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Paranjoy Guha Thakurta

Booming business of corporate espionage

A quick look at the ministries from which information and documents were pilfered tells you much of the story: Finance, Defence, Petroleum and Natural Gas, Coal and Power

Corporate espionage in India is hardly new. For decades, tycoons have used spies to ferret out information about what is going on behind closed doors in the corridors of power. Access to sensitive information known only to a few powerful politicians and influential bureaucrats is often not just a source of profit but also provides competitive advantage over business rivals. The government is vast and multi-layered — it can be easily compromised by bribing junior officials with relatively small amounts to part with valuable information. The big names from the world of politics, bureaucracy and the corporate sector are rarely caught when law-enforcing agencies crack down on spies and thieves. Only their minions are jailed.

So what’s new about the recent incidents of corporate espionage that are being investigated by the Delhi Police? Not much. Except that the modus operandi of the spooks has changed with technological advancements. Xerox machines are out, scanners are far more convenient. Why cart away large bundles of paper when there are pen drives that fit into your wallet, when broadband-enabled email can in a jiffy move a zillion kilobytes of data across continents, when smartphones and WhatsApp make life unbelievably simple?

However, some things have not changed. During years of licence raj, every important decision impacting businesses countrywide were taken by a clutch of netas and babus sitting in Delhi or Mumbai. The brave new era of economic liberalisation was supposed to have made the working of ministries less discretionary, more predictable and transparent. But that doesn’t seem to have happened. To use the memorable phrase from Reserve Bank of India Governor Raghuram Rajan, crony socialism was replaced by crony capitalism, especially when it came to allocation and pricing of natural resources.

The series of scandals relating to the farming out of second-generation (2G) telecommunications spectrum, the opaque and arbitrary allocation of coal blocks by so-called “steering committees”, and the controversies relating to extraction of natural gas from the Krishna-Godavari basin by a contracting company controlled by Reliance Industries Limited (RIL) are but three instances of how government decision-making has been vitiated by cronyism. It is, therefore, not surprising that corporate captains have felt it ‘important’ to utilise the services of spies to find out what’s going on in North Block, South Block, Udyog Bhavan or Shastri Bhavan, among other buildings that house powerful economic ministries and government departments.

A quick look at the ministries from which information and documents were pilfered tells you much of the story: Finance, Defence, Petroleum and Natural Gas, Coal and Power.

The pattern is familiar. Journalist Santanu Saikia ran web portals on the petroleum, fertilisers and energy sectors, before he was put behind bars. Among those arrested or questioned by police are employees of groups like Reliance, Essar, Cairn/Vedanta and Jubilant. Those detained or accused are in the middle or bottom of the corporate hierarchy in conglomerates headed by well-known industrialists like the Ambani siblings Mukesh and Anil, the Ruia brothers Shashi and Ravi, Anil Agarwal and Shyam S Bhartia. As stated, it appears unlikely that the investigations will go all the way up to these individuals.

Who remembers the corporate spies of yesteryear? In 1986, Coomer Narain, regional manager of SLM Maneklal Industries, was charged with criminal conspiracy and leaking important classified information to agents of foreign companies. He would bribe junior employees in the atomic energy and defence ministries for documents, which he sold to the highest ‘bidder’. His employer used to supply textile machinery to the Soviet Union, Bulgaria and Czechoslovakia; source marine equipment from Poland; and represent firms from France, Austria, Switzerland, West Germany and Japan that sold defence equipment and machinery for nuclear power plants.

One of Narain’s sources was a personal assistant to Dr PC Alexander, the then Principal Secretary to Prime Minister Rajiv Gandhi. Alexander resigned in the wake of the espionage scandal. After Narain’s arrest, the government ordered two French diplomats, including the then ambassador, to return home. As in the recent case where at least one official of the Defence Ministry has been arrested, much of the corporate spying in the country has related to companies associated with military purchases. This is again not surprising, given that defence deals are extremely lucrative.

In November 1998, a search-and-seizure raid on V Balasubramaniam (or Balu), group president of the then undivided Reliance group, led to the recovery of secret documents including Cabinet notes. The police registered a first information report against him and two other senior Reliance executives, AN Sethuraman and Shankar Adawal (the latter was questioned by Delhi Police in the latest episode too). It was in April 2012, nearly 14 years later, that a court framed charges against the executives and passed an order, against which an appeal is pending before the Delhi High Court.

A number of surveys by industry associations and consulting agencies indicate the business of trading in sensitive information is ‘booming’ in India. In fact, this was precisely the language used in a report prepared in 2012 by PricewaterhouseCoopers.

The same year, a study by the Associated Chambers of Commerce and Industry of India stated that more than a third of the companies surveyed across different sectors were involved in some form of espionage to gain advantage over competitors. Nearly 80 per cent of the chief executives spoken to had used or were using detective agencies and surveillance systems to spy on current and former employees.

A 2014 annual risk survey by the Federation of Indian Chambers of Commerce and Industry called business espionage the ninth biggest threat to Indian companies. It stated that in spite of widespread use of closed-circuit television cameras and tracking computer software, only 15-20 per cent of corporate espionage cases is actually detected.

Minister of State for Commerce and Industry Nirmala Sitharaman has gone on record stating: “...We are on the side of keeping processes transparent and not on the side which will lead to corrupt practices.”

Time will tell whether this will indeed be the case and whether the corrupt nexus between politicians, corporate bigwigs and bureaucrats that has spawned the spying industry will weaken.

Date posted: April 2, 2015Last modified: April 3, 2015Posted bySneha Mukherjee
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