When Crime Pays

by Milan Vaishnav

  On the more sordid side, many candidates engage in a practice known in India as “paid news,” or campaign advertising masquerading as legitimate reporting. Typically, news organizations and politicians will strike a deal whereby the latter can buy a “package” of media coverage from the former for a fixed cost. The packages, also called “rate cards,” read like restaurant take-out menus, with more expansive coverage fetching accordingly higher prices.86 According to a 2009 investigation by the newsmagazine Outlook, one rate card involving a Hindi newspaper charged candidates 14,000 rupees ($210) for three election stories with black-and-white photographs. Color photos required an additional 4,000 rupees ($60). A “soft focus” interview—running 84 column centimeters—with a color photo of the candidate sold for around 9,000 rupees ($135).87 What makes the practice especially pernicious is the inherent difficulty of establishing a quid pro quo between the reporter or media company and the politician in question. Unless there is documentary evidence, both sides can easily plead ignorance.88

  WHERE MONEY MEETS MUSCLE

  The coexistence of costly elections and inadequate in-house funding has resulted in a serious financial dilemma for parties, prompting them to respond by devising new ways of covering the costs of campaigns—such as recruiting self-financing candidates. Thanks to the weak pull of ideological considerations and the oligarchic organization of parties, this strategy opens the door to financially secure candidates who might also be associated with criminal activity. The coming together of parties and politicians associated with criminal behavior is a product of parties’ financial stress as well as suspected criminals’ desire to avail themselves of the perks to office. Although the disclosed income of parties has consistently gone up, it is still inadequate relative to even more conservative estimates of true cost of elections. As one observer once told me, in India “parties claim to be dirt poor but politicians are filthy rich.”

  The political and regulatory environment in India provides an opportunity for those with criminal links to enter the electoral marketplace. Their financial capacity represents a crucial incentive for resource-strapped parties. Money and muscle are not independent forces shaping India’s electoral politics but are deeply intertwined.89

  Comparative Advantage

  There are several reasons why candidates associated with crime are likely to both have a financial advantage and be willing to deploy these resources in politics. First, candidates with criminal records may be involved in illegal activity that provides them with ample liquid financial resources. Candidates with hardened reputations can also play this perception to their advantage. The use, or even the threat, of force, can be advantageous in obtaining government contracts or extorting money.

  Second, existing research shows that candidates with criminal reputations tend to be strongly embedded in the villages and towns that make up their constituency.90 They tend to be “native sons,” clearly identified with a local base that is territorially rooted, and are usually people of prominence in the local community, who maintain significant kinship and patronage networks. Such candidates can accumulate resources through local networks and leverage their power within network structures to obtain political support from other members. In turn, these networks help to form the candidate’s base of support come election time.

  Third and related, given the short (but intense) time frame and the nature of retail politics in India, campaigns rely on manual labor to organize rallies, operate vehicles, and recruit volunteers. Candidates tied to criminality, to the extent they are embedded within larger social networks (often dominated by underemployed males), are connected to labor resources that help them run campaigns. Although these social bonds may have been developed for nonpolitical reasons, they can easily be redirected toward campaign activities.

  Finally, if an individual is implicated in ongoing criminal proceedings (especially those of a serious nature), one can plausibly assume that he might be willing to cut legal corners from time to time. This potential ethical deficit means that criminally suspect candidates may be able to raise significant funds through illicit means (or may already possess considerable ill-gotten gains) and will be inclined to condone rent-seeking activities by the party.

  Campaign Finance as Investment

  Of course, the financial advantage criminal candidates possess is complemented by the fact that they also have deep-seated incentives for joining the political arena. In the previous chapter, I discussed the baseline motives of self-preservation and protection. But there is another reason criminals may want to try their hand as politicians: the sizeable financial rewards associated with holding office. Because politics can be a highly lucrative proposition, the money candidates spend on securing a party ticket and—if they are fortunate—an election victory can be thought of as a promising investment.

  Once in power, legislators have significant discretion and influence in the awarding of government contracts and licenses, especially in sectors where the regulatory footprint of the state is high. This sets the stage for bribe taking and regular conflicts of interest. As the government’s allegations against Jagan Reddy indicate, the progeny of an incumbent politician can set up, say, a construction firm and receive favorable dispensation from regulatory agencies (with a behind-the-scenes assist from a close relative), which gives them an advantage over their competitors. The profits can then be shared within the family.

