- The Washington Times - Thursday, November 18, 2010

NEW DELHI | India’s center-left government has been shaken to its core in recent days by the resignations of three key officials embroiled in three separate scandals that have made “corruption” the buzzword among the media, opposition parties and political analysts.

In perhaps the country’s biggest scandal, the Indian Supreme Court on Thursday demanded that Prime Minister Manmohan Singh explain why his administration took a year to investigate a faulty cell-phone licensing deal that cost the country nearly $40 billion.

The rebuke marks the first time in India’s democratic history that the court has taken the prime minister’s office to task, political analysts said, according to the Associated Press.

Meanwhile, a report released Wednesday by Washington-based Global Financial Integrity (GFI) shows that India lost a total of $213 billion in capital via “illicit financial flows” from 1948 through 2008.

“These illicit financial flows were generally the product of corruption, bribery and kickbacks, criminal activities, and efforts to shelter wealth from a country’s tax authorities,” states the report, which was written by Dev Kar, a former senior economist at the International Monetary Fund.

According to the GFI report, the present value of India’s total illicit financial flows is at least $462 billion.

In addition, India’s ranking has fallen in an annual international assessment of governmental integrity. The Corruption Perception Index, compiled by the global corruption watchdog group Transparency International, ranked India 87th among 178 countries in 2010, down from 84 among 180 countries in 2009.

“It is an indication that the country continues to be perceived as more corrupt as in the past,” the index report states.

India, the world’s largest democracy, has experienced significant industrial growth that has made it Asia’s third-largest economy, behind China and Japan.

However, corruption has long been a part of Indian politics, and lingering doubts about the government’s integrity could hamper future business deals and put a damper on the country’s economic growth.

What’s more, the scandals have distracted the national legislature - a coalition led by Mr. Singh’s center-left Congress Party - from its agenda and prompted the opposition, led by the center-right Bharatiya Janata Party, to call for investigations.

Over the past two weeks, three officials have resigned and denied any wrongdoing in their roles in three separate scandals:

c Ashok Chavan, chief minister of Maharashtra state, was forced to step down Tuesday over his involvement in a housing scam in which tony apartments that had been built for war widows were sold to government and military officials.

c Telecommunications Minister Andimuthu Raja stepped down Sunday amid charges that his agency sold second-generation (2G) spectrum licenses at undervalued rates to cell phone service companies, costing the national treasury about $40 billion.

According to an auditor’s report released this week, the telecommunications deal “lacked transparency and was undertaken in an arbitrary, unfair and inequitable manner,” and many of the licenses were awarded to “ineligible applicants,” who resold the licenses for a profit. India’s telecommunications regulator on Thursday recommended that 62 licenses given to five companies be canceled, the AP reported.

c Suresh Kalmadi, chairman of the Commonwealth Games organizing committee, resigned last week amid a federal investigation of corruption charges stemming from the poor planning, construction and sanitation that plagued the games this summer. Two other officials from the organizing committee - Sanjay Mohindroo and T.S. Dibari - were arrested this week and charged with corruption.

A fourth scandal is looming: This week, the chairman of the Tata Group, one of India’s top industrial conglomerates, disclosed how a government official asked for a bribe when he sought to start an airline business.

Chairman Ratan Tata said he refused to pay the $3.3 million bribe.

“We went through three governments, to three prime ministers. But each time a particular individual thwarted our efforts to form the airline,” he said.

Mr. Tata said another industrialist suggested paying the bribe and going ahead with plans to set up a domestic carrier in collaboration with Singapore Airlines, but he refused because he did not want to buy his way into the market. He did not identify the official.

T.R. Raghunandan, founder of the anti-corruption website Ipaidabribe.com, said the Indian government’s corruption is hobbling the nation’s economic growth by providing poor services to the common people and fostering social inequities.

The GFI report supports his conclusion. It says accelerated rates of growth since the start of India’s economic boom in 1991 led to a deterioration of income distribution, which prompted more illicit flows from India.

“This report puts into stark terms the financial cost of tax evasion, corruption and other illicit financial practices in India,” said GFI Director Raymond Baker. “It also shows that these illicit outflows contribute to stagnating levels of poverty and an ever-widening gap between India’s rich and poor.”

Firing government ministers is only a symbolic gesture because they can be re-elected to office, Mr. Raghunandan said. “You need to convict them so that they cannot [be elected] again.”

“We have to give more teeth to our federal investigating agency and augment the evidence-gathering and criminal-prosecution procedures,” he said.