Friday, February 4, 2011

Lobbying: An Indispensable Part of Pluralistic Democracy or the Evil That Needs to Be Shunned?

[The role of lobbying in the legislative and regulatory process in India has been the subject matter of great debate lately. In particular, the role of lobbyists in proving an interface between the corporate sector and various arms of Government is at the forefront. Lobbying has thus far been carried on in an informal manner, and the issue has received scant attention from a legal perspective.
In the following timely post, Satvik Varma explores the precise scope and meaning of lobbying activity and the manner in which it is regulated in the West. Based on the analysis, Satvik suggests measures for regulating lobbying activity in India.

Satvik Varma is an Advocate and Corporate Counsel based in New Delhi. He holds an LL.M. from Harvard Law School and is licensed to practice in India and in New York. He can be contacted at svarma@post.harvard.edu]

Lobbying and the individuals, some self-professed and others who have famously or notoriously earned the title of lobbyists, have recently been scorned at in India. Their existence appears to have astonished some. Their role in civil society and administration has been questioned by others. And their purported influence on the government machinery has left many shocked. Consequently, professional intermediaries, with the persuasive powers to convince, the ability to connect individuals/corporations with the government and the skill to influence public policy appear to have peremptorily been dismissed from the decision making process in India. But before we demonise these individuals let us trace the origins of lobbyists and try to understand the legitimate role these influential individuals/organisations play in some of the more politically advanced countries. It may also be helpful to analyse the legislation which currently exists and regulates the functioning of these powerbrokers in western countries and try to determine if similar legislation could be introduced in India to monitor their scope of work. The eventual goal is to assess, what role, if any, exists for lobbyists in the Indian democracy.

The term ‘lobbyist’ is said to have been in common use in England around the 1840’s. Finding its roots to the British House of Commons, it is believed that special interest petitioners would often gather in the rooms besides the legislative chambers, called ‘lobbies,’ to try to interact with Parliamentarians. These petitioners began to be called ‘lobbyists’ and since then the term has stuck. In the U.S., lobbyists are believed to have been at work from the earliest days of the Congress. It may be of interest to note that some of Washington's first newspaper correspondents were, in certain respects, tariff lobbyists and were sometimes also allowed to obtain seats on the House floor. Some reports revealed that these persons, in contravention of promises to the contrary and in violation of House rules, would lobby the representatives concerning matters such as claims or bills. But one urban legend has it that American President Ulysses S. Grant would often dine at the Willard Hotel in Washington. Wealthy individuals would hang around the lobby of the hotel to interact with him and President Grant began to describe them as lobbyists.

As a profession, lobbying has grown significantly over the years and it is believed that currently there are in excess of 17,000 registered lobbyists in the American capital. Given that most lobbyists focus their activities primarily on the Congress, it is interesting to note that since 1998, 43% of the 198 members of Congress, who left government to join the private sector, have registered themselves as lobbyists! President Obama has been keen to stop this practice termed as “revolving door” and, immediately after taking office, signed some executive orders and presidential memoranda to curtail this movement. But his actions came under severe criticism from these powerful individuals, some of whom were believed to be large contributors to the Democratic Party.

So who is a lobbyist and what is the function they perform? The Lobbying Disclosure Act of 1995 (“LD Act”) in the United States defines a lobbyist as “Any individual who (1) is either employed or retained by a client for financial or other compensation (2) for services that include more than one lobbying contact; and (3) whose "lobbying activities" constitute 20 percent or more of his or her services on behalf of that client during any six-month period.” Lobbying contact is defined as “any oral, written or electronic communication to a covered official that is made on behalf of a client” in relation to subjects specifically covered by the LD Act. Lobbying activities includes “lobbying contacts and any efforts in support of such contacts, including preparation or planning activities, research and other background work that is intended, at the time of its preparation, for use in contacts and coordination with the lobbying activities of others.”

Simply put, leading dictionaries define lobbying as a form of advocacy intended to influence decisions made by public officials and legislators. And lobbyists are persons who undertake the above mentioned activities on behalf of corporations or special interest groups and thereby attempt to affect the formation and implementation of public policy. Before we dismiss lobbyist as sleazy backroom operators one should note that governments also carry out lobbying activity sometimes through its foreign emissaries or by hiring law firms or registered lobbyists. Case in point is when the Indian government engaged the services of a lobbying firm to garner support on Capitol Hill during the Indo-U.S. Civil Nuclear Deal.

