Recently the Union government sought a review of the Supreme Court's order constituting a Special Investigative Team (SIT) to probe the issue of black money stashed abroad. The government believes this is judicial over-reach, but it forgets that the courts stepped in because of executive "under-reach." It is one thing to object to a Supreme Court-appointed SIT, quite another to be SITting on your hands doing nothing.

But stashing money abroad is not just about the government not earning its share of tax revenues.

It is actually a vote of no-confidence in the country and its people.

Hence, it is financial skullduggery.

Here's the second part of our Dummy's Guide to Tax Havens and Black Money in which we explain how black money is generated and spirited away. The first part was published by First post on 3 June.

What is black money and how is it generated?

It's not the colour of the currency, for sure. Income generated by illegal means and on which no tax is paid is called black money. Corruption is one of the major causes. All corrupt acts generate black money since the receiver does not want to show it as income to the tax authorities. This is why the finance ministry's chief economic advisor, Kaushik Basu, even suggested legalizing small-time bribes since it can at least be taxed.

Domestic corruption can be retail or wholesale. The retail one is what hurts most of us. The policeman who collects a bribe when you jump a red signal, the electricity board engineer who wants speed money to fix your meter, or the RTO official who wants a payment to issue a driving licence - such situations can be multiplied a million times.

We can also call this womb-to-tomb bribery, from birth certificate to death certificate. This retail corruption is what we are up against on a day-to-day basis. And this generates huge amounts of black money, mostly in the hands of thousands of government employees. This is what is not felt in developed countries. In the US or Europe, retail corruption that affects the common man is rare.

Corruption generates black money but black money is generated even without corruption. For instance, if you do not collect the bill for your next petrol purchase you have generated black money.

Then there is wholesale corruption, which is generated through the award of road/project contracts (as in Commonwealth Games) or the issue of licences or allotment of scarce resources like spectrum (as in 2G scam). Wholesale corruption also happens in government purchases - whether it is medicine in hospitals or books in schools or aircraft for Air India or Bofors guns or coffins for defense. Corruption happens even in the private sector, but since the losses are borne by promoters and shareholders, we should not bother about that now.

Why should I bother about wholesale corruption?

Wholesale corruption does not affect us directly, but it does impact us indirectly. When A Raja allegedly made money by under pricing spectrum and allotting it to specific parties, telecom companies had to recoup the costs from somewhere - it could be through higher mobile bills or poorer quality service, or both. Also, the government loses revenue, which means less money to spend on more worthwhile projects like subsidizing the poor.

It is important to note that corruption generates black money but black money is generated even without corruption. For instance, if you do not collect the bill for your next petrol purchase you have generated black money. If you visit your doctor and pay him his fees without a bill, the doctor may not pay his taxes.

So the equation is corruption generates or implies black money but black money does not imply corruption.

Where is this black money kept?

Unlike what is shown in Bollywood films, black money is not kept in cupboards or suitcases - though some if it may well be kept there. Black money is usually kept in circulation by using it to finance informal trade and commerce - usually at a higher interest rate than what banks charge.

For instance, we estimate that only 30 percent of retail trade financing is done by banking institutions. The remaining money comes from money-lenders - a good portion of it from black money. Actually, domestic black money is a hidden reserve and it may also be beneficial in some ways as it finances economic activities. Also, black money circulates faster than white money, which slows down as it passes through the banking and taxation loop.

But black money distorts resource allocation since people with huge amounts of it will use it to build spas at home or buy Italian marble for the verandah or gold-plated bathroom fittings. The economy thus tries to cater to this profitable demand instead of what the bulk of the people need.

Moreover, black money is also stored in real estate, which is one reason why we are finding everything unaffordable in the property market.

If black money is useful here, how did it land up in tax havens abroad?

There are several reasons for keeping wealth abroad clandestinely. They can be broadly categorized as vegetarian and non-vegetarian reasons/purposes. The illegal wealth itself can be classified as veg or non-veg. The veg reasons for keeping wealth abroad include tax evasion, and keeping some dollars abroad for meeting expenses when you travel abroad or for your child's education or daughter's honeymoon.

The non-veg money is accumulated for terror financing or gun running or drug money or flesh trade. (Disclosure: I am a vegetarian and so I am categorizing these purposes in this fashion.) The former is illegal but less harmful compared to the latter. The government needs to approach the issue in different ways in tackling these two segments of black money. We will elaborate it later. Let us first look at the veg segment first, and how it emerged.

Why did so much black money get generated?

In the sixties and seventies, tax rates used to be very high in India. At the margin it was more than 90 percent in many years. This meant that for every Rs 100 earned in the upper-income brackets, more than Rs 90 would go as taxes. Hence rich persons began to accumulate wealth abroad to avoid such "usurious" taxes.

The high levels of taxes were the result of "Nehruvian socialism" which felt that the rich should be soaked to improve the lot of the poor. The latter did not happen, but such policies "improved" the ability of tax officials to extract money as bribes from the rich and encouraged the latter to look out for secretive jurisdictions to store their wealth.

Foreign exchange controls were also so stringent that businessmen found they could not afford to stay in decent hotels when travelling abroad for business. They could not send their sons and daughters to get an Ivy League education. Hence the need to maintain dollars abroad - often in tax havens.

But it is the second broad category - namely the non-veg - that is insidious and dangerous. It is not only about lost taxes, but also about what kind of nefarious activities it may be financing, including possibly terrorism and gangsterism.

India's restrictions on gold holdings and high customs duties created an entire class of smugglers who brought in gold illegally from Dubai. There were smugglers not only in gold, but any luxury item that was banned or too expensive to import (including electronic gadgets at one time). This is how Nehruvian economics created crime syndicates which, over time, metamorphosed into financiers of terror, a la Dawood Ibrahim.

How does the money go out of the country?

One of the important mechanisms is called "trade mispricing". When an exporter under invoices (underprices) his goods, the difference is paid by the importer abroad in a Swiss account, or any tax haven. One can also over invoice imports. Let's say a US exporter sells us a piece of machinery worth Rs 100 crore for Rs 110 crore. In this case, a higher amount is remitted from India, enabling the exporter to pay us the excess back in a tax haven.

Black money is also generated in defence deals. In the Bofors case, a commission was paid for the deal when the Indian policy was that no commissions could be paid? Who got the money?

Then there are hawala transactions. At the criminal level, you can merely hand over a sackful of rupees, and the courier will deliver dollars somewhere abroad - obviously at an exchange rate that is significantly higher than the official one.

But hawala transactions can also be done by the ordinary well-to-do. Let's say you want to finance your father's operation abroad. You can ask you friend in Dubai to bear the cost, in return for paying the equivalent amount in rupees to his sister in Hyderabad. This does not look like a criminal thing to do, but legally it is no different from the illegal hawala deal.

R Vaidyanathan is professor of finance at IIM, Bangalore

In India, one cannot talk about public service without raising the issues of corruption, lack of transparency and accountability. Without raising esoteric issues on ethics, I would like to focus attention on practical measures to combat corruption and increase transparency and accountability in all facets of public services.

Mark Twain once said, "Everyone talks about the weather, but no one does anything about it". Corruption has become one such topic of conversation, with few in the establishment or outside really doing something to curb it. The fight against corruption is too important to be left to a few formal institutions or politicians. The people at large have enormous stakes in clean public life and corruption-free services. Experience all over the world showed that determined initiatives with public support can and will succeed in curbing corruption and cleansing the system effectively.

As many scholars like Robert Wade have pointed out, most corruption at the citizens' level is extortionary, and people have often no choice when faced with the dilemma of having to lose much more in the form of lost money, time and opportunity, not to speak of anxiety, harassment and humiliation if they did not comply with demands for bribes. The only silver lining is, everyone, including those in positions of influence is a victim and no one seems to be exempt from these extortionary demands. We seem to have achieved the ideal of socialism through equal treatment of all citizens in terms of extortionary corruption! With the advent of economic liberalization and delicensing of most industry, the nature of corruption is now undergoing a major transformation. The one-time grand corruption on large private projects - notably in power and other infrastructure sectors - has now become quite common. An even more alarming trend is the shift of corruption from licensing and permits to more dangerous and pernicious areas of sovereign functions of state like policing. The increasing nexus between hardened criminals, rogue policemen and corrupt politicians is one such example. It is clear that the state's gradual withdrawal from economic activity does not automatically eliminate corruption. Many more practical and institutional initiatives are needed to successfully curb corruption.

It is in this context that civil society's role is critical. Enlightened public opinion and informed and collective citizen assertion are the very basis of any successful fight against corruption.

In my opinion, there are three broad areas of action to combat corruption involving the state and the civil society. The first is active citizen assertion to curb corruption as illustrated by the examples cited above.

There are several rules and procedures whose only impact on the public is extortionary corruption. There is need for a comprehensive review of the regulatory functions and procedures in every department and agency, with three objectives:

1. a) Identify unnecessary regulations and repeal them
2. b) Improve, simplify and make trans-parent procedures in respect of those regulations and services still relevant
3. c) Specify levels of responsibility for each official in the heirarchy, so that accountability becomes real and mean-

For example, widespread petty corruption was eliminated by repeal of the Hackney Carriages Act in mid 70's when cyclists were exempted from obtaining licenses. Similar steps could be taken in respect of all private motor vehicles now. A body of experts from government and civil society should be set up to undertake this complex but vital exercise of deregulation and simplification of rules and procedures. The government would be inclined to take it up as it is politically popular. What is required is the momentum to break the inertia which funding agencies can provide.

Apart from these and other deregulation efforts, citizens need effective tools for collective action. Right to information on all matters of governance with very few specific, limited exceptions in the interest of national security etc., should be enshrined in law. Article 19 of the Constitution and several Supreme Court judgments recognize right to information as a fundamental right. We need to codify this right by law, and evolve fair and objective procedures for its enforcement. The recent draft legislation of Government of India leaves much to be desired. There are too many vague exemptions; no penalties are provided for non-compliance, and there is no independent appeal mechanism. A sensible, citizen-friendly law needs to be quickly enacted and strictly enforced.

