World's #9 Most Powerful Person Now Accused of Corruption -- Will She Fall?

Cleo Paskal

Associate Fellow, Royal Institute of International Affairs

New Delhi. Some of India's biggest fish are getting caught up in the country's fast-growing wave of anti-corruption activity. In what could be India's equivalent of a judicial jasmine revolution, previously invulnerable politicians, business icons, and pillars of the community are all nervously keeping their lawyers on speed-dial.

The anti-corruption push is an unprecedented coming together of myriad facets of Indian society. Religious leaders are concerned about the effects on morality and spiritual growth. NGOs speak of the effects on the poor. The middle class is angry about its future being stifled by a smothering blanket of day-to-day corruption. The intelligence services see corruption a clear threat to national security. And the business community, thanks to globalization, has seen how efficiently things can operate without having to constantly pay bribes or be tangled in red tape, and they want the same thing at home.
Even the Supreme Court is fed up, with Justice B. Sudarshan Reddy saying about the vast sums of Indian money being illegally hidden away in Liechtenstein Bank:

We are talking about the huge money. It is a plunder of the nation. It is a pure and simple theft of the national money. We are talking about mind-boggling crime.

The scandals are bursting on to the front pages fast and thick. Suresh Kalmadi, a Congress Party politician and the former head of the corruption-plagued Commonwealth Games, was arrested April 25. According to a report by the Indian Comptroller and Auditor General, the 2G spectrum scam alone, in which 2G licenses were sold off in a manner that was, to say the least, less than transparent, cost close to $40 billion in lost revenue.

All across India, people are saying enough is enough. And suddenly the unthinkable is starting to happen. People considered above reproach, or at least untouchable, are coming under the judicial cross-hairs. 2G alone has seen charges laid against one former government minister and several captains of industry.

And the latest high profile target is one of the biggest fish of all, Congress Party President Sonia Gandhi, currently #9 on Forbes list of the World's Most Powerful People.

Sonia Gandhi has one of the most remarkable life stories in international politics. Born Edvige Antonia Albina Maino into a family of modest means in rural Italy, she didn't even get a chance to complete high school before heading to the UK for work. There she met Rajiv Gandhi, son of Indian Prime Minister Indira Gandhi. She eventually married him and the young family moved in to Indira Gandhi's New Delhi's home, putting her literally in the heart of Indian politics.

After Indira Gandhi's assassination in 1984, Sonia's husband Rajiv became Prime Minister. Following Rajiv's 1991 assassination by Tamil terrorists, there were rumors that Sonia was going to put herself forward as Prime Minister.

As she herself later said, she "could not walk past the portraits of my husband, my mother-in-law and her father and not feel that I had some responsibility to try and save the party they had given their lives to."

Given her focus on the party, it was fitting that instead of becoming Prime Minister, she ended up as President of the powerful Congress Party. Politically, it proved to be a smart move as it gave her power without direct responsibility -- while she is #9 on Forbes list of power people, the actual Prime Minister of India, Manmohan Singh, is only #18. According to Forbes, "Gandhi remains the real power behind the nuclear-tipped throne [...] she has cemented her status as true heiress to the Nehru-Gandhi political dynasty."

Her image is of a dutiful, submissive Indian wife, now widow. When her husband was alive, she would walk behind him. In public she wears saris. Although a devout Catholic, she is often photographed at Hindu Temples. And like a good Indian mother, though she has decorously pulled herself out of the race for Prime Minister, she is happy to encourage her son, Rahul, to take the job.


However there have been growing, persistent murmurs about questionable business deals and inexplicable exponential jumps in the personal wealth of her and her family.

The allegations came out in the open in 1995 when M. D. Nalapat, then Resident Editor (Delhi) of the world's largest English language newspaper, the Times of India, began a groundbreaking series of articles about Sonia.

The articles made the controversial (at the time) claim that the public docility was just a ploy, and that Sonia actually had serious political ambitions (later confirmed by her role in Congress). Also, crucially, the series said that her desire for power wasn't simply altruistic and that the wealth not only of her, but of her Italian relatives, rose stratospherically after Rajiv Gandhi became Prime Minister in 1984.

Nalapat's articles could not be ignored as he was one of India's most respected journalists and had, throughout his career, taken on corrupt politicians, social inequity and institutionalized discrimination.
This however was a 'topic too far'. While the facts in the article were never refuted, Nalapat was forced out of journalism in 1998 and moved into academics.

Next came public questions from another highly reputed source, Sten Lindstrom, Sweden's special prosecutor investigating the pay-offs associated with the sale of weapons by Bofors to the government of India. His investigation showed that a close friend of Sonia's, Ottavio Quattrocchi, has received kickbacks in the millions.

In 1998 Lindstrom gave an interview in which he said:

the Gandhis, particularly now Sonia, should explain how Quattrocchi-owned companies got such fat sums as payoffs from the Bofors deal. After all, what is the connection of Sonia and the Gandhi family to Quattrocchi? Who introduced Quattrocchi and his AE Services to Bofors? At least one thing is certainly known now. A part of the payoffs definitely went to Quattrocchi. [...] the papers all pointed to the Gandhi family.

Not only have the questions not been answered by Sonia, but in spite of substantial evidence against him, Quattrocchi has managed to evade prosecution in India, and has even had his kickback funds unfrozen from overseas accounts.

Part of the genius of Sonia Gandhi is her ability to present herself as a helpless victim, convincing even her political rivals not to fear her as she is fatally flawed. In 1998, India was being led by BJP Prime Minister Vajpayee. When Nalapat spoke with him about Sonia, he was bluntly told to lay off, as, "so long as a white Christian lady is head of the Congress Party, I [Vajpayee] and my party will always be in power". Vajpayee and his party lost power to Sonia's Congress in 2004.

