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The new chairman of the Reserve Bank of India calls for an end to his country’s version of ‘crony capitalism’


raghuram rajanRaghuram Rajan, professor of finance at the University of Chicago, is the new Governor of the Reserve Bank of India. He has good credentials: a former Chief Economist at the IMF, he warned about the dangers of the US financial bubble as early as 2005. He also described the failings of India’s financial sector in 2008 and the country’s credit bubble in 2012.

The Financial Times reports that he has long called for an end to ‘cronyism’ and last year the NDTV website reproduced an article on this subject from the New York Times, describing “a brazen style of crony capitalism that has enabled politicians and their friends to reap huge profits by gaining control of vast swaths of the country’s natural resources . . . “.  Sounds familiar . . .

Though acknowledging Mr Rajan’s record as a critic of cronyism, the Economist believes that he will “have his work cut out to prevent licences going to well-connected tycoons”.

Rampant also in Britain and the United States, there is little hope for a decent life for the ‘man in the street’ in these three countries unless people like Mr Rajan combine to eliminate this ‘brazen style of crony capitalism’.

Adapted from sister site:



The new government’s plans to introduce a lobbyists’ register

PCU has been alerted by the 38degrees campaign to an undertaking in the full text of the coalition agreement reached by the Conservatives and the Liberal Democrats:  

6. Political Reform 

The parties will tackle lobbying through introducing a statutory register of lobbyists. We also agree to pursue a detailed agreement on limiting donations and reforming party funding in order to remove big money from politics.

38 degrees sees two remaining problems:

  • The timescale hasn’t been announced.
  • Big business pressure could change the government’s mind again. 

They note the headline on the home page of the Public Relations Consultants Association [PRCA]: PRCA to fight Government plans for statutory register for lobbyists. They hope to continue on the ‘self-regulation’ path, favoured by the majority of corporations in most sectors.

38 degrees, which works with Spinwatch and the Alliance for Lobbying Transparency asks readers:

Please email David Cameron and Nick Clegg now and urge them to introduce the new rules as soon as possible:

The message ends:

“Again and again we’ve seen lobbyists distorting politics.  Whether it’s the Digital Economy Bill, plans for a new runway at Heathrow, [PCU adds pharmaceutical & GM interests] tobacco advertising or arms deals, too often it feels like lobbyists are calling the shots behind closed doors. Let’s move fast to make sure the Government turns this ban into law quickly, and doesn’t water it down under pressure from big business.”

Guido Fawkes: “It is essentially the job of a government lobbyist to subvert democracy”

Last year Paul Staines [Westminster blogger Guido Fawkes] announced that his ‘new campaign over the coming years’ would be to highlight ‘the fat cats of spin and their hidden hand in politics’.

‘What I would like to see is much more above-the-counter lobbying,’ Paul Staines told PRWeek. ‘There is a legitimate role for lobbying, but I don’t want it to be over coffee and cigars after a meal. I want it to be up-front and out in the open – like a political campaign.’

He blogs: ‘The Sunday Times sting that caught Byers, Hewitt and Hoon offering themselves for hire comes as no surprise . . . It is essentially the job of a government lobbyist to subvert democracy, that is what their clients by-and-large pay them to do.   Sometimes the hired-help (politicians) get embarrassingly caught out, but most of the time they get away with a more subtle form of corruption’. 

He was invited to give a speech on the influence of lobbying to a room full of lobbyists at the AGM of the Chartered Institute of Public Relation’s Government Affairs Group. CIPR invited Guido to explicitly express his view that “lobbyists are scum”.

Public Affairs News reports that Fawkes/Staines accused professional lobbyists of “being paid to thwart the will of the people”, and taunted the crowd, asking “Tell us, when you were little boys and little girls, who wanted to be a lobbyist?” A paltry number of hands were raised, rather gingerly.

He said: “You might call it ‘lobbying’, I call it corruption”, later adding: “We have to do something to stop you guys running amok.”

