Obituary: Eight Years of the Bush Administration.

Amidst all the hype and hoopla that surrounds Obama’s first days in Office, it maybe worthwhile to take a step back and evaluate the implications of the Bush Presidency. Seldom has the post-Cold War world seen such tectonic shifts in many matters of global concern. These eight years, starting right from the doorstep of the new millennium, have dictated our thought, outlook and course of action. From January 20, 2000 to 2009, the most powerful political position of responsibility today was held by a mercurial personality, who managed to emerge both as the most and least popular President of the United States of America. Whether you adored him (like the corporate and industrial lobbies of the US) or loathed him (pretty much like the rest of the World), you just could not ignore George Walker Bush Jr. Here’s our take on what the Bush Era has meant for tomorrow.

1. Iraq, Afghanistan, the Middle East and the War on Terror.

Within one year of his taking over the US Presidency, George Bush witnessed the first major terrorist attack on an American metropolis in decades. 9/11, hence immortalized through its suffering and consequence, was pivotal in influencing the Bush administration’s foreign policy outlook towards West Asia and the Middle East. Following the launch of a global ‘War on Terror’, a belligerent Bush pursued the Al-Qaeda to the footsteps of the Taleban. Months later, Afghanistan was left in tatters, besieged by the armies of the West in a futile attempt to capture the masterminds behind the WTO strikes.

The President then trained his guns further East, onto Iraq, where the ‘outrageous’ and ‘tyrannical’ regime of Saddam Hussein had allegedly held Weapons of Mass Destruction. Portraying Iraq to be a threat to the precarious stability of the Middle East, the US assumed the patriarchal role of a superpower to chastise the rogue nation. The extant situation in Iraq is left for everyone to see; while the US is fighting a trillion-dollar war, Iraqis are struggling to find a foothold on the world map.

As the Bush Presidency is all set to be a bygone era, the world has been left reeling from an increased spate of terrorist attacks, raising incisive questions of the efficacy of a costly ‘War’.

2. The Environment and Climate Change

As a presidential candidate, Bush began his campaign with a pledge to clean up power plants and reduce greenhouse gas emissions. During the initial months of his first Presidency, he even sought to commit billions of dollars to fund ‘clean-energy’ technology. The President also assured the Congress, environmental groups and the energy industry of his full co-operation to secure a reduction in emission rates within a reasonable period of time. However, his subsequent volte-face on the matter, terming greenhouse gas reduction to be adversely affecting energy prices, shocked the environment-conscious community.

The Bush Administration also refused to implement the substantive content of the Kyoto Protocol, stating that “ratifying the treaty would create economic setbacks in the U.S. and does not put enough pressure to limit emissions from developing nations”. After years of subservience to the powerful oil and energy lobbies, environmental surveys at the end of Bush’s tenure indicated a marked increase in the US’ contribution to global warming and sustained ecological recklessness.

3. Human Rights and Guantanamo.

Guantanamo merits a separate post. The connecting link will be uploaded in a day’s time.

4. The State of the Economy.

The fag end of George Bush’s stint as the President witnessed the implosion of the mighty US financial sector, triggering a global economic meltdown. A consequence of hasty and often unmonitored actions of the corporate lobby, the financial downturn meant a loss of jobs for millions of people around the world in professional services. The chain-reaction of such a collapse is yet to cease, and major banks and industries continue to be bailed out by the day.

While we may have to dig deep to find positive lessons from the Bush regime, it is suffice to say that the period is dead and gone. May the Bush Presidency rest in peace.

The Apex Court and the Right to Information

I learnt today that apparently the Chief Justice and his office do not constitute a ‘public authority’ under the Right to Information Act.

This, after the Supreme Court petitioned the Delhi High Court against an order passed by the Central Information Commission asking the CJI to disclose as to whether the judges of the Supreme Court were disclosing their assets to him.

 

In a brief background to the situation, a resolution was passed on May 7, 1997 requiring every judge to declare to the CJI assets including properties or any other investment in the name of their spouse and any person dependent on them.  Earlier petitions regarding the disclosure of assets of judges under the RTI were dismissed on the ground of such information not being in the ‘public domain’. However, in this order, the CIC did not ask for the disclosure of assets but as to whether the practice set out in the resolution of 1997 was still being followed.

 

In the petition before the Delhi High Court, the Supreme Court (as a petitioner) stated that this practice was only ‘informal’ in nature and that there was nothing in the Constitution or any other law ‘mandating’ the judges of the Supreme Court to disclose their assets to the CJI. I now know that the Delhi High Court has issued a stay on the CIC order and the next date of hearing is set on 12^th February 2009.

Questions are raised when the most powerful organ of the Government sheds and denies any degree of accountability upon itself. In Association of Democratic Reforms v. Union of India, the Court had asked candidates standing for elections to disclose their assets stating that in a democracy, those in power must behave responsibly and know that they ultimately work at the behest of the people. Much earlier, it had asked IAS officers to disclose their assets and ordered authorities to keep a check on them.

