Identity Project

Are countries with a poor democratic record more likely to mandate an Aadhaar-like ID?

Research from the Centre for Communication Governance suggests robust democracies are less likely to have biometric identity systems.

Can a country’s democratic record indicate whether it is likely to mandate a national biometric identity? Research by scholars at the National Law University, Delhi suggests there may be some correlation, at least to indicate that robust democracies have been more cautious about adopting biometric identity systems.

The Supreme Court’s decision last month upholding a fundamental Right to Privacy for all Indians has put a renewed focus on Aadhaar, India’s 12-digit biometric identity programme that has been criticised for not only violating privacy but also lacking sufficient data protection safeguards. Challenges to the Aadhaar project, in fact, prompted the Supreme Court to take up the question of a Right to Privacy, and the apex court will hear petitions against the unique identity initiative later this year.

Ahead of those hearings, researchers from the Centre for Communication Governance at the National Law University, Delhi sought to look at the adoption of biometric identity systems by countries across the world. While examining whether countries were instituting these Aadhaar-like systems, researchers from the Centre noticed a trend wherein nations with strong biometric identity systems were less likely to have robust democratic governments.

“As we gathered and analysed the data, we noticed an interesting trend where many countries that had strong biometric ID systems, also did not have strong democratic governments,” the researchers said.

So they sought to map out their research, based on data collected primarily from countries within the Commonwealth, measured against their positions on Freedom House’s Freedom in the World index and the Economist Intelligence Unit’s Democracy index. The results show a cluster of nations with less freedoms also instituting a biometric system, while others higher up the democracy index do not have similar identity programmes.

Chart: Anand Katakam
Chart: Anand Katakam

“Our findings do suggest that the stronger Commonwealth democracies tend to have public consultations, challenges before the courts, and public discussions about the various issues that a system like this poses,” the researchers said. “Most of the stronger democracies in our study also have privacy and data protection laws... It may, however, be fair to say that democracies are typically cautious in terms of whether and how they adopt biometric identity systems.”

Looking at just the Freedom Index, India sits right in the middle relative to the countries being examined here and, as the graph below shows, the lower down the index you go, the more likely the country has a biometric system for social transfers.

Edited excerpts of an email interview with Chinmayi Arun and Smitha Krishna Prasad follow:

What prompted you to undertake this research?
Centre for Communication Governance: We noticed that one of the arguments being made in defence of Aadhaar was that there are similar systems in most countries across the world. We were aware, of course, that the United Kingdom’s National Identity Cards Act, which called for biometric-based national identity cards for all citizens and an associated national identity register, was repealed after concerns were raised that the project was unnecessary, wasteful, and invaded the privacy of the registered citizens. All information collected during the initial years of the project was destroyed.

We did, however, want to engage with the argument about the prevalence of biometric identity systems being used in other countries in a fact-based, research-oriented manner. We, therefore, decided to study other countries’ biometric-based identity cards/schemes. The decision to focus on Commonwealth countries was mainly because we felt their legal systems would be more easily comparable to India.

We started our research by simply looking for the existence of biometric identity systems, and the legal frameworks for these systems with an open mind. As we gathered and analysed the data, we noticed an interesting trend where many countries that had strong biometric ID systems also did not have strong democratic governments. We then decided to map our research on biometric ID systems across Commonwealth countries, against existing research that maps the nature of government (democratic or not), in each of these countries. The Freedom in the World Index – 2017, published by Freedom House, seemed like a reasonable index to work with especially since it covered all the countries we had examined in our our research.

What were you expecting to find over the course of the research?
Centre for Communication Governance: We were curious about why other countries were adopting these systems, what models they were using and if they had found ways to address the civil liberties concerns. We went in with an open mind, to see if there were details that would be useful as we debated these questions in India. One should not be adopting or rejecting a system purely based on other countries’ choices – the underlying reasons and context are very important if we actually want to understand the choices.

What do you make of the results? Do you think there is a strong enough trend in the correlation to make some conclusions?
Centre for Communication Governance: Our findings do suggest that the stronger Commonwealth democracies tend to have public consultations, challenges before the courts, and public discussions about the various issues that a system like this poses. We have inherited our top-down processes from the United Kingdom, but the United Kingdom has a healthy tradition of public consultation and has had the courage to roll back a project that was not working. There are also ongoing discussions and protests against the smart ID system in South Africa.

