Politics and Corruption

What follows is a random, hastily written observation about corruption in politics.

Countries typically have GDPs far in excess of the revenues of most corporations. Even otherwise, leading a country is a significantly more challenging task than leading a corporation. Then why are leaders of countries entitled to far less compensation than say CEOs of companies?

Take the case of Egypt for example. It has a GDP of $500 billion. Hosni Mobarak was at the helm of the country for 30 years. What would be the net worth of a typical corporate CEO who has been heading a company of equivalent size for 30 years? A billion dollars would be easily achievable!

So why are Mobarak’s finances a problem? Well for starters, it is stolen money. And that’s that. There is no excuse for Mobarak to have made that amount of money. But our political systems are set up in a way that incentivizes people like Mobarak to steal.

Say my family owns a business that no one from our family is interested in running on a day-to-day basis. So we decide to hire a manager. Since we own the business, the money it generates belongs to us. We will use that money to pay the manager. We can’t hope to hire a good manager if we offer a bad salary. Or we will find a really smart manager who understands he is worth more than we are offering, but figures that he can bridge the difference by skimming off some money.

I claim that tax payers are unwilling to pay a good salary for the CEO of their country. I claim that our political leaders should be compensated in a manner that is commensurate with the intellectual complexity and importance of the job we hire them for. And the compensation we offer should be competitive with what the private sector can offer. We don’t believe that corporate CEOs do their jobs solely out of the desire to make the world a better place. So why do we expect our political leaders to do so?

There is a problem with this scheme. Once a leader is in power and is raking in the big bucks, why would she relinquish power? I can imagine it is a problem in countries like Egypt where dictators rule for 30 continuous years. But in countries like India, where elections are held frequently and largely fairly, with an independent press and judiciary, this shouldn’t be an issue.

CEO incentives are aligned to the best long-term interests of the company they head, by giving them an ownership stake in the company. If we can come up with a similar system, which gives every leader a fair ownership stake in the country, perhaps one of the big drivers behind top-level corruption will go away.


Corrupt Cricket

This is an excerpt from one of Prem Panicker’s recent blog posts about corruption in cricket.

This is a true story [and knowing you guys, the comments field will fill up with speculation on the identity of the central characters. Speculate all you like, I’m not telling]:

There was once an opening batsman known as much for his impeccable technique as for his preternatural sense of the ebbs and flows, the rhythms, of Test cricket. The way he constructed an innings was both masterclass and template: the early watchfulness, the constant use of the well placed single to get away from strike and go to the other end, from where he could observe the behavior of pitch and bowler, the imperceptible change of gears and then, as the lunch interval loomed, the gradual down-shifting of gears as commentators marveled: ‘He is pulling down the shutters… he knows it is important not to give away his wicket just before the break… the onus is on him to return after the break and build his innings all over again… the man is a master of focus…’

I followed along, on radio first and later, on television, and I marveled along with the commentators, the experts. And then, years later, I heard a story — of how, when the toss went the way of his team and this opener went out to bat on the first day of a Test, a close relative would bet with not one, but several, bookies, about whether the batsman would get to 50 before lunch. Or not. ‘So he would get to 45 or so, and there would be 20 minutes to go before lunch, and he would defend like hell, and all these experts would talk about how he is downing shutters for lunch when the fact was, there was a lot of money riding on his not getting 50 before the break,’ is a paraphrase of what one of the bookies who suffered from such well-placed bets said.

Prem makes it clear that he has no intentions of revealing the identity of the person. However, he drops enough hints about who the person might be. The only big assumption required is that he is talking about an Indian cricketer. Assuming that, I am fairly certain that the cricketer he is talking about is Sunil Gavaskar. Gavaskar used to open and he fits the description Prem provides very well. Also, Prem alludes to the fact that he initially followed the games on radio and then on television which matches the age in which Sunil played.

Prem Panicker has a lot of credibility among cricket writers. He’s done a lot of reporting and has a lot of contacts in the cricket fraternity. I am inclined to believe that his heart is on the right side in matters cricket related. If his allegation is true and my deduction that he is talking about Sunil Gavaskar is true, then all cricket fans should be shattered. For Mohammed Azharuddin to indulge in match fixing is one thing. For a legend of the game like Sunil Gavaskar to do it is a completely different thing altogether! I pray to God this isn’t true. The sad thing is: I will never know!


(Common)Wealth Games

While the Commonwealth games are still two months away, we are increasingly hearing sordid tales of Indian Olympic Association (IOA) officials making money in the guise of getting Delhi ready for the games. Here are a few examples that made me particularly sad:

  • Instead of buying treadmills, the games committee has decided to lease them for the duration of the games. The organizers claim that the cost to lease a treadmill for 45 days is a ridiculous Rs. 10 lakh. Investigation by media outlets have later revealed that you can buy (not lease) these same treadmills for around Rs. 4 lakh! (link)
  • Contracts have been brazenly awarded to the people who run the IOA. See this for example where the contract to prepare the tennis courts has been awarded to a company which is headed by the IOA treasurer’s son.
  • All preparations are hugely behind schedule. Many people attribute it to official apathy or incompetence. The truth is much more sinister. The IOA guys know that given a choice between (a) pumping money and getting Delhi ready at the last minute at all costs and (b) immense loss of national prestige by a lackluster event; the Indian/Delhi government will clearly choose (a). Hence, the IOA has deliberately delayed the preparations and now it is basically holding the Indian government hostage. “If you want us to be ready, we need Rs. xxx. And make it fast please!”.
  • Mr. Suresh Kalmadi has been the head of the IOA for the past fourteen years. I wonder what credentials does he have which allow him to remain the head of such a critical body for such a long time? His resume doesn’t list any sports background. The results he has delivered (as evidenced by our performances in international sports competitions) have been mediocre at best, and if you take out two or three brilliant individual performers, they are downright appalling. So why does he get to be the head of the IOA?

I am sure we will hear many more stories like this in the days to come. And it will be followed by the usual. After the games, a committee will be seated to investigate the conduct of the officials organizing the games. After six years of painstaking effort, all of it on taxpayer’s money, the committee will produce a 600 page report. Suresh Kalmadi by that time will be standing for his seventh re-election to the post of the IOA President. And India will be preparing for Olympics 2020 with the same wealth games being played in the background. I hope I am wrong.