For some years now, Citizen's Charters are being released by various departments. A true Citizen's Charter should fix responsibility on individual public servants, specify performance standards, and provide compensation to citizens for delays. No Citizen's Charter conforms to these standards. As a result, these charters are full of shibboleths and pious intentions without any impact on corruption or quality of services. Under pressure, Govt of Andhra Pradesh has recently released a Citizen's Charter in respect of certain municipal services, and probably for the first time in India a compensation of Rs 50 a day for delay in services is provided for, and this amount is to be recovered from the public servants responsible for delay. Another such citizen's charter for panchayats covering twenty services, and providing for a compensation of Rs 10 per day's delay is on the anvil. We need such effective charters for all public services with compensation and clear penalties for non-performance.

Similarly Wards Committees need to be constituted in accordance with the letter and spirit of Article 243-S of the Constitution, and these Committees serving small areas of about 25000-50000 population should be empowered to collect municipal taxes and pro-vide basic services. Such local accountability will reduce corruption. Wherever stake-holders of public services can be clearly identified, they should be legally empowered to take responsibility for those services. These and many other simple, practical steps will promote transparency and accountability and give citizens the required tools for effective action against corruption.

The second broad area of action is in respect of tightening the anti-corruption laws and creating independent and effective agencies to curb corruption. The 161st report of the Law Commission made valuable recommendations in respect of the Vigilance Commission and CBI. The Supreme Court in Jain Hawala Case gave specific directives and suggestions. Sadly, the Union government is still to act. And we understand that the 'Single Directive', by which prior permission of the government is required to investigate charges against officials of the rank of Joint Secretary and above are sought to be restored by law. We need independent, honest and fearless agencies to fight corruption. The Law Commission recommendations should be accepted and a law should be enacted. The CVC and Vigilance Commissions in States, which have been created by executive orders in 1964 in the wake of Santanam Committee report should be given statutory status and given freedom to act. Lok Pal Bill has now been pending for over three decades, and even where Lok Ayukta’s exist in States, they have no effective role. We need to create strong anti-corruption agencies modelled after Hong Kong's successful Independent Anti-Corruption Commission until 1997. Penalties for corruption should be made far more stringent as proposed by the Law Commission in its 166th report. Anti-corruption and crime investigation must be insulated from partisan political control. Without such fair, impartial, independent and strong agencies, there will be no real success in increasing the risks of corruption and minimising the rewards.

Finally, we should all recognize that the roots of corruption lie in the exorbitantly high, illegitimate and illegal election expenditure. Our estimate is that about Rs 7000 crores is spent in a block of five years for the Parliament and State Assembly elections. In most constituencies, the actual election expenditure is several times the ceiling prescribed by law. Much of this expenditure is not only illegal, but is also illegitimate, and is incurred to buy votes, bribe officials and hire hoodlums. This unaccounted expenditure necessitates a tenfold return to the political class, which in turn results in a hundredfold extortion by the bureaucracy, leading to Rs 700,000 crore corruption in five years. The citizens pay a much heavier price on account of anxiety and uncertainty. If we wish to curb corruption, we should together launch a movement for electoral and political funding reform. We are now building alliances across the country for a people's movement for democratic reforms. Electoral funding reform should be the center-piece of our strategy to fight corruption.

In recent times, the political and governance system has shown signs of sensitivity responding to this challenge. Five major initiatives have been taken in the past one year. The Election Commission responded to years of informed advocacy on improvements in voter registration, and has decided in principle that post offices will be the nodal agencies for voter registration. This will make the voter registration process citizen-friendly and accessible, making it easy to curb polling irregularities, and along with voter identity cards will make it difficult to indulge in bogus voting. The disclosure norm put in place, forcing candidates for elective office to file affidavits revealing their criminal antecedents, if any, and the financial record of family members, is a step in the direction of promoting transparency and better candidate choice. The amendments to the RP Act, 1951, incorporated in September, 2003 are by far the most far-reaching legislative provisions reforming our political campaign finance. All contributions for political activity, individual or corporate, will not get 100% income tax exemption. All contributions of Rs 20,000 and above will be disclosed to the public. The infamous Explanation 1 under Section 77 of the RP Act, 1951, which made non-sense of the election expenditure ceilings has been repealed. Most important, free time can now be allotted in private electronic media, including cable networks, recognized parties and candidates for political campaigning. This will drastically cut down campaign costs, and alter the very nature of elections in future.

The fourth reform enacted is the amendment to the Tenth Schedule of the Constitution, thus altering the anti-defection provisions. Through this amendment, no split in a legislature party is recognized, and all members violating a whip will be disqualified. Finally, through the 97th amendment of the Constitution, the size of the Council of Ministers has been pegged at 15% of the membership of the lower house, thus reducing distribution of minister-ships, and meeting the longstanding demand for reform.

All these reforms will certainly help improve the political process, and make it easy for honest persons to raise resources for legitimate campaigning purposes. However, in India, much of the election expenditure is both unaccounted and illegitimate, leading to a vicious spiral of corruption.

In a well-functioning democracy, the political process ought to find answers to such governance problems. It is through the process of elections that a democratic choice is exercised on solutions to be adopted for various governance problems. Every election holds a promise for peaceful change. People in India have been voting for change time and again. But the political process is locked into a vicious cycle, and has become a part of the problem. There are six factors complicating the political process, perpetuating status quo. First, election expenditures are large, unaccounted and mostly illegitimate. For instance, expenditure limit for assembly elections in most major states was Rs 600,000 until recently, when it was revised to Rs 1 million. In reality average expenditure in most states is several multiples of it, sometimes exceeding Rs 10 million. Most of this expenditure is incurred to buy votes, bribe officials and hire musclemen. Such large, unaccounted expenditure can be sustained only if the system is abused to enable multiple returns on investment. Rent-seeking behaviour is therefore endemic to the system.

Most of this corruption is in the form of control of transfers and postings, which in turn sustains a system of retail corruption for a variety of routine services, regulatory functions and direct transfer of resources through government programmes. Large leakages in public expenditure, and collusion in contracts and procurement are extremely common. The economic decision-making power of the state is on the wane as part of the reform process. But as the demand for illegitimate political funds does not decrease, corruption shifts to the core areas of state functioning, like crime investigation. Robert Wade studied this phenomenon of corruption, and described the dangerously stable equilibrium that operates in Indian governance. This vicious chain of corruption has created a class of political and bureaucratic 'entrepreneurs' who treat public office as big business.

Second, as the vicious cycle of money power, polling irregularities, and corruption has taken hold of the system, electoral verdicts cease to make a difference to people. Repeated disappointments made people come to the conclusion that no matter who wins the election, they always end up losing. As incentive for discerning behaviour in voting has disappeared, people started maximizing their short-term returns. As a result, money and liquor are accepted habitually by many voters. This pattern of behaviour is responsible for converting politics and elections into big business. As illegitimate electoral expenditure skyrocketed, the vicious cycle of corruption got further strengthened. With public good de-linked from voting, honesty and survival in public office are further separated.

Third, this situation bred a class of political 'entrepreneurs' who established fiefdoms. In most constituencies, money power, caste clout, bureaucratic links, and political contacts came together perpetuating politics of fiefdoms. Entry into electoral politics is restricted literally, as people who cannot muster these forces have little chance of getting elected. While there is competition for political power, it is often restricted between two or three families over a long period of time; parties are compelled to choose one of these individuals or families to enhance their chances of electoral success. Parties thus are helpless, and political process is stymied. Absence of internal democratic norms in parties and the consequent oligarchic control has denied a possibility of rejuvenation of political process through establishment of a vicious cycle.

Fourth, in a centralized governance system, even if people wisely use the vote, public good cannot be promoted. As the citizen is distanced from the decision-making process, the administrative machinery has no capacity to deliver public services that are cost-effective and of high quality. A climate that cannot ensure better services or good governance breeds competitive populism to gain electoral advantage. Such populist politics have led to serious fiscal imbalances.

Fifth, fiscal health can be restored only by higher taxes, or reduced subsidies or wages. The total tax revenues of the union and states are of the order of only 15 percent of GDP. Higher taxation is resisted in the face of ubiquitous corruption and poor quality services. Desubsidization is always painful for the poor who do not see alternative benefits accruing from the money saved by withdrawal of subsidies. A vast bureaucracy under centralized control can neither be held to account, nor is wage reduction a realistic option.

Sixth, elected governments are helpless in changing this perilous situation. As the survival of the government depends on the support of legislators, their demands have to be met. The legislator has thus become the disguised, unaccountable executive controlling all facets of government functioning. The local legislator and the bureaucrats have a vested interest in denying local governments any say in real decision making. The vicious cycle of corruption and centralized, unaccountable governance is thus perpetuated.

This vicious cycle can be addressed by three fundamental systemic reforms:

1. Political party reform: Political recruitment has suffered a great deal, and bright young people are no longer attracted to politics. Centralized functioning of parties is imposing enormous burden on leadership to manage the party bureaucracy, leaving little time for evolving sensible policies or governance. Party leaders are helpless in candidate selection, and the choice is often between Tweedledum and Tweedledee. An important reform to improve the quality of politics and restore credibility would be a law to regulate political parties' functioning, without in any way restricting leadership choice and policy options. A law needs to be enacted to regulate political parties in four key aspects.

Membership and disciplinary action would be a crucial focus area ensuring internal party checks. Leadership choice by regular, secret, democratic ballot is the second key feature. This will be accompanied with formal processes to challenge the party leadership without fear of retribution. The third suggested reform would be transparency and public auditing of party funds and expenditure. Finally, choice of candidates for elective office to be decided by members or their elected delegates through secret ballot. The provisions can be similar to Article 21 of German basic law and federal law to regulate parties.

1. Proportional representation: The first-past-the-post (FPTP) system that India has adopted led to several distortions, given the passage of time and ingenuity of legislators. Politics of fiefdom at constituency level has forced the parties to rely on local strongmen. As a result, the political parties and independent candidates have astronomical election expenditure for vote-buying and other illegitimate purposes. This has led to a significant weakening of the party platform and ideology, reducing elections to private power games. In many states, national parties have been marginalized where their voting percentage falls below a threshold. Following from this, regional parties have occupied center stage in several pockets, holding larger interests at ransom.

All these failings find expression in bigger and long-term predicaments. The inability of all political parties to attract and nurture best talent is the primary issue. Difficulties of minority representation leading to ghetto mentality, backlash, and communal tension form another facet of the problem. Lastly, leadership is undermined by permanent reservation of constituencies (or regular rotation) in order to provide fair representation to SCs. The solution to this flawed system is adoption of mixed system of election combining FPTP system with proportional representation. This will be broadly based on the German model. The key features of the suggested system are as follows:

The overall representation of parties in legislature will be based on the proportion of valid vote obtained by them.

