Time to donate India’s “corrupt” funds to charity?
If charity is a good thing, what do you do if the funds come from murky, or corrupt, dealings?
The visit of Bill Gates and Warren Buffett has sparked debate in India over whether the country’s new billionaires are giving enough to charity.
If that wasn’t a delicate enough issue, Buffett was asked at a press conference whether foundations should accept money from dubious sources.
Buffett, a straight talker who is one of the world’s richest men, had a simple answer.
“That child who receives that vaccine that saves his life is not going to question the source of that money,” Buffett told a press conference.
A report by U.S.-based research group Global Financial Integrity in November estimated India had lost $462 billion in illegal transfers over the past six decades, with $16 billion illicitly moved overseas each year between 2002 and 2006.
So, if some of those funds end up in charitable foundations, will anyone mind?
Will Buffett, Gates’ giving pledge convince rich Indians?
Billionaire investor Warren Buffett and Microsoft co-founder Bill Gates are on a week-long trip to India, primarily to encourage the rich to give away a portion of their wealth to charity.
The visit follows a similar one made by the duo to China, the country with the most number of billionaires after the United States, where they urged the wealthy to sign up for their Giving Pledge campaign.
India’s rich are not really known for sharing their wealth. Big, family-run businesses are often inherited and set up with the help of ancestral wealth, and few have shown any willingness to part with it.
The number of wealthy Indians has been rising fast over the last decade, but they’re not ready yet to let go of their cash, even for charity, according to a study last year by business consultancy Bain & Co.
Despite billions of dollars in donations by software czar Azim Premji and telecom tycoon Sunil Mittal to set up charitable foundations, and by Vineet Nayyar, head of software firm Tech Mahindra, things haven’t changed much. The Indian media on Tuesday said the attempt by Gates and Buffett could go in vain, as the rich plan to “turn up at the event to hear the wit and wisdom of the Oracle of Omaha – but may send him back with empty pockets.”
India currently has 55 billionaires and their average net worth is $4.5 billion versus $2.5 billion for a Chinese billionaire, according to Forbes.
Gates, on Tuesday, promoted his charity organisation in a newspaper column that quoted Buffett and Mahatma Gandhi, and highlighted how funds are used at the Bill and Melinda Gates Foundation.
In India money and power are interlinked. To lose one means to lose the other. Being rich alone will not help someone live in paradise in India. One needs to have a clout in addition to being rich. This way they can twist anything to their desire. If medical attention is needed, there will always be a bed made ready in the most expensive hospital. Any patient needing critical attention will be evicted to make room for the rich. It is still a feudal system in disguise. In the US, the rich still have to follow the law of the land. They can at the most live inside a high security wall. But outside of it, an average American can demand the same right as the rich man. In India, the rich have modeled themselves after the royal people of the past – make way for the king. That is how things work in India. In this condition, who would want to part with their money? No one wants to fall hard, especially in India, where the fallen get trampled. So everyone is trying hard to keep his money all to himself as much as possible.
Ambani’s vertical palace vs Premji’s horizontal giving
In a contest between who is the most celebrated Indian billionaire, a man who donates $2 bln to education versus a man who builds himself a $1bln home, the winner is obvious. Right?
The founder and chairman of infotech giant Wipro Ltd., Azim Premji, is India’s third richest man, said to be worth $17 bln. In one gesture, he has given away more than ten percent of his wealth to a fund for rural education. Surely such a generous donation is most noble and worthy?
And yet the act which has had the deeper impact on the public’s imagination is the recent show of wealth by India’s richest man, industrialist Mukesh Ambani.
Tongues across the world have been wagging for weeks, some in admiration, most in condemnation, about his controversial 27-storey apartment block built only for a family of five. It’s easy to dismiss his new home as offensive in a city where more than 60 percent of the population live in slums. But when was it never thus? Since time immemorial kings and queens – and in modern democracies the business elite are the rulers – have spent ostentatiously on imported marble, rare crystal chandeliers and gilded gold furniture for lavish palaces and private monuments.
So why the bemused uproar that India’s industrial king did the same? His is just a vertical palace – and without slave labour or tax-payer dollars. And he’s taken up less land mass than most mansions do and created an international architectural first, which is already an icon in India’s City of Dreams.
Why do we expect the uber rich to act the same as we do? Ambani is said to be worth $29bn and the suggested $1 billion price tag for his new home is about 3 percent of that, which is probably less than most of us spend on our housing. Also, I wonder how much his critics give to charity themselves? Yet we expect greater generosity from the super rich?