Specifically Fawkes/Staines attacked the Association of Professional Political Consultants (APPC) and Public Relations Consultants’ Association (PRCA), claiming that they are soft on disciplining/expelling their members for bad behaviour. He said: “This pretence that you are all angels isn’t going to wash.” 

Brave words – and all the more disappointing that he has not used the opportunity of the election platform to further his new campaign. 

Like the subject of Iraq – the issue of undue influence and the subversion of parliamentary democracy is not being addressed ‘head-on’. 

What a wasted opportunity . . .

European corporate food lobbies rule OK!

60% of EU lobbying consultancies have not registered almost two years after the European Commission launched a voluntary lobby transparency register. A survey by the Alliance for Lobbying Transparency and Ethics Regulation (ALTER-EU) highlights the failure of the voluntary approach.

A few days after reading about the survey it was reported in the Financial Times that European food companies had successfully opposed a scheme to put icons denoting the amounts of fat, saturated fat, salt and sugar on the front of packaging – a scheme backed by the less well-resourced consumer groups.

Are ‘corporate paymasters’ able to blackmail governments?

In a letter to the Co-operative News [30.3.10] Edgar Parnell comments on the revelations from the joint investigation for the Sunday Times and Channel 4’s Dispatches programme: 

“Powerful business lobbies influence the decisions of governments of ostensibly sovereign states and, few if any, are in any position to withstand the pressures applied by big business within the framework of a globalised economy.  

“Large companies are able to blackmail governments into providing favourable conditions for the expansion of the profitability of their businesses under the threat of transferring elsewhere, along with the investment, jobs and tax revenue.

“Sponsorship is yet another means of exercising control over organisations and activities that rightfully belongs to citizens. Sponsorship and charitable donations are in practice seen as an alternative to accepting a fair share of the taxation burden that should be picked up by corporate businesses.” 

He notes that MPs are free to advise their clients [‘corporate paymasters‘] on the best way of changing the law in their favour and to set up meetings with decision makers:

“All this adds up to the means of exercising illegitimate power in what is supposed to be a democracy . . .the reality is that we actually function within a system that at best can be described as ‘corporatocracy’ and that citizens should be demanding changes in the way that our political and economic systems are organised.” 

The need for a new generation of leaders – to bring about substantial changes to our political system so that it serves citizens rather than corporate elites – is voiced.

PCU adds that ‘new’ leaders will not bring about the desired changes unless they are also altruistic and incorruptible.

Another MP has breached parliamentary lobbying rules

The Farmers Guardian reports that David Curry MP has been found in ‘serious breach’ of Parliament rules by the Standards and Privileges Committee.  

Ironically, for three years Mr Curry had been a member of this committee which enforces the rules of conduct in the House of Commons. 

Between August 2005 and September 2008, when he was chairman of Dairy UK, he was charged with lobbying on behalf of Dairy UK – breaking Parliamentary rules. 

Mr Curry was paid a salary of over £35,000 for this work with Dairy UK and received a payment of £20,000 when it ended.

Will there be loop-holes in the register of lobbying activities?

The One World Trust has claimed that ‘accountable lobbying’ will not be achieved even if all the recommendations of the PASC report into Westminster lobbying are implemented. 

The think-tank said that the proposed register of lobbying activities – including the requirement requiring all meetings between lobbyists and the lobbied to be minuted and published – ‘would still contain loopholes, particularly relating to organisations’ abilities to lobby Parliament without revealing potential sources of bias’.

The One World Trust advocates rules to ensure that:

  •  non-profit organisations have to register their donor and grassroots support
  • all statistics and ‘supporting evidence’ used in lobbying are cited formally and made publicly available
  • an ombudsman (to supplement the powers of the PASC-suggested ‘umbrella group’) offering ‘formal complaints-handling powers’ on ‘irregularities’.

One World Trust research manager Brendan Whitty said: “Our research supports the main findings of the PASC paper, but suggests a lot more is necessary to ensure accountable lobbying.”

Lobbying perverts legislation – 2

The PCU website was set up because of a belief that challenges facing this country are not being effectively addressed, largely due to the distortion of policy-making by those on ‘an inside track, largely drawn from the corporate world, who wield privileged access and disproportionate influence’ [PASC].