But the most serious threat to Sonia -- and, as she is at the apex of the Congress Party, and so to Congress itself -- is now lying on the desk of #18, the Prime Minister of India.

On April 15, former Law and Justice Minister and Harvard Professor Dr. Subramanian Swamy asked Prime Minister Manmohan Singh for leave to lay corruption charges against Sonia Gandhi. In a meticulously researched 200+ page submission Dr Swamy alleges Sonia Gandhi has been involved in corruption in India since 1972 and personally benefited from the Bofors scam (1986), has held billions in non-Indian bank accounts since at least 1991, illegally profited from the Iraqi oil-for-food deals (2002), and even accessed KGB payoffs during the Cold War.

The Prime Minister has three months to decide whether or not to grant sanction to prosecute. If he doesn't, Dr. Swamy can take the case directly to the Supreme Court, which under Chief Justice Kapadia is showing a definite proclivity towards facilitating corruption cases.

While, so far, the corruption cases in India have caught up some pretty big fish, if charges are laid against Sonia Gandhi, it won't just be part of a wave, it will be a sea change.

Sonia Gandhi is not just an individual, she is the steely core of a pillar of Indian politics. If she crumbles, it will shake the foundations of the venerable Congress Party, and possibly leave a gaping hole in the political scene. Meanwhile, a range of polarizing and regional parties are ready to rush in and stake their claim. Given the growing importance of India in our heavily globalized world, this is not just an Indian story, this is one all should be following very closely indeed.

http://www.huffingtonpost.com/cleo-paskal/worlds-9-most-powerful-pe_b_853132.html

‘When Mayawati needs sandals, private jet flies to Mumbai’

Source: firstpost

It isn’t often that we get to see for ourselves the lavish lifestyles of our rich and famous politicians, given the high security walls that they build around themselves. But every once in a while, we’re offered a sneak peak into their charmed lives, and we learn a little bit more about the many ways in which they manage to squander public resources and our taxes to live their obscenely opulent lives.

Uttar Pradesh chief minister Mayawati has, of course, quite a distinguished record of wasting state resources on building numerous fanciful statues for herself. But she may be outdoing herself on this front, going by a recently released WikiLeaks cable that details some of her idiosyncratic ways ever since she returned to power with an absolute majority in 2007.

A WikiLeaks cable details how Mayawati has "institutionalised corrupton" in Uttar Pradesh. AFP
 
The cable was filed by the Political Consul in the US Embassy in New Delhi in October 2008 after a visit to three cities in Uttar Pradesh to get a sense of the Mayawati government’s records. The Consul met many business, political academic and media contacts to get a 360-degree assessment of the “political state of play.” The cable then pieces together the “portrait of a lady” in all her megalomaniacal excess, who has become a “paranoid dictator.”

It records that these contacts “remarked on Mayawati’s vice-like grip on all levers of power”, which meant that all decisions had to run through Mayawati or her small coterie of advisors. It then cites a Lucknow journalist as narrating an incident in which a State Minister was “forced to do sit-ups in front of her as penance for not first asking permission to call” on the State governor. Mayawati, the cable notes, also forced a civil servant to resign when she learned that his daughter had joined the Congress party in Delhi.

Pointing to Mayawati’s other “eccentricities, whims and insecurities”, the cable notes that “when she needed new sandals, her private jet flew empty to Mumbai to retrieve her preferred brand.”

According to Lucknow journalists, Mayawati employs nine cooks: of them, only two had the actual cooking responsibilities. The other were hired to watch over the cooks. In addition, Mayawati had two food tasters, since she is paranoid that she will be assassinated.
 
“In addition to an outsized security apparatus,” the cable says, “she constructed a private road from her residence to her office, which is cleaned immediately after her multiple vehicle convoy reaches its destination.”

The cable also records that journalists and civil servants in the State live in fear of Mayawati’s retribution. “Civil servants will not speak to the press for fear of losing their positions. Journalists admitted they feared retribution should they print anything negative about Mayawati. 
One journalist claimed that all civil servants’ and most journalists’ phones are tapped.”

The cable acknowledges that most of the Consul’s contacts acknowledged that the law and order situation in Uttar Pradesh had (in 2008) improved somewhat from the previous Samajwadi Party government of Mulayam Singh Yadav. But it had a startling explanation to account for this.

“This is not because Mayawati has put more police on the streets or reduced corruption.” Instead, whereas Samajwadi Party rule was characterised by “rival mafia gangs shooting each other in the streets while vying for dominance,” Mayawati had “institutionalised corruption” – with competitive fealty payments to her replacing shootouts.

“Just to run as a BSP parliamentary candidate costs roughly 250,000 dollars,” the cable noted. “This does not ensure victory of course, but with the BSP likely to field candidates in over 300 constituencies nationally (in the 2009 general elections), it does ensure Mayawati’s campaign coffers will be full, in addition to all her other revenue sources including payoffs and kickbacks from almost every interaction that large businesses have with the state government, standard practices in UP.”

In comparison, the cable noted, “several commercial contacts in Lucknow and Kanpur spoke glowingly of the business climate in Gujarat and its Chief Minister, Narendra Modi.”

 http://www.ibtl.in/news/wiki-leaks/1175/%E2%80%98when-mayawati-needs-sandals--private-jet-flies-to-mumbai%E2%80%99

Amar Singh asked Manmohan and Sonia to remove Chidambaram, Deora: 2008 cable

Source: The Hindu

In the first week of July 2008, contrary to the public posturing and the assurances that were given to political allies, the United Progressive Alliance (UPA) government led by the Congress was “quietly” working on the draft nuclear safeguards agreement that was to be submitted to the International Atomic Energy Agency (IAEA) board. 

Simultaneously, it was involved with a “deal for the deal” arrangement with political parties to garner support for the government and its nuclear initiative.