Most of the stronger democracies in our study also have privacy and data protection laws. We are still in the process of analysing and understanding the specific safeguards contained in these laws. It may, however, be fair to say that democracies are typically cautious in terms of whether and how they adopt biometric identity systems.

From carrying out this research, what is your sense of the way governments are using biometric IDs? Is there a clear trend, regardless of position on the political freedom spectrum, of more countries using biometrics for specific things – say as a national ID or for voting?
Centre for Communication Governance: We have seen that a number of countries seem to be moving towards implementing national ID systems. However, not all of these are necessarily biometric-based. Where biometric systems are being implemented, they seem to be in place to help with passport / visa applications, law enforcement, or KYC (know your customer) for financial transactions.

As a follow-up to that, do you believe that countries that are using biometrics for social welfare delivery are likely to also be using that ID for other things like voting and so on?
Centre for Communication Governance: A few of the countries we have seen on the list seem to be using biometric or non-biometric national IDs for delivery of social welfare benefits. A few are using the ID systems across different types of services. However, it is hard to tell what direction they will move in, although we have noticed that many organisations writing about these systems are critical or questioning of these systems, especially from the point of view of function-creep (or the widening of the use of a system beyond its original purpose). Questions are already being asked in South Africa about their ID system being accessed by law enforcement, and being used to profile and discriminate against marginalised people.

What takeaways do you have from the legislation aspect mentioned? Would we need more research to judge the relative strength of data privacy laws if they exist?
Centre for Communication Governance: Some countries, especially the ones higher up the democracy index, do seem to have privacy laws in place. We will, however, need to study these laws more, and possibly get inputs from legal experts in these countries to understand the specific safeguards that they offer to mitigate potential harm arising from the ID systems.

Is there any sense, when looking qualitatively at the aspects of biometric systems, that countries are using ‘best practices’ based on one nation’s model like, say Aadhaar?
Centre for Communication Governance: It is possible that this is the case. However, we will need to undertake further research to see if there is a specific pattern. We have also noticed other interesting links between the systems adopted by different countries: for example, service providers getting contracts for the supporting infrastructure for these systems in some other countries have also got contracts for the Aadhaar project. It would be worth examining this trend more closely.

Where does the research go from here? What would you want people to take away from this information, and what sort of follow-ups are you expecting, either that you will be working on, or what others may be able to do based on your data?
Centre for Communication Governance: We hope our work so far is useful and triggers more data-oriented, detailed investigation by others. We plan to continue our research by adding more countries to this list.

We would also like to analyse the particulars of the data protection and privacy frameworks that operate in the countries we are studying. The Centre for Communication Governance is an academic research centre at the National Law University, Delhi. Our aim is to use research to facilitate informed public debate, and effective, research-led policy making in relation to issues at the intersection of technology and law.

We welcome your comments at letters@scroll.in.
Sponsored Content BY 

Behind the garb of wealth and success, white collar criminals are hiding in plain sight

Understanding the forces that motivate leaders to become fraudsters.

Most con artists are very easy to like; the ones that belong to the corporate society, even more so. The Jordan Belforts of the world are confident, sharp and can smooth-talk their way into convincing people to bend at their will. For years, Harshad Mehta, a practiced con-artist, employed all-of-the-above to earn the sobriquet “big bull” on Dalaal Street. In 1992, the stockbroker used the pump and dump technique, explained later, to falsely inflate the Sensex from 1,194 points to 4,467. It was only after the scam that journalist Sucheta Dalal, acting on a tip-off, broke the story exposing how he fraudulently dipped into the banking system to finance a boom that manipulated the stock market.

Play

In her book ‘The confidence game’, Maria Konnikova observes that con artists are expert storytellers - “When a story is plausible, we often assume it’s true.” Harshad Mehta’s story was an endearing rags-to-riches tale in which an insurance agent turned stockbroker flourished based on his skill and knowledge of the market. For years, he gave hope to marketmen that they too could one day live in a 15,000 sq.ft. posh apartment with a swimming pool in upmarket Worli.

One such marketman was Ketan Parekh who took over Dalaal Street after the arrest of Harshad Mehta. Ketan Parekh kept a low profile and broke character only to celebrate milestones such as reaching Rs. 100 crore in net worth, for which he threw a lavish bash with a star-studded guest-list to show off his wealth and connections. Ketan Parekh, a trainee in Harshad Mehta’s company, used the same infamous pump-and-dump scheme to make his riches. In that, he first used false bank documents to buy high stakes in shares that would inflate the stock prices of certain companies. The rise in stock prices lured in other institutional investors, further increasing the price of the stock. Once the price was high, Ketan dumped these stocks making huge profits and causing the stock market to take a tumble since it was propped up on misleading share prices. Ketan Parekh was later implicated in the 2001 securities scam and is serving a 14-years SEBI ban. The tactics employed by Harshad Mehta and Ketan Parekh were similar, in that they found a loophole in the system and took advantage of it to accumulate an obscene amount of wealth.

