Lobbyists & the law

Published : Mar 11, 2011 00:00 IST



The Niira Radia episode may not have gone as far as it did if there had been a law that exposed the activities of lobbyists to the public gaze.

THE Niira Radia episode richly illustrates a gaping void in the Indian legal system. There is no law to regulate activities of lobbyists. The affidavit filed in the Supreme Court on behalf of the Government of India in the Ratan Tata case says in paragraph 6: A complaint was received by the Finance Minister dated 16 November 2007 inter alia alleging that Ms. Radia had within a short span of nine years built up a business empire worth Rs.300 crores, that she was an agent of foreign intelligence agencies and that she was indulging in anti-national activities. On this complaint, it was directed that the matter should be examined.

It proceeds to mention that the Deputy Inspector General of Police, Anti-Corruption Branch, Central Bureau of Investigation, in a letter, dated November 16, 2009, to the said Director General of Income Tax (Investigation) stated: It has been reliably learnt that certain middlemen including one Ms. Niira Radia of M/s. Neosis Consultancy were actively involved in the above mentioned criminal conspiracy. It is understood that the Director General of Investigation Income Tax kept information regarding such undesirable contact persons using various methods of surveillance including telephonic surveillance. In case your office is in possession of any information or records pertaining to any middleman including Ms. Niira Radia regarding award of UAS licenses, the same may please be made available to this office for pursuance of investigation.

It is unlikely that matters would have gone as far as they did including influence peddling by her and associated journalists to secure plum portfolios in the Ministry at the Centre for favourites if there had been on the statute book a law that exposed activities of lobbyists to the public gaze.

Lobbying is a part of the democratic process. The human rights activist who meets legislators and Ministers to press for ratification of an international convention is also a lobbyist. Not all such lobbyists are unpaid. Non-governmental organisations (NGOs) remunerate them sometimes. This lobbyist acts out of conviction. It is the lobbyist hired to promote an interest who poses the problem. India has ignored this problem despite growing signs of abuse. The H.G. Mudgal case is 60 years old. He was expelled from the Lok Sabha for taking money from a business house in return for promoting their interests. Here is the text of a press note issued by the Union Home Ministry and published in The Statesman as far back as on July 13, 1973: Cases have come to the notice of the government that certain persons approach business houses, trade associations and important individuals and assure them that for a fixed fee they could expedite consideration of their cases pending with certain agencies of the government.

In order to create confidence in the minds of the people, communications are accompanied with printed pamphlets and other literature. They also make it appear that they have contacts in certain departments of government with which businessmen have to deal. Also, these people obtain advance payments for doing lobbying or liaison work for business firms. Even when these persons turn out to be cheats, as most of them are, the firms fight shy of reporting the matter to the police.

The government therefore warns the public against the operation of such undesirable elements.

On March 26, 1981, Indian Express published this report: The Central Bureau of Investigation circulated to all Ministries a blacklist of liaison officers with unsavoury antecedents with instructions that they are not to be permitted to enter any Ministry or meet any official. This was revealed in the Lok Sabha by the Minister of State for Home Affairs, Mr. P. Venkatasubbiah, who said that the list was updated from time to time by the CBI. Care is taken to see that such liaison officers are not allowed to come into Ministries and contact officers.

The Minister said this was in line with the recommendation of the Santhanam Committee, which said that no officer should have any dealing with any representative of any business firm unless that representative is properly accredited to the government. There was, however, no restriction on proprietors and managers contacting officials.

Niren Ghosh (CPI (M)) demanded that retired Indian Civil Service and Indian Administrative Service officers be banned from accepting liaison jobs. He alleged such officers got easy entry into Ministries and they spent crores in securing licences for their principals.

Venkatasubbiah said he had no information about retired ICS and IAS officers doing liaison work The government would spare no effort to stop leakage of official files to multinationals in connivance with some government officials as alleged by Mr. K. Lakappa (Congress(I)).