In recent times, Britain has also seen a growth of professional lobbying. And while their activities are on a much smaller scale than their counterparts in the United States, the Chartered Institute for Public Relations estimates that almost 14,000 individuals were employed in governmental relations and ancillary activities. These individuals prefer to describe themselves as 'Political Consultants', or 'Public Relations' or 'Public Affairs' consultants but their role in bridging the gap between the government and special interest groups appears to be no different from their counterparts across the Atlantic.

Lobbying in the European Union is slightly more complex given the role of the European Parliament and the impact of its decisions on member nations. But the more political influence the EU gains globally and the additional areas of policy it covers, the greater the role of some 15,000 Brussels based lobbyists who look to influence the EU legislative process. Lobbying in the EU takes place both at the European level as also within the member nations. Lobbyists are active at the EU Commissions, the Council and the European Parliament and exert their influence either through members of the various working groups or through the delegations of the national governments.

Thus, lobbying is a reality of modern day democratic functioning. And given the influence that lobbyists exert in the formation of public policy, the need was felt to establish a set of rules and standards for their functioning. Legislative history relating to lobbying in the United States dates back to the 1940’s, but the LD Act, introduced in 1995, was required to balance the need for reforms with the ability of individuals, groups, and corporations to lobby the government which is protected by the right to petition enshrined in the First Amendment of the United States Constitution. The LD Act required lobbyists to register themselves and while it was amended by the Lobbying Disclosure Technical Amendments Act of 1998, both legislations require lobbyists to file on a regular basis a report identifying themselves, their clients, the individuals lobbied and details relating to the major expenses undertaken, as also a list of legislation that was influenced.

In 2006, the U.S. Senate passed another piece of legislation titled the Legislative Transparency and Accountability Act of 2006, which bars lobbyists themselves from buying gifts and meals for legislators and also requires lobbyists to file a detailed report of their activities, more frequently. Subsequently, the Honest Leadership and Open Government Act of 2007, amended the LD Act with the view to introduce further transparency in the industry. But it would be naïve to overlook the real objective which was to rein in the influence of K Street (the street where most lobbyists have their offices) over Capitol Hill.

In the United Kingdom, currently lobbying is not entirely regulated. In 2009, the House of Commons appointed a Public Administration Select Committee (“U.K. Committee”) to conduct a parliamentary inquiry on lobbying and examine what regulation could be introduced. The U.K. Committee published a detailed report titled, “Lobbying: Access and Influence in Whitehall,” and noted that “the practice of lobbying in order to influence political decisions is a legitimate and necessary part of the democratic process. Individuals and organisations reasonably want to influence decisions that may affect them, those around them, and their environment. Government in turn needs access to the knowledge and views that lobbying can bring.” As for regulation, the U.K. Committee proposed that the “ethics of the activities of lobbyists should be overseen and regulated by a rigorous and effective single body with robust input from outside the industry.” The U.K. Committee also proposed that “there should be a register of lobbying activity provided for in statute, independently managed and enforced, to include information provided by both lobbyists and those being lobbied.”

Unfortunately, the objective of the U.K. Committee’s report to try to bring transparency in the dealings between Whitehall decision makers and outside interests was not successful. The British Parliament responded to the U.K. Committee’s proposal by saying that ‘self-regulation’ was more practical. Hence, currently in the U.K. some self-regulatory bodies which U.K. public affairs companies can join are the Association of Professional Political Consultants and the Public Relations Consultants Association as also the Chartered Institute of Public Relations, which registers individual lobbyists.

In India, the business landscape has changed and Washington-style advocacy methods based on rigorous research, accompanied by power-point presentations and seeking assistance of industry experts, trade associations and think-tanks for building public opinion seems to be the new order of the day. While some of these practices have been criticised, it should be noted that lobbying is not an illegal activity and is not banned in India. Admittedly, organized lobbying is still at a nascent stage in India, and is thus entirely unregulated. Lobbyists or special interest groups are not obliged to adhere to any specific rules or laws and also don’t have any obligation to reveal the lobbying position of corporations or the money which is spent to campaign for particular policies.

Notably, in 1998 a 5 Judges Constitution Bench of the Supreme Court of India heard the famous “Cash for Vote Case.” There was a split judgment in this case and the view of the majority was that the alleged bribe-taking Members of Parliament (“MP”) were entitled to Constitutional immunity from being prosecuted for the alleged act of having received monies to exercise their right to speak or cast their vote in a particular manner in the Parliament. The majority was also of the opinion that while prosecution against the bribe-givers could be proceeded with in the manner prescribed under law, the Parliament could proceed against both the bribe-givers and the bribe-takers for breach of privileges and for contempt of the Parliament.

