Govt., Business, NGOs – Interface between them in the rise of globalization
BUSINESS ETHICS PROJECT
Govt., Business, NGOs – Interface between them in the rise of globalization
BUSINESS ETHICS PROJECT
Chand Ajmera, PGP/17/192
Ananya Jha, PGP/17/194
Shraddha Srikhande, PGP/17/240
Dinesh Kumar V, PGP/17/248
Chand Ajmera, PGP/17/192
Ananya Jha, PGP/17/194
Shraddha Srikhande, PGP/17/240
Dinesh Kumar V, PGP/17/248

TABLE OF CONTENTS

1. INTRODUCTION

2. ROLE OF CSOS IN BUSINESS GOVERNMENT INTERFACE

3. LOBBYING - INTRODUCTION

4. ETHICAL IMPLICATIONS OF LOBBYING

5. EXAMPLES OF LOBBYING

6. ACTIONS BEING TAKEN TO CURB THE UNETHICAL ASPECT OF LOBBYING

7. CONCLUSION & RECOMMENDATIONS

1. INTRODUCTION
The growth and function of every business is highly dependent on the government. A large number of government actions in addition to laws and regulations affect companies’ finances. There are several reasons behind regulation of business by the government. 1. Public safety and welfare: Many industries are regularly reviewed and overseen because their activities, if they go skewed, can have detrimental effects to human health, financial well-being, or community structure. [21] 2. Protecting industry: Many regulations are in place to protect those who have developed their business correctly; licensing, permits, and inspections by the government clear out criminal activities that challenge truthful industries. [21] 3. Revenue generation: Many programs require certification or licensing that businesses must pay for in order to operate. The funds collected go to pay for the government programs that perform the oversight of the particular industry. However, in many cases, some portion of revenue is also deflected to general government purposes and is, effectively, a tax. Businesses, on the other hand, may consult with government, either informally, individually, formally, collectively, financially or in other ways or publicly criticize governments in an effort to put particular items on the political agenda.
Following is the result of the survey done by McKinsey where top companies were asked relevant questions to study the economic impact of government activities on businesses and business’ frustration with the government. [2]
“INSERT figure 1 HERE”: Economic impact of government activities
“INSERT figure 2 HERE”: Businesses’ frustration with government
The past 20 years have seen growth of Civil Society Organizations (CSOs) that operate independently from government. For example, in OECD countries the number has grown from 1,600 in 1980 to 2,970 in 1993. In India, it is approximately equal to 50,000 currently. A CSO's orientation refers to the type of activities it takes on. These activities might include human rights, environmental, or development work. The power of CSOs has increased to such an extent that they can influence the government while designing certain regulations so that business functions take into consideration all the stakeholders. The introduction of CSOs as influencers in corporate and political strategy processes and as important stakeholders in the business-government relationships suggests that the theories which are used to study business-government relationship need to be revised.

ROLE OF CSOs IN BUSINESS GOVERNMENT INTERFACE

DIRECT INFLUENCE: CSOs can have direct influence on the Business-Government interface where agency theoretical perspective can be used to study the role. Here it is assumed that the social responsibility is valued in terms of economic performance that enhances the welfare of the people. [1]

“INSERT figure 3 HERE”: CSOs acting as direct influencers
Influence of CSOs on corporations
There have been a large number of examples where CSOs have directly influenced the corporations and forced them to change their behavior. One of the early examples includes pressure CSOs had put on U.S public and private institutions to divest from South Africa in the 1980s. Others include boycotts, such as that of Nestle in 1980s by a group of CSOs to protect against alleged exploitation of women in developing countries who were misled about the benefits and proper use of infant formula. Boycott of Nike, Walmart, and other retailers for allegedly manufacturing goods under abusive working conditions in developing countries can also be highlighted in this context.
Influence of CSOs on government
CSOs have been instrumental in influencing government to incorporate environment and labor provisions in the North American Free Trade Agreement and the World Trade Organisation (WTO) negotiations, emboldening governments to allow banning of genetically modified organisms and food products and forcing World Bank to excuse the debt of developing countries.