That was 30 years ago. As the economy grew, competition intensified and the role of the state expanded, opportunities for lobbyists increased. They became smoother, more skilful and insidious. Even heads of reputed business houses employed them.

Quoted and courted

Lobbyists need the services of legislators as well as journalists; not the poor hack but the one at the top with contacts that can help the lobbyist. Known identifiable lobbyists have emerged as public figures quoted and courted by the media.

How lobbying acquired menacing proportions is ably documented in Karl Schriftgiesser's The Lobbyists: The Art and Business of Influencing Lawmakers. He writes: Lobbying is as old as legislation and pressure groups are as old as politics. The lobbyist was once known as lobbying agent. Walt Whitman denounced bawling office-holders, kept editors, bribers, compromisers, lobbiers, spongers the lousy combings and born freedom-sellers of the earth.

In 1874, the United States Supreme Court delivered a stinging rebuke to one form of lobbying which it found reprehensible. Justice Noah H. Swayne said: The agreement was for the sale of the influence and exertion of the lobby agent to bring about the passage of a law for the payment of a private claim, without reference to its merits, by means which, if not corrupt, were illegitimate, and considered in connection with the pecuniary interest of the agent at stake, contrary to the plainest principles of public policy.

If any of the great corporations of the country were to hire adventurers who make market of themselves in this way, to procure the passage of a general law with a view to the promotion of their private interests, the moral sense of every right-minded man would instinctively denounce the employer and employed as steeped in corruption and the employment as infamous.

If the agent is truthful and conceals nothing, all is well. If he uses nefarious means with success, the springhead and the stream of legislation are polluted. To legalise the traffic of such service would open a door at which fraud and falsehood would not fail to enter and make themselves felt at every point. It would invite their presence and offer them a premium. If the tempted agent be corrupt himself and disposed to corrupt others, the transition requires but a single step. He has the means in his hands, with every facility and a strong incentive to use them. The author points out that lobbying flourishes under two political circumstances. One is when the executive is weak. The other is when the parties are decentralised.

In 1905, the Armstrong Committee's 10-volume report exposed how far big business had corrupted legislators in every State in the U.S. and in Congress, no less. Witnesses were reluctant to appear before it. The report said: Nothing disclosed by the investigation deserves more serious attention than the systematic efforts of the large insurance companies to control a large part of the legislation of the State. They have been organised into an offensive and defensive alliance to procure or to prevent the passage of laws affecting not only insurance, but a great variety of important interests to which, through subsidiary companies or the connections of their officers, they have become related. Their operations have extended beyond the State, and the country has been divided into districts so that each company might perform conveniently its share of the work. Enormous sums have been expended in a surreptitious manner. Irregular accounts have been kept to conceal the payments.

Vicious circle

It is a vicious circle. The politician needs money for election campaigns. Big business helps. Its lobbyist sends IOU to the legislator when his help is needed. None other than Woodrow Wilson said: The masters of the government of the United States are the combined capitalists and manufacturers of the United States. It is written over every intimate page of the records of Congress; it is written all through the history of conferences at the White House; that the suggestions of economic policy have come from one source, not many sources.

Suppose you go to Washington, Wilson, who was then the Governor of New Jersey (in 1912), continued, You will always find that while you are politely listened to, the men really consulted are the big men who have the biggest stake the big bankers, the big manufacturers, the big masters of commerce, the heads of railroad corporations, and of steamship corporations.

Every time it has come to a critical question, these gentlemen have been yielded to and the demands treated as the demands that should be followed as a matter of course. The government of the United States is a foster child of the special interests. It is not allowed to have a will of its own.