A cable (160825: confidential) sent on July 4, 2008 from the U.S. Embassy in New Delhi under the name of Ambassador David Mulford noted that Prime Minister Manmohan Singh was determined to announce “to President Bush during their meeting at the July 7-9 G-8 Summit the United Progressive Alliance government's plan to submit the safeguards agreement to the IAEA Board of Governors.” This, the cable said, “prompted the Congress Party to seek the support of the regional Samajwadi Party (SP) to retain a parliamentary majority in the event the Left withdraws support.” In return, the cable revealed, the SP leaders wanted Finance Minister P. Chidambaram and Petroleum Minister Murli Deora to be dismissed.

The cable documented a flurry of meetings that were convened in Delhi on July 4, 2008. “Samajwadi leaders Mulayam Singh Yadav and Amar Singh met sequentially with Prime Minister Singh and Congress Party leader Sonia Gandhi to discuss the broad outlines of a political alliance.” After the meeting, the Samajwadi leaders announced their 

“support for the nuclear initiative.” They explained that “Narayanan's [National Security Adviser] briefing and Kalam's [the former President] position helped ‘clear their doubts'.”

The cable mentioned that “the savvy political power-brokers of the Samajwadi Party are unlikely to have expressed such public support for the nuclear initiative without prior guarantees from Congress Party leadership.”

It came to this conclusion based on what Amar Singh told the U.S. Political Counselor, and “Prime Minister Singh's confidence as expressed to Representative Ackerman [member of the pro-India Caucus of American legislators who led a Congressional delegation to meet the Prime Minister].”

On July 4, after meeting Manmohan Singh and Sonia Gandhi, Amar Singh met the U.S. Political Counselor. He explained to him that “he did not require positions for his party members,” but had “told the Prime Minister and Sonia Gandhi that Chidambaram and Deora should be sacked.” He also had “grievances against [Indian] Ambassador Ronen Sen, but dismissed Sen as ‘too small a fish' to warrant his attention.”

On the same day, in another meeting, a confident Prime Minister assured Mr. Ackerman, that ‘“things are moving in the right direction' politically, and that he expected to ‘clear the issues' within a few days so that India could move forward with the nuclear initiative.”

The cable noted that through its contacts the U.S. Embassy had come to know that, apart from the Samajwadi Party, “the UPA has secured eight more votes: one each from the National Loktantrik Party (NLP), the Sikkim Democratic Front (SDF), an Independent UPA supporter from Kerala, an Independent UPA supporter from Assam, and four votes from other previously undeclared Independents.” The contacts also reported that “the UPA has approached the Shiromani Akali Dal with eight seats, to abstain in the event of a confidence vote.” The other “small parties” in discussion with the Congress party, as the cable mentioned, were the Marumalarchi Dravida Munnetra Kazhagam with four seats, and the Asom Gana Parishad with two seats.

For its part, the U.S. government, through its Ambassador, conveyed to the Prime Minister on June 4 that if the government of India announced that it would proceed with the nuclear agreement initiative before the Prime Minister left for the G8 summit meeting in Japan, where he was scheduled to meet President George W. Bush, it was willing “to seek language in the G-8 chairman's statement.”

Foreign Secretary Shivshankar Menon told the Ambassador at the July 4 celebration of the U.S. Independence Day at the U.S. Embassy that the government “understood the advantages of an earlier announcement and was working to arrive at some conclusion prior to the Prime Minister's departure.” Mr. Menon also assured the Ambassador that he would keep him informed “over the weekend of any developments.”

On Monday, July 7, 2008, the Prime Minister announced that the government would go to the IAEA board soon. The next day, the Left parties withdrew support to the UPA government. The same day, the government submitted the draft nuclear safeguard agreement to the IAEA for circulation. At the lakeside resort of Hokkaido Toyako in Japan on July 9, Prime Minister Manmohan Singh met President Bush on the sidelines of G8 summit and discussed the nuclear deal.

http://www.ibtl.in/news/wiki-leaks/1084/amar-singh-asked-manmohan-and-sonia-to-remove-chidambaram--deora:-2008-cable

Modi asked to be notified if any official asked for a bribe : a Special Report

Source: deshgujarat

While Gujarat Congress leaders continue to say in every forum that the Narendra Modi government is corrupt, the reality could be different.

One of the latest leaked cables available on Wikileaks is interesting in this regard.

In 2009 April, when Mumbai based American Consul General Paul Folmsbee talked with Pune based industrialist Baba Kalyani, the Chairman & Managing Director of Bharat Forge, Kalyani told Congenoffs that Modi is the “best” candidate to lead the federal government and is the “best for India.” He noted that Modi quickly realized that “the best way to maintain power is to improve the life of the people and not make empty promises.” So, he electrified the villages and ensured adequate drinking water for all residents in Gujarat. Kalyani stated that when Bharat Forge went to set up a plant in Gujarat, Modi asked to be notified if any official asked for a bribe. In addition, Modi asked Kalyani to help the schools in the area where the plant would operate.


Under the title ‘Modi’s Pro-Development “Brand” Finds Devotees,’ the cable further said, ” Business leaders in western India generally concur that Modi has introduced good governance, ensured relatively low corruption, and created a pro-business environment that has undergirded Gujarat’s strong economic performance over the past seven years. In January, at a Gujarat investment conference, a number of India’s most senior industrialists were unusually and emphatically vocal in touting Modi’s achievements and suitability to become Prime Minister.

These sentiments are objectively true, in that Gujarat’s infrastructure, governmental accountability and efficiency, and responsiveness to business concern is considerably better than most other states, especially its economic rival in western India, Maharashtra. His dominance in the state minimizes political distractions which help him focus on his goals. Business leaders hope that Modi’s commitment to these principles can be extended to the wider Indian environment, where state and federal governance is consistently poorer than in Gujarat.

 http://www.ibtl.in/news/wiki-leaks/1199/modi-asked-to-be-notified-if-any-official-asked-for-a-bribe-:-a-special-report

Corruption - Towards solutions?

