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Mr builder! You have cartel of corruption around

Posted on by Track2Realty
Track2Realty Operation Clean Up

Bottom Line: It is not easy to be in real estate media and yet not become a part of mutual appreciation club with the decision maker and influencer professionals in the sector. Ravi Sinha nevertheless believes that best practices is challenging but not impossible in a business crying for operation clean up. 

Corruption, Corruption in real estate, Corrupt real estate, Corrupt property market, Corrupt property deals, Shady property market, Indian real estate is corrupt, Corrupt practices in real estate, India real estate news, Indian realty news, Real estate news India, Indian property market news, Investment in property market, Track2RealtyIt was around eight years back that a lady from the corporate communication team of one of the builders in Mumbai approached me for a story while I was writing for a leading English daily in the city. The concept of the commercial project was something that made me excited about it from the standpoint of its news worthiness.

However, being new as a real estate journalist I had little idea that the news pitch was a trap for me, thanks to the cartel of corruption that is a way of life in the business of Indian real estate.

As it turned out, the developer had summoned its marketing & communication team to create a buzz around the project. The marketing team had subsequently got into an advertising deal with the very same newspaper. And then as a PR exercise, I was approached for the feature story around the concept of the project.

Till this point it was not unethical and at least not something that could make me suspicious. But the moment the management of the developer was briefed about my story they asked the marketing team to cancel the advertising deal and instead focus on the free publicity only.

It did not go down well with the sales team which had their own vested interests with the release of advertising. As a result, it was leaked to the marketing team of the said newspaper that the deal is being cancelled since I have agreed to offer them a free publicity for the project.

With absolutely no idea about the advertising deal between this developer and the newspaper, it led to a blame game and I was suddenly caught in this cartel of corruption. Needless to add, the corrupt practice on part of the developer was as much financial corruption as moral & ethical corruption.

This was my first brush with the corrupt practices in the business of Indian real estate. It nevertheless did not dent my credibility as the editors of the newspaper strongly backed me, being aware of my reputation as a journalist. My entry into the big bad world of real estate journalism has been accidental, but these are the kind of instances that have made me extra careful and alert with real estate professionals.

Corrupt coterie around builders 

Corruption is so well rooted within the system of developers that often they are themselves unaware

Corruption suits the builders if the sales team is corrupt but result oriented

Corruption hurts the builders if only they are at the receiving end at government agencies

A ‘Cut’ & ‘Give & Take’ is such an accepted norm that whistle blowers are seen as NPAs  

With so much money around and developers mostly uneducated, it is the senior functionaries in most of the real estate companies who create their own cartel of corruption. Sales leads that are generated within the company are generally leaked to the brokers and the brokerage is distributed with the sales, marketing or the corporate communication, depending upon their clout within the organisation.

The Managing Director of a leading real estate company who happens to be professional being hired on the job once admitted to me that there is dishonesty flowing in the very DNA of the of professionals in the sector. Sharing his personal experiences ‘off the record’ he says when he joined the sector he was taken aback with the lifestyle of his juniors who even had half his experience and salary, forget professional capabilities.

Many of these professionals flaunt swanky cars and the kind of wealth that is disproportionate to their known income. With corruption all around and his non real estate background, this professional tried to inculcate some of the best practices from other matured industries. He had to fire most of his sales & marketing team and bring in fresh blood from some of the leading real estate companies.

The mandate now was very clear: get more brokerage but this culture of cut for passing sales leads to brokers have to be stopped. Did it work? The professional soon realised that howsoever better pay package or incentive he may offer these professionals can’t resist creating their own innovative ways & means to make extra money.

I am no more new or novice in the world of real estate and have learnt how to deal with such shady characters. One of the weakest weak links and farce in real estate (other than sales) is Corporate Communication. Forget MEA (Media Entertainment Allowance) for PR that cannot be audited, the department makes money through Creative Agency as well.  

For example, an agency charges one developer INR 1.5 lakh for PR account in the same Bangalore market where it charges INR 5 lakh to another developer. The mandate is the same and so is the result in terms of media outreach or coverage. How could an agency charge inflated bills from one company for the job that is nothing but mass mailing of press releases. Is it professional incompetence of Corporate Communication or hand-in-glove?

