Eleven years ago, in the middle of Bihar’s infamous animal husbandry scam, better known as the fodder scam, Saryu Roy, who exposed the scam in 1994 (about two years before it came to the surface in 1996), raised some deeper and wider issues to be investigated in this regard. He wrote a letter to the then union finance ministers based on the facts described in the documents prepared by the enforcement directorate and income-tax officers and shared with the monitoring bench of the Patna high court in course of the probe into the scam.

ALSO READ: Lalu: a case of subaltern aspirations gone astray

The issue is relevant at this juncture, after the prime accused, former chief minister Lalu Prasad, was convicted along with 44 others and sent to jail. According to Roy, the RJD chief’s conviction came despite half-hearted investigations and conspiracies of bigwigs in the union government to extend outright help to bail out the accused and put the scam in the cold storage.

We reproduce Roy’s letter dated November 19, 2002:

SARYU ROY, M.L.C.
402, Lotus Apartment
Doranda
Ranchi – 834 002.

November 19, 2002.

To,
Shri Yashwant Sinha / Jaswant Singh Ji,
Hon’ble Minister of Finance,
Govt. of India, North Block,
New Delhi.

Sub.     :    Investigation conducted by the Enforcement Directorate and Income Tax officials regarding return of the FODDER SCAM money through various NRI accounts overseas and Mauritius route.

Respected Sir,

    You are aware about infamous Animal Husbandry Scam better known as Fodder Scam of Bihar and Jharkhand in which huge amount of nearly 1000 crores of rupees was directly siphoned of from over half a dozen treasuries of the then Govt. of Bihar by the unholy nexus of ruling politicians, senior bureaucrats and greedy suppliers. The main accused and kingpin of this scam is Mr. Laloo Prasad, the then CM of Bihar and presently RJD President, but the treasuries from which about 1000 crores of rupees were fraudulently withdrawn through fate Govt. orders now lies in the State of Jharkhand. A large portion of the fraudulent withdrawal consists of the Central assistance and grants to raise the income level of below poverty line beneficiaries, mostly tribals by providing them cows, buffaloes, hens, goats, pigs, etc.

This scam was officially unearthed in January, 1996 and after the direction from the Supreme Court of India, the enquiry was handed over to the CBI under direct monitoring of the High Court of Judicature at Patna. After bifurcation of Bihar and creation of Jharkhand on November 15, 2000, the monitoring of these scam cases is being conducted by both the Patna High Court as well as Jharkhand High Court at Ranchi as per Supreme Court orders. The following are the brief details of the progress made in the scam cases till now which provides a glimpse of the scam :-

1.    The amount allegedly defrauded by the scamsters is estimated about 1000 crores of which about Rs.650 crores has been proved during CBI investigations.

2.    Total number of accused persons charge sheeted is 538 and number of cases instituted is 64, out of which charge sheet has been filed in 48 cases, investigation is going on in one case, closure report has been filed in 3 cases and in the remaining cases sanction of prosecution from appropriate authorities are awaited.

3.    The seriousness of this scam may be measured from the fact that 10 prominent politicians – including the present Chief Minister and former Chief Minister of Bihar, former Central Ministers, State Ministers, former Chairpersons of Public Accounts Committees of State Legislatures – as well as present and former MLAs are accused in various cases. Besides eight IAS officers and one IRS officer are also among the accused charge sheeted.

4.    Though the amount allegedly defrauded nears Rs.1000 crores and the amount proved in the CBI investigation nears Rs.650 crores, yet the amount recovered is very low. Total amount identified in the form of disproportionate assets is about Rs.30 crores – value of the properties attached is about Rs.50 crores and total recovery amount including cash, unencashed bank drafts, bank balances, gold bonds, jewellery, etc. and other movable assets comes around Rs.20 crores.

It is evident that out of a alleged scam of Rs.1000 crores and proven scam of about Rs.650 crores – the recoveries made are not more than 100 crores – which indicates that influential scamsters have managed to hide the remaining amount in one way or other. The investigating agency like CBI too finds it difficult to get hint of the hidden amount.