  In an attempt to quantify just how lucrative a career in politics can be, a 2013 study analyzed the financial disclosures of state and national incumbent legislators who won elections and then stood for reelection several years later. The average wealth of sitting legislators increased by 222 percent during one term in office (from an average of 18 million rupees, or $270,000, in the first election to 58 million rupees, or $880,000, at the time of reelection).91 Of course, the 2000s were a period of rapid economic growth for India, so one would expect assets to grow at an exceptional rate, especially for the politically connected. Indeed, when one considers a broader pool of candidates who re-contested elections (and thus had to disclose their wealth at two points in time), it appears that the assets of all candidates, current incumbents and previous runners-up, grew quite impressively. The average declared wealth of re-contesting candidates (to include losers and winners both) was 17.4 million rupees ($264,000) in 2004 and 40.8 million rupees ($618,000) in 2013, an increase of 134 percent.92 Thus, while re-contesting candidates all saw an increase, there was a distinct winner’s advantage.93 Moreover, legislators with criminal records fared even better than comparable “clean” candidates. This latter finding is not unexpected given the fact that politicians engaged in illegal activity might be more inclined toward misusing their office to extract greater financial rewards.94

  More statistically rigorous explorations of the financial rewards of office suggest more modest, though still significant, returns. For instance, economists Ray Fisman, Florian Schulz, and Vikrant Vig studied a subset of razor-thin election contests where the same two candidates ran against each other in two consecutive elections. By virtue of the close electoral margin, the identity of the winner is effectively decided by a coin toss, which makes it easier to isolate the true impact of holding office. When it comes to changes in financial assets, the winners of the first election (the incumbent officeholders) enjoy an average annual “winner’s premium” of 4.5 percent compared to those who lost the first election and were shut out of office. The additional returns to ministers and to incumbents who face off against freshmen legislators are even higher: 10 and 12 percent per annum, respectively.95 One should be careful in interpreting these results as the authors look only at reported income (not black money) and restrict their attention to close elections. Moreover, since both candidates finished either first or second in an election, the sample is biased in favor of the politically connected.96

  But joining politics and winning office is associated not just with financial benefits; there are also psychological benefits related t
o social status and prestige. One survey of MLAs shows that an overwhelming majority of respondents report an increase in their social status since entering politics. Similarly, large majorities viewed their future social position with great optimism.97 The financial and intangible gains associated with holding office support Sumanta Banerjee’s conclusion regarding the quality of Indian politicians: “Politics as a career is indeed more remunerative and power-enhancing in India than any other profession.”98

  Initially, the presence of criminally suspect candidates contesting elections could be limited to a few “bad apples,” yet over time their entry could create long-run path dependency.99 Irrespective of why candidates implicated in wrongdoing contest elections—whether for status reasons or due to material interest—they can generate negative externalities for politicians who do not have criminal records. Rising numbers of criminal candidates could sour electoral politics more generally, thereby making it less enticing for clean politicians to run for office. Over time, polities can get stuck in a bad equilibrium trap whereby bad politicians are attracted to office while the so-called good ones are filtered out. India clearly exhibits worrying signs of succumbing to this trap.

  Crores and Criminals

  The financial and psychological rewards of office, not to mention the protection politics offers, applies to legislators of all types, but the lucrative nature of politics in India has been particularly important in explaining the entry of individuals tied to crime. Although not all legislators are necessarily criminals, the system in India “tacitly permits an increasing number of opportunists who use politics to further their own personal interests” to seek office.100 As one observer asks rhetorically of “unscrupulous” politicians, “Where else can they get ever-increasing income, the unrestricted privileges, and absolute immunity”?101

  Although the link between money and “muscle” has not been systematically scrutinized, several analysts have previously linked the two. For instance, James Manor has argued that parties in India recruit criminals because “criminals bring with them money and the capacity to raise it.”102 According to him, legislators have gotten mixed up with criminal elements because such individuals “can assist in generating funds to meet the soaring costs of elections.”103 This mode of recruitment may have started with the Congress Party’s embrace of “a very large number of extortionists and racketeers” in order to enlarge party coffers, but it was soon copied by all political parties.104

  An ethnographic account of politicians associated with criminality in the western state of Gujarat highlights the fact that for parties, “goondas are indispensable for the money they bring in.”105 Describing the prevailing conditions in a poor, urban constituency, anthropologist Ward Berenschot states that the election budget of the local MLA—a dada who had deep ties to criminal elements—came largely from hafta, the payments owners of illegal businesses (such as liquor bootleggers and gambling dens) make to politicians for protection. In this way, politicians who rely heavily on goondas are able to marshal both “muscle power” and “money power” for political ends.