At both the above instances, the Court judged on the basis that the Right to information was a constitutional and fundamental right of the citizens; thus holding that in the case of the legislature and the executive, this right must not be denied to the citizens. The Right to Information Act was passed to give effect to this constitutional right.

However, when the Apex Court denies this responsibility upon itself and ensures its performance among other organs of government, it is using double standards. There is a tint of supremacy of the Court over the Constitution here which I would say is no where mandated by the Constitution. In the Hamlyn Law Lectures, MC Mehta had stated,

“there is no theory of judicial supremacy in India, but that of Constitutional Supremacy”.

So if there does exist a theory of Constitutional supremacy in India, surely the Court should not place itself above the Constitution. If the argument is that the Right to Information Act does not look upon the Court as a public authority, surely under the rights guaranteed by part III, this disclosure of assets can be achieved; just as done in the case of the executive and the legislature (In both cases, the RTI Act did not exist).

V Venkatesan of Law and Other Things wrote a post here on the CIC decision that was passed on the 6^th of January 2009. He says;

“Although the decision pertains to the RTI question on the declaration of assets by the Judges of High Court and the Supreme Court, it has set an important precedent to make the Higher Judiciary truly accountable. It will be unfortunate if the Supreme Court appeals against the decision in the High Court, in which case, the Judges hearing the appeal may not be able to decide the appeal objectively in view of the apparent conflict of interests.”

I will not be faltering when I say that I share the same concern. 

 

 

Corporate Governance: Satyam’s Year-End Woes.

As the year is fizzling down to an economically weak finale, Satyam Computers has found itself in a deep mire, with the Maytas acquisition deal coming under strict scrutiny.  In an unrelated development, the World Bank later announced its intention to snap all business and development ties with Satyam following allegations of data theft in one of the Bank’s projects managed by the latter.

Many might be wondering why this seemingly plain-vanilla private sector transaction is figuring in a blog that addresses larger policy issues. However, the Satyam-Maytas deal throws critical aspects of efficient and ethical corporate governance into relief. Before I venture to speculate on the  Big Picture, here’s a primer on what really happened.

On December 16,  Satyam Computer Services, India’s fourth largest IT services provider, proposed to acquire Maytas Properties and 51 per cent stake in Maytas Infrastructure for a consideration of 8,000 Cr (Approx.). The deal, which surprised analysts and shareholders alike, was held out as a plan to ‘de-risk the core IT Business’ in the face of the ongoing economic downturn. On the other hand, it was no State secret that the Maytas (a palindrome for Satyam!) Group was controlled by the sons of Mr. Ramalinga Raju, Satyam’s Chairman. The proposal and its justification raised many eyebrows as the financial crunch was yet to show a perceivable impact on the software/IT industry.

Well, eyebrows were pretty much the only things raised by this deal, because every other financial index of Satyam plummeted. The next day, the ADR (American Depository Receipts) of Satyam Computer in the NYSE tumbled by over 50 per cent. In India, the scene was less dramatic, but the stock continued to be flat, indicating little interest from the shareholders. Consequently, Satyam was forced to call off the deal, all within a span of 24 hours. Mr. Raju said,

We have been surprised by the market reaction to this decision even though we were quite positive about the merits of the acquisition.

Thus, the shareholders and investors in the company were quick to shift gears into activist mode, evoking an incident hitherto unseen in Indian corporate history. From the outset, it was clear that the deal had thrown caution to the winds, materializing without any respect to shareholder sentiments. Despite the enormity of change proposed through diversification, Satyam failed to factor in public opinion on the matter that, prima facie, seems like a family affair.  The appalling lack of transparency has forced SEBI and the Ministry of Corporate Affairs to take note of the matter and the watchdogs will certainly examining the nuances of this deal.

The issue brings the role of independent directors of a Company to the forefront; their opinion on such matters is expected to echo the views of a rational shareholder and not merely the interests of the promoter.
Business Line has an exceptional piece on the matter and the author goes on to say,

Questions will be raised rightly about the role of independent directors in issues such as this. The standards of corporate governance were sought to be raised when the stock market regulator insisted that independent directors should be in the majority on the boards of listed companies. Companies have in general complied with the rules, but the nagging doubt was whether independent directors appointed by a body of shareholders dominated by promoter can at all remain independent. The Satyam saga has brought the issue to the fore yet again.

Transparency in corporate governance is crucial as India is opening her markets to major foreign players.  If our domestic  segments cannot set an ethical example to its shareholders and investors, retail and institutional confidence is going to take a hit. Lifting the corporate veil in such cases is integral to sustain the company’s reputation and shareholder trust.

For the average shareholder/investor, the Satyam fiasco presents yet another reminder of the need to be activist and informed. The economic crisis might generate a number of transactions which are intended to be a quick-draw shortcut to ease monetary repercussions. Nonetheless, those at the receiving end have to be cautious, adopting a rational approach to the ‘lucrative’ deals that present themselves. The $50 billion Madoff fraud has left investors reeling; corporate accountability must be preserved to ensure a fair disposition of rights.