V Raghunathan

At the outset, it must be reiterated that corruption is a function of both greed and fear. When the benefits of greed exceed the intensity of fear, corruption is imminent, as is the case in our country. Now the intensity of fear is a product of the probability of being caught and the consequences of being caught. In less corrupt countries, the corrupt have a high probability of being caught and when caught, may have to cough out up to three times the loot and serve stiff sentences, all of which make the intensity of fear very high - typically higher than the benefits of greed. In a country like ours on the other hand, particularly for the big crooks, fruits of greed are plentiful, while the probability of being caught is very low and so are the consequences of being caught. In short, unless we try to create systems which ensure that the intensity of fear exceeds the fruits of greed, we are unlikely to be able to tackle corruption.


Now that is the theory of corruption. Also in theory, it is not as if the law of our land is silent on corruption. It does provide for sundry punishment for the corrupt. Also, in the imagined 'majesty of law' all are equal. But in practice, the seriously rich and the powerful are far more equal than the lesser mortals! For instance, with the enforcement directorate and the CBI operating as the handmaidens of the Government or the ruling political party, the actual probability of bringing the big crooks to book is very small. Also, even in theory, unfortunately, our laws don't provide for very stringent punishment for the guilty. Rarely does it call for exemplary financial penalties even if that means bankrupting the guilty (think back on all the financial scamsters whether Harshad Mehta, Ketan Mehta, Telgi, et al. In practice, even the legal provisions for the guilty are substituted with mere transfers or resignations or molly-coddling in VIP suites of hospitals (think Ramalalinga Raju) when the crooks should be in prisons.


Given this huge gap between the theory and practice of how corruption is to be tackled, here are some suggestions (borrowing from my article 'Beyond the Year of Scams', ET, December 25, 2010), particularly in the light of Mrs. Sonia Gandhi's averred intent to fight corruption.


1. Pass a bill in parliament for transparent state funding of all elections in the country - an issue at the very root of rampant corruption, which trickles corruption down from the very top downwards.


2. Establish a rigorous regulatory regime with fast track courts exclusively for corruption cases. This will also call for fast-tracking of judicial reforms, and brining about extremely stringent punishment for the corrupt.


3. We are aware how corruption hacks away at the roots of patriotism (for example a corrupt sim-card vendor selling away sim-cards to Pakistani Terrorists, or Army Generals usurping apartments meant for war widows, thus demoralizing the armed forces, etc. If Dr. Binayak Sen's playing a postman between some key Maoists is sedition, it is difficult to see why corruption cannot be equated with un-patriotism.


4. Taking a cue from on-line railway reservations that reduced corruption in railway reservations, much of the discretionary powers at lower levels of the government mechanism must be dispensed with in favour of transparent web-based technology for routine governmental payments and receipts, and tracking of all property taxes, tax refunds, stamp duty, passport or RTO applications, licenses and what have you. Apprehensions on how the rural India will make use of such a system may be addressed though internet kiosks manned by ex-service men or self-employed graduates could be a good starting point, much like the STD booths of yore.


5. Discretion on the part of Government minions can also be minimized by simplifying many of the processes. For example, in Scandinavian countries, property taxes are paid on the basis of the frontage of the houses, which entails little computational complications and hence relatively little room for corruption, since there can be little scope for hanky-panky in measuring the frontage of a property.


6. Provide a constitutional status to the Enforcement Directorate and the Central Bureau of Investigation along the lines of the Election Commission, so that they are not handmaidens of any government or political party, and ensure that they shall have the freedom to act independently and speedily against the erring big fish.


7. Along similar lines, the more enlightened states should place the state police force under the powers of a politically insulated Lokayukta.


8. All natural resources and all land owned by the government (local governments included) for sale should be legislated to be offered transparently through on-line bidding mechanism, with highly restricted discretionary powers or exceptions. What is more, the entire process should be available for perusal in the public domain.


9. Concessional land allocation (mostly restricted to prime properties in practically every city) to civil servants, members of judiciary, armed forces, police et al, should be through a clearly spelt out process with due justification which should be made available for scrutiny on the public domain, before the allocation is made.


10. Both parliamentarians and bureaucracy should be extremely well paid, but tolerance for corruption should be brought down to zero. A parliamentarian or a Secretary in the Government of India may be paid a salary as high as, say, Rs. one crore a year, but a corrupt Minister or Secretary should be divested of several times the stolen assets and also awarded rigorous imprisonment of several years.


The problems with such "solutions' is who implements them? How or why would the polity muster the necessary political will to put such reforms in place? To these questions all one can say is that one hopes that by introducing some of these reforms, also inherent in some of the measures announced by the Congress President, the incumbent party in power will hope to emerge more credible than ever before, unless the opposition wrests that credibility - either of the two riding the wave of mass-scale public disillusionment with the wide-spread corruption. Depending on who dithers the fight against corruption, we the public will know who stands for or against corruption.


But no solution to corruption can be entirely outward looking. A country of a billion people cannot be corrupt merely because a handful of politicians or civil servants are corrupt or unwilling to change their corrupt ways. The fact is, as a people, we have become slaves to corruption. If we have to free ourselves from this slavery as Mahatma Gandhi advocated, each and every one of us must become the change we want to see in ourselves. We cannot wait for others to change themselves first. Because if doing so is good strategy for us, it must be good strategy for others as well, so that no one ever makes a beginning at the change, waiting for others to change first (I have expanded on this theme in my book Games Indians Play (Penguin).


