The nexus between business, politics and
cronies was never out in the open as it is at present. It is grudgingly
acknowledged today by even the most ardent votaries of the policies of
democratisation, followed over the past few years, that crony capitalism has
become rampant and that a new breed of oligarchs has emerged in an environment
characterized by governance and ethical deficits.
Crony Capitalism is a
pejorative term used to refer to the corrupt business dealings or the public/private
collusion carried out in a capitalist economy. It refers to the success in
business based on a close relationship between businessmen, politicians and
cronies. Cronyism is essentially where
economic decisions in terms of who accumulates wealth and who doesn't, is not
based on merit, it's not based on economic prowess or success or meeting needs
in the marketplace; or on people who are
most deserving based on technological breakthroughs and consumer demand. It's
based on political connections and relationships whereby you are able to either
manipulate the state to your advantage, and to the disadvantage of your
competitors. It is a system in which connection trumps competence, and money
supersedes merit.
The supposed democratisation of the
economy has enriched only cronies and some specific conglomerates through
allocations of licenses, land, contracts and special deals. Every other day,
our local press is fraught with “allegations”
of the nexus between politicians, business groups and cronies. Some years back,
we had a leading conglomerate and life insurer involved in unsound related
party transactions which was propped up and given a license under the Banking
Act by BOM. And recently that the banking Act was amended to to relax the limitation on investments and
non-banking operations, and allow financial institutions to buy, sell, hold or manage
pools of assets. Now going much beyond insurer solvency, the same process is being
repeated again and again in other sectors/areas like the biometric ID card, CT
power, the LRT/MRT project and the purchase of aircrafts. In the words of Ogden
Nash: “Heights by great men reached and
kept, were not attained by exertion, but they while their companions slept,
were busy contacting the right person “.
The "rodeur-boute " mentality has not spared any section of our
society. Everyone now wants easy money with so many lousy role models across different
sectors. Still, paradoxically, the honest minority among bureaucrats,
businessmen, workers and journalists have become increasingly proactive and
vocal about the need to curb this mentality.
But many disagree; their common argument is to have recourse to the law,
to justice etc. But these cases are very difficult to prove and they drag on
for years as those crony capitalists influence politicians in ways that let
them run rings around rules. Take the case of Ambani of India, it has never
been proved till now that it has obtained favours from Government and there are
court cases dragging since 2007. The
issue of the Economist of August 2-8, 2014 had a whole article on Ambani showing
his companies in all its ways and deals, especially the allegations of crony
capitalism.
In a society ridden with crony capitalism, cronies and politicians
inevitably try to stop people writing that reveals their goings-on. But there
is a limit to how much they can prevent from being divulged to the public. If a
small outfit like Wikileaks can shake the might of the most powerful
establishment on the planet (the US government), if the democratic uprising
against corrupt regimes in North Africa and West Asia can hold the promise of
becoming defining moments in human history, how can Mauritius still remain
isolated and insulated from these winds of change sweeping across the globe?
Take the case of India, it has been shown by the recent publication of three
books that , despite the odds, some people are succeeding in uncovering many of the secrets of the
showy but shadowy Sahara Group run by the idiosyncratic and reclusive Subrata
Roy (now in jail); the intrigues, spats and influencing of Reliance companies,
run by the Ambani brothers, over natural gas pricing; and the fixes and fudges
of Air India, especially when Praful Patel, a suave and wealthy politician, was
aviation minister in the last government.
Mauritius can ill-afford crony capitalism. Mauritius has forged its success on strong
institutions that developed representative democracy, accountable government
and rule-of-law- all important for investment and growth. We are now heading the other way . Recently,
the Reserve Bank of India governor, Raghuram Rajan, has warned against crony
capitalism which he said creates oligarchies, slows down growth and is highly
damaging. "By killing transparency
and competition, crony capitalism is harmful to free enterprise, opportunity,
and economic growth." Crony capitalism must be challenged. When the
state and powerful private interests collude the result is a cocktail of market
distortion. The threat posed by crony capitalism is not that the chosen cronies
do a bad job, but that the lack of competition removes the incentive to
innovate and improve the quality of products. Such practices not only result in
millions of rupees being lost but also signal to the rest of the world that
Mauritius is not a level playing field. This is detrimental to the interest of
creating a sound business environment in our country.
We are proud of many of our businessmen who have been
doing quite well weathering the present downturn and are helping Mauritius to
carve its way out of the middle-income trap to a high-income economy. But
others are rising less cleanly, building fortunes off the back of unsavory
government/private “partnerships” –
part of the reason why the country’s growth has flagged badly over the past
years. It is not hard work, intellectual
brilliance or innovations that have made many of our millionaires, but 'right connections' from which they
prospered by leaps and bounds. It is very tragic for a country not to help the
hard working and deserving but continues to help the families of the same
influential set of people at all levels. And it is these beneficiaries of crony
capitalism which lead many to worry that we may be undermining the country’s
hopes for future growth and development.