MEDIATORS OR MODERATORS: CSOs act as mediators or moderators where they collaborate with corporates jointly working for the betterment of the community. They try to influence various policies without being directly involved in it. Stakeholder-agency theory which can be used to study this role, assumes that the corporate has ethical and social responsibilities towards a wide variety of stakeholders which impact them in one or the other way. [1]

“INSERT figure 4 HERE”: CSOs acting as direct influencers
One of the examples is the participation of CSOs, and NGOs in particular, in mediation of Mozambican peace process that led to agreements in Rome in October 1992, attended by the Community of Sant'Egidio. Other example includes CSOs persuading Home Depot and IKEA to sell FSC certified products. Such a contract had no direct contact with the government but still it led to spreading awareness regarding environmental issues.

AS A NODE WITHIN THE INTERFACE: Finally CSOs may take up a role of the similar status as business and government in the business-government-CSO interface through networks and alliances. [1]

“INSERT figure 4 HERE”: CSOs acting as a node within the interface

One of the most important contracts between CSO and a corporate is in the ambit of forest products where the Forest Stewardship Council that monitors forestry practices, developed a global program to create public awareness regarding sustainable development. Similarly, HUL collaborated with NGOs all over India to empower women in villages and make them independent and self-sufficient through its project “Shakti”.

In recent years, politically active CSOs have been growing in numbers. The internet has led to reduction in cost of monitoring issues, spread information about issues, and attract new members to influence public policies. CSOs’ strategies with business are likely to be time bound and focused on specific outcomes, and partnerships in general are likely to be heavily scrutinized. More collaboration between CSOs and rise of virtual campaigns will take place. CSOs are the key players in the public policy process-making either to change it or resist changing it. 2. LOBBYING - INTRODUCTION ‘Nothing that is morally wrong can be politically right’
Providing a reflection in the current imbroglio of economics and politics, William Ewart Gladstone justly brings out the deep dependencies existing between the government policies and regulations and capitalist ambitions. In the current parody of democracy and free market economics, one of the manifestations of such unethical behavior can be found in lobbying. According to the "Principles for the Ethical Conduct of Lobbying" developed by Georgetown's Woodstock Centre[3], lobbying can be defined as the deliberate attempt to influence political decisions through various forms of advocacy directed at policymakers on behalf of another person, organization or group. Though technically complete, this definition fails to encapsulate the ethical implications that lobbying has on the society.
The term lobby was used in reference to the physical structure of British Parliament. People pushing for changes in various policies and structures met the lawmakers in an intermediary room called lobby and convinced the congressmen to forward their agendas. Though etymologically it derives its roots from Britain, most of the countries and organizations around the world are heavily influenced by lobbying. In the world’s biggest economy-United States of America; lobbying has been formally recognized and has been legally accepted on the grounds of providing free speech, assembly and petition to government. As of 2011, there were close to 12000[4] officially recognized lobbyists in US, though many political scientist peg this number at a much higher quanta. In India, lobbying has still not acquired statutory or non-statutory recognition [6]. But India has become the home-ground for proliferation of unethical lobbying by both domestic and foreign players. 3. ETHICAL IMPLICATIONS OF LOBBYING
Ethical foundation of lobbying is the center of heated debates among many political scientists. Since lobbying can be justified on the grounds of free speech and grievance redressing , it is lawful for people to be involved in decisions that affect them and this is a crucial part of the decision making process. Ethical dilemmas arise when the lobbyists undermine the fairness and transparency which may go against the societal justice.
The pillars of fairness, transparency and common good have been shaken with the unethical approach of lobbyists. This undue influence may be obvious in some cases like bribing a lawmaker or sponsoring a congressman. But these may be way more subtle. Fairness is challenged especially if a non-professional relationship exists between the lobbyist and the lawmaker. This makes the access to corridors of power easy for a lobbyist. A simple way to overcome unjustness is by bringing both the spectrum of influence and the monetary as well as non-monetary exchanges into the public domain.
In simple terms, lobbyists are advocates [5]. They represent a particular side of an agenda. There is no obligation on the lobbyist to play a fair game. From the deontological point of view, he has to represent and forward the client’s agenda, putting in all the effort and reaping in all the means. Hence to ensure an ethical approach in the case of lobbying, someone should be made to take the onus of representing the common good.
How Government, Business and CSO are involved
Policies are designed by the government. When businesses use undue influence on the government to use the already scarce resources, this tilts the corporate environment in their favor. Consequently, it becomes very difficult for general public to bring out this unjustness in the open and ensure fair policies. CSO and NGO were once those crucial organizations that followed the utilitarian principle for maintaining social justice. They would fall back on John Rawls’ Theory of justice [7] from time to time. This ensured socially just distribution of public resources. But NGO’s have also transgressed into the darker side of ethical conduct. As can be seen from the top management of NGO’s and CSO’s, these organizations were formed primarily to circumvent the income tax regulations. Hence even though these organizations claim to represent society and to work in the direction of upliftment, they work as hubs for hiding pecuniary assets belonging to various individuals. In many cases, NGO’s end up working against the very cause they once stood for.
There are always two sides of a coin. Hence, not all NGO’s or government or businesses; individually or collectively work against the development of society, when they lobby. Yet, society has sporadic organizations whose interests are not replicated in the repercussions on the society. Organizations cannot be divided simply into black and white. For, it is the grey area where most organizations function. Situations determine an organization’s reaction towards propagation of its agenda. 4. EXAMPLES OF LOBBYING There are many examples of lobbying in the world as well as in India. Some of them are highlighted in the following section.