More often than not the unprofessional hobnobbing is so profound that they get PR/Ad account on the sheer merit of personal rapport with the top functionaries of the developer. The cost of the PR account is not more than INR 1.5 lakh for any developer and over and above that is either hand-in-glove by functionaries or sheer incompetence.

Similarly, the Marketing Communication Head of a Noida-based developer hires a creative agency in Mumbai for its art work while sitting in Noida office. The said agency that does not command professional fee of even INR 1 lakh in its home market is being paid INR 3.5 lakh for just delivery of copy & paste sales driven creative sans creativity or original thoughts. It just shows nefarious designs of Marketing Communication Head of this NCR builder.

Inflated billing to PR and Creative Agencies and sales team passing leads to brokers for extra commission is not the only covert practices that raise many questions about the corrupt functioning of the sector. Even the PR agencies that are hand-in-glove with the Corporate Communications have the audacity to overtly mock at clients for their higher brand ranking and calling it paid reward of the client in front of other clients who fail to make it to top ranked brands.

In the wake of getting exposed, more than the PR agencies the Corporate Communications of the developer gets into damage control mode and are so very possessive for the agency that they don’t want the controversy to affect the jobs of its employees. After all, no one can afford the skeletons to come out of the cupboards. The excuse is that the poor guys have jobs to save and EMI to pay. There is more than what meets the eyes in real estate and the prevailing culture smacks of ‘Ganda Hai Par Dhandha Hai’ (Its dirty but my business).  

Recently a couple of builders who subscribe to my kind of brutal honest journalism approached me for my opinion over participation in an award at Singapore. Award being bought and sold is anyway no news to me but what baffled me is the price tag where one builder was asked to pay INR 5 lakh and another one got the negotiated (?) price of INR 9 lakh. Needless to say, the Marketing Head of the builder persuaded his level best to make the builder believe that the offer is God’s gift for his brand reputation. I could somehow find out that the professionals with both these developers trying to influence for the deal had the background of same advertising agency.

Forget the shady deals behind the back of builders, I often wonder why do builders even allow a senior professional to bring on board his set of agencies when taken on board. Can’t a senior functionary not help sales velocity or brand makeover without his crony team? If that is the case, what is the competence of a high priced professional?

I am often asked in real estate circle why do I continuously rake up these grey issues. It is because I sincerely feel this sector needs more radicals. I love my work and the world of real estate but I don’t love the direction that this sector is heading. The challenges that the sector is facing today read like a shopping list that is endless. Unfortunately, many are self-generated and definitely avoidable, like in the case of impulsive shopping.  

The future of real estate and realty media is not at risk from slow moving economy. It is being mortgaged by diseased cultures and practices that are now legacy of most of the developers and are not easy to cure. Cartel of corruption is almost terminal.

And it is here that an independent objective opinion has more value now, than it has ever been. Even within the media there are two kinds of voices -institutional and independent. The business model of institutional media is so costly in terms of its overhead expenses that they can’t afford to raise voices of dissent, howsoever corrupt practices they may otherwise find in the sector. It takes a different set of skills and mindset to work in independent and alternative media. It is not for everyone. But it is needed now.

I am also conscious of the fact I am paying the price of being brutal honest with my expose every now and then. A Mumbai-based advertising agency has been as upfront to tell this to my marketing team that they won’t release any advertising to us. “The reason is your editor who has the bad habit of broadcasting everything in the public domain. Most of the Corporate Communication team expects a “cut” if they would influence the management for releasing the advertising to the media. But the reputation of your editor is such that instead of moving forward for the business deal he will expose it in public domain.”

I remember once on the sidelines of an industry event we journalists were talking about some of these grey areas of the sector. Suddenly when one of the developers known to champion the moral high ground in the sector appeared to interact, the editor of one of the real estate magazines changed his tune instantly, “No no! Everything is not bad in the sector. Many of the developers are doing good work.” I could not resist exposing him and asked him upfront why was he saying contrary before this gentleman became part of the discussion. The said editor lost his face in the process.

We need people in the industry that are free to be the rogues that call out the emperor’s new clothes and challenge the status quo. We need change agents. As an Independent media group, we want to do things differently.  The idea is to put trust back into the business.

I rest my case but look forward to playing the role of market disruptor that could goad the sector to some of the best practices. It is time for #OperationCleanUp that could help the business of real estate be seen with more respect.

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