ETHICS ASSIGNMENT-1 CASE STUDY ON COMMOWEALTH GAMES SCAM

SUBMITTED BY: B JAGAN MOHAN 10BEE0142 APRIL 17,2012

INTRODUCTION:The Commonwealth Games is an international, multi-sport event involving athletes from the Commonwealth of Nations. The Games are overseen by the Commonwealth Games Federation (CGF), which also controls the sporting program and selects the host cities. The host city is selected from across the Commonwealth, with eighteen cities in seven countries having hosted it. There are currently 54 members of the Commonwealth of Nations, and 71 teams participate in the Games. The 2010 Commonwealth Games, officially known as the XIX Commonwealth Games, were held in Delhi, India, from 3 to 14 October 2010. A total of 6,081 athletes from 71Commonwealth nations and dependencies competed in 21 sports and 272 events. It was the largest international multi-sport event to be staged in Delhi and India, eclipsing the Asian Games in 1951 and 1982. The opening and closing ceremonies were held at the Jawaharlal Nehru Stadium, the main stadium of the event. It was the first time that the Commonwealth Games were held in India and the second time it was held in Asia after Kuala Lumpur, Malaysia in 1998.Initially, several concerns and controversies surfaced before the start of the Games. Despite these concerns, all member nations of the Commonwealth of Nations participated in the event, except Fiji, which is suspended from the Commonwealth, and Tokelau, which didn't send a team. A widely-praised opening ceremony helped improve the image of the Games. The concerns raised during the buildup to the Games proved largely unfounded as most events progressed smoothly. The opening ceremony played a key role in improving the image of the Games. As athletes arrived and competitions started, many earlier critics changed their view. The final medal tally was led by Australia. The host nation India gave its strongest performance yet to emerge second, while England placed third. The day after the conclusion of the Games, the Indian Government announced the formation of a special investigation committee to probe the allegations of corruption and mismanagement that had marred the buildup to the Games.

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ORGANIZING COMMITTEE:The organization of CWG 2010 was beset by delays: in January 2010, the Indian Olympic Association vice-chairman Raja Randhir Singh expressed concern that Delhi was not up to speed in forming and organizing its games committee and, following a 2009 Indian Government report showing two thirds of venues were behind schedule, Commonwealth Games Federation president Mike Fennell stated that the slow progress of preparations represented a serious risk to the event. Singh also called for a revamp of the games' organizing committees: Jarnail Singh, a former Secretary of the Government of India, was appointed as the Chief Executive Officer and Indian Olympic Association President Suresh Kalmadi was appointed as head of the committee. In spite of delays and the corruption cases levied on the organizers, commentators stated that they were confident that India will successfully host the games and do so on time. At the launch of the Queens Baton Relay in October 2009, the Business Club of India (BCI) was formed through the partnership of the organizing committee, the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI). The BCI was formed to both market the Games and promote Indian business interests internationally.

COSTS:The initial total budget estimated by the Indian Olympic Association in 2003 for hosting the Games was 1,620 crore (US$351.54 million). In 2010, however, the official total budget soon escalated to an estimated 11,500 crore (US$2.5 billion), a figure which excluded non-sports-related infrastructure development. Business Today magazine estimated that the Games cost 60,000 crore (US$13.02 billion).The 2010 Commonwealth Games are reportedly the most expensive Commonwealth Games ever.