A. Lobbying around the world
In many countries, lobbyists are required to register with an authority and disclose information about their clients and the methods they employ to lobby. For example, in the US, lobbyists are required to make quarterly disclosures of their expenses[9]. A lobbyist who defaults is liable for penalty or imprisonment. In Germany, law makers are required to disclose their communications with lobbyists[9]. In Australia and Slovenia, a lobbyist may be prohibited from engaging with policymakers if he violates the law[9].
Despite the strict regulation, lobbying has been misused in numerous cases across the world. One of the most glaring cases of unethical practices in American history came up with Enron. Enron poured millions of dollars into US politics, gaining unequal access and using the entrée to influence the Congress, the White House and the regulatory agencies. Several top administration officials have been Enron advisers or stockholders. Enron contributed $1.7 million [12] in donations to politicians in the 2000 election cycle, according to the Centre for Responsive Politics. Enron influenced the Congress & the Commodities Futures Trading Commission to deregulate its energy futures & derivatives trading operations, a major reason for its exponential growth. B. Lobbying in India In the Indian conscience, lobbyists are viewed as agents of giant business groups who indulge in corrupt practices to get their work done.
2G Scam: It all began with the release of Radia tapes which reported telephonic conversation of Nira Radia with A.Raja, the then telecom minister of India. The tapes contained blatant proof of intensive lobbying on part of Radia in appointment of A.Raja as the telecom minister [11]. The insidious agenda was to broker large amount of 2g spectrum on behalf of Tata TeleServices and Mukesh Ambani’s Reliance Industries. It resulted in loss to the exchequer which ultimately led to immense social unrest especially on social networking sites. This brings out the truer picture of corruption in the country and the way corporate lobbying is undermining the democracy. Similarly Coalgate scam which was the output of lobbying resulting in unethical distribution of already scarce coal led to a loss of exchequer amounting to 1.86 lakh crores[13].
However, there are a large number of advocacy groups who campaigns for social reforms. One of the most successful campaigns was run by the Mazdoor Kisan Shakti Sangathan (MKSS)—a coalition of non-governmental organizations—for the Right to Information Act[9]. Women’s organizations have campaigned for women-friendly laws such as the Protection of Women from Domestic Violence Act, 2005[9]. Anna Hazare led a mass awakening campaign for the establishment of an anti-corruption body called the Lokpal [9].
The influence of these groups depends on the public support they command. Therefore, there is merit in including both commercial and advocacy groups in the definition of lobbyists so that no one gets an undue advantage in influencing legislature.

