India's black economy is so large that untaxed income seriously reduces the Government's ability to fund urgently needed projects. Yet, when you talk about corruption, people often say: 'How can I be honest when everyone else is dishonest?'
Om Prakash Bagaria, universally known as OP, is an Indian businessman who has decided to give the lie to this excuse. Among other things he has decided never to pay a bribe, with the result that he must be one of the few businessmen who sometimes stand on the crowded trains rather than put a few rupees into the right pocket. The story of his struggle goes back several years.
Bagaria comes from the north-eastern state of Assam. In 1963 he obtained an engineering degree from the prestigious Indian Institute of Technology at Kharagpur. Then he entered the family business, Steelsworth Private Ltd, which his uncle, DP Agrawal, had originally founded to manufacture equipment for Assam's tea planting industry. Starting as a development engineer, Bagaria was soon made Technical Director of Steelsworth with a seat on the board.
1972 was an eventful year for Steelsworth and for Bagaria in particular. Eight years earlier a worker named JC Kar had been sacked for absenteeism from the company's plant at Tinsukia. As well as fighting a long legal battle with the company, he had organized a union with a thousand members. In March of that year, the union put 32 demands to the company and the workers burnt effigies of the management. Agrawal, greatly upset, had a heart attack. On his way to hospital he urged his colleagues to settle the dispute.
About three weeks later, Bagaria came across a group of people who advocated a life based on absolute moral standards and obedience to the will of God. Bagaria was sceptical at first. Telling them about Kar, he said that he would accept their ideas if they could produce some change in that 'devil of a person'.
To Bagaria's surprise, Kar turned up at a Lions Club meeting which the group were addressing. However, Kar was not impressed, saying: 'Even if we admit our mistakes, how can we be sure that the management will admit theirs?'
Bagaria was not a religious man -'I only went to the company's temple because it was my job to make sure the tube lights were working' - but shortly after this he was taking part in a prayer meeting for his uncle's recovery. Suddenly a thought struck him - he had done nothing for a worker who had been bed-ridden for six months with a knee injury. 'I never bothered about the workers till then,' he says, 'because my specialty was machines. But the thought was so compelling that I went to his house.' Bagaria asked him to go to Patna to see a specialist, promising to cover all costs and apologizing for his previous callousness.
For the first time Bagaria had visited the home of a worker, and it somehow gave him the courage to approach Kar. 'Why are we afraid of each other?' said Bagaria. 'Let's sit and talk.'
'Make an invitation, give us an agenda, and we will come,' Kar replied.
'No invitation, no agenda. Bring your friends to my house and we'll have a chat.'
Kar came on the understanding that the meeting would be off the record. Bagaria had never bothered to find out what the workers' demands were, regarding it as 'not my subject'. He told them that if they withdrew their unjustified demands, he would fight for their justified demands. Within three hours, they had reached verbal agreement on all points. Bagaria promised that if Kar wrote out the agreement he would take responsibility for signing it on behalf of his board.
Agrawal's reaction? 'He was very happy and said that the concessions were less than the board was prepared to give.'
The company offered to reinstate Kar but he refused, saying he was no longer well enough to work.
This experience marked a turning point in Bagaria's thinking. When subsequently asked for bribes, he says, he simply could not bring himself to pay them.
He next took on Steelsworth's Gauhati factory where 300 employees made doors, windows and other products. To get orders Bagaria had to fill in tenders, mostly to government departments. It was a testing time as job after job was given to rival firms because Bagaria would not grease the necessary palms.
One person he met was a Mr Mathur, the purchase officer of a refinery who was known to take bribes. Bagaria told him, 'I don't want you to give us this contract so that my company's directors become fatter but so that the lives of 300 people become brighter.' Mathur was moved and fought so hard for Bagaria's company to get the job that Mathur's managing director became suspicious. Bagaria did not get the contract but he counts the friendship he built with Mathur as more important.
After a long struggle, Bagaria won contracts to make heat-exchangers, pressure vessels and other items for the oil industry. The factory's current profitability is based on such products.
In 1974 family divisions led to the splitting up of Steelsworth. Bagaria became managing director of the company's Tezpur factory and also of a small factory in Ranchi, Bihar, which made steel castings.
In Bihar, Bagaria's stand led to a threat to put him behind bars. The trouble started when he complained to the state's Chief Minister that an official of the labour department had asked for bribes. Meanwhile, inspectors from the Heavy Engineering Corporation had found that some of the manganese steel liners produced by Bagaria's factory had the wrong composition. Knowing that the liners were worth 400,000 rupees, the inspectors said they would pass them for five per cent of that sum. Bagaria asked them who would be responsible if a blast furnace failed because of the faulty liners. 'Don't worry,' they said, 'others supply worse castings.' Bagaria refused to pay.
The threat to jail Bagaria came to nothing but the factory had to close down. He says that the factory was useless and that, if he had bribed his way through, his losses would have been much greater in the long run. But some people thought him 'mad to throw away goods that could have been delivered'.
Three years ago, Bagaria set up a factory in Coimbatore in South India. Again his principles got him into difficulties; this time over getting power for the factory. 'Everyone told me you cannot get one kilowatt of connected load without paying a certain amount. But something in me revolted.' He installed a generator in the factory but also applied for power from the electricity board. He began to receive messages, 'Come to our offices, we've authorized 35 kws.' Knowing why they wanted to see him, Bagaria delayed. But one day, after praying for freedom from 'bitterness, condemnation and superiority', he went.
This was at the height of Rajiv Gandhi's 'Mr Clean' days and Bagaria said to the official, 'Will one Rajiv Gandhi clean up the whole of India? Doesn't he need people like us?' This struck an unexpected chord and the man almost jumped up from his seat. 'We need people like you,' he said. He sanctioned 35 kws immediately and promised Bagaria an additional 30, the total amount applied for, within the month.
Bagaria says that this and similar experiences convinced his colleagues in Coimbatore of the need for honesty in business. Returning to Assam, he felt confident that he could trust them to run the south Indian factory in his absence.
Bagaria's convictions have not made life simple but he insists that the struggle is worthwhile. 'Society would not be in such a mess if people did not avoid doing difficult things,' he says. 'If we are concerned about turning society around, absolute honesty is a must.'
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