With due respect, it appears that the majority decision was perhaps based on the practical political realities and in fact the decision of the minority holding that a MP is not entitled to the powers, privileges and immunities of the Parliament from being prosecuted before a criminal court for an offence involving offer or acceptance of bribe for purposes of speaking or by giving his vote in Parliament appears to be more appropriate. One also tends to agree more with the minority view that “the criminal liability incurred by an MP who has accepted a bribe for speaking or giving his vote in Parliament in a particular manner thus arises independent of the making of the speech or giving of vote by the MP and the said liability cannot, therefore be regarded as a liability “in respect of anything said or any vote given” in Parliament.” It is difficult to reconcile with the fact that MPs are entitled to Parliamentary immunity if they accept a bribe to speak or cast their vote in a particular manner in Parliament and do what they accepted the bribe for, but are liable to be prosecuted on a charge of bribery if they accept a bribe but do not actually undertake the act for which the bribe was given. The bottom line is that legislators should be liable to be prosecuted for accepting a bribe to perform their legislative responsibilities.

Many years later the Supreme Court of India also decided the “Cash for Query Case” which had prominent hints of lobbying. The facts in this case were that a private channel had conducted a sting operation and found some MPs accepting money as consideration for raising certain questions in the House and for otherwise espousing certain causes for those offering the lucre. The matter was referred by the House to a committee which found the acceptance of money had a direct connection with the work of the Parliament and had eroded the credibility of the Parliament as an institution and as a pillar of democracy and recommended the expulsion of all the 10 charged MPs. However, the issue before the Court in this case was not about the ethics of accepting money for raising questions, for which the appropriate course of action would be to prosecute the MP for corruption in accordance with law, but rather the constitutional validity of the expulsion of the MPs, and, so currently there appears to be no direct judicial precedence concerning lobbying.

Steering back to the main issue of lobbying, U.S. Senator Robert C. Byrd in his address in 1987, when he was the Senate Majority Leader, quoted Margaret S. Thomson, the author of “The Spider’s Web: Congress and Lobbying in the Age of Grant,” as stating that the U.S. “Congress was unprepared for the vast economic changes occurring in the nation and needed all the help it could get.” Thomson went on to state that “pressures on the federal government were steadily increasing. The more crowded the congressional agenda became-with issues of finance, industry, internal improvements, and international relations-the more interests demanded to be heard. This is the nub of what political scientists call ‘pluralistic democracy.’ With this background, Margaret Thompson defined lobbying as “the process by which the interests of discrete clienteles are represented within the policy-making system.” She defined lobbyists as “representatives who act concurrently with, and supplement the capabilities of, those who are selected at the polls. Lobbyists fill roles that in many ways are comparable to those of legislators: helping to transmit and obtain satisfaction for demands upon the government, thereby advancing the substantive interests of those whom they have taken it upon themselves to serve.”

Interestingly, Senator Byrd in his address went on to say that “although we often hear a hue and cry about “special interests,” everyone, in a sense, belongs to a multitude of these interests: we are defined by our gender, race, age, ethnicity, religion, economic status, educational background, and ideological bent. Some groups are better funded or better organized than others: corporate interests, organized labor…. Some groups, especially the very young, the very old, the very poor, are the least organized and the least able to make their needs heard. Nevertheless, they all have a “special interest” in congressional (read parliamentary) action. Members of Congress, of course, attempt to represent all of the various interests within their constituencies, but they must establish some priorities. Lobbyists attempt to shape those priorities by reminding them of the needs of specific groups.

Whether or not we agree with the above comments, the reality is that lobbying exists, is more widespread than it is presumed to be, performs a critical function and is likely to remain a major element within the wider political and governmental process. In fact, sufficient research has been carried out across different countries, which concludes that “lobbying is a legitimate part of the democratic system, regardless of whether it is carried out by individual citizens or companies, civil society organisations and other interest groups or firms working on behalf of third parties (public affairs professionals, think-tanks and lawyers).” The lobbyists therefore play an important if not an essential role in the entire legislative process and sometimes even help to ensure that the view of certain interest groups are heard before policies that potentially affect them are drafted.

In light of the above, it would be prudent to accept that it is not lobbying that is the problem. The lack of transparency coupled with the lack of regulation and inability to monitor the functioning of these powerful individuals is what appears to be the root of the problem. The UN Global Compact, the world's largest voluntary coalition of corporations, has been battling lobbying. This coalition believes that “lobbying, by nature, is informal and opaque, and therefore may defy regulation.” But, the coalition goes on to note, that there is consensus even among those who resist it that “lobbying ought to cease to be a 'behind the scenes' activity and that it ought to be seen as a legitimate, regulated business function.”