India’s richest man takes a pay cut
Mukesh Ambani has accepted a two-thirds cut in his salary in 2008/09 as chairman and managing director of Reliance Industries. His total compensation fell 66 percent to 150 million rupees.
The move comes just days after Corporate Affairs Minister Salman Khursheed warned firms against paying huge salaries to top company brass.
Ambani’s “desire to set a personal example of moderation in executive compensation” may be in line with the Congress government’s efforts to shore up public finances with an austerity drive of its own.
Excessive compensation has sparked outrage across the developed world after years of multi-million dollar bonuses paid out to executives, even at money-losing firms.
Politicians and policy makers have advocated curbs on these salaries, a theme echoed at the G20 meeting in September.
Ambani’s revised pay package is a far cry from the 440 million rupees he got last year but the salary cut is not seen as making too much of a dent in his wallet.
Earlier this year, Forbes magazine pegged Ambani’s worth at about $19.5 billion in its list of the world’s billionaires.
At least one corporate czar seems to have been of the same mind as Company affaires minister Salman Khursheed’s call of austerity in corporate salaries.
The prime minister though when asked recently about his observations made along similar lines said that he had just made a general observation and there was no proposal before the government as such.
So is that a good move?
In economics what is good for the individual may not be good for the whole. As Keynes explained if everyone starts being thrifty it may make the economy spiral downwards.
So if everyone follows Mukesh Ambani could it be good for the economy and society?
On the other hand is the argument that conspicuous consumption in an underdeveloped country encourages wasteful expenditure which should be used instead in asset building.
The proof of the pudding would be not how much Ambani has cut down but where.
Is the media going overboard in its coverage of the Ambani feud?
The war of words between the billionaire Ambani brothers took an unexpected turn when younger sibling Anil offered an olive branch to elder brother Mukesh in a bid to resolve a feud over the split of the Reliance business empire in 2005.
The widespread coverage the Indian media has given to the squabble between the brothers has led to a debate on social networking sites such as Twitter, with some accusing news organisations of playing host to a reality show or soap opera that stars the Ambani family to boost ratings.
Prominent columnist Vir Sanghvi wrote through his Twitter account virsanghvi: “Do you think some network should plan a reality show on the Ambani battle? Or are they doing it already on the news?”
But the battle between the billionaire Ambani brothers is not a manufactured product for mass entertainment, as it involves two of the world’s wealthiest men and could pose a stumbling block to India’s goal of achieving energy security.
The siblings have been involved in several disputes since the family business was split in 2005 following the death of their father, Dhirubhai Ambani, a legendary Indian business tycoon who built Reliance from scratch.
The latest of these disputes is over a deal for Mukesh Ambani’s Reliance Industries to sell gas to Anil Ambani’s Reliance Natural Resources at below-market rates as agreed in the 2005 family settlement, brokered by their mother Kokilaben.
The dispute has drawn in the government, which claims it is the rightful owner of the gas. The government can also decide who can buy gas and at what price, but it has been accused by Anil Ambani of supporting Reliance Industries.
all said & done, the name “reliance” tends to be anything but reliable…!
the media is, as well, trying to make delicious hay of trp rating while the feud goes on..on..& on.
the ultimate sufferer is alas the investor(s)-as always.
btw what was the govt doing until the brothers’ feud was heard in the court?
I am a Cardiac Surgeon performing free cardiac surgery for less affluent children as a project Needy Little Hearts under K J Research Foundation, Chennai, India.We not only perform free cardiac surgeries but also their follow up which are free. The data collected are used for improving our results and for research for prevention of heart diseases in children. We have so far performed 146 surgeries.Funds are very hard to get.There are around 400 children waiting for surgery.They may die or become inoperable while waiting for surgery. 2 infants have already died and it is very painful to realize that they could have lived if we had more funds. This knowledge is too painful to bear.As rightly said by Mr Buffet, I do feel that corrupt funds which seem to be plenty can be used to save lives of these children. Rs 1,50,00,000/- can be used to save lives of 200 children. This paltry sum according to illegal standards can save precious lives. How do I make, those in possession of corrupt funds, understand that a small fraction can actually save lives of children 80% of whom can lead a normal life and lifespan.10% can join white collared jobs and 10% can lead a better and a longer life ?