A party will be entitled to such a quota based on vote share only when it crosses a threshold, say 10% of vote in a major state, and more in minor states.

50% of legislators will be elected from territorial constituencies based on FPTP system. This will ensure the link between the legislator and the constituents.

The balance 50% will be allotted to parties to make up for their shortfall based on proportion of votes.

Eg 1): If the party is entitled to 50 seats in legislature based on vote share, but had 30 members elected in FPTP system, 20 more will be elected based on the party list.

Eg 2): If the party is entitled to 50 seats based on vote share, but had only 10 members elected in FPTP system, it will have 40 members elected from the list. The party lists will be selected democratically at the State or multi-party constituency level, by the members of the party or their elected delegates through secret ballot.

There will be two votes cast by voters - one for a candidate for FPTP election, and the other for a party to determine the vote share of the parties.

It needs to be remembered that PR system can be effective only after internal functioning of political parties is regulated by law. Otherwise, PR system will give extraordinary power to party leaders and may prove counterproductive. However, the PR system has one more advantage, which needs to be reiterated. PR system, more than FPTP system, ensures better representation of women in legislatures.

1. c) Direct election of Head of government in States and Local Governments: The other systemic reform that is needed to isolate the executive from unwanted influences, as has been pointed out, is to ensure direct election of Head of Government in States and Local Governments.

As election costs have skyrocketed, candidates spend money in anticipation of rewards and opportunities for private gain after election. Legislators perceive themselves as disguised executive, and chief ministers are hard-pressed to meet their constant demands. Postings, transfers, contracts, tenders, tollgates, parole, developmental schemes, and crime investigation - all these become sources of patronage and rent-seeking. No government functioning honestly can survive under such circumstances. While the legislators never allow objective and balanced decision-making by the executive in the actual functioning of legislation, their role has become nominal and largely inconsequential. This blurring of the lines of demarcation between the executive and legislature is one of the cardinal features of the crisis of our governance system.

Therefore, separation of powers, and direct election are necessary in States and local governments. At the national level, such a direct election is fraught with serious dangers. Our linguistic diversity demands a parliamentary executive. Any individual seen as the symbol of all authority can easily become despotic, given our political culture. But in states, separation of powers poses no such dangers. The Union government, Supreme Court, constitutional functionaries like the Election Commission, UPSC, and CAG, and the enormous powers and prestige of the Union will easily control authoritarianism in any state. This necessitates adoption of a system of direct election of the head of government in states and local governments. The fundamental changes suggested find mention as under:

The legislature will be elected separately and directly while the ministers will be drawn from outside the legislature. The legislature will have a fixed term, and cannot be dissolved prematurely except in exceptional circumstances (sedition, secession etc.) by the Union government. The head of government will have a fixed term, and cannot be voted out of office by the legislature. Any vacancy of office will be filled by a due process of succession. The elected head of government will have no more than two terms of office. Even though these changes may not be panacea to all evils in the present structure of legislature and executive, it will certainly encourage more healthy and vibrant democracy and democratic processes. Further, clear delineation of functions between Union and States, and among various tiers of local governments is also a necessary condition for a vibrant democracy. It is only a true federal structure that can ensure unity in this multi-ethnic and multi-religious society.

To sum up, four broad strategies are required to curb corruption. First, we need comprehensive electoral reforms to make funding transparent and accountable, to curb criminalization and polling irregularities, to eliminate political fiefdoms and transform politics from big business to public service, and to ensure that honesty and survival in public office are compatible. Second, we need to empower local governments and stakeholders in a way that there are clear links between citizens' vote and public good, taxes and services, and authority and accountability. Third, we need instruments of accountability in the form of right to information, citizen's charters, independent crime investigation and independent anti-corruption agencies. Fourth, we must increase the risks of corrupt behaviour to an unacceptable level by ensuring speedy justice, exemplary punishment and confiscation of assets.

This is clearly a vast agenda for action. But it is both necessary and possible. The recent economic reforms have certainly helped promote competition and reduce corruption through license-permit-quota raj. But the incentive structure in our governance structure is still perverse. Our political system has inexhaustible appetite for illegitimate funds. The supply of such ill-gotten money in economic sphere is dwindling on account of economic reforms. But the demand continues unabated in the face of unchanging political rules of the game, thus forcing open newer, and more dangerous avenues of corruption. The telgi stamp scam, the organized leaks of CAT and other examination papers, the brutal murder of Satyendra Kumar Dubey, and the sting operation exposing the corruption of a judge in Gujarat are all not accidents. Corruption is now shifting into more dangerous areas from where the state cannot withdraw, and criminalization of our politics, economy and society is on the rise. Organized crime and systematic abuse of office are flourishing. These require serious institutional responses.

The time for action is now. The national mood is ripe. People are disgusted with endless corruption and are restive. The business class, which was earlier happily paying bribes to get favours in return for monopoly and assured profits is now realizing that corruption in a competitive world kills industry. The unprecedented agitation (2001) of small industrial entrepreneurs in Andhra Pradesh against the extortion of Central Excise officials is a sign of increasing resistance to corruption. Politicians are increasingly recognising that the present chain of corruption is unsustainable. Many nations went through phases of high corruption. They eliminated corruption through systematic, effective, practical steps. The proactive steps of the High Court of Bombay to remove 150 corrupt judges, followed by similar steps in Rajasthan and West Bengal show what can be accomplished with determination and good sense. We Indians are no more venal and corrupt than the rest of the world. We only created conditions in which honesty is not adequately rewarded, and is in fact discouraged. Corruption is not only left unpunished, but is rewarded consistently and extravagantly. We need to alter this state of dangerous equilibrium feeding the cycle of corruption. The people are ready for fundamental changes. What we need are practical steps to empower citizens and make public servants accountable. People are ready to act. What we need are tools for informed citizen assertion. I am confident all of us here and else-where have the vision, will and courage to take those practical and enduring steps required to launch an all-out struggle against corruption. There is no room for cynicism or despair. The task is big, but achievable. As Margaret Mead said "Never doubt that a small group of thoughtful, committed citizens can change the world. Indeed, it is the only thing that ever did". In this war we will surely succeed. But what we need is fewer words and more tangible action.

The Anna Hazare phenomena that recently shook the nation is a growing reflection of the popular mood of the nation. India is at a crossroad wherein some structural adjustments in the governance can lead to tremendous growth of the nation.

The writer is Editor-in-Chief

The dark clouds of the 2G scam and the repeat- ed evidence being given by A. Raja and other accused of his tacit involvement and other acts of omission and commission are menacingly closing in on Chidambaram. Chidambaram's note assumes significance in the light of Janata Party President Subramanian Swamy's petition in the Supreme Court saying that the Central Bureau of Investigation (CBI) should investigate Chidambaram's role in the 2G scam. Swamy alleges that Chidambaram "fixed" spectrum rates along with Raja. The note shows that even if the two didn't collude to fix the prices, Chidambaram wanted to treat it as a "closed chapter".

He is losing his cool, and more importantly, losing his carefully clipped English accent to its more indigenous roots more often. And like his colleague Digvijay Singh, his mind seems to be disintegrating to a stage where he has started talking gibberish. Take this, for example: in reply to the BJP demand for his resignation for his involvement in the 2G scam, Chidambaram claims that the BJP is targeting him since he initiated a probe by the NIA into Hindu terror.

Can any rational person see the connection between the two?

Chidambaram's special financial skills have diversified into electoral politics also. He has the dis- tinction of having been declared defeated in the last Lok Sabha election, after which he galvanized his special skills and local machinery, in particular, a data entry operator, and doctored a margin- al victory on the recount. That is quite a record for fraud. Sadly, he has to confront with hostile state government led by Amma that won the recent assembly election in his home state. And can one for- get how the Indian Bank was cleaned up and left with only non-performing assets thanks to him and his Tamil Maanila buddies?

Celebrity lawyer Ram Jethmalani recently hurdled serious charges in an article stating that being Finance Minister in the UPA government was his finest hour. He could fiddle around with share markets, capital markets, banks, financial instruments, such as, securities, participatory notes, tax treaties, not to speak of spectrum sale, and use his extraordinary innovative powers of black money magic to plunder our country with complete impunity. He assiduously cultivated the media with his clipped English accent (that led him down, now and then), occasion- al freebies, and sustained shadows of the Enforcement Directorate that he commanded.

On the positive note, he is unfairly criticized for his handling of home ministry but to his credit, he has performed better than his predecessor Mr Shivraj Patil by far. The terror attacks are drastically reduced, J&K situation looks under control, Telengana is a political issue hence he should be blamed for the mess, North East is looking fragile though manageable. We must understand that India's internal security is a huge challenge with micro dynamic changes every hour. We have open borders with many hostile states making the internal issue more complex. But his handling of public standoff with Pranab Mukherjee, Baba Ramdev mid night assault, Anna Hazare unexpected arrest prior to his historic fast, booking Subramanium Swamy for anti minority article, open support to suspended Gujrat cop Sanjeev Bhat questions his political intelligence.

By J Gopikrishnan - The Pioneer 

As I reflect on my past life, I am faced with the harsh reality that success has eluded me for three quarters of a century. Even in the field of Corruption, which has been the subject of study by me for over half a century, I have been a failure. I haven't amassed a fortune through this route though it looks so easy, nor have I become a celebrity, like Anna Hazare, by exposing and fighting this phenomenon. However, since the whole nation is agitated on the issue, I am motivated to add my voice.

Like pollution, which is the right material in the wrong place, Corruption is the right wealth in the wrong hands used for the wrong purpose. The first lesson in Corruption is that money / wealth must first be created. Governments have learnt the art of making money --- they make it by the process called "Printing". The rising prices have nothing to do with improved quality, value or performance --- nothing whatsoever. It is connected with the performance and overtime work put in at the government printing press. To prevent the money put into circulation from causing inflation, the governments take it out again by way of taxes. Fortunately in India we are more enlightened than in USA where the TEA [Taxed Enough Already] Party has emerged to prevent the government from Right wealth in wrong hands raising taxes. The Indians take out the excess money in circulation themselves. The old practice of hiding this under the mat- tress has long since gone out of vogue and the tax havens, which have emerged around the world, enable the smart Indian to keep it out of the hands of the government, which would in any case waste it.

