Or, in search of lost money. What we can learn from past scandals and what we need to do to prevent them
We Indians love scams so much so that the word ‘scam’ is now part of all Indian languages though the meaning is not exactly the same. In Indian languages ‘scam’ is not any dishonest scheme but a big-ticket swindle involving top people. Any Indian, whether educated or not, is fully aware of all scams, from Bofors to 2G. But the relevant question is: has anyone in authority tried to analyse past scams with a view to prevent their recurrence? The answer is an unambiguous ‘no’.
Let us discuss a typical scam. Right from the day the scam becomes public knowledge, it is converted into a political issue. All opposition parties start demanding the government’s resignation while the government starts listing out the scams which occurred when the opposition parties were in power. Meanwhile, the perpetrators of the scam roam free. Years are taken by investigating agencies to file charge-sheets running into thousands of pages. No wonder, court proceedings drag on for decades. By that time investigating officers have retired, most of the culprits are dead and the persons who had unearthed the scam have lost interest.
The Bofors affair exemplifies the lifecycle of a typical scam. It first surfaced in 1987. The massive publicity given to it led to the downfall of the Rajiv Gandhi government in 1989. Having won on the Bofors plank, VP Singh, the next prime minister, promised that the culprits would be put behind bars within 15 days. However, the first charge-sheet in the case was filed in October 1999 which was quashed by the Delhi high court in 2004. Today, its main dramatis personae are dead. No part of the alleged illegal commission of '64 crore has been recovered and no one has gone to jail for perpetrating the scam.
But the Bofors scam had a very interesting sequel. Once the matter came to light, Bofors had been blacklisted and no purchases were made from the company. At the time of the Kargil war, we had the Bofors gun but no ammunition to feed it. In desperation, we purchased ammunition at the rate of $10,000 per round from South Africa. The entire cost was never officially revealed but given the fact that the Bofors gun fires three rounds per minute, the cost must have been astronomical. It is a matter of record that the Bofors gun proved itself in battle and turned the tide of the Kargil war decisively in our favour. However, after blacklisting Bofors, we could not get the benefit of the second part of the contract with Bofors, which would have allowed us to manufacture the Bofors gun indigenously. The infamy associated with the deal has ensured that even essential defence purchases drag on endlessly. Even 30 years later, we have not been able to finalise a successor to the Bofors gun. Thus, looking back at the Bofors scam we are left wondering if there was any scam at all or whether it was all made up for political benefits. However, what is unquestionable is that our unprepared knee-jerk reaction caused untold harm to the country.
The Tehelka sting (2001), which showed that everyone from clerks to ministers were willing to sell the security of the country for ridiculously small sums, proved that no steps had been taken to prevent recurrence of a scam of the Bofors type. The only distinguishing feature was that some Tehelka journalists and investors were jailed after they reported on the scam.
What happened after the Bofors and Tehelka scams is not exceptional. Take the Coalgate, the Commonwealth Games and the 2G scams; the outcome has been the same. No one is punished, cases drag on till eternity in various courts and no part of the defalcated cash is recovered.
Why is it so? For one, the investigating agencies prosecute scam cases selectively. They are liberal with some perpetrators and strict with others. Once the government changes, these agencies change their tune. More often than not, it is discovered that personnel of the investigating agencies were colluding with the persons they were supposed to investigate. In the Telgi scam, it was the Mumbai police commissioner, in the 2G scam, it was the CBI director and in the Adarsh scam, it was government advocates. It is no wonder that most scamsters go unpunished and, after the spotlight leaves them, enjoy the proceeds of their crime.
The second reason is that once a juicy scam breaks out, all investigating agencies run helter-skelter after the scamsters. This may not appear to be a bad idea; but on the ground this derails the investigation because all agencies pursue different goals and guard (and never share) any information they gather. Thus the CBI would try to prove that the scamsters did not follow proper procedures, the income-tax department would try to prove that the scamsters did not pay income-tax while the enforcement directorate would play on the money laundering angle. Consequently, the whole case becomes a jigsaw puzzle – too complicated for the courts to resolve in any finite period of time.