CONCERNS AND CONTROVERSIES:Several concerns were raised over the preparations of the Games and these included excessive budget over runs, likelihood of floods in Delhi due to heavy monsoon rains, infra structural compromise, poor living conditions at the Commonwealth Games Village, delays in construction of the main
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Games' venues, the withdrawal of prominent athletes, widespread corruption by officials of the Games' Organizing Committee and possibility of a terrorist attack by militants. The 2010 Commonwealth Games in Delhi was criticized by several prominent Indian politicians and social activists. One of the outspoken critics of the Games is Mani Shankar Aiyar, former Indian Minister for Youth Affairs and Sports. In April 2007, Aiyar commented that the Games are "irrelevant to the common man" and criticized the Indian government for sanctioning billions of dollars for the Games even though India requires massive investment in social development programs. In July 2010, he remarked that he would be "unhappy if the Commonwealth Games are successful". Miloon Kothari, leading Indian expert on socio-economic development, questioned the justification of spending billions of dollars on a 12-day sports event "when 46%of India's children and 55% of women are malnourished". Concerns raised by Aiyar were echoed by several others in India. Initial concerns about the 2010Commonwealth Games included delays in completion of projects, poor construction standards, corruption by Games Organising Committee officials and possibility of a terrorist attack. The Daily Telegraph UK showed photographs taken of child labour working on the Games sites. There were also multiple cases of items being rented for the45 days for more money than it would cost to actually buy the item. In one such case, 72 golf carts were hired for 4.23 lakh (US$9,179.1) each, when they could have been purchased for 1.84lakh (US$3,992.8) each. Weeks before the start of the Games, Indian media outlets highlighted the poor construction standards at several of the main Games venues. In late September 2010, the president of the Common wealth Games Federation remarked that the Games Village were far from completion and needed a "deep clean" and New Zealand's chef de mission even claimed that the Games might not take place given the amount of work to be done.

COMMONWEALTH GAMES SCAM:The day after the conclusion of the Games, the Indian Government announced the formation of a special committee to probe the allegations of corruption and mismanagement against the Organizing Committee. The probe committee was led by former Comptroller and Auditor General of India VK Shungloo. This probe was done in addition to the Central Bureau of
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Investigation, Enforcement Directorate, and Central Vigilance Commission investigations already underway. The probe committee was tasked with looking into "all aspects of organizing and conducting" the Games, and "to draw lessons from it." It was given three months time to submit its report. The Indian Sports Ministry had directed the Organizing Committee of the 2010Commonwealth Games (led by Suresh Kalmadi), to not release any staffer from their position still the probe committee's work got finished. CWG was infamously known as Corruption Wali Games - Name first appeared in Times of India in an article by author Chetan Bhagat Estimated scam of Rs. 70,000 80,000 crores.

Civic Bodies Involved: Sports Authority Of India (for building sports infrastructure) Organizing Committee (for conducting games) Delhi Development Authority (for Games Village) GNCT-Delhi Government (Civic Infrastructure)

Civic Bodies probing the Scam: A panel has been set up by the government to look into the corruption charges in the Games. Headed by former Comptroller and Auditor General, VK Shunglu, the panel will submit its report within three months to the Prime Minister. It has the mandate to review every transaction, if needed. The special panel appointed by the government will probe the financial bungling and administrative lapses. The Comptroller and Auditor. General (CAG) is looking into financial misappropriation; and the Enforcement Directorate (ED) is probing the routing of funds, which have been traced to tax havens like Mauritius. The Central Bureau of Investigation (CBI) will be examining tenders issued for various Games related projects, which are already under scrutiny after exposes on items being bought at absurdly inflated rates. The Central Vigilance Commission (CVC) is looking into allegations of corruption in all infrastructure projects like the stadia and Games' venues.
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MAJOR ALLEGATIONS: It is estimated that the expenditure bills have been inflated by 30% of the actual value of services or commodities procured. The Income Tax department is scrutinizing financial documents relating to the broadcast rights for the CWG following charges of tax evasion The Central Vigilance Commission is examining 11 major project tenders which were awarded at artificially hiked rates causing a loss of over Rs.500 crore The Enforcement Directorate is looking into a case of alleged violation for foreign exchange regulations related to the Queen Baton Relay in London. Infrastructure developer Emaar-MGF is in the dock for alleged irregularities in the construction of the CWG Village in Delhi. The Rs.183 crore bank guarantee furnished by Commonwealth Games village builder Emaar-MGF was ordered to be confiscated on charges of irregularities. A Rs. 760 crore bail-out package given by Delhi Development Authority (DDA) for Emaar-MGF also came under the scanner. The CWG Organizing Committee head office being burglarized several times to steal or destruct the data which is being probed The Central Vigilance Commission has initiated an inquiry into an alleged recruitment scam in the Commonwealth Games Organizing Committee (OC) following complaints that it showed ghost employees on its muster rolls and violated norms while inducting people. A total of 2,100 people were shown as having worked between May 2009 and November 2010 in different capacities and together drew salary running into several crores. Kalmadi delayed catering contract in CWG which inflated the budget by more than Rs 20 cr. The CVC has found alleged financial and administrative irregularities in over 30Commonwealth Games projects in the national capital and overlays deals by the Organizing Committee for the mega-sporting event.