Modern education teaches the basic principle that anything and every service can be converted into one common, understandable unit MONEY. From earliest times we have seen that Sex has been a money spinner when apples were used as the medium of exchange. But today even the care and education of children and senior citizens call for a lot of money. So money has to be generated to meet all one's needs. In the good old days we pitied the poor government servant for the pit- tance they got for their services and the thoughtful citizen made up for it with Baksheesh or tip for the services rendered. The various Pay Commissions have changed all this. Today, I understand that in retirement a government servant could get in hand more than what he was getting while in service. The rates for getting things done have kept pace with the in- creases given by the Pay Commissions. If the commission given by you for a service doesn't match up to the expectations you face the possibility of your voluntary offering being sarcastically turned down.

India has been the birth place of many religions --- There are hundreds of religions practiced by the tribals and thousands of Gods. There are also the well established religions of Hinduism,Buddhism Like pollution, which is the right material in the wrong place, Corruption is the right wealth in the wrong hands used for the wrong purpose. The first lesson in Corruption is that money / wealth must first be created. Today a new religion is emerging and being created by our elected representatives. It is termed as Indian Democracy. The quintessence of this new religion are:

"All your sins past and future will be forgiven if you get elected or work for the government. Nobody can accuse you of any wrong doing. You have been raised above the mortals of this world. Unfortunately entry is restricted to just a few and there is a heavy price to be paid to get admission to the club. You must show this ability even before you can even at- tempt to get membership.

" Your behavior will never catch up on you. It will take an eternity before any- one can find out what you really did or didn't do. The truth will be buried under a mountain of documents some of which may disappear and disintegrate with time. "The tax havens are temples / sanctuaries which no one can violate to discover what you have hidden there.

"On the principles on which this religion is founded there is no opposition --- All parties are in full agreement and there is no such thing as a minority, all are in it together.

"Like in all religions there are pre- scribed rituals like the share that must go to each layer in the value chain.

Unfortunately, I have passed the expiry date to get admission to this new religion.

By F Lobo: E-mail: fllobo@gmail.com

Corruption: As old as the country

India's date with corruption seems to be as old as the country itself. Starting with the British bribing the Maharajas to gain control of the unconquered lands, it is a long trait that has been a boon and a bane to many. You must be thinking how is it a boon? I'll come to that later.

Licence Raj: Corruption Raj since Independence, India's economy has been driven by socialist-inspired policies for practically three to four decades. When Indira Gandhi came to power in 1966, she went on a socialist spree --- Nationalising banks, Garibi hatao campaign and Licence Raj. Licence Raj became synonymous with corruption as red tape was inevitable while the companies scouted for licences to set up businesses in India.

Imagine this: Up to 80 government agencies had to be satisfied before private companies could set up shop, and if they did manage to do it, the government would regulate the production. Probably that is not what Jawaharlal Nehru, the architect of the system of Licence what Jawaharlal Nehru, the architect of the system of Licence Raj, had in mind.

Spectrum Raja: Billions vanish into air

That licence raj is still prevailing today, albeit in a different manner, thanks to Spectrum Raja, is disturbing. A Raja, who is the Union Minister for Telecommunications, seems to have literally thrown spectrum to the winds. There were major irregularities in allot-ting wireless radio spectrum and licences by the Telecom Ministry to nine private telcos in 2007(second generation).

The Rs 60,000 crore-scam began when the government allocated scarce 2G spectrum at throwaway prices that too to a string of companies without any experience in the telecom sector.

The allegation is that the government gave away scarce spectrum to nine companies, clubbed with licences, on a first-come-first-serve basis, rather than through an auction process.

That is, an operator got start-up spectrum by paying pan-India licence fee of Rs 1,650 crore. This price was not taken on the basis of the 2007 market value but on the basis of an auction held in 2001.

Also, many new players roped in foreign investors soon after acquiring the licences, thereby making a neat sum. The value of the licence and spectrum in 2007 could not be the same as in 2001 as the telecom market has grown phenomenally during this period. Prime Minister Manmohan Singh refused to accept the allegations surrounding Spectrum Raja.

NEW FACES OF CORRUPTION: RAJA (ABOVE) AND KALMADI

Raja has continually maintained that the government has simply following its earlier practice of allotting 2G start-up spectrum along with licences on a first-come-first-serve basis. The 2G spectrum allocation issue came under the scrutiny of various bodies, including the Central Vigilance Commission (CVC) and the Central Bureau of Investigation (CBI). Despite these investigations during the UPA-1 regime, Raja re-turned as the IT and communications minister in UPA-2. Raja is an MP of UPA ally DMK.

The government policy of 2G spectrum is facing fire as the ongoing auction of 3G (third-generation) spectrum has resulted in exceedingly high bids. Against the pan-India reserve price of Rs 3,500 crore, the 3G auction has yielded close to Rs9,000 crore in 16 days of bidding. The 3G bidding is nowhere near the closing line yet.

Commonwealth Games: Muck yet to stop flying

Imagine buying a 100 litre fridge for Rs 42,202 (which can be bought for a mere Rs 14,000-15,000), a toilet tissue paper roll for Rs 4,132 (Original price: Rs 30-40) and a 2 tonne AC for Rs 1,87,957 and wait..... an umbrella for Rs 6,000 and more!!!!

This is probably a Guinness record and the neatest way in which Suresh Kalmadi, the chairman of the Games Organising Committee, could make pots of money... after all price is a matter of perception. The rot starts right at the top. The probe of Comptroller Auditor General of India (CAG) revealed that undue favour had been showed to London-based Fast Track Sales solely on the recommendation of Commonwealth Games Federation Mike Fennell and Chairman Suresh Kalmadi.

Jubilee Sports Technology, a relatively unknown company, had bagged many Games contracts and was a key supplier. It appears as if the company's headquarters and other shareholders have simply vanished into thin air as most of the addresses have turned out to be a fake. There too much more muck.... At this rate, Mani Shankar Aiyar's dreams of the Delhi Games flopping might come true.

Among the other famous scams that have rocked India for several years are the Bofors scandal (which is yet to see the light of the day), fodder scam and Mayawati's Taj Corridor Scam. A quick look at history to find out why they are still rocking the Parliament.

Bofors: The Indian government signed a $1.4 billion contract with Swedish arms company AB Bofors on March 24, 1986, for the supply of over 400 155mm howitzers. It is alleged that Bofors paid kickbacks to top Indian politicians and key defence officials to secure the deal. Italian businessman Ottavio Quattrocchi, who was close to Rajiv Gandhi, was the middle man.

Former prime minister Rajiv Gandhi's name figured in the first CBI charge sheet in the case as "an accused not sent for trial" as he was killed in 1991. The Hinduja brothers also have been charged in this case --- with cheating, criminal conspiracy and corruption. Both were later cleared of any involvement by the Delhi High Court. The latest --- CBI has applied for a closure of the case against Italian businessman Ottavio Quattrocchi

Fodder Scam: The Rs 950-crore scam kept Lalu Prasad Yadav in the limelight long enough. It involved the alleged embezzlement of about Rs 950 crore from the treasury of Bihar. This was done over many years and through various officials who even fabricated vast herds of fictitious livestock for which fodder, medicines and animal husbandry equipment were supposedly procured.

Now back to why it is a boon for people like us. It is because our officials are corrupt that we know that a bribe here and there will get our work done, without breaking our heads too much about being law-abiding citizens. We evade taxes, pay off cops for traffic violations, register properties under false names, play for the country even if we are not eligible all because corruption has become so intrinsic in our system.

Judiciary: Nearly 30 million cases pending

In India, if you file a case, your case might come up for hearing 10 years later. Well, with a population of 1 billion and in counting what would you expect? India could take some lessons from the US on litigation -- a country where people get sued if their dog poops on the road, or they show cruelty towards their cat.

Over three million cases are pending in India's 21 high courts, and an astounding 26.3 million cases are pending in subordinate courts across the country.

At the same time, there are almost a quarter million under-trials languishing in jails across the country. Of these, some 2,069 have been in jail for more than five years, even as their guilt or innocence is yet to be ascertained. The only thing that works in India is money and muscle power -- even in the judiciary. Not true? Tell me one case of where a politician or an actor or a businessman who is accused of some really serious crimes (mostly they do turn out to be true even though we have to give everyone the benefit of the doubt) actually punished?

Take the case of the Anti-Sikh riots. Despite 16 years of courts and cases and more cases, not one accused has been brought to book. Congress MPs Sajjan Kumar and Jagdish Tytler have been charged with murder in the case. Yet, both of them roam freely.

The ex-chief executive officer of Satyam, now Mahindra Satyam, Ramalinga Raju is now "recuperating in a hospital" when he should be serving time in a jail for embezzling thousands of crores of rupees from his company. That is another fad: Feigning illness to escape going to jail. Actors too are not far behind. Salman Khan and Sanjay Dutt have been in the limelight mostly for all the wrong things they have done rather than their acting. Sanjay Dutt, who is one of the six accused in the 1993 Mumbai riots case, was sentenced to six years in jail under the Arms Act but was exonerated for terror offences under the stringent TADA (Terrorist and Disruptive Activities Act). Sanjay Dutt has moved on... He got married and is going to be a father. In September 2002, Salman Khan ran his Land Cruiser over some pavement dwellers killing one and seriously injuring three people. At the time of the accident, Salman was returning from the J W Mariott Hotel in Juhu and heading for his home in Bandra. The actor was booked for rash driving and causing death due to negligence under sections 304, 279 and 388 of the Indian Penal Code. He is currently making movies...

Honour Killings: Partition horror act continues

The funny thing is there is nothing honourable about them. "Honour killings" is the murder of a family or a clan member by one or more family members in which the perpetrators believe that the victim is bringing dishonour upon the family, clan or community.

The rate at which honour killings are reported in India, it is a miracle that people still find the courage to fall in love outside their community. Widespread in most circles, conservatives or otherwise, in India or abroad, it shows up in different ways. Women and young girls are especially at the receiving end of such heinous crimes. Funny, people don't seem to think parading women naked and molesting them in public are not "dishonourable".