And finally, we must learn to socially boycott those whom we know to have come to wealth through corrupt means. We must stop inviting them to public seminars, conferences and functions or to our weddings. The press should black out such characters except to expose their dark deeds. They should be treated with the contempt they deserve for looting our country. We must recognize that corruption is not a 'victimless' crime. In fact it is a crime of which each and every Indian is a victim. It is this crime that ensures that only 13 paise of every rupee of the public spend reaches the target. And this is the reason why six decades after independence, a large majority of our people does not have access to the most basic amenities of life, while our rulers -- some of whom are supposedly our servants - amass wealth in Swiss Banks.


So let us all, including the four estates of the nation, make a resolution for a 2011 that will define a new India that will go to war against corruption.

http://blogs.timesofindia.indiatimes.com/Outraged/entry/corruption-towards-solutions

How to eliminate corruption? Abolish the laws

(Former telecom minister A Raja (C) arrives at a court for a hearing in New Delhi.

M R Venkatesh


As the 2G scam is now reaching its home stretch the Union Law Minister set the cat amongst the pigeons when he is reported to have stated that the judiciary needs to understand the "political economy" of the country.

Speaking to The Indian Express last week, he is reported to have stated: "What will affect the functioning of the government if other institutions do not understand the kind of political economy we are faced with today: what is needed to encourage growth and investment? If you lock up top businessmen, will investment come? What optimal structure should be put in place for investment to come?"

Naturally, this observation did not go well with the Hon'ble Supreme Court. Taking exception to these remarks the Court expressed its displeasure amidst hearing of the bail pleas of a number of corporate executives in the 2G case.

Justice H L Dattu reportedly told Additional Solicitor-General (ASG) Harin P. Raval:  "If reports of the Minister's comments are true, it is disturbing. Are you supporting the stand of the minister? Are we wasting our time? If you file a memo, please release them, we will release them on bail."

Justice G S Singhvi is reported to have told the ASG "the news item was a surprise for us. It appears as if we are interested in keeping these businessmen behind bars. Is this news report/statement and what has been reported in the newspaper totally correct? It was in the headline of a leading newspaper. We are not interested in keeping them behind bars."

Union Law Minister Salman Khursheed.

Almost simultaneously and perhaps on cue, the Union Law Minister Salman Khursheed is also reported to have said that while it was for the courts to decide as to who should be locked up, he pointed out to the dictum of bail being the rule and jail an exception has been laid down by the Supreme Court itself.

In the process the Union law minister has inadvertently opened a Pandora's Box. Is jailing of the corrupt marring the investment climate in India? Is the minister completely oblivious to the extent of damage created by the scourge of corruption and its impact on the image of India? Is not corruption per se impacting investment into India?

Or is he attempting to re-define political economy of India of modern times – one which can be best described as "cash and carry?" What does he mean by "optimal structure" when world over governments claim to have a "zero tolerance" to corruption.

In short, is the law minister of the Union of India suggesting that we improve our tolerance to corruption and balance between corruption and growth? Is he suggesting that corruption is inevitable in a robust, growing and emerging economy?




Corruption derailing investment in India

In contrast, a widely circulated and hotly debated article titled - Warning Signs in Over Crony capitalism in India (by James Lamont and James Fontanella-Khan, Financial Express, (FE) March 21, 2011) captures the entire issue succinctly - "Even as the country becomes one of the great economic growth stories of the 21st century, significant members of the Indian elite fear it may be following Russia in developing a kind of crony capitalism dominated by powerful insiders."
The article goes on to add "A slew of recent corruption scandals - notably in telecommunications - has nourished anxieties that the combination of fantastic wealth creation and weak governance threatens to undermine India's long-term success."

Twenty years since reforms one is sure that the system still favours those with the right connections. Call it cronyism or corruption; it harms the Indian economy.

According to FE "Accusations of influence-peddling by powerful entrepreneurs, combined with a colluding state bureaucracy, has led commentators such as Arun Poorie, editor-in-chief of India Today Group, to identify corruption as the biggest issue confronting the country."


 
Crucially, the article points out that the international investor sentiment has turned sharply for the worse.
 
"Foreign capital flows have fallen. Nine out of 10 clients are not positive on India in the near future," says Suresh Mahadevan, head of research at UBS Securities in Mumbai. "Most of the bad news is already in the (market) price."
 
"We met with about 50 investors in Singapore and Hong Kong last week," says Rohini Malkani, economist at Citigroup in Mumbai. 

"About 70 per cent remain bearish on India, with investments, inflation, and politics topping the list of worries." That was in spring of 2011. As winter sets in, things have got bad to worse.
 
In short, the fact remains that corruption and not jailing industrialists (as suggested by the Union Law Minister) that is causing consternation amongst global as well as local investors.


 
Scam a way of life?

It may be noted that all these negative developments were hastened since late eighties when Indian economy underwent mild doses of reforms.

Contrary to popular belief that liberalisation of our economy would prevent corruption, the reforms process since the early 1990s is seen as having increased the opportunities for corruption. This is a paradox that remains unexplained.

The emergence of globalised corporations with huge financial and political powers disproportionate to the power of our local governments (manned by people without adequate understanding of the emergent situation) has provided an impetus for a very high level of corruption.

Perhaps we began liberalising, privatising and globalising the Indian economy without adequate preparation of our administration for the same.


 
The net consequence is that the nation has been a silent witness to massive doses of corruption.

Bofors, procurement of armaments for our armed forces, imports and exports of various edible items, food for oil and, of course, licensing spectrum for our telecom companies are a few cases in point not to speak of massive evasion of taxes.

The corruption involved in all these cases has been brazen, so much so that despite the availability of overwhelming evidence, precious little has been done, lest the system becomes dysfunctional. (In fact, in a hearing connected with the 2G issue, the counsel for the central government is reported to have said that probe by the court against high functionaries could "destabilise the system.")