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CBI registered the fourth FIR in connection with the overlays contracts given out to four firms. The total value of these contracts was over Rs. 600 crore. The lawn bowling tracks to be used during the Games had been built at around Rs 1.36 crore when it could have been done at just Rs 27 lakh. there were a number of teenagers between the ages of 14 and 16 who worked atthese places, obviously lured by an adult salary

VIOLATION OF BUSINESS ETHICS :Institute of Business Ethics, London defines it as Business ethics is the application of ethical values to business behavior. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their employees and suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements for a company and is, therefore, about discretionary decisions and behavior guided by values. Business ethics is relevant both to the conduct of individuals and to the conduct of the organization as a whole.

Causal Factors: The various factors that led to such a huge scam were as follows: Presence of avenues for corruption Lack of Accountabilty Psyche of citizenry to believe that corruption is normal All praise for the Indian jugaad

VIOLATION OF MORAL RESPONSIBILITY:Some cases which clearly highlight the violations on the part of the several people involved in the scam are as follows:The organization committee members ignored the Prevention of Corruption Act and government procedures for contracts and tenders. Mr. Lalit Bhanot, SCG of OC: some false ceiling has fallen down, which means nothing, and these things happen even at your house . Government has urged public sector units to shell out, CSR investments

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Bad publicity of the nation.

Tarnished image in terms of hygiene. Loss of faith in the system Refusal of athletes to participate in games or withdraw from games. The incomplete work added unnecessary cost burdens Unnecessary laundering of tax payers money India perceived as more corrupt after CWG scam 87th out of 178 countries surveyed A marginal decline in India's integrity score to 3.3 in 2010 from 3.5 in 2007 and3.4 in 2008 and 2009 Innocent employees at the OC still waiting for their salaries

Effect on Brand India: India had a unique opportunity to prove that they have the necessary infrastructure to host such a huge game. The members should have been more ethical and morally responsible to make the citizens believe that not all politicians are corrupt. Indian politicians should have taken a lesson from their neighbor country China which was able to showcase an excellent performance by hosting Beijing Olympics. The image of India suffered because of the greed of a handful of politicians. The corruption to the tune of thousands of crores have snatched away all the pride that India could have boasted of, had the games gone without a black spot. But the situation went out of control and have left India high and dry. Indias position degraded in global list of corruption where they went from arank of 82nd to 81st as soon as this huge scam came to light

SUGGESTION: The scheme of fighting against systemic corruption comprises a global fostering of democratic ethos, universal ideology of public service, and public ethics, education and training -Gerald Caidin

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LEARNINGS FOR YOUNG LEADERS :After studying the whole case pertaining to Commonwealth Games scandal, we have been able to arrive at some of the learnings that is of very much importance to the young leaders. These are as follows: The leaders should take strict action against corruption, dishonest behavior and manipulation being carried out in the organization The leaders should take care of the interests of all the Stakeholders involved The leaders should take an inside-out view of the problem and stop blaming others Businesses should be governed by establishing a strict Code of Conduct Commitment should come from top management Preparation of the Plan Document should be done well in advance The implementation strategy should be developed Complaints should be handled effectively Corrective action must be taken Commitment to ethical values must be evaluated The Contract must be reviewed and updated annually

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