But as the U.K. Committee noted, “The experience of other jurisdictions suggests that there is no ‘one-size-fits-all’ or ‘off-the-shelf’ solution to the regulation of lobbying and that early attempts at solutions often need subsequent adjustment.” Therefore, India, while considering regulating the lobbying industry, can learn from the international best practices and adopt what’s most appropriate and practical. One of the paramount considerations has to be to ensure that all those who engage in the development and delivery of policy in India do so with complete transparency. Lobbyists and groups that seek to contribute to the policy development, influence decision-makers, looking to raise issues and special interests, must at a minimum disclose who they represent, the objectives of their efforts, the input they provide and how they are funded. The general public has the right to know about the relations between interest representatives and the policy makers. The Right to Information Act can prove to be handy in achieving this objective and compliance under the said Act can be extended to include information about ministerial and other official/bureaucratic meetings with external interest groups.

Equally important is to have rules that govern the conduct of the lobbyists and those being lobbied. With the rise of single-issue politics, people are looking to NGOs and other interest groups, be it think tanks, professional bodies, trade unions, trade associations or charities to represent their interests. Given that policy makers are more likely to be persuaded by the arguments put forward by charities and interest groups over those put forward by private business, (as noted by Hansard Society, a U.K. based independent, non-partisan educational charity which exists to promote effective parliamentary democracy, based upon a survey conducted by it and published in a discussion paper titled, “Friend or Foe? Lobbying in British Democracy”), it is important that all those who have a significant impact on policy development in a democracy are required to register themselves. The registration process needs to be mandatory and enforced by statute and this should help in not only organizing the industry but can also prove as an incentive to those registered to be consulted in the policy making process. The registration can mirror some of what is prescribed internationally to include details of the organizations hiring their services, details of any public office previously held by an individual lobbyist, details of the interests of decision makers within the public service and summaries of their career histories outside the public service.

One realizes that there is no unanimity over the legitimacy and usefulness of lobbying. There is also fear that the interests of those who do not have the money or influence to hire lobbyists may not be appropriately represented in the democratic process. Hence, any proposed regulatory systems needs to maintain a balance so that the business groups regardless of their political contributions do not wield disproportionate influence over policy making.

In the final analysis, the observations of the Hansard Society most appropriately sum up the discussion on lobbying that “it is necessary to move beyond debates about the relative legitimacy or illegitimacy of lobbying in itself. Instead, it is important to focus more directly on the issues raised in debates between NGOs, charities, interest groups, think tanks, trade associations, and businesses, and whether the organisations the public increasingly looks to in order to represent their views in the political process are transparent and accountable and bound by common standards of good practice and ethical conduct. When conducted in such a way, lobbying may enrich our parliamentary democracy by providing new and diverse channels through which different groups and the wider public might feed into the democratic system.”

The choice in India is now ours on whether we want to invite these powerful individuals away from the lobby into the main stay of the legislative process or risk that they continue to use all means at their disposal to influence policy making from ‘a third house.’

- Satvik Varma

2 comments:

Anonymous said...

Dear Satvik,
very insightful post. But you could have shortened it a bit..
There exists a very thin line of demarcation bw lobbying and corruption. What is your take on this issue? I mean, is it possible to have a framework which allows lobbying and at the same time precludes corruption?

vswaminathan said...

I should say that, unquestionably, answers to the two posers of Mr Anonymous are more than self-evident. According to an impassionate view, ‘lobbying’, is certainly not but a product of a ‘corrupt mind’. As such, its potential to prove yet another breeding ground for the social evil of ‘corruption’ cannot be denied.
As highlighted in the write-up, and in its title itself, the practice of ‘lobbying’ has come to be given ‘legal acceptance’, in some way or other, by a few of the other nations who have, despite the strong opposition, decidedly veered round to the New age – ‘pluralistic democracy’. None, however, can have reason as yet to honestly believe that, our nation has reached such a horrid stage. For, neither our ‘people’, nor our men in power, could afford to venture and openly confess that ours is not an unadulterated democracy.
The subject discussion, of course, brings to one’s mind similar but more fundamental questions that have surfaced off and on, and continue to be hotly debated. They are these: Should, having special regard to the obtaining realities/facts of life, ‘corruption’, though a social evil, be ‘legalised’ in any manner; Or strive and continue to put up a stiff and bold fight – even if that be a formidable task – no less formidable, nay well nigh impossible, than an attempt to reach the horizon; or more aptly, to ‘reset’ or ‘rewind’ the ‘mindset’ of anyone -individual or group.
One may, to know of the related horrid stories, go to: ‘Are terror acts at the root our black money?’(click and paste on Google)