It may be mentioned that in course of monitoring of the scam cases – both the Patna High Court and the Jharkhand High Court – from time to time, have directed the Income Tax Department and Enforcement Directorate to investigate the scam from their specific angles and find out the whereabouts of the monies swindled by the powerful lobby of scamsters. I myself, as the then State General Secretary of the undivided Bihar unit of the BJP, was one of the petitioners of the PIL filed for CBI enquiry of the scam and I also follow regularly the monitoring of the scam cases in the High Courts. Some times in 1998, I raised the issue of transfer of scam money to the overseas accounts of some of the industrialists and businessmen and how the same money is being returned in India and is being used for political purposes, especially in Assembly and Lok Sabha elections.

The Enforcement Directorate and the Income Tax Department of the Govt. of India also conducted investigations in the fodder scam cases on the direction of the High Courts and submitted their reports to the monitoring bench of the High Courts, which has not been made public. I have been informed, through reliable sources, that the Enforcement Directorate has instituted adjudication proceedings u/s 51 of the FERA, 1973, against 27 persons and started prosecution proceedings u/s 56 of the FERA 1973. It is learnt that more than three dozens Letters of Rogatory were sent for overseas enquiries to several countries. But, in less than half a dozen Letters of Rogatory, the results were communicated by the overseas Governments. In most of the cases, either the parties could not be located or results not communicated to the investigating agency. The prominent countries to which Letters of Rogatory was issued are USA, Canada, Dubai, Australia, Hongkong, Singapore and UK. The Income Tax authorities also conducted raids at Mumbai and Delhi offices of some of the industrialists and businessmen and found incriminating evidences – proving their involvement’s in the fodder scam and also return of hefty amount from the small companies established with meager amount ranging from 2 US dollars to 100 US dollars at Bahama Island and Mauritius. I have been informed that over the last 3 years the Income Tax Authorities are seeking permission from the Government to go abroad and investigate the matter in depth on the basis of the evidences recovered during the raids. But so far I have been informed no substantial progress have been made. The Enforcement Directorate is also not active since the last one year on the investigation front after submitting a status report of investigation sometimes in June 2001 to the Patna and Ranchi High Courts.

In this connection, I would like to bring some glaring facts to your notice, which may be summed up as below :-

1.    One, Mr. Ramesh Arora of USA, admitted to the E.D. officials that payments totaling Rs.30 lakhs made-through his NRI accounts in India – to the family members of one accused MLA of Bihar, close to Mr. Laloo Prasad, were not in fact gifts, but return of Mr. Laloo Prasad’s money only. He also disclosed that a sum of Rs.3.42 crores were also paid to various people after routing their money through his NRI accounts in the guise of gifts, which was not actually gifts but laundering of unaccounted money generated by those people close to scamsters. He also expressed apprehension that his and his family member’s lives could run into danger because of his revelations.

2.    The Letter of Rogatory, incase of one Jagmohan Mallick of Austrialia, who made payments to the family members of later Dr. S.B. Sinha through his NRI accounts could not be executed because he has left Australia. It may be mentioned that Dr. S.B. Sinha was the main brain behind the scam. Similarly, a Letter of Rogatory sent to USA in the case of one Ms. Neelam Agarwal too could not be reported back from USA.

3.    The investigation regarding linkages of Mr. Prem Chand Gupta, a prominent industrialist and Rajya Sabha Member of RJD, involved with the scam and laundering of scam money too could not be completed. It was found during the investigation that Mr. Prem Gupta’s concerns in Hongkong have received large amount of funds from the Embassy of Veninzula in the same period when the scam was at its peak. But no concrete investigation has been made in this connection.

4.    The M/s. Vanturra Brass, M/s. Leela International and M/s. Angill Overseas are the export companies related to the suppliers and officials of the Animal Husbandry Department. These companies have made substantial exports between 1991 and 1996 which is the peak period of the scam. But no in depth investigation has been made on the nature of their exports and the money shown to be returned in lieu of the export. Only preliminary report from the custom houses agents, airlines agents and the overseas consignees were obtained. The first two companies are owned by one Vipin Malik, a supplier and last one is owned by Mr. Ravi Sinha, son of Late Dr. S.B. Sinha, the kingpin of the Scam. Instead of only imposing penalties and confiscation of assets created through laundering of proceeds, the matter should be investigated in detail and its linkages with the politicians and bureaucrats too should be examined keeping in view the direct impact of the returned money of the scam on the political process in Bihar and Jharkhand.