C. India lobbying in US: 1. TCS and Tata America International have spent more than Rs2 crore on their lobbying activities so far in 2013[8]: As per the latest lobbying disclosure forms, the specific issues on which Tata America International Corp and TCS lobbied during the last quarter included US-India relations, immigration reforms, STEM (Science, technology, engineering, and math) education issues, high-skilled workforce issues. 2. In the last quarter, the Indian government spent $180,000 on lobbying[8] D. US lobbying for India: 3. Wal-Mart spent $1.5 mn on about 50 specific issues, including those related to Indian market during the Jul-Sep[10]: “Discussions regarding FDI in India” was one of the top issues that was lobbied on behalf of Wal-Mart during third quarter of 2013. According to its latest Lobbying Disclosure Form submitted to the US Senate, Wal-Mart’s lobbying activities covered the Senate, House of Representatives, department of state, US trade representatives, US Agency for International Development and the department of labor[10].

4. Technology major IBM lobbied on “India market access issues and renewal of the generalized system of preferences”[10]. Business Software Alliance (BSA) “lobbied on issues pertaining to market access for software products and services in international markets including provisions related to intellectual property protection and market access for software products and services in China, India and other emerging markets”[10].

Thus, although lobbying by various interest and advocacy groups is widespread in India, the public remains unaware of it unless a scandal is exposed in the public domain. A law to regulate lobbying could win greater trust of the common man in the legislation process. Rightful access to information about expenses and details of communications of lobbyists with policymakers would give impetus in maintaining higher transparency. 5. ACTIONS BEING TAKEN TO CURB THE UNETHICAL ASPECT OF LOBBYING
No country in the world, including India, has banned lobbying. In fact, only a few countries such as US, Canada, Australia, Germany and Taiwan regulate lobbying. These countries treat lobbying as a legitimate right of citizens. Regulations serve as a tool to enhance transparency in the policymaking process rather than restricting access to policymakers.
Efforts made by Governments and other Agencies in legalizing lobbying & its regulation: a) Lobbying Regulation Acts Worldwide: a. Lobbying and Disclosure Act of 1995(USA) [14] * Definition/Classification of lobbyists* as Commercial/Interest groups and Advocacy groups, registration of lobbyists & disclosure requirements.

* Defines regulation of Lobbying & penalties on ethical violations

*However, the law generally exempts communication with parliamentary committees and responses to requests made by the government from specific individuals or groups.

b. Honest Leadership and Open Government Act of 2007(USA) [15]
It strengthens public disclosure requirements concerning lobbying activity and funding, places more restrictions on gifts for members of Congress and their staff, and provides for mandatory disclosure of “Earmarks” in expenditure bills.

c. Lobbying Act of 2008(Canada) [16]
Regulation of public office holders (DPOH) becoming Lobbyists - Mandatory Disclosures & penalties on violations are laid out.

d. Disclosure of Lobbying Activities Bill, 2013(India) [17]
Clearly defines concepts such as Lobbyists Registration Authority, Prospective Scope, Covered Persons, Lobbying Activity, Concept of Public Servant, Reporting and Disclosure, Penalties.

b) The Woodstock Principles [18]-The Woodstock Principles for the ethical conduct of lobbying offers practical guidance to persons who engage in the process of lobbying the federal government and its agencies.

The Woodstock Theological Centre is a non-profit research institute at Georgetown University in Washington, D.C., established by the Society of Jesus (Jesuits) to address the topics of social and political importance from a theological and ethical perspective.