In 1921, Senator Kenneth B. McKellar painted this picture. There are lobbyists from the sugar interests, for the steel interests, for the fertilizer interests, for the cotton manufacturers' interests, for prohibition and for anti-prohibition, for postal employees, for labour organisations, for railroads, for civil service employees, for the equal rights of women, for the bonus, for those opposed to the bonus, for the shipping interests, for Henry Ford's acquisition of Muscle Shoals, for the water-power trust, for the oil interests, for the disabled serviceman, for the manufacturers, for the Army, for the Navy, for national aid to education, and many other interests. Washington is honey-combed with lobbyists. The hotels are full of them.

The U.S. Constitution guarantees the freedom of speech and the right to petition the government for redress of grievances individually and collectively. This does not cover paid lobbying to bring pressure on behalf of business interests. This professionally inspired effort to put pressure on Ministers and MPs stands on a different footing altogether.

Regulation Act

In 1946, the U.S. Congress enacted the Federal Regulation of Lobbying Act. The act did not offer a succinct definition of a lobby or of a lobbyist. But it placed under its regulation any Individual, partnership, committee, association, corporation, and any other organisation or group of persons (Section 402 [c]) who by himself, or through any agent or employee or other persons in any manner whatsoever, directly or indirectly, solicits, collects, or receives money or any other thing of value to be used principally to aid, or the principal purpose of which person [individually or collectively, as above designated] is to aid, in the passage or defeat of any legislation by the Congress of the United States (Section 307).

Any person coming under this definition, with certain exceptions, shall before doing anything in furtherance of such object, register with the clerk of the House of Representatives and the Secretary of the Senate (Section 308 [a]). The registrations, to be made under oath, must contain the following information: the name and address of the person by whom he is employed, and in whose interest he appears or works, the duration of such employment, how much he is paid and is to receive, by whom he is paid or is to be paid, how much he is to be paid for expenses, and what expenses are to be included (Section 308 [a]).

Under these provisions, both lobby organisations and individuals acting as lobbyists are required to register. Having done so, the lobbyist must also file with the House and with the Senate detailed and sworn quarterly reports giving the following information: all money received or spent by him during the quarter for lobbying activity; to whom it was paid; the purposes for which it was paid; the names of any papers, periodicals, magazines, or other publications in which he has caused to be published any articles or editorials; and the proposed legislation he is employed to support or oppose (Section 308 [a]).

The New York Times suggested a crucial safeguard on October 23, 1950. It is transparency. Lobbying is not a crime, and Chairman Buchanan doesn't say it is. What he does say, and the argument seems reasonable, is that influencing legislation is an activity that should be carried on in a goldfish bowl.' The nature of the pressure and who is paying for it ought always to be public knowledge, and there ought always to be some accurate way of distinguishing between a million dollars and a million votes. If this can be done lobbying can be a part of the democratic process; if it can't some new legislation may be required.

In United States vs Harris 347 U.S. 612, the Supreme Court upheld the law by narrowing its scope. Present-day legislative complexities are such that individual members of Congress cannot be expected to explore the myriad pressures to which they are regularly subjected. Yet full realisation of the American ideal of government by elected representatives depends to no small extent on their ability to properly evaluate such pressures, otherwise the voice of the people may all too easily be drowned out by the voice of special interest groups seeking favoured treatment while masquerading as proponents of the public weal. This is the evil which the Lobbying Act was designed to help prevent. Toward that end, Congress has not sought to prohibit these pressures. It has merely provided for a modicum of information from those who for hire attempt to influence legislation or who collect or spend funds for that purpose. It wants only to know who is being hired, who is putting up the money, and how much.

Justices William Douglas and Hugo Black dissented. We start with an all-inclusive definition of legislation' contained in Section 302 (e). It means bills, resolutions, amendments, nominations, and other matters pending or proposed in either House of Congress, and includes any other matter which may be the subject of action by either House'. What is the scope of any other matter which may be the subject of action' by Congress? It would seem to include not only pending or proposed legislation but any matter within the legitimate domain of Congress.