5.    The Income Tax Department found evidences that one Mr. Radha Raman Prasad Sinha, a retired Govt. officer having obvious linkages with scamsters, received NRI gifts of about Rs.2 lakhs during 1993 and 1996 from Rafi Manjar Hassan, S. Hassan, B. Hassan and Massood Qazmi of Saudi Arabia. He admitted receiving certain remittances from them and also having received an amount of Rs.5 lakhs from Dr. V.K. Sinha and Dr. R.K. Singh of London. This case needs in depth overseas investigation to ascertain the genuineness of the remittances.

6.    The most glaring example of siphoning scam money to overseas and its return to India through Mauritius route is revealed from the evidence found by the Income Tax authorities during search raids on thr Mumbai premises of Mr. Anil Agarwal of M/s. Sterlite Industries (India) Ltd. (SIIL). The Income Tax Officials reached to the conclusion that the promoter of SIIL, who were of the modest background at the time when they shifted to Mumbai from Patna, are involved in laundering of fodder scam money. They also apprehended that the amounts drawn from Govt. treasuries in Bihar was taken out of country through hawala channels and was later introduced in SIIL as overseas borrowing and share capital. It was found that introduction of funds in SIIL relates broadly to the same period as fodder scam. During the post search investigation it was found that the group has received huge funds by way equity participation or borrowings from various offshore companies. Keeping in view the modest background of the promoters of SIIL such huge funding from International sources of tax heavens islands in itself is very serious and needs thorough probe. The doubtful overseas transaction of SIIL becomes more serious when relation between SIIL owner and that of Mr. Laloo Prasad, the kingpin of the scam comes to picture. It may be mentioned that during the Assembly and Lok Sabha elections, as well as during Laloo Prasad’s visit to various places in the country including Chennai, the SIIL plane service is provided free of cost.

I have been informed that M/s. Oasis International Trading Corporation of Panama and M/s. Twinster Holdings Ltd., of Maurtious are actually owned by the promoters of SIIL, M/s. Twinster Holdings Ltd., a company with share capital of US Dollar 100 only was registered on 12-01-1993, which was peak period of this scam. This company in fact is a subsidiary of M/s. Volcan Investments Ltd., a company registered in Bahamas, a tax haven island with share capital of only US Dollar 2. In fact, both these companies are actually run from 15, Healthfields Court, Framton Road, Houstow Heat, Hounslo, Middlessex, UK.

M/s. Oasis International Trading Corporation, Panama has supplied various capital goods to M/r. Sterlite Industries (India) Ltd. during 1993 and 1995, a peak period of this scam. These goods worth Rs.40 crores were supplied for SIIL Tuticorin project. Besides, a sum of around Rs.44 crores was also paid by the SIIL to M/s. Oasis International Trading Corporation. The Income Tax authorities in the search operation found many evidences of transactions between SIIL and Oasis Internal Trading Corporation in the name of import of raw materials between 1989 and 1991 as well.

M/s. Duratube Ltd., U.K. and M/s. First Dynasty Ltd., Canada are two other overseas companies, which are also having business activities with M/s. Sterlite Industries (India). The promoter of M/s. Sterlite Industries (India) Ltd. have certain financial interest and management control of the said two overseas concerns. The documents received from the Income Tax authorities, Mumbai provides significant evidences from which it appears that prima-facie funds have been siphoned out of the country and the same has been introduced to M/s. Sterlite Industries (India) Ltd. by way of investments through various off-shore companies including M/s. Twinster Holdings Ltd., Maurtius.

In view of the details above, it appears that further in depth investigation is needed to substantiate the prima-facie evidences of laundering of fodder scam money to overseas and its return as it is influencing the political process in the State of Bihar and Jharkhand. The huge gap in the alleged scam amount, the proven scam amount and the actual amount recovered by the CBI, in itself tells the real story behind the siphoning of the scam money to the overseas accounts of the companies, established at tax haven islands, with small authorised capital of US Dollar 2 to US Dollar 100 and its returns in the form of borrowings and share capitals to India.

I request you to kindly pass suitable orders, so that the guilty persons responsible for plundering the Govt. money, may be punished and illegal monies be confiscated, according to the spirit of the Supreme Court direction dated 19.03.1996 in Civil Appeal No.5177 of 1996, ordering CBI enquiry of this mega scam, which says ‘there is no gain saying that all persons involved in these offences need to be identified. Not only all the aforementioned persons but also all other persons involved need to be dealt with according to law’.

With regards,

Yours faithfully,

(SARYU ROY)