobbying? What is the difference between lobbying and bribing?

The mood of the Congress in Parliament regarding FDI in retail resembled the nuclear Bill mood, when it was willing to sacrifice an ally and risk its government for an issue that had least relevance to the development or progress of the country. The conclusions are obvious. A noticeable difference, however, was that Rahul Gandhi did not pipe up that Walmart was essential because impoverished Kalavati should have the taste of a mall.

I now present two conclusive arguments that have made me a sworn opponent of FDI in retail in India. Walmart may be the largest multinational retailer and the biggest private employer in the world, but what frightens me is not its size, but it’s bad reputation and continuous malpractice regarding principles of business probity. There has been heated debate whether FDI in retail is really going to bring prosperity and joy into the life of the aam agriculturalist, informal retailer, hawker, kirana shop owner or local intermediary. Walmart’s business record in Mexico, South Africa, Chile, Thailand and China, provides adequate evidence that it neither improved wages or quality of life of workers or agricultural income. On the contrary, because of their power to start with low prices, they drive out other competitors out of business, most importantly small businesses like kirana shops; then start monopolistic price mechanisms of buying the lowest and selling the highest, replace the existing intermediaries with their own corporate middlemen, and exercise a complete control over the retail market.

Walmart’s corruption to establish itself in Mexico is well-documented in a New York Times report that details heavy bribery by Walmart Mexico, based on evidence provided by an insider lawyer whistleblower, Sergio Cicero. His allegations were confirmed by a preliminary enquiry conducted by a veteran FBI agent, including payment of $16 million in ‘donations’ to local politicians and their organisation. The company’s senior executives defended the company by arguing that ‘that was how the business was done in that country and what they have done was essential for success of their commercial ventures’.

Well, when a retailer trader with Walmart’s antecedents joins hands with the most corrupt government that India has seen, the ensuing synergy will cause a looting explosion on the unfortunate aam aadmi of this country, who will be robbed of his livelihood and his purse. It is for this reason alone that this monster must be prevented from landing in our mist. FDI is plainly ‘Foreign Dacoit’s Invasion’.

In ‘The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008’, Global Financial Integrity (GFI) has estimated that from 1948 to 2008 a total of $213.2 billion has been shifted out of India through illicit outflows. It needs to be ascertained whether this money has at least partly already returned to India. FDI statistics perhaps point to this fact. As per data released by the Department of Industrial Policy and Promotion, the two topmost sources of the cumulative equity inflows from April 2000 to March 2011 are Mauritius (41.80 per cent) and Singapore (9.17 per cent). Mauritius and Singapore with their small economies cannot be the sources of such huge investments and it is apparent that the investments are routed through these jurisdictions for avoidance of taxes and/or for concealing the identities from the revenue authorities of the ultimate investors, many of whom could actually be Indian residents, who have invested in their own companies, though a process known as round tripping.

Investment in the Indian Stock Market through Participatory Notes (PNs) is another way through which black money holders re-invest in India, as the PNs are held in the name of the FIIs, though the profits go to the investors, through specifically designed contracts. PNs/ODIs can be freely traded and easily transferred without disclosing the identity of the actual beneficiaries.

The above two paragraphs are not my words. They are composed and authorised by the gentleman who has been recently elected as the president of this country in his white paper on black money, from the section ‘Has the money transferred abroad illicitly returned’? For a change the gentleman who had prevented the recovery and repatriation of stolen wealth uttered a great truth and confirmed that money transferred abroad is being illicitly returned under the guise of FDI.

In short, FDI is going to be the biggest money laundering operation, earning wealth with stolen money. It is doubtful whether even small crumbs will be thrown at the grovelling poor of this country.

Ram Jethmalani is an eminent jurist and Rajya Sabha member