Why pay a price for honesty?

When I joined business 20 years ago, I was aware of the several skill gaps that my candidature presented. I wrote down a long list of things to learn and skills to acquire.

Negotiating a bribe, often referred to in more benign terms such as speed money or transaction costs, was not on my list. When I look back now, it was also the most painful challenge to resolve.

Our business was clean. There was no intention to avoid taxes, manipulate books or conduct business in anything but a totally legal manner. Why would we then have to pay any “under the table’ money? A meeting with a senior government official was my “baptism”.

His staff had firewalled an application for over a month because we refused to play ball. When confronted, he sat me down and explained: “The chair that you and I sit on, and the coffee I offer you, is not provided by the government. My staff and I have purchased it with personal money. Treat the amount that you were asked for as convenience money.”

I argued that we did not indulge in anything unlawful and that we had not evaded any taxes. He surprised me with his retort: “Of course we know that you are clean. Otherwise, we would be partners.” I had a hard time taking a decision.

I was being coerced into doing things that I would preach against, things that my children were hopefully learning not to do. If I stood up to the “system”, I was putting at peril a successful business. My shareholders, family and employees did not hand over the charge of the business to me so that I could risk it all for my principles. I was expected to go with the flow, not rock the boat.

I gave in.

The “cash” required for such convenient transactions was a problem. The generation of cash meant either selling something without taxes, off the books or over-invoicing a purchase, or some innovative but illegal transaction. Another skill gap identified.

I wondered if others felt the same sense of loss that I was experiencing. Despite my education, competence as a business manager and confidence as a problem-solver, I was beginning to feel defeated.

I searched for the best practices being followed. I was surprised to find that large chambers of industry were asking their members to sign codes of ethics; they were running to the government holding up these ‘trophies’ even as they swept the whole issue under the carpet.

It may have been more effective if they collected confidential data regarding the amount of bribes being paid by each member, per department, and put up the consolidated figure on a website.

I’m told there are those who fought the system and never paid a bribe, and I’m not talking about the ones who have tucked away the painful truth by hiring a consultant to do the dirty job.

But I have not had the privilege of meeting any such business persons. I would like to know what it cost them: if it slowed them down and if growth had to be sacrificed.

Why do we have to pay a price to be an honest, law-abiding business? I believe it is because the bribe-seekers are unified in their purpose. They stand together. They have a well-oiled machinery that takes care of all the vested interests and that ensures the perpetuity of this malaise.

The solution, hence, also lies in the bribe-givers standing united in their resolve to clean up the system. Here is a proposal:

A ‘Society for Ethical Business’ is established as a self-help group for members engaged in business that is legal and seeking to stop being blackmailed by corrupt officials. The society is a visible platform of like-minded business people who have decided to fight the system.

Once you register your intent to join as a member, the society arranges a confidential compliance audit of your company for a fee. Upright senior officers retired from key government bodies conduct this audit. The idea is to (i) highlight any inadvertent non-conformities in your compliance to laws, rules and regulations (direct, indirect taxes and labour laws, and so on), and (ii) verify your claim as being nethical business.

Once you are declared ‘clean’, you pay a fee (not large, especially compared to the bribes you have been paying) and enrol as a member. You are required to sign a declaration that you will abide by the society’s charter.

A plaque announcing your membership to the society will be displayed outside your premises. The society informs the authorities in your area that you are now under the society’s care — no bribes will hence be paid hereafter.

Any action initiated against the company will henceforth invite intervention by the society. As an example, any raid will be done in camera in the presence of representatives of the society. Members of the society will defend any untoward pressure on the business collectively.

All such incidents will be reported in the press and to the appropriate authorities. The society will use a large part of the membership fee collected to make donations to political parties officially. This is not meant to be a cost-saving exercise, it is an assertion of our right to conduct ethical business.

In the background of the AAP-isation of Indian politics, the time for all of us in business to stand up and be counted, is now.

Of course, ethics is not limited to refusal to pay a bribe. It includes refusal to use pirated software, infringe intellectual property or solicit business by unfair means.

For these, we do not need a society. Here, we stand alone.

The writer is the CEO of Deki Electronics and chairman of the Electronics and Software Export Promotion Council. The views are personal.