This "tradition" has its roots in the gory Partition saga, where many women were forcibly killed to save family honour. During those troubled times, there were a lot of forced marriages where Indians and Pakistanis would marry each other. This, in turn, led to them being declared social outcastes. But, it did not stop there. It became a bloodbath, which got sucked into the melee of all the things that came to define Partition.

This is not a practice relevant to India alone. It is practised in Pakistan, Afghanistan, Africa, the Middle East and many other countries. This is a genocide that needs to be addressed soon... before it gets any worse.

FCI: Nation starves, food grains rot

What is with the Food Corporation of India? They are supposed to be feeding millions of people and instead are doing everything in their power to make sure the food grains don't reach the masses. The FCI is responsible for procurement and storage of food grains. Even as thousands and lakhs of people starve everyday, food grains rot in FCI godowns. In one of the latest exposes, the government has admitted that 61,000 metric tonnes of food grains, which could have fed about 8.4 lakh people for one year, was unfit for consumption. And the best part is, the FCI wants to export the unfit grains to our neighbours-Bangladesh and Nepal.

Now, Agriculture Minister Sharad Pawar is of the opinion that all reports on rotting of food grains are not "correct and quite ex-aggerated. "There are only certain cases of damage and we have suspended some officials," he added.

The remark came two days after the Minister conceded in the House that rotting of foodgrains was a "shameful" fact. He had said that over 11,700 tonnes of foodgrains worth Rs. 6.86 crore were found "damaged" in government godowns. We give food to rats, but don't have enough for our people.

Source: India Syndicate

Subramanian Swamy: Where will he strike next?

He is accused of being a destroyer, the one who changes parties frequently, one who strikes at will, a megalomaniac, unpredictable and a Nehru-Gandhi family baiter. Economist-turned politician, Dr Subramanian Swamy fields the volley of accusations in his inimitable style and shares his views and plan of action in an exclusive interview with K Ramachandra Murthy

Dr Subramanian Swamy, the Harvard-educated economist-turned-politician, has been a fighter throughout his political career. Coming from a family with leftist ideology, his right-winged fundamentalism faced much derision. He calls Rajiv Gandhi a close friend, but has been a crusader against the Nehru-Gandhi family; his ardent Hindutva doesn't seem to impress the BJP who are wary of inviting him into the party.

The intelligentsia around the world respects him for his knowledge and the young Indians of the day vouch for him for his anti-corruption stand, that he showcases through his incessant tweets. He and his wife, Roxna Swamy, a Supreme Court advocate, have been campaigning against the 2G scam and have ruffled many a feather in the process.

He had a crucial role to play in the legal campaign and has won two cases - getting a time-frame to sanction prosecution against public servants and the judgement to scrap the 122 telecom licences. He however, lost one - to make Home Minister Chidambaram the co-accused. He has not given up yet. In an exclusive interview with SUNDAY HANS, he adds, "Chidambaram is unsuited for the post of Home Minister. Excerpts:

What is going on in New Delhi with five Chief Ministers taking on Home Minister Chidambaram?

It was an ill-advised move. All the Chief Ministers are not Congress party appointees. They are the people independently elected on their own strength. And, therefore, to suggest a measure which will de-value the state police in having the Central Police to conduct investigations is derogatory for the federalism of the country. Therefore, they have protested against it and the government didn't stand up for Chidambaram.

The Home Minister is trying to have a DGPs' conference bypassing Chief Ministers. It's actually immaturity on the part of Chidambaram. He is unsuited for the post of Home Minister.

But as a Home Minister he has committed statehood for Telangana people…He has and he went back on his word. He sent a list to Pakistan of people who are in their country asking their government to send them back to India. It turned out that two of them were in Indian jail and three of them were dead. He writes a letter saying that LET is responsible for Samjhoutha express and later on writes a letter saying it was a Hindu terrorist. What is this?

What happened to Chidambaram in 2G spectrum case? Is it a reprieve for him?

Well, these things happen in our country where one court says 'no', then another court says 'yes'. When I had gone to the Delhi High court for cancellation of licences it had rejected my plea. And then we went to Supreme Court and it had accepted it.

We are all human beings. Judges also are human and they make mistakes in law. In the case of justice Saini, he has agreed with everything that I said, that the decision making was jointly done by Chidambaram and Raja etc., but then he says that I have not shown any criminal intention of Chidambaram. Unfortunately that shows the judges have been working too much within the CRPC and the IPC.

Actually, in the Prevention of Corruption Act, a special provision was enacted only to free it from this concept of criminal intentions. Therefore, in the Prevention of Corruption Act, it says, if you are holding a public office and you benefit somebody to get extra money, and that is not in public interest, then it is corruption. So the judge should have applied that. It is not difficult for me to go to the Supreme Court and get it done. Chidambaram has not gone to the jail yet, but he will soon go.

So, it is not yet finished. You have not given up. Obviously, I have already filed Special Leave Petition (SLP) in the Supreme Court, and the date has been given as March 16.You seem to have some problems with Tamil Nadu politicians. Even Mani Shanker has said that you did not speak to him for two decades...

(Laughs) I have not spoken with him for decades. There is no point in talking to a man who is not serious. Any time and every time he makes silly remarks and tells lies to please Sonia Gandhi. So, how can I respect a man who is a chamcha?

You are now friendly with Jayalalithaa…

Now I am friendly with Jayalalithaa. I like her intelligence. She came to my house, and she said that she had acted with inexperience. I accepted… but I didn't withdraw the cases that I filed against her.

What according to you will happen in UP?

If there are no Electronic Voting Machines (EVMs), the Congress will stand in the fourth position. It will not get more than 25 seats. Probably Mulayam Singh's party will be number one. Mulayam may also be close to the majority, he may not need any other party. But the consequence is that in the Presidential elections opposition President will be elected. Then I think mid-term poll will be held very soon for the Lok Sabha.

If there must be mid-term poll who do you think will gain - NDA or UPA?

NDA has to enthuse its party workers, particularly the BJP, their party workers are disheartened. In fact some people suggested that I should align with NDA and I have said I am ready. But I wonder what we shall say to people. Congress says development and secularism. Are we going to say the same thing? Then people may not give us much chance. I think we have a better chance if we say we will unite the country on the basis of Hindutva. Because today there is a feeling in Hindus that nobody is talking about them. So that sentiment needs to be captured. If there is an honest projection with a new set of faces, there may be a chance.

It means no Advani?

It means none of them. All those who were there in NDA government. People will not believe them.

It also means no Jaitley, Sushma and all the second rung leaders?

They can be the ministers. But to be the Prime Minister, it has to be a new face. It could be Modi. The problem with him is that, he will not get the majority and other allies will not come with him.

The killings of Muslims in Gujarat will also go against him. Do you think people in South India would vote for Modi?

(laughs) That's what I mean. He can deliver Gujarat but whether he can deliver in other places, we don't know.

That's why even BJP also is hesitating to project him as prime ministerial candidate Maybe. But they don't have anyone else.

He can at least get Gujarat. (laughs) That's right.

There are predictions that if the Congress gets about 100 seats in Uttar Pradesh, Rahul will take over from Manmohan Singh and if the Congress gets around 50 seats, Rahul will remain as an MP, Manmohan will continue. What do you have to say?

(Laughs) They say a lot of new changes are going to take place in the Congress. Sonia Gandhi has terminal cancer. Rahul is not a very intelligent person, neither is Sonia Gandhi. But Sonia has the backing of Vatican.

That's what Morarji said of Rajiv Gandhi, that he is not burdened by brains.

Yes, that's true. But he (Rajiv) was a nationalist.

You were close to him and you liked him.

He was basically a strong nationalist. That is what I liked about him. People made a fool of him; lot of people took advantage of him, especially Sonia, Arun Nehru and Arun Singh.

From the day you appeared in the Rajya Sabha during Emergency and created a sensation and then disappeared, till now, you have fought many a battle. What do you think of yourself and your position in Indian history when you look back?

When I came into politics, I said India needs three or four things to be done. Number one - It must give up socialism. When I said this, everyone was shocked. Ultimately, as a Minister, I got it done. Then, I said that we must have good and strong relations with Israel, which I ensured and it has since happened.

The third thing was that we must improve relations with China, and we should not be so dependent on the Soviet Union. When Morarji Desai became Prime Minister I had got Kailash Manasa sarovar opened. The fourth thing is that India can become a united country if you have a renaissance in Hinduism. I would like people to think of themselves more as Hindus than as Brahmins, Kshatriyas, North Indians or South Indians. I think that in contemporary history maybe things will not be so kind to me, because journalists get influenced by business houses. But when history gets recorded, it will be something like the improvement of the image of Sardar Patel - when he was alive nobody gave him much credit.

But Sardar Patel was considered the modern Bismark of India?

Yes, but those are afterwords. During his time nobody said so, as people were afraid that it might displease Jawaharlal Nehru. You have a very peculiar image. Maybe, it is because of the bias on the part of the journalists as you put it, but you are seen as a destroyer and one who changes parties frequently. One doesn't know where you will strike next, that you are a megalomaniac and unpredictable and that you are a Nehru-Gandhi family baiter forever. All that is wrong. First of all I have never changed the party. I joined the Jan Sangh and it merged with the Janata Party, I continue to be in Janata Party. I have had steady friends like Morarji Desai, Charan Singh, and I am not a Nehru family baiter because I had a great friendship with Rajiv Gandhi.

Nehru-Gandhi dynasty minus Rajiv?

(Laughs) That's a big minus. I did not know Jawaharlal Nehru. But as a historian, I think he was a bad Prime Minister. But to Indira Gandhi I was opposed because she was a socialist, pro-Soviet Union and then the Emergency. So, I had every reason to oppose her, and Sonia Gandhi naturally you know she had done a lot of harm to our country.

Don't you think the slowdown in the economy that affected a vast part of the globe did not affect India too much because of the Nehruvian economic policy?

No. All the countries that were affected by the collapse in America had weak banks. We have always had strong banks, that's because of the Reserve Bank.

Credit to the Reserve Bank of India, recently headed by two Telugus.

That's right. They both did a good job. Y V Reddy did much more. The current man (D Subba Rao) is not so good. If he was, he would have incriminated.

Now, can I say that your target is Sonia Gandhi?