Play

Call it greed, addiction or smarts, the 1992 and 2001 Securities Scams, for the first time, revealed the magnitude of white collar crimes in India. To fill the gaps exposed through these scams, the Securities Laws Act 1995 widened SEBI’s jurisdiction and allowed it to regulate depositories, FIIs, venture capital funds and credit-rating agencies. SEBI further received greater autonomy to penalise capital market violations with a fine of Rs 10 lakhs.

Despite an empowered regulatory body, the next white-collar crime struck India’s capital market with a massive blow. In a confession letter, Ramalinga Raju, ex-chairman of Satyam Computers convicted of criminal conspiracy and financial fraud, disclosed that Satyam’s balance sheets were cooked up to show an excess of revenues amounting to Rs. 7,000 crore. This accounting fraud allowed the chairman to keep the share prices of the company high. The deception, once revealed to unsuspecting board members and shareholders, made the company’s stock prices crash, with the investors losing as much as Rs. 14,000 crores. The crash of India’s fourth largest software services company is often likened to the bankruptcy of Enron - both companies achieved dizzying heights but collapsed to the ground taking their shareholders with them. Ramalinga Raju wrote in his letter “it was like riding a tiger, not knowing how to get off without being eaten”, implying that even after the realisation of consequences of the crime, it was impossible for him to rectify it.

It is theorised that white-collar crimes like these are highly rationalised. The motivation for the crime can be linked to the strain theory developed by Robert K Merton who stated that society puts pressure on individuals to achieve socially accepted goals (the importance of money, social status etc.). Not having the means to achieve those goals leads individuals to commit crimes.

Take the case of the executive who spent nine years in McKinsey as managing director and thereafter on the corporate and non-profit boards of Goldman Sachs, Procter & Gamble, American Airlines, and Harvard Business School. Rajat Gupta was a figure of success. Furthermore, his commitment to philanthropy added an additional layer of credibility to his image. He created the American India Foundation which brought in millions of dollars in philanthropic contributions from NRIs to development programs across the country. Rajat Gupta’s descent started during the investigation on Raj Rajaratnam, a Sri-Lankan hedge fund manager accused of insider trading. Convicted for leaking confidential information about Warren Buffet’s sizeable investment plans for Goldman Sachs to Raj Rajaratnam, Rajat Gupta was found guilty of conspiracy and three counts of securities fraud. Safe to say, Mr. Gupta’s philanthropic work did not sway the jury.

Play

The people discussed above have one thing in common - each one of them was well respected and celebrated for their industry prowess and social standing, but got sucked down a path of non-violent crime. The question remains - Why are individuals at successful positions willing to risk it all? The book Why They Do It: Inside the mind of the White-Collar Criminal based on a research by Eugene Soltes reveals a startling insight. Soltes spoke to fifty white collar criminals to understand their motivations behind the crimes. Like most of us, Soltes expected the workings of a calculated and greedy mind behind the crimes, something that could separate them from regular people. However, the results were surprisingly unnerving. According to the research, most of the executives who committed crimes made decisions the way we all do–on the basis of their intuitions and gut feelings. They often didn’t realise the consequences of their action and got caught in the flow of making more money.

Play

The arena of white collar crimes is full of commanding players with large and complex personalities. Billions, starring Damien Lewis and Paul Giamatti, captures the undercurrents of Wall Street and delivers a high-octane ‘ruthless attorney vs wealthy kingpin’ drama. The show looks at the fine line between success and fraud in the stock market. Bobby Axelrod, the hedge fund kingpin, skilfully walks on this fine line like a tightrope walker, making it difficult for Chuck Rhoades, a US attorney, to build a case against him.

If financial drama is your thing, then block your weekend for Billions. You can catch it on Hotstar Premium, a platform that offers a wide collection of popular and Emmy-winning shows such as Game of Thrones, Modern Family and This Is Us, in addition to live sports coverage, and movies. To subscribe, click here.

This article was produced by the Scroll marketing team on behalf of Hotstar and not by the Scroll editorial team.