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Bribery, corruption down in India: Outgoing GE India chief
Aziz Haniffa in Washington DC | May 22, 2007
Scott Bayman, the outgoing president and chief executive officer of General Electric-India, who has lived in New Delhi for the past 14 years, says the endemic culture of bribery, corruption, kickbacks, nepotism and cronyism that he first arrived to had significantly dissipated.
Bayman cited Indian Airlines' and Air India's purchase of Airbus and Boeing aircraft, respectively, as prime examples of this growing transparency.
Meanwhile, General Electric announced on Monday that Tejpreet Singh Chopra will succeed Scott R Bayman as president and CEO of GE-India.
"India, like lots of emerging markets and some developed countries, has some issues around corruption and bribery," Bayman said during a question and answer session that followed his speech, titled 'Fourteen Years on the Inside: A Perspective on India,' at the Johns Hopkins University hosted by its School of Advanced International Studies' Office of Development and Alumni Relations last week.
"I think those of us from the United States have been insulated from it a little bit, frankly," he said, "because of the fact that they know the answer [to a bribe offer] is 'no,' because we go to jail as compared to some competitors in other parts of the world. So it's not been such a big issue for us. The big issue for us has been where we try not to get sometimes specked out of contracts because of competitors' improper payments."
"I would say this though," Bayman continued, "over time just the noise level around corruption in terms of big things has gone down." He noted, "There were no accusations in the press or anywhere about any improper payments" about the Boeing and Airbus deals."
"I think that the process that we are experiencing as the defense sector is opening up. . . it's almost making it difficult -- the government officials are going so far overboard to make sure that it's very transparent that there is not even a presence or suspicion of it -- that it's almost slowing down the process. So, I think the (Indian) government is responding properly to this."
But, he added, "I guess you all know, as you move out and get to the lower levels -- and whether it's the inspector raj or whatever -- that some of these facilitating payments are likely still taking place.
"[But] I would say that in big ticket items where the central government is involved or right at the top of the state governments, there's been a significant improvement."
Earlier, Bayman was challenged on the laundry list of positives he cited about India -- almost as if he had gone 'native' -- and reminded about GE's series of issues in terms of its initial ventures and how GE struggled in some of these businesses, particularly in areas like appliances and plastics, and that many of these issues have yet to be overcome.
He acknowledged, "It hasn't all been easy. We had a couple of difficulties in some markets in India that frankly, I think we didn't do our homework on. "We exited the appliance business at our choice," he continued, "because we concluded that it was a market where we couldn't get the reforms that our shareholders demand and that we wanted to deliver to the shareholders. It was a market where the GE brand wasn't very well recognised among consumers and as we have become much more of a business-to-business company and not as big a presence in consumer markets, particularly outside the US, we elected to exit from that business.
"But plastics has been a terrific success story," he added. "When IPCL was sold to Reliance, we bought the IPCL shares and our plastics business has gone from $125 million to one that's growing to $300 to $400 million."
He argued, "We've had far more successes than we've had issues, and fortunately we are a big company and we can take a lot of wings and we figure if we can bat 80 or 90 per cent, we're doing pretty well. And, I'd say in India, we are batting at least 90 per cent, probably better."
On the question of wage differentials between highly skilled workers who work on essentially the same jobs and tasks in India and the US, which has led to his firm and other US companies being accused of outsourcing simply because of cheap wages in India, Bayman countered: "We treat countries in terms of compensation and benefits just like we do in the United States. It's a matter of supply and demand, and we don't pay our engineers in the US the same wage; we don't pay all our engineers in India what we pay in the US."
"If you are an Indian scientist or engineer," he continued, "and you are working in our center, your lifestyle in India is every bit as good, maybe better, some would argue, than it is for researchers that are making maybe twice as much money but working in Schenectady, New York. So we find that whether it's an engineer with a master's or a PhD or whether it's a factory worker or a salesperson, you just have to be competitive to the market you are in."
"Right now, because of the supply of highly skilled people in India, wages are lower there than they are in the US. We find however, the technical capabilities to be every bit as good," he said.
As far as GE is concerned, India would be the fastest growing country through 2010, he said. "So it's a big piece of our growth strategy." He summarily dismissed any political risk in terms of investment, saying, "India has shown over the last six elections its resilience in terms of who's in power.
"The coalition government is going to be a way of life in India and we cannot get around that," he continued. "If you think about country risk and put it to India -- and political is one part of country risk -- nobody in India is arguing that you should turn the clock back on liberalisation."
He did concede that "there are some issues in selected sectors, but frankly, other than a few people, who cares if retail is opened up for 100 per cent investment this year, next year or the year after? It's not as important in my view as privatising and developing airports. . . There is nobody saying throw those foreigners out and let's go back to where we were."