What contributions might be used principally to aid' in influencing directly or indirectly, the passage or defeat' of any such measure by Congress? When is one retained for the purpose of influencing the passage or defeat of any legislation'? (1) One who addresses a trade union for repeal of a labour law certainly hopes to influence legislation. (2) So does a manufacturers' association which runs ads in newspapers for a sales tax. (3) So does a farm group which undertakes to raise money for an educational program to be conducted in newspapers, magazines, and on radio and television, showing the need for revision of our attitude on world trade.

(4) So does a group of oil companies which puts agents in the nation's capital to sound the alarm at hostile legislation, to exert influence on Congressmen to defeat it, to work on the Hill for the passage of laws favourable to the oil interests. (5) So does a business, labour, farm, religious, social, racial, or other group which raises money to contact people with the request that they write their Congressman to get a law repealed or modified, to get a proposed law passed, or themselves to propose a law. Are all of these activities covered by the Act? If one is included why are not the others? The court apparently excludes the kind of activities listed in categories (1), (2) and (3) and includes part of the activities in (4) and (5) those which entail contacts with Congress.

There is, however, difficulty in that course, a difficulty which seems to me to be insuperable. I find no warrant in the act for drawing the line, as the court does, between direct communication with Congress and other pressures on Congress. The Act is as much concerned with one as with the other.

Disclosure Act

In 1995, Congress enacted the Lobbying Disclosure Act to make reporting obligations more stringent. Under Section 4 of the Act every lobbyist or his employer must register with the Secretary of the Senate and the Clerk of the House of Representatives. As well as details about himself and his area of work, he is required to disclose the identity of his client and a general description of its business or activities. Contribution from other sources for lobbying in excess of $10,000 must also be mentioned along with details about the donors. Registered lobbyists file semi-annual reports.

The law and the reality

The law is one thing, the reality is another; and the reality is the power of the National Rifle Association (NRA) to prevent sensible reform of gun laws and the power of the American Israel Public Affairs Committee (AIPAC) to prevent any pressure on Israel to make the concessions which alone can make any accord with the Palestinians possible.

Prof. S. John Mearsheimer and Stephen M. Walt have exposed its activities in their famous book The Israel Lobby and U.S. Foreign Policy.

In an article in Foreign Policy of January-February 2011, Walt notes: Even in areas where there is a clear scientific consensus, like climate change, public discourse has been distorted by well-organised campaigns to discredit the evidence and deny that any problem exists. Not surprisingly, those whose economic interests would be hurt if we significantly reduced our reliance on fossil fuels have aggressively funded such campaigns.

In the United States, this problem with self-interested individuals and groups interfering in the policy process appears to be getting worse, in good part because of the growing number of think tanks and research' organisations linked to special interests.

Organisations like the American Enterprise Institute, the Centre for a New American Security, the Washington Institute for Near East Policy, and the Centre for American Progress to name but a few are not politically neutral institutions, in that their ultimate purpose is to assemble and disseminate arguments that advance a particular worldview or a specific policy agenda. The people who work at these institutions no doubt see themselves as doing serious and objective analysis and many probably are but such organisations are unlikely to recruit or retain anyone whose research challenges the organisation's central aims. Their raison d'etre, after all, is the promotion of policies favoured by their founders and sponsors.

As for the NRA, Albert R. Hunt reported in International Herald Tribune that over time the clout of the National Rifle Association only grew. There are few lobbies in Washington as powerful or protective of their interests. Any gun laws are seen as violations of the Second Amendment to the Constitution, which cites the need for a well-regulated militia, stocked with arms. The power of the NRA is pervasive, both in Washington and in State capitals. When Democrats were trying to pass a campaign finance disclosure measure last year, they had to write a special exemption for the gun lobby in order to secure majority support in the House.

Peter Hennessy's classic Whitehall describes the clout of lobbyists in Britain. It led Douglas Hurd to remark: They are the serpents constantly emerging from the sea to strangle Laocoon and his sons to their coils.