Thirdly, the government of the day puts all its might in defending the scamsters. It is a matter of record that the then prime minister Manmohan Singh defended Coalgate and 2G scam in parliament. The Vyapam scam in Madhya Pradesh found mention even in a US State Department report on ‘Human Rights Practices in India for 2016’ but despite investigations going on for more than seven years and after more than 40 unnatural deaths, the dimensions of the scam are not yet clear. The press, the whistleblowers and even concerned citizens have been threatened by the scamsters. The BJP issued a statement denouncing the US for daring to comment on the Vyapam scandal. Of course, no one has been punished in the Vyapam scam except for the 634 students whose degrees were cancelled by the supreme court. Even in light of such startling facts, the MP government chooses to adopt an ambivalent attitude; playing down the scam in one breath and promising action against the scamsters in another.
Even more strange is the case of the Adarsh Housing scam, where top politicians, bureaucrats and army officers cornered flats meant for Kargil widows. Despite indictment by a judicial commission in 2011, the four former chief ministers and two ministers are still at large. Some bureaucrats have been suspended and some army officers have been arrested and released on bail but the case is nowhere near resolution.
To restore public confidence, it is essential that a standard operating procedure is devised to deal with scams with a view to (a) punish the guilty, (b) recover the money earned illegally, and (c) prevent the recurrence of similar scams.
The first step would be to have a separate law for scams. Once a crime is classified as a scam, an inter-ministerial special investigation team (SIT) would be constituted. The team would have people from the CBI, enforcement directorate and income-tax. If necessary, banks and customs would also be associated. The jurisdiction of all other agencies would be barred. The SIT would be required to submit a report within a definite period, say three months or six months, and file a charge-sheet simultaneously. The court would be obliged to hear scam cases on a day-to-day basis and decide such cases expeditiously. Public servants (politicians and bureaucrats) found guilty of participating in a scam would be debarred from holding public office for ever. The SIT would also be obliged to suggest ways to recover the money lost in the scam. Every year the SIT would submit a public report so that the scam does not vanish from public memory.
Of course, what I have suggested is not foolproof. A law can only be as strong as its enforcers. Haphazard action by the investigating and regulatory agencies has become so farcical that top serving bureaucrats publicly lay the blame for their inaction on the “5Cs” – CBI, CVC, CAG, CIC and the courts.
This view is not as irrational as it seems. If we look at the 2G scam, we cannot help but notice that the decision to allot airwaves on ‘first come first served’ basis was a very sound policy decision of the government. It ensured that mobile telephony rates in India are the cheapest in the world. Even the poorest Indian has a mobile phone and all Indians can participate in the digital revolution. Prime minister Narendra Modi has repeatedly stated that all government programmes, be it subsidy handouts or digital payments, would have mobile telephony as their delivery platform. This would not have been possible if the airwaves had been auctioned and mobile had been that much expensive. Of course, they being Indians, the persons dispensing airwaves made sure that they had feathered their nests before benefits reached anyone.
Ditto for Coalgate. Not auctioning coal mines was a sound policy decision. Had coal mines been auctioned, coal which is an essential input in electricity generation and many other industrial processes would have been much more expensive. This would have pushed up prices of all commodities and would have hit all manufacturing industries badly. But here also, the persons in power allotted coal mines to undeserving persons enriching themselves in the process. Thus in the ultimate analysis, both 2G and Coalgate were instances of common corruption and not scams in which the interests of the country were sold down the river. Looked at in this perspective, even Bofors was hardly a scam. The Bofors gun was the best in its class and was selected after a series of trials. Bribes were paid because politicians never do anything without ‘Vitamin M’ and arms dealers have an unbroken history of paying money to whoever buys their outrageously priced goods.
Of course, all instances of corruption in high places lower public confidence irretrievably. People begin to think that if their rulers are engaged in massive corruption they would be justified in engaging in corruption in their small way. In this way, the moral fabric of the entire country is destroyed. Moreover, after being perceived as corrupt, the moral authority of leaders diminishes so much that fringe elements peddling communalism and casteism assume leadership roles.
In the final analysis, to prevent scams, the ruling classes have to realise that there is no good scam – even if their own friends and party members are involved. Till this realisation dawns, we will continue having unresolved scams which would make corruption a way of life in our country.
Saksena, an IRS officer of 1979 batch, retired as principal chief commissioner of income-tax, Mumbai last year
(The article appears in May 15, 2017 edition of Governance Now)