She is the root cause of all problems. People blame Manmohan Singh, but it is Sonia Gandhi who prevented him from stopping Raja. And she got the biggest share of the bribe amount - of about Rs 36,000 crore.

Even in your battle against corruption, people say you are selective and that you are not fighting against every corrupt leader.

I agree, that is because I am an individual, I have no CBI with me, I have no money with me to throw around and I don't have a staff. I have to do everything myself. My wife is a lawyer and she takes most of the burden. So, I have to pick and choose. I can't catch everybody.

What do you think about Anna Hazare's movement or his fight against corruption?

Anna Hazare said corruption will be eliminated only if Jan Lokpal Bill is passed. I did not agree with that.

Do you think Jan Lok pal will come?

No, How can congress commit suicide?

BJP also was not ready for that...

I cannot defend BJP, they have to defend themselves.

You were close to PV Narasimha Rao. Do you think that he was treated properly by the Congress? Actually PV Once told me that he had asked the ministers to do whatever Sonia's secretary (George) asks them to... But what went wrong? Why had they become enemies?

He should have got Bharat Ratna for what he did. The economic reforms blueprint was prepared by me and he gave political support. Manmohan Singh only implemented it. But every-body gives Manmohan Singh the credit. I think Sonia Gandhi was unhappy with PV because he wouldn't give up party presidentship for her. She wanted him to remain as Prime Minister and give her the party presidentship. He told her that it has been the Congress tradition to have the Party President as the Prime Minister.

Don't you think it was wrong on his part to associate with people like Chandra Swamy?

What is wrong in associating with bad characters if you don't help them. Moreover, I don't think he met him more than a couple of times in a month.

But he used to enjoy unlimited access to PM's residence.

Yes. That is because he was a Swamiji. PV gave all Sawmiji’s the liber-ty to meet him directly. Newspapers only mentioned Chandra Swami.

But journalists also say that the Father of Indian economic reforms is Manmohan Singh.

That's wrong. If he could do all those big economic reforms then as a Finance Minister, what stops him now? So obviously it means that they have been Narasimha Rao's reforms.

What is your take on small states?

I am totally in favour of small states. First of all let us remember, no state is going to leave India, we are not talking about cutting the state out. Nowadays governance has become important. Every chief minister must be able to go and meet people of his state. In these large states, in the five years of regime chief minister is not able to go to every district. I don't think any state should be bigger than, say about 10 to 15 districts.

What do you expect the people of India to do now?

We are a very young population with over 70 percent below the age of 35. People have to take more risks. I want the people not to think of money as the final goal. You can't sacrifice your whole life for making money. The desire for more money is the reason for increased corruption. I will say don't imitate the West. Learn from our tradition and have the correct view of the history. Don't learn the British version of our history. I want people to take interest in politics...clean it up…don't complain!

Where will India be 20 years from now?

India will overtake China in ten years of time. China is going to have very big financial crisis. We will have a budgetary crisis but we are a democratic country so we can improve ourselves. When there is food crisis we had Green Revolution and when there was foreign exchange crisis we had economic reforms and so when we have a budgetary crisis we will have a more efficient government.

How do you like Dr. Swamy to be remembered?

As a man who said what he believed in and did what he liked.

Dawood Ibrahim Kaskar, is the head of the organized crime and terror syndicate D-Company in Mumbai. Dawood’s D- Company has been identified as a criminal terrorism syndicate by the US Congress.

Dawood is currently on the wanted list of Interpol for organised crime and counterfeiting, besides association with Al- Qaeda as identified in UN Security Council resolutions 1822 (2008) and 1267 (1999).He was No. 4 on the Forbes 2008 list of The World’s 10 Most Wanted criminals, and no. 50 on the Forbes 2009 list of The World’s Most Powerful People.

He is said to have begun his real criminal career in Mumbai working for the Karim Lala gang (which later became his own gang’s rival) exploiting the rapid expansion in the Bombay (now Mumbai) textiles industry to his advantage, though another version says that he began his criminal career working as a career for smuggler Haji Mastan.

In either case, he eventually split from both of them and started his own gang, D- Company. He soon moved his residence to Dubai in the United Arab Emirates (UAE) where he has business interests along side India. He established chains of businesses in partnership with local Sheikhs. He rubbed shoulders with kings and princes of the Gulf emirates and acquired more power, which at later stages saved him from being extradited to India.

Dawood is a tool for Pakistan ISI security agencies to disturb India

Dawood leapfrogged into big time once he came into contact with the Pakistan Inter Services Intelligence (ISI) wing. The twoshared a couple of interests.The ISI wanted a person whofelt strongly for his community.In other words, someone whocould foment communal trouble whenever the need arose.Two, Pakistan’s territorial waters were a haven for gold smugglers. Dawood wantedhis piece of action in that territory and an understanding was therefore reached. The ISI allegedly helped Dawood to flourish. The gold runner became a mafia don and his gang came to be known as D-company in Mumbai. His net worth is said to be in billions and his ‘business interests’ are spread in Malaysia, Singapore, Thailand, Sri Lanka, Nepal, Dubai, Germany, France, the UK and several Muslim countries in Africa.

Ibrahim is widely believed to have masterminded the 1993 Bombay Bombings, a series of terrorist attacks carried out in the city on March 12 of the year. In 2003, the Indian and United States governments declared Ibrahim a “Global Terrorist”. The then Deputy Prime Minister, described it as a major development and that India stands “vindicated”. Ibrahim is currently on India’s “Most wanted List”.

The United States Department of Treasury has also designated Ibrahim as a terrorist as part of its international sanctions program effectively forbidding U.S. financial entities from working with him and seizing assets believed to be under his control. The Department of Treasury keeps a fact sheet on Ibrahim which contains reports of his syndicate having smuggling routes from South Asia, the Middle East and Africa shared with and used by terrorist organisation al-Qaeda. The fact sheet also said that Ibrahim’s syndicate is involved in large scale shipment of narcotics in the United Kingdom and Western Europe. He is also believed to have contacts with al-Qaeda leader Osama bin-Laden. In the late 1990s, Ibrahim traveled in Afghanistan under the Taliban’s protection. The syndicate has consistently aimed to destabilize the Indian government through riots, terrorism and civil disobedience.

Washington added that they will request the United Nations to list Ibrahim “in pursuance of relevant Security Council resolutions”. The UN listing will require that all UN member states freeze Ibrahim’s assets and impose a travel ban. Juan Zarate, the Deputy Assistant Secretary for Terrorist Financing and Financial Crimes, said that they are committed to identifying and attacking financial ties between terrorism and the underworld. Ibrahim is also suspected to have connections with terrorist organisations, and in 2002 was linked to the financing of increasing attacks in Gujarat by Lashkar-e-Toiba. New Delhi handed over to Islamabad a list of 38 most wanted criminals, including Ibrahim.

In a major blow to Ibrahim, ten members of his gang were arrested by Mumbai Crime Branch on November 21, 2006. They were extradited from the United Arab Emirates, from where they had been deported. Sources reported in India Today indicate that Dawood Ibrahim provided the logistics for the November 2008 Mumbai attacks.

United States Deportation Resistance, In January 2002, a month after the Parliament attack, Indian officials visited the US, where they had meetings with ColinPowell and Condoleezza Rice. A list of the Top 20 most-wanted terrorists in Pakistan was handed to the US. Ibrahim was wanted in connection with the 1993 Mumbai serial blasts. Ajmal Amir Kasab, a gunman arrested for participation in the November 2008 Mumbai attacks that killed 173(164 civilians and security personnel and9 terrorists), has confessed to authorities according to reports that Ibrahim’s organization provided arms and explosivesto the Lashkar-e-Toiba group that wereused to carry out the attacks.

Pakistan denies any knowledge of his existence. Indian intelligence agencies,such as Research and Analysis Wing (R&AW), believe that some of his addresses include House No. 37, 30th street, DHA, Karachi and White House, Near Saudi Mosque, Clifton, Karachi, Pakistan, and is provided protection by Pakistani intelligence agency, the Inter Services Intelligence (ISI). The issue of extradition of Dawood Ibrahim is one of the major hurdles in the frosty relations between India and Pakistan. Despite hectic efforts during the past many years, the government has failed to bring him back. The mere existence of Dawood proved a point that India is a soft state hence targeted repeatedly by terrorists across the borders. Indian security agencies may have achieved some success in apprehending a few terrorists planning attacks in Mumbai recently, but investigators say the arrests are just a tip of the iceberg.

”The ISI has brought together underworld don Dawood Ibrahim, Tiger Memon, and elements of the LeT, Jaish-e- Mohammad and Indian Mujahideen operatives such as Amir Reza Khan to create terror and mayhem throughout the country,” an investigator said. The officer added the information was gleaned from inputs from central intelligence agencies and also through those involved in planning the terror attacks.

”Abdul Latif, who has been arrested, is a relative of Bashir Khan. The latter was involved in planting explosives in the first serial blasts in Mumbai in 1993. Since the 1993 bomb blasts had a bigger involvement of Tiger than Dawood, we believe Tiger has once again been roped in to create terror,” the officer said.

Life isn’t trigger happy for Dawood Ibrahim any more. Once comfortably ensconced in Karachi, and enjoying the hospitality of the Inter-Services Intelligence (ISI), his enemies are now ensuring he doesn’t have a settled existence. Following the ISI’s interception of a ‘Get Bhai Plan’ by his RAW-sponsored enemies to sneak into the port city and target him, the underworld don has been made to relocate his family to Islamabad where he now lives in a high security zone under the ISI’s covert protection. The ‘Get Bhai Plan’ was masterminded by Indian intelligence in collaboration with Dawood’s main business rival and former right hand man, Rajender Sadashiv Nikhalje alias Chhota Rajan.

His inclusion in the list came as an embarrassment to Islamabad, especially as the US department in its reasons for doing so cited intelligence reports of his connection with global outlaws Al Qaeda and Lashkar-e-Toiba. The department’s fact sheet on Dawood stated: “Dawood Ibrahim, son of a police constable, has financially supported Islamic militant groups working against India such as the Lashkar-e-Toiba. Information as recent as fall 2002 indicates that Ibrahim had been helping finance terrorist attacks in the Indian state of Gujarat by Lashkar-e-Toiba, the armed wing of Markaz Dawa Wal Irshad.

