Alacrity Housing - Ethics First

Details

Themes: Coporate Governance
Period : 1990 - 2001
Organization : Alacrity Foundations Pvt. Ltd.
Pub Date : 2001
Countries : India
Industry : Housing and Construction

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Case Code : CGOV002
Case Length : 12 Pages
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An Honest Organization

The Indian construction industry was so corrupt that it appeared to be impossible for a construction company to survive without giving bribes and or dealing in black money. The companies in the industry required large sums of money to purchase property and building materials. In addition, to obtain licenses, they had to deal with corrupt and bureaucratic government officials. Following short cut routes, speeding up processes through bribes, and accepting sub-standard materials seemed to be common practices in the industry.

However, Alacrity Housing felt that it could behave in an ethical manner and still survive in the industry. A strong Gandhian principle seemed to run through Alacrity. The company believed that perseverance and patience were the most important weapons to deal with the corrupt bureaucracy of government departments. Indukanth explained, "If you want to beat the bureaucracy at its own game, there's a very simple rule to follow. Read up and understand their procedures - and you may be sure each government department is governed by detailed do's and don't's. I admit that it takes a little more time, but the effort is worth it."

Sharing his experiences of seeking appointments with officials for obtaining clearances, Indukanth said, "The first day, I waited in the queue, having taken an advance appointment and arrived half an hour early. But that day the official left early. I took a fresh appointment, but this time the concerned person did not came to the office. The third time, someone else was let into the room ahead of the rest." Since Indukanth was unable to meet the official after following the government's 'system,' he went into the official's room. He informed the official of his previous experiences and explained that he couldn't wait any longer. Alacrity got the appointment and the permissions. Indukanth explained, "People don't really want to take bribes. It robs them of their dignity and their 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."

To keep this good feeling and encourage the government departments not to take bribes, Alacrity released series of large advertisements in 1992. The ads were headlined as "It still pays to be honest." The ads named seven government departments that had not taken bribes and issued permissions to Alacrity. These departments had issued about 200 planning and building permits, 1100 sewerage, drainage, water and electricity connections, more than 100 no-objection certificates and 1500 sale deed registrations. It seemed to be a very good corporate strategy. Indukanth said, "Those we mentioned became our supporters in clean dealings."

Alacrity Housing also believed in having fair dealings with customers. They were given detailed information of the house that they planned to buy. The company's booklet - Key Questions to Ask while Buying a Flat - explained the municipal development control rules and formalities. The company prohibited any black money dealings with its customers. In one of its ads, Alacrity applauded and named hundreds of customers who had bought flats without paying in black. The Chief Vigilance Commissioner, Govt. of India said, "Alacrity is an illustrious example among the glorious exceptions of companies observing ethical practices in business. The Urban Land Ceiling Act and the Income Tax Act had ensured that real estate became a gold mine for black money. In that sector, for a company to adopt ethical standards was unbelievable and the fact that they succeeded is really incredible. The question is, if Alacrity can afford to be honest, why not other companies?" The Economic Times⁶ also said, "Will Alacrity's example of honest business be replicated elsewhere? ... Actually, making and selling even one flat without black money is a feat in today's India."

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