Corporate Espionage: The Silent Threat
Intro: The Modi government should take the initiative to cast the first stone against Corporate Epsionage which has haunted the Indian economy since Independence.
It was very interesting when the news spread all over the country that there had been some large-scale arrests of some very small scale people indulging in what was called in the mainstream media as “Corporate Espionage”.
How the Government executed operation
The first question which is on everybody’s mind is how deep does the rot go and if indeed the rot is deep then whether those at the very top will be held responsible. As of now the answer seems quite unlikely. However before the entire racket unravels in front of us it is worth exploring what is the likely impact on law as we see around us.
With the entire situation being unpredictable and
unforeseeable in the future, at the present stage it can be
safely predicted that there seems to have been large-scale stealing of documents by misusing positions, tampering with official documents like entry passes and so forth.
It is being heard here that some very important documents had been stolen, regarding some of the most important government departments and commercial actions. It is also being surmised that defence has been compromised. With the arrest of staffers in the petroleum, coal and power ministries it is apparent that the stealing of documents was going on rampantly. There is news that people in the Ministry of Defence have also been arrested. There is also news that important documents from the PMO have been stolen as well. The anecdotes as to what has been stolen and what has been recovered are now matter of conjecture on the pages of newspapers and in coffee shops. If even half of the stories, which are being spread, are true it is apparent that the actions were borderline treason, if not treason itself.
The greatest danger to any economy, socialist or free market is cronyism and insider trading. Corporate Epsionage is one such example of cronyism and insider trading.
While beyond the wild conjectures, the immediate legal question is, whether the thefts and leaking of documents would be mere questions of theft or will the documents be covered by the Official Secrets Act, in which case the punishments will be much more stringent? It can be surmised that while majority of the documents may not be classified under the Secrets Act, some would definitely fall under the rubric of the Act. In that case it would lay the people involved to wide ranging punishments which can go upto 14 years of imprisonment.
That apart the question is how one classifies this sort of action. Corporate Espionage is part of corporate life. In fact, in the world today, espionage in the days when gunboats were used have been replaced by trading houses and the internet has come to mean corporate espionage. Not one corporate house all over the world is beyond this game. The game is played across the world, crossing national boundaries. It is also played viciously between different corporate groups within the country, who are jockeying for the largesse of the government.
In this battle there are as is always, soldiers and generals. The generals are never on the front lines. They operate from swanky offices in the middle of some of the toniest of districts all over the world, including Delhi. They mingle with the powerful and the powerful are in many ways beholden to them. Some of them are also very powerful themselves holding extensive empires, with wide ranging business interests including interest in media.
On the other hand there are the soldiers, the sort of people who tamper with the ID cards, who make the photocopies and who sell secrets for Rs. 1 lakh which in the right hands would become thousands of crores. These are the nameless, faceless people who are seen everyday in the newspapers as the ones who are arrested.
Of course a few of the middle level staff is always compromised and on most occasions: these mid level staff give us a glimpse of how deep the rot may lie, however as always, it's here where the buck stops.
Predictably, even this time there are attempts being made to make out as if some of the mid level staff had gone rogue and were doing things on their own. Like any secret service operation gone wrong, the pieces are disclaimed when there is a danger of the higher ups being compromised.
The question is whether the present investigation will reach the generals or whether it will be restricted to some middle level operatives. Going by the past, it is unlikely anything major will happen.
There has been a history of such corporate thefts and corporate warfare using the government as a proxy from the time of independence in India. The fights between very famous industrial houses are legendary. Movies have been made in Bollywood on them. Governments have fallen because of feuding industrial houses. However the industrial houses have remarkably managed to keep themselves insulated from the long arm of the law. While politicians and even bureaucrats have been made to pay for their omissions and commissions, the industrial houses have never been touched.
Whenever there is an attempt to nail the higher ups, the shouts go up that the government is acting against the industry, and, if the industrial houses are affected the economy of the country is bound to be hit. It is time that the two main legal issues are dealt with unequivocally.
“It is clear that corporate spying is rampant in Government of India with business groups, journalists and bureaucrats involved. Primarily, it is reflection of greed that finds fertile ground in non-predictable, lacking in transparency, and discretionary government policies and processes. Crony capitalism thrives in such an environment as we saw in a big way during the UPA days. Government has to open up in a much bigger manner. For example, it has to make policy making evidence-based and not individual-based. Draft policies should be put out for public discussion so that there are no surprises. More important government should discard all discretions and rely on well-defined criteria. Specifically, all clearance required should be given in open, transparent and time-bound manner. UPA government ultimately gave all projects environmental clearance but the time varied from 1 year to 3 years, giving rise to opportunities for both direct corruption and corporate spying.”
—Shakti Sinha, former Power Secretary, Government of NCT of Delhi
Firstly, in no other country in the world would the big players get away with the things that they do in India. In the USA, the land of the market economy, the high and mighty goes to prison regularly if they refuse to play by the rules. The trials and punishments of those important personages who tried to break the rules are both cautionary and legendary. An entity as powerful as ENRON was wound up, and Arthur Anderson one of the greatest accounting firms in the world had to fold up. Many of their executives had to go to prison in long jail terms. In fact the free market is based on the concept of the rule of law that is anyone who tries to bend the rules or break them must be punished, because that is the only way the market can be kept truly “free”, without it being subverted by monopolies, cartels and cronies of the government of the day. In India for 60 years we have not touched the powerful industrial houses.
International Cases of Corporate Espionage
Secondly, the actions of the industrial houses which have sold or used state secrets for personal gain are guilty of border line treason if not treason. At the very least they are guilty of illegal benefits. It is time that they were made liable for their actions. This liability should not only be in criminal law, which is fine but should be in civil law as well, that is it is important for those who have benefitted out of selling state secrets to be made to repay the state the benefits earned along with penalty for cheating the country. It is time that we explore myriad different legal routes to make those responsible exorbitantly legally liable.
The greatest danger to any economy, socialist or free market is cronyism and insider trading. The present incidents are examples of cronyism and insider trading. It is important for the sake of our economy that those responsible are made liable and the responsibility be traced to the very high. It is in the interests of both the rule of law as well as the law of economics that players in the market should not be allowed the benefit of cheating to get ahead.
We expect this government to cast the first stone against this cronyism which has haunted the Indian economy since Independence. The arrests if they are followed with further action to the very top would be indeed an indicator of “Acche Din”.
Vikramjit Banerjee (The writer is an Advocate of the Supreme Court of India)