Interestingly, all these point to a seamless integration of all players involved and it becomes virtually impossible to distinguish one from the other.

As Mrs. Indira Gandhi famously remarked in the 70's corruption is a global phenomenon. And it involves the business houses, politicians, bureaucracy, media, professionals and academicians.


 
But in the Indian context, there is something more - it is complex, sinister and crucially despite such massive levels of corruption, we have not been able to get at big fishes in any meaningful manner.

Therefore, it is rationalised that corruption has become a way of life in India. In the process, scam is India's gift to the English language which suggests the following paradigm - one, that indicates massive levels of corruption; two, the availability of irrefutable evidence; and three, the impotency of the law enforcers to punish those who violate the law with impunity.

It is this that is traumatizing the collective conscience of the nation is the fact that the judicial system has been unable to convict anyone from the ruling elite, despite overwhelming evidence available in such high-profile cases of corruption till date.

Corruption, according to John Christensen, (an authority on the subject of Tax Havens), is "the abuse of public interest and the undermining of public confidence in the integrity of the rules, systems and institutions that promote the public interest." In fact, market economics is all about the rules, systems and institutions.

Whenever rules are broken by those who seek to profit on the sly - as it happens more often than not in India - genuine investors turn negative about India.

Corruption is a Public-Private Partnership affair in India or simply PPP. It includes every possible economically corrosive activity such as insider-trading, tax evasion, rigging of markets, policy hijack, and plain embezzlement, all of which occur through a well-defined and pre-planned structure. 

Inexplicably, the law minister does not realise that all these economic crimes are highly damaging to our economy and social fabric.

Naturally, if excesses are committed by the courts, it is seen by all right thinking citizens as to remedy the excesses committed by every other player in our economy.

Surely, when courts do their duty and jail errant industrialists as the prescribed by the law of the land, the rule of law will once again be established. And when it happens genuine investors will flock back to India - a fact that is lost on the Union Law Minister. And that to me is the sad state of affairs.

It is preposterous for him in blaming the law of the land for impeding investment into the country! Perhaps to remedy the situation, it is suggested that he may well use his authority and delete corruption laws from the statute book.

Needless to emphasise, if there are no corruption laws, there would be no enquiry, FIR, arrests, bail, trials and jailing of industrialists.
That in turn could possibly eliminate both corruption and jailing big industrialists. What an idea Sirji?

---

The author is a Chennai-based Chartered Accountant. Comments can be made to mrv@mrv.net.in

 http://www.rediff.com/business/slide-show/slide-show-1-column-how-to-eliminate-corruption-abolish-the-laws/20111021.htm

Zero tolerance, secret billions

 

S Gurumurthy

  Jan 2011

 


What was Rajiv Gandhi’s fatal error in politics? It does not need a seer to say that it was his claim to honesty — branding himself as ‘Mr Clean’ — that proved fatal to him. Indira Gandhi was his contrast. Asked about corruption in her government, she said nonchalantly, ‘it was a global phenomenon’. This was in 1983. An honest Delhi High Court judge even lamented how could corruption be controlled when someone holding such a high position had almost rationalised it. The result, no one could ever charge Indira Gandhi with corruption, because she never claimed to be clean. But, ambitious to look ideal, Rajiv proclaimed honesty and so provoked scrutiny; in contrast, Indira, opting to be practical, immunised herself against scrutiny. Eventually, Rajiv’s claim to honesty became the very cross on which he was crucified in the 1989 elections when the Bofors gun shot the Congress out of power. The lesson to the political class was: don’t claim to be honest, if you really are not so. The hard lesson seems forgotten now by the Gandhi family itself. Sonia Gandhi, instead of following Indira’s safe path, is wrongly caught on Rajiv’s risky steps. The consequences seem to be ominous. Will the politics of 1987 to 1989 repeat?

Following Rajiv and forgetting Indira, Sonia Gandhi proclaimed ‘zero tolerance’ to corruption at a party rally in Allahabad in November 2010. She repeated it at the Congress plenary in Delhi weeks later. 
Asking the cadre to take the corrupt head on, she said that her party was ‘prompt’ in acting against the corrupt; ‘never spared the corrupt’ because corruption impedes development’. This was almost how Rajiv Gandhi spoke in the Congress centenary in Mumbai 25 years ago. Two crucial differences marked Rajiv away from Sonia. First, when Rajiv claimed to be ‘Mr Clean’, he had no scams to defend against. But, Sonia claims to be honest amidst huge and continuing scams — CWG, Adarsh, 2G Spectrum allocation scam…. Next, Rajiv had a clean slate to begin with, with no known skeletons in his cupboard till the Bofors scam smashed his ‘Mr Clean’ image. In contrast, Sonia’s slate is full of credible exposures of bribes and pay-offs in billions of dollars secreted in Swiss bank accounts, not counting Quattrocchi’s millions from Bofors. To make it worse, for almost two decades now, she has not dared to deny the exposures or sue the famous Swiss magazine or the Russian investigative journalist who had put out evidence of bribe against the Sonia family. Seen against this background, Sonia’s vow to act against the corrupt seems like a suspect hooting ‘catch the thief’ and scooting away. This is the main story that unfolds here.

$2.2 billions to 11 billions! 