Situation in India

The situation in India was well described by Payal Khandelwal in a report in Indian Express of December 6, 2010. It bears quotation in extenso: There are no regulations on lobbying in India, so far, but it is not illegal either. Lobbying is a well-established industry though it operates in a largely opaque environment. There have been demands from the lobbying industry and also outsiders to spell out clear laws determining dos and don'ts for the practitioners, but it hasn't happened so far.

Dilip Cherian, founder of a public relations agency, Perfect Relations, and also a well-known lobbyist, says that lobbying is an iterative' process and lobbyists function as a bridge between companies and the government. We help our clients in understanding the policy environment of the country. We help them in identifying key players and their positions in the policy area. The key players could be political parties, bureaucrats, Central government, panchayat government, etc. We advise companies on the communication to present their point of view to these key people,' he says. He, however, agrees that there is no transparency in the industry so far.

Industry bodies such as Federation of Indian Chambers of Commerce and Industry (FICCI), Confederation of Indian Industry (CII), National Association of Software and Services Companies are among the top lobby groups. The FICCI, however, maintains that it is not a lobby group and has only been working as an influence to engage with the government on the policy issues. CII president Hari S. Bhartia has also maintained a similar stand on the issue: We are not lobbyists, we are advocates [We] help build policy framework and perform advocacy work,' he had said earlier this year.

There are several other private lobbying firms such as Vaishnavi Corporate Communications owned by Niira Radia, DTA Associates managed by Deepak Talwar. These firms represent top private companies and lobby for them with policymakers. There are some individual lobbyists such as Tony Jesudasan, who represents the Anil Dhirubhai Ambani Group and Suhel Seth of Counselage.

The Planning Commission has set up an expert group to look into the processes that comprise lobbying. Arun Maira, member of Planning Commission, said, We will be considering various interests of all the stakeholders involved. This expert group comprises industries and government secretaries. There is an ongoing dialogue with the industry associations for their views. We want lobbying to be transparent and representative.'

This is best accomplished by a statute on the lines of the U.S. Act of 1995. Additionally, we must fill a serious lacuna in our parliamentary system. There is no Register of Members' Interests in which they record their business interests and the like.

The Report of the Select Committee on Members' Interests (Declaration), which was endorsed by the House of Commons on June 12, 1975, identified nine classes of pecuniary interest or other benefit which were to be disclosed in remunerated directorships of companies, public or private; remunerated employments or offices; remunerated trades, professions or vocations; the names of clients when the interests referred to above include personal services by the Member which arise out of or are related in any manner to his membership of the House; financial sponsorships, (a) as a parliamentary candidate where to the knowledge of the Member the sponsorship in any case exceeds 25 per cent of the candidate's election expenses, or (b) as a Member of Parliament, by any person or organisation, stating whether any such sponsorship includes any payment to the member or any material benefit or advantage direct or indirect; overseas visits relating to or arising out of membership of the House where the cost of any such visit has not been wholly borne by the Member or by public funds; any payments or any material benefits or advantages received from or on behalf of foreign governments, organisations or persons; land and property of substantial value or from which a substantial income is derived; the names of companies or other bodies in which the Member has, to his knowledge, either himself or with or on behalf of his spouse or infant children, a beneficial interest on shareholdings of a nominal value greater than one-hundredth of the issued share capital.

Transparency is an effective guarantee. The U.S. Congress' Findings in Section 2 of its Act of 1995 put it well: (1) responsible representative government requires public awareness of the efforts of paid lobbyists to influence the public decision-making process in both the legislative and executive branches of the federal government; (2) existing lobbying disclosure statutes have been ineffective because of unclear statutory language, weak administrative and enforcement provisions, and an absence of clear guidance as to who is required to register and what they are required to disclose; and (3) the effective public disclosure of the identity and extent of the efforts of paid lobbyists to influence federal officials in the conduct of government actions will increase public confidence in the integrity of government.

We have no time to lose. A law on lobbying is essential.

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