What happens when a builder decides not to participate in the merry-go-around of corruption?
I have always believed that you could not be a builder in Mumbai without being utterly corrupt as well. I accepted this as a part of Mumbai's gothic reality. Pic /ISTOCK
My father spent his life's savings to buy a house on a marsh for all of us to live in. According to the unwritten law of the corrupt city of Mumbai, you had to pay 40 per cent of the unstated price of the house in untraceable hard cash. The money would not be acknowledged by receipt and would never be spoken of again. It would have disappeared into the black hole of the builder's pocket forever to re-emerge in a universe of black money.
As the eldest, it was for me to carry the cash from Worli, where we lived, to Andheri, where the builder's office was. After much discussion regarding the best way to carry so much cash — including a briefcase chained to my wrist — my pragmatic mother suggested that the most innocuous way would be a large everyday plastic bag, the kind you got when grocery shop-ping.
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At the builder's Andheri office, where a crowd of other nervous cash-carrying people stood around, I was asked to deposit my loot on the floor along a wall, next to scores of bags, stuffed pillow-cases and suitcases. I was surprised at how little space one man's life savings could take up.
I have always believed that you could not be a builder in Mumbai without being utterly corrupt as well. Like everyone else, I accepted this as a part of Mumbai's gothic reality.
Until I came upon the story of Alacrity Housing, the construction company that is legendary for never having paid or taken a bribe. Ever. And building solid, sturdy, high-quality houses at a fraction of the going market price.
Amol Karnad, who founded Alacrity Foundation in 1978, could be a character from a novel by Ayn Rand, a writer he was much inspired by. He actually believed that personal dignity and integrity were key to spiritual progress in life and that both traits should be fully expressed in the workplace. A client then thought Alacrity was a company of "smart young people with ideas, but really quite impractical."
When Alacrity started building houses in Chennai in the early 1980s, the Indian construction industry was so rotten that giving bribes to obtain licences and no-objection certificates was the unquestioned norm. All transactions had a 'black' side, under-the-table black money paid in addition to the stated price.
Karnad believed Alacrity could thrive without diving into the swamp of corruption. They refused to pay a single paisa as bribe though it meant a period of losses. Their commitment to clean dealing remained unshaken.
It took Alacrity a few loss-making years to establish themselves as a company that would not pay bribes under any circumstances, even if it meant waiting in line longer than others.
Things changed when Alacrity released a full-page advertisement in 1992, with the headline It pays to be honest. The ad named seven government departments that had not taken bribes while issuing permissions to Alacrity — 200 planning and building permits, 1,100 sewerage, drainage, water and electricity connections, more than 100 no-objection certificates and 1,500 sale deed registrations.
A second ad listed landowners who had sold their properties to Alacrity without asking for any black money, and a third listed all flat buyers who had paid for their flats with only white money.
"Those we mentioned in the ads became our supporters in clean dealings," says Indukanth Ragade, vice president of Alacrity in those days.
Even though Alacrity posted net losses in its first few years — R42 lakh in its first year and over R32 crore in 1992 — their costs of building a house were lower than others' because they never paid bribes. Their houses were economical to buy at about two-thirds the prevailing market price, striking a balance between a healthy return on investment and a fair and affordable price. The material was of higher quality and the construction work more professional. Over time the business turned around.
Alacrity offered customers benefits no one else could — a one-year warranty and after-sales service, including free maintenance for the first year. On principle, Alacrity refused to pass on price overruns and increased costs to its customers. The price they paid was exactly what the contract said. If construction was delayed, Alacrity paid the rent for alternative housing while they waited.
What makes a values-driven company succeed in a corrupt market? The answer is surprising, unexpected. Alacrity believes that people are fundamentally decent, even the supposedly corrupt bureaucrats it had to deal with.
Indukanth says, "Bribes rob people of their dignity and self-respect. When we deal with someone honestly, although we face difficulties at first, eventually we are the winners, and so are they because they feel good about themselves. People don't really want to take bribes."
Here, viewed from there. C Y Gopinath, in Bangkok, throws unique light and shadows on Mumbai, the city that raised him. You can reach him at cygopi@gmail.com. Send your feedback to mailbag@mid-day.com
The views expressed in this column are the individual's and don't represent those of the paper
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