Petroleum ministry leak: Consultants can be good, bad, ugly and lightly taxed

  • Pramit Pal Chaudhuri, Hindustan Times, New Delhi
  • Updated: Feb 21, 2015 11:08 IST

Within the spaces between government, corporations and civil society thrive consultants. However, professional consultants come in all shapes, sizes and ethical standards.

Global consultancies like McKinsey have tight vigilance systems. In India, financial and engineering consultancies are regulated. Public relations and media relation firms are not. And there are “black consultants” who, says a defence industry executive, lobby for contracts, influence bureaucrats and steal documents.

At the top of the heap are the international firms. Sociologist Dipankar Gupta, who worked for KPMG for seven years, said the firm was “very particular about who their clients were. They weren’t interested in sullying their brand for just a few more rupees.”

Mature consultancies realise once they “cross a red line” they dig themselves into a hole, trying to cover up the first error.

Even well-known Indian firms, like Dua Consulting, have a reputation for integrity. Ravi V Sharada Prasad, an independent telecom and software consultant, said the best of these firms hire ex-bureaucrats and retired judges. “These provide in-house knowledge to corporations or even NGOs about how the government works or who in the government should be contacted,” he said.

The defence executive explained “contrary to popular opinion” there is a lot of perfectly legitimate consultancy, even in a scandal-prone sector like defence.

One of the India growth areas is business-to-business consultancy, helping tie up joint ventures and partnerships. “Explaining to a foreign defence firm how to even bid for a contract is a domain expertise of its own,” he said. So is dissecting the opaque Indian defence budget.

Industries where the regulatory process is opaque and political interference strong, like energy, telecom or civil aviation, are ones where black consultancy breeds.

The telecom department, said a few consultants, is infamous for asking firms to hire consultancies which are run by associates of bureaucrats. The fee paid to the consultancy is, in effect, a bribe for the bureaucrat. “The paperwork however is perfect so the malfeasance is hard to prove,” one of them said.

NGOs also sustain armies of consultants, not all of them above board. “A study of the blood relatives who run or consult for NGOs and the bureaucrats in related ministries would be revealing,” said an Indian official.

At the bottom of the heap are the consultants who offer to bribe, influence contracts or get illegal inside information. “This was very rampant in the 1970s and 80s, during the licence raj days,” said Prasad. The defence executive agreed, “Thankfully, it is becoming less and less important.”

A lot of consultants do little more than write reports for an ever-changing list of clients. Others do on-site work, working in-depth for two or three close agencies.

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