  The political scientist Francesca Jensenius reports speaking with a senior MLA in western Uttar Pradesh who claimed that the price for tickets was one of the main reasons for the criminalization of politics in the politically critical state, because only criminals could afford to cover the price of admission.106

  The financial incentive for parties to recruit criminal candidates is also borne out by my own interviews with MPs, MLAs, and leaders of state and national parties over the last several years. In 2009, I paid a visit to a Congress MP from Andhra Pradesh in his official residence in New Delhi. As is the case across India at all hours of the day and night, the politician had a long line of people eager to see him, their wait slightly eased by the repeated cups of homemade chai on offer. The man was a longtime Congress stalwart, having commenced his association with the party years earlier when he was a university student. His residence was sparsely furnished, a contrast to the gaudy opulence of the homes of many of his parliamentary colleagues. Perhaps it was his decades in politics or the fact that I had come to see him at the end of a long day when Parliament was in session, but the MP was jaded about the state of politics in the country when we sat and talked in his drawing room. When I first asked whether parties recruit criminals because of their money, he interrupted, snorting, “What do you think?” Realizing perhaps the condescension in his voice, he went on: “Look, if you put a few big-time criminals in a room and you have a few crores [an Indian unit of wealth equal to 10 million rupees, or $150,000], you can call yourself a party. Crores and criminals are the essential ingredients.”107

  I heard the same story in Bihar around the state’s 2010 election. As the campaign was getting under way, I spent a morning in the party office of one of the national parties in the center of Patna, the capital. I had come to meet the state party vice president, but when my interlocutor spotted the party treasurer and knowing my interests, he immediately introduced me. After all, the party treasurer of all people should know where the money comes from. After some initial small talk, the man candidly fessed up that his party made the money-muscle calculation when determining the distribution of party tickets. At first I was taken aback by his candor, but he went on to say that all parties selected candidates facing criminal cases, at least in part, because of their deep pockets. There was hardly any shame in it, the treasurer assured me. “All parties claim to shun criminality,” he said, “but the reality is different. As they say, ‘All is fair in love and war.’ Parties select people who can win by saam daam dhand bhed [by hook or by crook], and the most important criterion is financial assets.”108

  When I interacted with Sanjay, the aspiring candidate in Andhra Pradesh, on the campaign trail in 2014 I asked him about the link between money and muscle. As far as I could tell, he had no direct involvement with any criminal elements and he himself had a clean record. He had family in politics and none of them had been implicated in any wrongdoing either. But he told me he could see the attraction parties would have. “Parties have a pretty good sense of what elections cost now and what they’re likely to cost in the future,” he said. “They know that they have to find well-off candidates to fight elections for them.” What costs 100 million rupees today will cost 200 million rupees five years from now when the next election comes around, he said. But, I interjected, not all were criminals—HE did not have a criminal record, for instance. “But there are not enough of us,” he replied. “Without money, you cannot do anything. You will be wiped out. You first have to make money, and then you can do good after you’re entrenched and secure.” Sanjay related to me the example of one of his party’s senior leaders, who had amassed a large fortune through a series of questionable business dealings that traded heavily on his political connections. He is a good man, Sanjay assured me (in what sounded like a blatant rationalization), but he needed to build a big enough war chest that would allow him to do good in the future. For those in a rush to make money, there were lots of shortcuts available, and parties are always willing to look the other way. “Political parties are full of excuses,” he said with a smile.

  NEW DATA SOURCES

  Scrutinizing the link between money and muscle more closely requires fine-grain data on the personal attributes of candidates. Typically, such information is lacking, particularly in developing countries. Even when researchers can construct credible data, the latter are often restricted to election winners rather than all candidates standing for office. But a major breakthrough for political data in developing countries occurred in 2003. A wellspring of information about India’s political class was tapped for the first time, introducing a new level of transparency about India’s electoral aspirants and elected officials.

  Window into a Private World

  As part of its effort to address the criminalization of politics, the ECI had long agitated for candidates to make public disclosures about their criminal antecedents. The first breakth
rough came in 2002 when the Supreme Court ruled in a public interest litigation (PIL) suit filed by ADR requiring that each candidate standing for election at the state and national levels submit at the time of nomination a judicial affidavit detailing their educational qualifications, financial assets and liabilities, and information about pending criminal cases.109

  Politicians and political parties strongly opposed the move, but soon after the government promulgated an executive ordinance severely watering down the new transparency regime.110 A coalition of civil society groups once again appealed to the judiciary, which invalidated the ordinance. With the court’s backing, the ECI framed new guidelines for disclosure, which have increased the level of political transparency and the ability of ordinary citizens to access information about competing candidates.111

  Building on the work of some pioneering civil society groups, I set out to build a dataset that contains information on virtually the entire universe of candidates standing for state and national election in India between 2003 and 2009. This database includes details on 46,739 candidates who contested 35 state assembly elections and 21,697 candidates who contested national elections in 2004, 2009, and 2014.112 Details of the dataset, its creation, and caveats can be found in Appendix A.

  A few salient points about the data are worth mentioning. First, the affidavit data are self-reported, immediately raising concerns about their veracity. It is less of a concern for criminal cases, given that these are a matter of public record, but it is likely to affect the data on financial assets and liabilities. It is best to treat the financial data as an underestimate given that candidates face incentives to underreport their wealth in order to obscure financial assets from prying eyes. Nevertheless, the assets candidates do report are very high relative to the average Indian, as are the monetary gains over time.