Metrics Of Corruption

Posted in Business, Current Affairs, History, Media by Anuraag Sanghi on April 3, 2009

What you measure is what you manage.

Nixon and Tanaka

Nixon and Tanaka

Measurement of scandals and corruption is a particularly thorny issue. Due to the lack of a common measure, transnational comparison  of scandals is currently impossible. Was the Lockheed Scandal more egregious than the Harshad Mehta Scam?

Was Watergate more dangerous than The Lewinsky Affair? How does one compare corruption across nations and time periods?

Some scandals captured, much more than others, national and international attention. To understand the nature of scandals, we will examine three such scandals. These scandals were seen as particularly flagrant – and damaged the careers of the concerned politicians.

America’s Watergate scandal

President Nixon was forced to resign over this scandal. Two Washington Post journalists were tipped off by “Deep Throat”, William Mark Felt, Sr., an FBI official.  Disturbed by the sidelining of FBI insiders by President Nixon, Felt kept the two journalists updated. The scandal erupted when burglars, supposedly at President Nixon’s behest, were caught trying to bug the site of the Democratic Party Convention. Watergate was projected as a major ‘threat to democracy’ – and the resultant outrage was captured by films and books.

The two journalists were lionized by the American media – as well as international media. The media took care of their own, even though the role of media was only minimal. Under media pressure (and the threat of impeachment), ‘Tricky Dick’ Nixon resigned. Vice President Gerald Ford succeeded and granted Nixon a full pardon. Compared to the shenanigans in the Kennedy regime, Watergate was tame. Yet the media circus made Watergate appear as Armageddon.

Japan’s Lockheed scandal

1974. The Japanese Prime Minister, Kakui Tanaka, resigned, when it was found that he (and some politicians) had allegedly taken bribes to buy fighter jets from  Lockheed Corporation, USA – an incident that the ‘Japanese poetically refer to as kuroi kiri (black mist).’ Though, Tanaka resigned from Government, he remained a powerful politician in the LDP and remained king maker till his death.

After the revelation of the scandal, “Bungei-Shunju’s circulation has jumped 10%, and collectors are now paying up to $60 for a copy of the historic November issue.” The interesting part was the ease with which Bungei Shunju was able to cover this story – and the complete lack of opposition.

The team encountered no political interference. Says Tachibana: “We went to tax offices and census registration bureaus, bowed to the officials, paid a modest fee for copying and came back with a treasure-house of information.”

Was it the amakaduri, or was the faceless MITI, who gave a unspoken go ahead for this bit of muck raking journalism? In a usually compliant Japan, such adventurism raised questions!

India’s Bofors scandal

After Indira Gandhi’s assassination, her son, Rajiv Gandhi won a stunning 400 seat majority in India’s Parliamentary election (1984) – giving him unprecedented power. India had high hopes from him – which he partly fulfilled. India’s telecom revolution, software success owe their success, partly to initiatives during that period.

India’s rising crude oil output from Bombay High gave Rajiv Gandhi elbow room, which he utilized for increased imports. India’s historic rupee overvaluation, corrected during and after his regime. From roughly Rs.18 to a dollar, by 1995, Indian rupee depreciated to over Rs.35 to a dollar. But what finally did him in was the Bofors scandal. It was alleged that Bofors AB, paid off various people involved in the finalization of the howitzers for Indian armed forces.

Post Bofors, the resignations of Arun Nehru, Arun Singh and VP Singh, complicated by the strained relations between the Bachchan-Gandhi families, coupled with Rajiv Gandhi’s weak defense, ensured that he was guilty in public opinion – and he lived and died under the shadow of Bofors. Added, was the aggressive and strident press campaign by Chitra Subramaniam and N. Ram of the normally quiet Chennai-based The Hindu newspaper.

Other scandals

Of course, there were many other scandals – bigger or less famous. Emperor Bokassa’s diamonds to Valery Giscard d’Estaing or the Mark Thatcher shenanigans. Hardly anyone remembers Valery Giscard d’Estaing and Bokassa’s diamonds. But none captured the public bandwidth the way these three scandals did. Hence, it would be a appropriate to examine the elements of these three scandals to understand create metrics for such scandals.

Some other sample cases

To measure the magnitude of the scandal incident itself, it is proposed that the unit of measure can be named as a cBofors (constant Bofors). And the measure of individual corruption can be a cTanaka (a constant Tanaka).

Morarji On Rushmore

Morarji On Rushmore

This metrics also makes clear why I have devoted so much space to Morarji Desai in the past. Morarji Desai’s gold policy has been examined in previous other posts – especially its contribution to: – One, the greatest crime wave ever in human history.; Two – the survival of Bretton Woods for 25 years;

St.PT Barnum, my guru, mentor, friend, philosopher, guide et al, in matters of propaganda, also believes that Morarji Desai must be elevated to Mount Rushmore.

Of course, there was the old case where Seymour Hersh alleged that Morarji Desai was paid of by the CIA. So, I will not repeat myself here.

The four elements that are common in these three scandals were:-

  1. Country Risk – These incidents became scandalous as the future of the nation in all the three cases was seen as jeopardized. The Bofors guns were seen as more critical and hence the outrage. The Coffingate during NDA-George Fernandes was seen as ‘almost benign corruption.’
  2. Cost & expense implication to the tax payer – In all these cases, it was seen that the tax payer was footing the bill – for something illegitimate.
  3. Social Impact – In some cases, the effect is a perceived corollary – and in others, the incidental change is direct and visible. After the Harshad Mehta Scam, a lot of people lost money. After the collapse of Lehman Brothers, the financial crisis in the US was exacerbated.
  4. Beneficiary toxicity – Who gains from these scandals also changes the perception. If a harmless broker like Harshad Mehta benefits, it does not create the outrage that would result if the beneficiary is say, Dawood Ibrahim.

Based on these four elements, we can rate each rate each scandal. As an index, I would propose two measures.

For instance, a scandal like the collapse of Lehman Brothers measures at an impressive 15 kiloBofors – but Watergate weighs in at small 2.21 cBofors. Similarly, AR Antulay, is possibly (say) 7 deciTanakas, but Kennedy is clearly about 5 kiloTanakas.

This is, of course, a dynamic metrics system, which will allow new elements with weights to also come in. It will allow political ‘decision makers’ and ‘business leaders’ to choose between ‘lesser evil’ based on data, instead of gut feel.

One immediate benefit. Such a measurement system immediately makes one thing very clear. Media clearly distorts the gravity of the issue. A Watergate which was a minor political storm in an American tea-cup, which affected  few politicians was blown up (and out) of proportion. But the media ignores, (and understands much less how) Morarji Desai’s support to Bretton Woods with his gold policy condemned billions to lives of poverty.

Blindsided Indians

Possibly more people in India (at least the English press) know about Bob Woodward and Carl Bernstein (who wrote the) Watergate, than about Chitra Subramaniam and N Ram – who ensured that all details of the Bofors Scam came out. Sucheta Dalal, who broke the Harshad Mehta story has become a female Don Quixote – I some times fear.

And of course, nothing happened to the Lockheed and the Bofors.

Incident Beneficiary toxicity Cost & Expense Country risk Social impact
Morarji Desai Gold Policy
Watergate scandal
Bofors (index incident).





Harshad Mehta
Ketan Mehta scam
Lehman Bros. collapse

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  1. admin said, on May 14, 2013 at 9:41 am

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