The principles are divided into seven sections dealing with the following aspects of lobbying:

1) Lobbying and the common good 2) Lobbyist - client relationships 3) Lobbyist - policymaker relationships 4) Lobbyists and shapers of public opinion 5) Conflicts of interest 6) Lobbying strategies and tactics 7) The integrity of the lobbying profession

c) First Amendment to the U.S. Constitution: Congress shall make no law abridging the right of the people "to petition the government for a redress of grievances” [20]. This makes Lobbying a “right” of a US citizen.
6. CONCLUSION & RECOMMENDATIONS
In this era of increasing globalization, the degree of interdependence among businesses, government and CSOs has increased greatly and hence one should be aware about the activities of these and the influence it has on the society. Lobbyists provide governments with valuable policy-related information and expertise but if the activity is not transparent, public interest may be put at risk due to vested interests. The ethical problem is that most people view the involvement of money in the system as inherently corrupt. Generally, the relationship between lobbyists and elected officials is clouded, leaving common man in the dark.
Recommendations:
* Governments should legitimize lobbying. But the scope and extent of lobbying needs to be defined carefully by law. * A shift to lobbying as a means of engaging with the legislative process would further the ideals of a participative democracy. The Lobbying acts by USA & Canada are a step in this direction. * Civil Regulation driven by the inter-organizational collaboration of NGOs & private firms is having great influence on State Regulation. However, mechanisms like Global Reporting Initiatives (GRI) [20] should be encouraged across the globe in order to bring greater synergies in public administration & mitigation of scandals.

In India, lobbying is still neither legal nor banned. John Rawls theory of justice should be the guiding principle in legitimizing lobbying which advocates transparency and fairness in the system. It is the democracy of the country which determines whether balance of justice is in favor of society. Adopting the principle of duty, the country as a whole should rise to becoming more aware and participative in ensuring greater good of the society.

7. REFERENCES:
[1] Globalization and NGOS: Transforming world, government and society by Jonathan P. Doh and Hildy Teegen
[2] How business interacts with government: McKinsey Global Survey results (http://www.mckinsey.com/insights/public_sector/how_business_interacts_with_government_mckinsey_global_survey_results)
[3] http://www.scu.edu/ethics/practicing/focusareas/government_ethics/introduction/lobbying.html
[4] http://en.wikipedia.org/wiki/Lobbying_in_the_United_States
[5] http://www.meyersandassociates.com/lobbyist.html
[6] http://www.indialawjournal.com/volume4/issue_3/article_by_diljeet_titus.html
[7] http://en.wikipedia.org/wiki/A_Theory_of_Justice
[8] http://www.livemint.com/Companies/Xm249v7cnDIxTAw44X8FDO/Tatas-step-up-US-lobbying-on-immigration-education-issues.html
[9] http://www.livemint.com/Opinion/DWZTZTfYOScT8inQuPCHAO/A-case-for-lobbying-in-India.html
[10] http://www.livemint.com/Companies/vMDIXEdscKngNBS3vMHTYN/WalMart-resumes-US-lobbying-on-FDI-in-India.html
[11] http://en.wikipedia.org/wiki/Radia_tapes_controversy
[12] http://www.washingtonpost.com/wp-srv/business/enron/4.html
[13] http://indiatoday.intoday.in/gallery/coal-scam-how-india-lost-rs-1.86-lakh-crores/1/7610.html
[14] http://en.wikipedia.org/wiki/Lobbying_Disclosure_Act_of_1995
[15] http://en.wikipedia.org/wiki/Honest_Leadership_and_Open_Government_Act
[16] http://ocl-cal.gc.ca/eic/site/012.nsf/eng/h_00008.html
[17] http://www.epw.in/commentary/disclosure-lobbying-activities-bill-2013.html?ip_login_no_cache=f62ea63c6c97cb8282127d8c7fba0fca
[18] The Woodstock Principles for the Ethical Conduct of Lobbying - By Edward B. Arroyo, SJ, Woodstock, senior fellow and sociologist
[19] http://en.wikipedia.org/wiki/Right_to_petition
[20] Introductory Essay Society Interface: Special Issue Overview and – Government − Role of Nongovernmental Organizations in the Business – Nocholas M. Dahan, Jonathan Doh & Hildy Teegen
[21] http://www.ehow.com/about_5465763_government-regulate-businesses.html