But the Bhai under protective umbrella of ISI is going strong, he is extensively used by ISI to plan all major nefarious operations in India. India is agrowing economy with massive global attention and business interest hence the divisive forces will be proactive to derail thegrowth story. It is note worthy to mention  that the nexus of ISI and D Company is patronized by all anti India forces indirectly toensure that India remains a hot spot of terror activities to limit its growing stature at the global forum. India is presently servedby the most efficient Home Minister in recent times. Mr P Chidambaram is managing the internal security with extreme clinical output though the Naxal front is looking quite gloomy. Indian naxal problem is related to the comprehensive systemic failure rather than the administrative failure but certainly India has witnessed better coordination between intel agencies and police network in the past few months. A nation of billion inhabitants are looking at the present security apparatus to bring and book India’s most wanted criminal, surely the time lost in the process will deplete already receding hope of many countrymen in the efficiency and credibility of our national approach towards terrorism.

(With inputs from Air Marshal R C Bajpai, Mr Ashoka Kumar Thakur – Senior Advocate, Supreme Court of India, Prakhar Misra – Political Editor, Veelaas Kengale – Mumbai)

Exposing unholy nexus between Dawood Ibrahim, al Qaeda,and the ISI

The US Congressional Research Service has is- sued a solid report on the nexus between criminal syndicates and terrorist groups.Entitled “International Terrorismand Transnational Crime:Security Threats, U.S. Policy, and Considerations for Congress,” there port has a section devoted to Dawood Ibrahim, the criminal don of South Asia. The report acknowledges that Dawood is aligned with al Qaeda, the Lashkar-e-Taiba, and Pakistan’s Inter-Services Intelligence agency.

Dawood Ibrahim’s D-Company Over time, a purely criminal group may transform, adopting political goals and new operational objectives. These organizations can form alliances with existing terrorist organizations or foreign governments to help achieve their strategic aspirations. Or they can initiate,direct, and perpetrate terrorist attacks without external assistance,resulting in the group becomin glabeled a terrorist organization.Criminal syndicates often already possess the operational expertise needed to engage in terroristacts. They may already employ terrorist specialists to conduct surveillance, transfer money, purchase weapons, build bombs, and eliminaterivals. A criminal organization can easily transfer this apparatus toward politically motivated ends. The result is either a truly evolved criminal turned terrorist group or a “fused” criminal terrorist organization that seeks to develop ties with like minded ideological movements. The use of criminal skills for terrorist ends raises the concern among some experts that terrorists may seek out criminals for recruitment or radicalization, believing them to be a higher skilled partner than non criminals. A criminal’s participation in terrorist activity, however, brings greater scrutiny from law enforcemen tagencies and politicians. Furthermore, a concentration on terrorist attacks could divert resources away from criminal endeavors, producing disillusionment and desertion among members who join edstrictly for monetary reasons.

Dawood Ibrahim’s D-Company, a5,000 member criminal syndicate operating mostly in Pakistan, India, and the United Arab Emirates, provides an example of the criminal terrorism “fusion” model. The U.S. Department of Treasury designated Ibrahim as a Specially Designated Global Terrorist (SDGT) under Executive Order 13224 in October 2003. In June 2006, President George W. Bush designated him, as well as his D-Company organization, as a Significant Foreign Narcotics Trafficker under the Foreign Narcotics Kingpin Designation Act (hereafter “Kingpin Act”).D-Company is reportedly involved in several criminal activities, including extortion, smuggling, narcotics trafficking, and contract killing. The organization has also reportedly infiltrated the Indian film making industry, extorting producers, assassinating directors, distributing movies, and pirating films.

Ibrahim began as a criminal specialist in Mumbai , India, first as a low-level smuggler in the 1970s and later as the leader of a poly-crime syndicate. He formed a thriving criminal enterprise throughout the 1980s and became radicalized in the 1990s, forging relationships with Islamists, including Lashkar-e-Tayyiba and Al Qaeda. D- Company’s evolution into a true criminal- terrorist group began in response to the destruction of the Babri Mosque in Uttar Pradesh, India, in December 1992, and the subsequent riots that killed hundreds of Muslims. Outraged by the attacks on fellow Muslims and believing the Indian government acted indifferently to their plight, Ibrahim decided to retaliate. A heretofore secular organization with a sizable Hindu membership now assumed the objective of protecting India’s Muslim minority. Reportedly with assistance from the Pakistan government’s intelligence branch, the Inter Services Intelligence agency (ISI), D-Company launched a series of bombing attacks on March 12, 1993, killing 257 people. Following the attacks, Ibrahim moved his organization’s headquarters to Karachi, Pakistan.

There, D-Company is believed to have both deepened its strategic alliance with the ISI and developed links to Lashkar- e-Tayyiba (LeT), which was designated by the United States as a foreign terrorist organization (FTO) in2001. During this time period, some say D-Company began to finance LeT’s activities,use its companies to lure recruits to LeTtraining camps, and give LeT operatives useof its smuggling routes and contacts.66Press accounts have reported thatIbrahim’s network might have provided aboat to the 10 terrorists who killed 173 peo-ple in Mumbai in November 2008. The U.S.government contends that D-Company hasfound common cause with Al Qaeda andshares its smuggling routes with that ter-rorist group. The United Nations has addedIbrahim to its list of individuals associatedwith Al Qaeda.

D-Company’s seeming transformationfrom a profit-motivated criminal syndicatedto a fusion crime-terror organization also al-tered its composition. Many of the Hindumembers left the group after the 1993bombings, with some forming a competinggang. While the organization reportedly col-laborates with LeT and Al Qaeda, the more secular orientation of D-Company’s leadership makes it unlikely that it will formally merge with those terrorist groups, analysts believe. Regardless, D-Company’s own terrorist endeavors, its deep pockets, and its reported cooperation with LeT and Al Qaeda, present a credible a threat to U.S. interests in South Asia, security experts assess. Lending his criminal expertise and net- works to such terrorist groups, he is capable of smuggling ter- rorists across national borders, trafficking in weapons and drugs, controlling extortion and protec- tion rackets, and laundering ill-gotten proceeds, including through the abuse of traditional value transfer methods, like hawala. By providing those organizations with funding, contacts, and logistical sup- port, it amplifies their capabilities and durability.

Dawood Ibrahim’s gang merger withthe Lashkar-e-Toiba: Two IslamicTerrorist Organizations come together forJihad against India – ISI reach will expandwith D-Company merger’. The merger ofDawood Ibrahim’s gang with theLashkar-e-Toiba at the behest ofPakistan’s Inter Services Intelligence(ISI) has Indian security agencies worriedsince the underworld gang will expandthe ISI’s reach in the country. “Manymembers of Dawood’s gang have beenindoctrinated and trained in the use ofweapons in the Bahawalpur centre of theLeT near Lahore. Funds are being raisedby investments in real estate and SRA projects in Mumbai and through smuggling of diesel and other essential commodities through the western coast spanning from Raigad to Mangalore along the Arabian Sea. We have warned Delhi about the smug- gling being carried out by the Dawood gang with impunity,” a security official said.

Asked why the ISI had roped in the D- Company in LeT activities, the official said, “The underworld’s penetration in Maharashtra, Gujarat, Karnataka, Andhra Pradesh and parts of Kerala and Tamil Nadu is very deep. By synergizing the D- gang with the LeT, the ISI’s reach has increased manifold. An out fit like the Students’ Islamic Movement of India could not have provided the kind of reach which Dawood’s gang can provide.”

Government sources brushed aside the hope in certain quarters that the installation of a democratically elected government in Pakistan would result in a decrease in LeT inspired violence since the ISI, which is heavily infiltrated by fundamentalist elements, is known to pursue its own agenda. D Company’ is now officially part of the Lashkar-e-Toiba’s terror network, with Pakistan’s notorious Inter-Services Intelligence (ISI) getting Dawood Ibrahim to merge his gang with the fundamentalist terror organisation as part of a game-plan to crank up its anti India campaign.

Sources in Indian agencies tracking ISI’s moves confirmed the coming together of the two outfits and the danger that it poses to India. “The underworld gang and the Lashkar jihadis have been knocked into a single entity and this has serious implications for India’s internal security,” a senior intelligence official. ISI’s links with D-Company are old, going back to 1993 when Pakistan’s external intelligence agency used Dawood and his henchmen to execute the March 12 terror attack on Mumbai in what marked the first instance anywhere of serial bombings. There has since been a shift in the dynamics of ISI-Dawood equations, reducing D-Company from being a useful ally to a group of individuals dependent on ISI to escape international law agencies.

Following the Mumbai blasts, Dawood along with his accomplices Chhota Shakeel and Tiger Memon fled to Pakistan. Pakistan has since shielded them from India and the new anti-terrorism sensitivities post-9/11 which saw Dawood being branded a global terrorist by the US. But the hospitality has a tag attached to it: complete dependence for survival on ISI, which does not mind displaying its leverage visa-vis the once ruthless gang. The merger will, inevitably, transform the character of Dawood’s gang, which did not display any communal tendency before the serial bombings aimed against members of a particular community.

In fact, many of their business partners were non-Muslims like Raj Shetty. Chhota Rajan was also a senior member of the gang before splitting in protest against the serial blasts triggered by Dawood, Shakeel and the Memons. “The serial blasts were essentially a retaliation for the January 1993 communal riots. But now there is a qualitative change with D-Company becoming part of a jihadi organisation like the LeT. Earlier, this gang’s members were not religiously indoctrinated, but now they are. The motivation now is not money, but religion,” a senior official said.

The joining of ranks with Lashkar, one of the most dangerous terrorist outfits which treats “liberation” of large tracts of India from “Hindu domination” as its religious obligation, can help ISI to further its subversive agenda. Stints with Lashkar camps can morph Dawood’s band of urban gangsters into well-armed and jihad-driven terrorists. On the other hand, Lashkar benefits immensely from collaboration with D-Company which continues to attract recruits and has acquired financial muscle by venturing into mainstream commercial enterprises without letting go of its original money spinner, smuggling.

— OEMCL New Services with inputs from our Dubai Bureau

2G scam has reached phase II, with the Supreme Court ordering DMK heiress and Member of Parliament Kanimozhi’s arrest in the 2G spectrum scam, the burning question now is: What next? Will corporate chieftains Anil Ambani, Prashant Ruia and Ratan Tata be prosecuted too?