A stunning exposure on Sonia Gandhi’s secret billions in Swiss banks came, surprisingly, from Switzerland itself, where the world’s corrupt stash away their booty. In its issue of November 19, 1991, Schweizer Illustrierte, the most popular magazine of Switzerland, did an exposé of over a dozen politicians of the third world, including Rajiv Gandhi, who had stashed away their bribe monies in Swiss banks. Schweizer Illustrierte, not a rag, sells some 2,15,000 copies and has a readership of 9,17,000 — almost a sixth of Swiss adult population. Citing the newly opened KGB records, the magazine reported ‘that Sonia Gandhi the widow of the former Prime Minister Rajiv Gandhi was controlling secret account with 2.5 billion Swiss Francs (equal to $2.2 billion) in her minor son’s name’. The $2.2 billion account must have existed from before June 1988 when Rahul Gandhi attained majority. The loot in today’s rupee value equals almost Rs 10,000 crore. Swiss banks invest and multiply the clients’ monies, not keep them buried. Had it been invested in safe long-term securities, the $.2.2 billion bribe would have multiplied to $9.41 billion (Rs 42,345 crore) by 2009. If it had been put in US stocks, it would have swelled to $12.97 billion (Rs 58,365 crore). If, as most likely, it were invested in long-term bonds and stocks as 50:50, it would have grown to $11.19 billion (Rs 50,355 crore). Before the global financial meltdown in 2008, the $2.2 billion bribes in stocks would have peaked at $18.66 billion (Rs 83,900 crore). By any calculation the present size of the $2.2 billion secret funds of the family in Swiss banks seems huge — anywhere between Rs 43,000 plus to some Rs 84,000 crore! 

KGB papers

 The second exposé, emanating from the archives of the Russian spy outfit KGB, is far more serious. It says that the Gandhi family has accepted political pay-offs from the KGB — a clear case of treason besides bribe. In her book The State Within a State: The KGB and its Hold on Russia-Past, Present, and Future, Yevgenia Albats, an acclaimed investigative journalist, says: “A letter signed by Victor Chebrikov, who replaced Andropov as the KGB head in 1982 noted: ‘the USSR KGB maintains contact with the son of the Premier Minister Rajiv Gandhi (of India). R Gandhi expresses deep gratitude for the benefits accruing to the Prime Minister’s family from the commercial dealings of the firm he controls in co-operation with the Soviet foreign trade organisations. R Gandhi reports confidentially that a substantial portion of the funds obtained through this channel are used to support the party of R Gandhi’.” (p.223). Albats has also disclosed that, in December 2005, KGB chief Victor Chebrikov had asked for authorisation from the Central Committee of the Communist Party of the Soviet Union, “to make payments in US dollars to the family members of Rajiv Gandhi, namely Sonia Gandhi, Rahul Gandhi and Ms Paola Maino, mother of Sonia Gandhi.” And even before Albats’ book came out the Russian media had leaked out the details of the pay-offs. Based on the leaks, on July 4, 1992, The Hindu had reported: “the Russian Foreign Intelligence Service admits the possibility that the KGB could have been involved in arranging profitable Soviet contract for the company controlled by Rajiv Gandhi family”.

Indian media

 Rajiv Gandhi’s sad demise delayed the Swiss and Russian exposé on Sonia being picked up here. But Indian media’s interest in it actually coincided with Sonia Gandhi assuming leadership of the Congress. A G Noorani, a well-known columnist, had reported on both Schweizer Illustrierte and Albats’ exposés in Statesman (December 31, 1988). Subramanian Swamy had put out the photocopies of the pages of Schweizer Illustrierte and Albats’ book in his website along with the mail of the Swiss magazine dated February 23, 2002 confirming that in its article of November 1991 it had named Rajiv Gandhi with a total of Swiss Franc 2.5 billion ($2.2 billion) in secret account; it had also offered to supply a original copy of the magazine to Swamy. (See: http://www.janataparty.org/annexures/ann10p43.html) These facts were again recalled in my article in The New Indian Express (April 29, 2009) written in response to Sonia Gandhi speech at Mangalore (April 27, 2009) declaring that, “the Congress was taking steps to address the issue of untaxed Indian money in Swiss banks”. The article had questioned her about her family’s corrupt wealth in Swiss banks in the context of her vow to bring back the monies stashed away abroad. Rajinder Puri, a reputed journalist, has also earlier written on the KGB disclosures in his column on August 15, 2006. Recently, in India Today (December 27, 2010) the redoubtable Ram Jethmalani has referred to the Swiss exposé, asking where is that money now? So the Indian media too has repeatedly published the details of the secret billions of the Gandhi family investigated by the Swiss and Russian journalists. Amal Datta (CPI(M)) had raised the $2.2 billion issue in Parliament on December 7, 1991, but Speaker Shivraj Patil expunged the Gandhi name from the proceedings!