As three ex-cabinet ministers are suspended from the parliamentary Labour party over claims about influencing policy for cash, following videoed interviews broadcast on Channel 4’s Dispatches programme, Politicians for Hire, another set of serious claims has been made.

A BBC investigation has revealed that more than 20 MPs from all the main political parties have breached rules in relation to registering and declaring overseas trips paid for by foreign governments. Any MP who has an overseas trip paid for by a foreign government must register it within four weeks. They must declare a financial interest if it “might reasonably be thought by others to influence the speech, representation or communication in question”

More than 20 MPs broke rules on declaring hospitality in questions or debates after visiting locations such as the Maldives, Cyprus and Gibraltar. Between them, the MPs – from all the major parties – are said to have breached parliamentary regulations on more than 400 occasions.

A restrained comment from Sir Alistair Graham, a former Chairman of the Committee on Standards in Public Life is that these revelations show that MPs cannot regulate themselves. A video of his comments can be seen on the BBC website.

Electors will be using stronger terms.

Lobbying perverts legislation 1: expenses merely take small change from taxpayer

The news of more lobbying revelations broke on Sunday [links below for any who missed it]. As the Mail’s Peter McKay wrote of the three former Labour Cabinet ministers:

“All three are disciples of Tony Blair. They are the true Heirs to Blair . . . Blair is a world-famous example of the notorious ‘revolving door’ scam in which government officials sell their inside knowledge and contacts in the private sector.

“America legislated against the revolving door with its Ethics in Government Act of 1978. But, here, we have instead the comical-sounding Advisory Committee on Business Appointments which — far from curbing Blair’s activities — was expected by Tony to conceal a new contract he’d landed from a South Korean oil company and a £1million deal to advise the Kuwaiti royal family . . .

“Messrs Byers and Hoon, along with Ms Hewitt, are small fry in the murky waters of public/private commerce. Blair is the Great White Shark. Having worked closely with him — and being aware more than most of his shortcomings — they must resent bitterly being pilloried for trying to make a modest-by-Blair-standards living. It’s the old story. If you want to make it big, aim for the sky. Fiddle on the edges and they’ll feel your collar.”

Ways round lobbying legislation are being found in the USA and will be adopted here. A fair and transparent system is needed.

It would ensure equal access to MPs, ministers and advisers, unaffected by income.

Postmen, bankers, plumbers, chief executives, union/NGO representatives, would applyfor an appointment by email or letter. Meetings would be allocated strictly in order of application and put on public record.

Scarlet letter ‘L’

Scarlet letter ‘L’ for American lobbyist

Stephanie Kirchgaessner in Washington reports that Barack Obama’s campaign proposal to curb lobbying is meeting industry resistance. Democratic lobbyist Heather Podesta wore a scarlet letter ‘L’ in protest

“Two years ago, Barack Obama, eager to win the Pennsylvania primary and the Democratic nomination for US president, launched an advertisement with a simple message: if elected, he would end Washington’s corrupt ways . . .

His target in the advertisement was a man named Billy Tauzin, a former Republican lawmaker turned lobbyist from Louisiana. Mr Obama is shown telling a roomful of concerned voters the story of how Mr Tauzin became chief lobbyist for the drug industry’s trade association on a reported $2m salary just months after he helped get a bill through Congress that barred the government from negotiating drug prices on behalf of elderly Medicare recipients. The legislation was a huge boon for the pharmaceutical industry. “I don’t want to learn how to play the game better,” Mr Obama says in the advertisement. “I want to put an end to the game-playing.”


In Mr Obama’s eyes, Mr Tauzin’s actions seemed to be a symbol for everything that was wrong with Washington; a glaring example of how legions of “hired guns” in the capital used their special access, money and influence over lawmakers to game the system in corporate America’s favour . . .

It has played a significant role in slowing the passage of two major initiatives in Mr Obama’s domestic agenda: reform of healthcare and of Wall Street. It is likely lobbyists will step up their campaign as lawmakers engage in a final push to pass the financial services reform bill unveiled on Monday.