Corporate Social Irresponsibility

Practices of an Indian Hotel Giant

By Sumesh Mangalassery

For the villagers of Kovalam fishing village, the night of April 13th, 2006 (the eve of the Tamil New Year) is still a nightmare. Police entered the village, beat their women, threatened their men, and arrested many. Later, the villagers were astounded to know that the complaint had been filed by the General Manager of Hotel Taj Fishermen's Cove - a property belonging to the Taj group of luxury hotels, one of the biggest hotel chains in India, owned by the famous Tata group.

It said that the fishermen had threatened guests by using "deadly weapons". Indeed, prior to the police raid, the hotel had complained that the fisher folk had been creating problems for the tourists by defecating on the open beach in front of the hotel and by parking their boats there (which is a customary practice).

Taking Over of Common Property Land

About 30 years ago, Tata established Fishermen's Cove Beach Resort about 30 kilometres south of Chennai. They entered into a lease agreement for two acres of land with the landowner, who obtained the land from the church. To build the resort, Tata also took over seven acres of land belonging to the fishing village. This was based on the oral agreement that Tata would in turn provide the community with basic services such as drinking water (two tankers a day), children's education (fees, books, etc.) and rice during the rainy season, as well as pay them a fee to take hotel guests on boat cruises.

Today, these seven acres are worth several million rupees, due to the money to be made from beach tourism. Whether by coincidence or otherwise, this oral agreement came to an abrupt end when the tsunami struck. After the tsunami, the Kovalam fishing community received about 50 fibre boats which they had to park on the shore, even though this sometimes encroached on the shore in front of the Fishermen's Cove Resort. The hotel management demanded the removal of these new boats, as they affected the tourists' view of the sea. This demand irked the community as their livelihood was challenged and they could not park their vessels anywhere else. However, after a few days of negotiation the community realised that Fishermen's Cove was not going to relent.

Unhappy with Fishermen's Cove for not providing adequate relief after the tsunami, the Kovalam fisher folk asked the hotel management to assign three acres of alternate land - less than half of what they had originally appropriated back in the 1980s - for the safe housing of the community. "The hotel people had been saying since 1991 that if any point we needed land for houses or schools they would return the land they'd taken or buy us land for somewhere else", said Narayan, a former life guard at the hotel and now a social worker in the village. "Then after the tsunami, when we really needed the land, they said they could help us with everything..." - except land, as it turned out. 

Facilitated by the Minister for Fisheries, negotiations between the Kovalam community and the hotel group lasted for more than three months before a memorandum was signed. The community agreed to forego the seven acres of home stead land held by the hotel if the government would instead compensate them with three acres of alternate land. However the government is yet to deliver their final verdict.

In the meantime, the hotel started and expansion and new construction, without the necessary permission of the Panchayat, says Janaki Raman, President of the Panchayat. The community members say that the existing hotel, too, violates the Coastal Regulation Zone Notification, an act which meant to protect the fragile coastal environment and ecology.

History repeats again

Already in the 1990s, ‘corporate atrocities' and violations of environmental laws by Taj hotels. The Nagarhole case in Karnataka is one such example of the conflicts between traditional marginalised communities and Taj. The Taj group of hotels entered a contract with the Forest Department of Karnataka in 1994 to run an eco-friendly jungle lodge in the Nagarhole National Park. In 1996, an Adivasi organisation of Nagarhole filed a petition against the Forest Department and the Taj. The petitioners argued that a five star hotel was totally prohibited in a national park, as it was a non-forest activity. The court pronounced the contract illegal and void and stated that the property be handed back. The Taj Group approached the Supreme Court - and lost the case. The state government was asked to revoke the lease and clear the site within 60 days.

Corporate Social Responsibility as a marketing ploy

In the Tata website, it says that 'social responsibility' is among the core values of the Taj Group. Tata is generally known as ‘one of the uncontested leaders and benchmark setters of Corporate Social Responsibility' in India. But a closer look shows that there is a sharp contradiction between their statements and their practices. As the examples show, the Taj group is denying the rights of the marginalised communities like Adivasis and fishermen and appropriating common property resources in the name of tourism development. They talk about conservation, environmental protection and social responsibility etc. Their EARTH project (Environment Awareness & Renewal at Taj Hotels) has received certification from "Green Globe", an environmental certification program for travel and tourism. At the same time, they are violating existing legislations and regulations which are meant to protect the fragile environment and the interests of the communities living there.

On the one hand, they are giving the image of helping the people with their responsible practices, but on the other hand they are exploiting communities' resources for profit. They use CSR to divert the attention from real and serious issues. Taj is also highlighting their charity to influence decision makers in order to avoid regulation and gain legitimacy.

Can the market solve the problems created by the market?

This ‘defensive image management' programme demonstrates the weaknesses of so called ‘Corporate Social Responsibility'. CSR is often a cheap vehicle for advertising and a counter strategy to silence pressure groups. The present discussions on CSR do not address the inherent problems associated with the market and economic liberalisation, such as over-consumption, the increasing divide between rich and poor, and the permanent damage to the environment and ecosystems our future generations depend on.

The discussions are taking a direction of increased corporate take-over of state functions. They give a notion that governments fail to ensure justice to their people, so that the role of governments and their policies need to be minimised. However, corporate power or CSR are not a lever for social change. Rather, the accumulating corporate power is one of the major obstacles to achieve this. Being voluntary, Corporate Social Responsibility is strengthening corporate power rather than challenging it.

So we should work for more regulatory frameworks within the democratic system for more governmental responsibilities and accountability towards the well being of its own people. Only government regulations can force corporations to internalize costs that are currently passed on to communities. We can't rely on the corporates or the market to solve the problems created by them.

Sumesh Mangalassery is a founder member of "KABANI - the other direction", a voluntary initiative working on tourism issues in India.

(March 2009, TW 54)