Self-incriminating

 But, what has been the response of Sonia or Rahul, major after June 1988, to the investigation by Schweizer Illustrierte and Albats and to the Indian media’s repeated references to their investigation? It can be summed up in one word: Silence. Thus, apart from the exposés, the deafening silence of the Gandhis itself constitutes the most damaging and self-incriminating evidence of the family’s guilt. When Schweizer Illustrierte alleged that Sonia had held Rajiv Gandhi’s bribes in Rahul’s name in Swiss banks, neither she nor the son, protested, or sued the magazine, then or later; nor did they sue A G Noorani or Statesman when they repeated it in 1998, or later; nor would they sue Subramanian Swamy when he put it on his website in 2002; neither did they sue me, or the Express when the article was carried in April 2009. When major papers, The Hindu and The Times of India included, had carried the expose on KGB payments in the year 1992 itself adding that the Russian government was embarrassed by the disclosures, neither of the Gandhis challenged or sued them; nor did they sue Yevgenia Albats when she wrote about KGB payments to Rajiv Gandhi in 1994. Neither did they act against  Swamy when he put Albats’ book pages on his website or when Rajinder Puri, a well-known journalist, wrote about it in his column on August 15, 2006. However, a feeble but proxy suit was filed by Sonia loyalists to defend her reputation when Albats’ exposé was made part of the full-page advertisement in The New York Times in 2007 issued by some NRIs to ‘unmask’ Sonia to the US audience, as they claimed. The suit was promptly dismissed by a US court because Sonia herself did not dare file the suit. Shockingly even that suit did not challenge the $2.2 billion Swiss account at all!Imagine that the report in Schweizer Illustrierte or in Albats book was false and Sonia Gandhi did not have those billions in secret accounts in Rahul Gandhi’s name or the family was not paid for its service to the KGB as alleged. How would they, as honest and outraged people, have reacted? Like how Morarji Desai, then retired and old at 87, responded in anger when, Seymour Hersh, a Pulitzer Prize-winning investigative journalist, had mentioned in his book that Morarji Desai was a ‘paid’ CIA mole in the Indian Cabinet. Morarji Desai forthwith filed a libel suit. Commenting in The American Spectator, Rael Jean Isaac wrote in 2004, five years after Morarji Desai had passed away, that Hersh habitually indulged in character assassination; and in his attempt to do down Henry Kissinger, Morarji Desai became the victim. Isaac added that Desai, 87, calling it a “sheer mad story”, reacted in outrage with a libel suit seeking $50 million in damages. When the suit came up, as Desai, 93, was too ill to travel to US, Kissinger testified on Desai’s behalf, flatly contradicted Hersh’s charge and stated that Desai had no connection to the CIA. That is how even retired and old persons, honest and so offended and outraged, would act. But see the self-incriminating contrast, the complete absence of such outrage, in Sonia, who is reigning as the chairperson of the UPA now, neither retired or tired like the nonagenarian Morarji Desai, being just 41 when the story broke out in Schweizer Illustrierte. Imagine, not Sonia or Rahul, but Advani or Modi had figured in the exposés of Schweizer Illustrierte or Albats. What would the media not have done to nail them? What would the government of Sonia not have done to fix them? 

Rs 20.80 lakh-crore loot

 The billions of the Gandhi family being both bribes and monies stashed away in Swiss banks, they are inextricably linked to the larger issue of bringing back the huge national wealth stashed abroad. All world nations, except India, are mad after their black wealth secreted in Swiss and like banks. But India has shown little enthusiasm to track the illicit funds of Indians in Swiss and other banks. Why such reticence?When during the run-up to the 2009 Lok Sabha elections, the BJP leader L K Advani promised to bringing back, if voted to power, Indian monies estimated between $500 billion and $1.4 trillion stashed abroad, the Congress first denied that there was such Indian money outside. But when the issue began gathering momentum, Manmohan Singh and Sonia Gandhi had to do damage control and promise that the Congress too would bring back the national wealth secreted abroad. Global Financial Integrity (GFI), a non-profit institution working against global black funds, has recently estimated that the Indian wealth secreted away is about $462 billion, approximately equal to Rs 20.80 lakh-crore. The GFI says that more than two-thirds of it was looted away under the liberalisation regime. This is what the GFI says about the character of the loot: “From 1948 through 2008, India lost a total of $213 billion in illicit financial flows (or illegal capital flight)” through “tax evasion, corruption, bribery and kickbacks, and criminal activities”. Does one need a seer to say under what head would the $2.2 billion in Sonia family’s secret account (which would have grown to $9 to $13 billion by now) fall? But accretions, if any, from the loot in 2G and CWG where the numbers are even bigger are not still accounted. Now comes the more critical, yet practical issue. When the Sonia Gandhi family is among the suspects who have secreted away monies abroad, how will it affect the efforts to bring back the wealth stashed away by others?

Looters safe 

Just a couple of examples will demonstrate how the government is unwilling to go after Indian money secreted abroad. As early as February 2008 the German authorities had collected information about illegal money kept by citizens of different countries in Lichtenstein bank. The German finance minister offered to provide the names of the account holders to any government interested in the names of its citizens. There were media reports that some 250 Indian names were found in the Lichtenstein Bank list. Yet, despite the open offer from Germany to provide the details, the UPA-II government has never showed interest in the Indian accounts in Lichtenstein Bank. The Times of India reported that “the ministry of finance and PMO have, however, not shown much interest in finding out about those who have their lockers on the secret banks of Liechtenstein which prides itself in its banking system”. But under mounting pressure the Indian government asked for details not under the open offer but strategically under India’s tax treaty with Germany. What is the difference? Under the tax treaty the information received would have to be kept confidential; but, if it were received openly, it can be disclosed to the public. Is any further evidence needed to prove that the government is keen to see that the names of Indians who had secreted monies abroad are not disclosed?The second is the sensational case of Hasan Ali, the alleged horse-breeder of Pune, who was found to have operated Swiss accounts involving over Rs 1.5 lakh-crore. The income tax department has levied a tax of Rs 71,848 crore on him for concealing Indian income secreted in Swiss accounts. This case is being buried now. The request sent to the Swiss government was deliberately made faulty to ensure that the Swiss would not provide details. Some big names in the ruling circles are reportedly linked to Hasan Ali. That explains why the government would not deepen the probe. It is Hasan Alis and the like who transport through hawala the bribes of the corrupt from India. If Hasan Ali is exposed, the corrupt will stand naked. This is how the hawala trader and the corrupt in India are mixed-up.Is it too much to conclude that thanks to Sonia family’s suspected billions in Swiss accounts the system cannot freely probe the $462 billion looted from India at all? Tail-pieces: The total wealth of both Gandhis, as per their election returns, is just Rs 363 lakh, Sonia owning no car. Sonia lamented on November 19, 2010, that graft and greed are on the rise in India!! Rahul said on December 19, 2010, that severe punishment should be given to the corrupt!!! Amen. 

comment@gurumurthy.net

About The Author:S Gurumurthy is a well-known commentator on political and economic issues

 http://expressbuzz.com/opinion/columnists/zero-tolerance-secret-billions/236261.html