The answer to this million-dollar question may lie behind certain recent developments. Shahid Usman Balwa, Swan Telecom promoter and an accused in the 2G scam case, on May 18 took objection to the Central Bureau of Investigation naming Ratan Tata as a ‘victim’ in the scam thus granting him the benefit of the doubt. Balwa alleged before the trial court that the Tata Group chairman was one of the biggest beneficiaries in the allocation of radio waves and came forward with many arguments and produced correspondence between Tata and the prime accused and former telecom minister A Raja in support of this claim. This is a very interesting development, according to legal eagles handling the case on be half of the various accused in the case.

Already, last month in the Supreme Court, petitioner Prashant Bhushan pre- sented a note on the direct involvement of Reliance Communications chairman Anil Ambani, Tata Teleservices chairman Ratan Tata, and Loop Telecom chief Prashant Ruia. If the other accused too, like Balwa, start pressing for Ambani, Tata and Ruia’s prosecution, the buck will have to stop somewhere and some- one will have to answer why they should not be prosecuted and arrested, says a senior lawyer appearing for the arrested accused in the 2G scam.

It is when lawyer Prashant Bhushan and politician Subramanyam Swamy took the case vigorously in the apex court and into the media, things moved. There is no doubt that the rejection of Kanimozhi’s bail application was one of the great newsy moments that rarely comes. In fact, Swamy is confident that both Anil Ambani & Ratan Tata will be prosecuted very soon for the serious crime.

In rarest of rare cases we see, in this corruption-ridden country, a powerful person’s daughter going to Tihar jail. Moreover, the charge is also so fantastic that the millions of middle-class people can never fathom it, properly. Most Indians believe that powerful people are not fined even for traffic violations so Kanimozi’s imprisonment is a phenomenon. One is gasping for words to describe that the person who is able to take Rs 200 crore bribe can, really became so powerless that nothing could help her to avoid going jail. That’s the might of the law.

If after detection of the 2G spectrum case, the system is not changed to ensure that public property is not looted in favour of a selected few then what’s the use of this tamasha of a powerful politician’s daughter going to jail? And, equally importantly, if the charges of corruption against Raja and Kanimozhi are not proved in the court of law then this moment will end up in a national tragedy. Many lawyers are privately saying that it’s possible that this case may face the fate of the the Jain Hawala case, in which the prime accused was not convicted.

As of today, the CBI is not totally independent. Until the Jan Lokpal bill comes and prepares the case for a totally independent CBI, the 2G spectrum case will remain in realm of danger of going the Jain Hawala way. At the end of day, let us accept that it’s too early to say that, in the India of 2011, the system can humble the rich and powerful. Bhushan argued before the court that the expert panel is required to nail the real bigwigs involved in the case.

Explaining why Anil Ambani should be prosecuted by the CBI, Bhushan’s note to the Supreme Court pleads that ‘the CBI has filed two charge sheets in the 2G scam case. The first charge sheet established the criminal culpability of Reliance Communications and Swan Telecom. The said charge sheet states that the accused, former telecom minister A Raja,entered into criminal conspiracy with the accused Shahid Balwa and Vinod Goenka (of D B Realty) for favouring Swan Telecom.’

Bhushan argued further before the two judge bench that the CBI chargesheet ‘also states that the accused Gautam Doshi, Surendra Pipara and Hari Nair (who are all employees of the Anil Ambani controlled Reliance and now arrested) in furtherance of their intention to cheat, created Swan Telecom out of funds arranged from Reliance Communications for applying for licenses in 13 circles where Reliance Communications did not have GSM spectrum.’ ‘The CBI has contented that Swan Telecom was held by Anil Dhirubhai Ambani Group companies through the funds raised by Anil Ambani- controlled businesses,’ Bhushan’s note says.

‘The CBI, in its first chargesheet of April 2, 2011, details the complex web of structuring that was done by the said Reliance employees to hide the fact that Swan was fully a RAGAG company. These people (arrested and jailed officers) are just the professional employees of the ADAG, and are not the beneficiaries of this scam. The real beneficiary is Anil Ambani, who holds a majority stake and is chairman of the group. The CBI has tried to shield him and has only charge sheeted the employees,’ argues Bhushan.

Giving more ‘details’ of Ambani’s alleged culpability in the scam, Bhushan wrote to the Supreme Court: ‘At the time of application for UAS licence, Swan had about 9.9 per cent equity in Swan, while the remaining 90.1 per cent equity was held by Tiger Traders Pvt Ltd, in which the above stated three persons (employees of R-ADAG) were the directors, fronting for Reliance ADAG. The entire money was provided by RADAG.’

The CBI has stated, ‘Investigation regarding M/s Tiger Traders Pvt Ltd has also disclosed that the source of funds to raise equity and also to subscribe to shares of other companies has also come from group companies of Reliance-ADAG. Further, the source of funds, i.e., Rs 3 crore (Rs 30 million) during January 2007 and Rs 95.51 crore (Rs 955.1 million) during March 2007, utilised by TTPL to subscribe to majority shares of M/s Swan Telecom Pvt Ltd, has been arranged through the group companies of Reliance ADAG. Moreover, a sum of Rs 992 crore (Rs 9.92 billion), which constituted bulk of the net worth of Swan Telecom, was also paid by Reliance….’

However, the CBI has wrongly stated that Gautam Doshi (arrested and jailed) took all the commercial decisions, insists Bhushan to the Supreme Court. In fact, the CBI is currently investigating the sequence of events and chronology of cash payments done by Reliance. The CBI believes that, ‘Amitabh Jhunjhunwala, who is the chief executive officer of Reliance Capital Limited and also group managing director at Reliance Anil Dhirubhai Ambani Group, would have more knowledge (about the goings on) than the three officers who have been arrested and are now in Tihar jail.’

Arguing further his case against Anil Ambani, Bhushan says, ‘A senior official of the ICICI Bank has stated to the CBI that only Anil Ambani or his wife Tina Ambani were authorised to make payments of Rs 10 crore (Rs 100 million) and above. There is no possibility of an employee of the company having taken such an important decision of massive investments running into hundreds of crore of rupees. Therefore, the payment made of over Rs 100 crore (Rs 10 billion) from Reliance account on October 19, 2007 to Swan (the same day Reliance got the dual- tech license), could not have been made without the concurrence of Ambani.’

‘Moreover, the benefit of dual technology spectrum was accrued to Ambani, as the majority shareholder, whereas the employees had no financial benefit at all. In the second charge sheet the CBI has established the money trail that establishes serious offences of bribery, corruption, fraud, cheating and conspiracy. ‘

It is only the dominant shareholder of the ADAG that stood to benefit the most. Most important, it was not possible for an employee to divert Rs 990 crore (Rs 9.90 billion) of public listed company Reliance Communications through its subsidiary Reliance Tele to Swan Telecom and subscribe to Re 1 preference shares bearing 8 per cent interest at a premium of Rs 999.’

‘It had to be done by the board and the executive director, the chief executive officer and the majority shareholder. Naming three employees of Reliance-ADAG as the accused without naming Anil Ambani is a serious and deliberate omission,’ he alleged.

‘The transfer of Swan Telecom could not have taken place without the consent of Ambani who had the foreknowledge that his application for dual technology would be granted. If the dominant shareholder, who is also the CEO, is allowed to escape accountability, then it will seta new benchmark to evade corporate criminality,’ argued Bhushan.

Bhushan, while talking about Ratan Tata’s culpability the in 2G scam, told the Supreme Court that ‘the CBI in its first charge sheet goes on for several pages as to how Tata Teleservices is a victim in the entire 2G spectrumscam. As per the CBI,since Tata was an existing operator, it had preference over all new applicants,and therefore since it was not given licence before applicants like Swan, it was a victim.’

‘The CBI disregards that DoT was following a procedure of FCFS (first come first served) and an application of Tata for the same GSM spectrum came in at the end, on 19/22.10.2007, i.e., after 575 applications were pending, and three weeks after the original cut-off date of 01.10.2007.’

‘The CBI disregards that as per policy, new operators were encouraged to increase competition and were assured a level playing field. Hence, there is no question of the existence of any policy that states that an existing operator would be given preference. In fact, the policy stated to being followed was of FCFS. On 10.01.2008, Tatas got GSM spectrum in 20 circles and were a major beneficiary of the policies followed by accused A Raja.’

Bhushan tells the court that ‘the CBI ignores the clear evidence of quid pro quo between Tata and A Raja’s party the DMK. The above has to be considered along with the conversation Niira Radia (Tata’s lobbyist) had with Rajathiammal (wife of former chief minister of Tamil Nadu M Karunanidhi) where in the name of the Tatas is clearly mentioned.’

‘The transcript of the said conversation is already on record as A1 of the additional affidavit. It has also come in the public domain as to how a big land in Chennai worth Rs 500 crore (Rs 5 billion) was given by Tatas to the family of the (former) Tamil Nadu chief minister. A letter written by Tata Group chairman Ratan Tata to then Tamil Nadu chief minister Karunanidhi has also come into the public domain wherein he praised the spectrum allocation policies of former telecom minister A Raja.

Bhushan argues that it ‘shows that the Tatas were one of the biggest beneficiaries of the actions of Mr Raja during his stint as telecom minister. The above has to be seen with the fact that Niira Radia lobbied heavily to ensure the return of the accused Raja as telecom minister and in one of the conversations she clearly states that her client Tatas were a beneficiary of the tenure of accused Raja.’

Bhushan has also alleged in his note to the judges that ‘the petitioners have now learnt that the CBI is sitting over a crucial lead wherein telecom companies who got 2G licences made payments to a Tamil cultural NGO of which Kanimozhi (accused) is a director. The said NGO received payments from telecom companies including Tata just before the licences were awarded on 10.01.2008.

‘Arguing the case against Prashant Ruia’s involvement in the 2G scam Bhushan said, ‘Petitioners have learnt that while the CBI might be following the case of Loop Telecom which made huge benefits, the investigation has gone cold over the involvement of Prashant Ruia andhis family members whothrough a complex web of transactions setup LoopTelecom to defraud and cheat the government for the award of 2G spectrum and licences.

‘Prashant Ruia is the CEO of Essar Group Ltd.The group is part of theVo d a f o n e – E s s a r – H u t c h Telecom service provider.Bhushan told the court that’the telecom watch dog, one of the petitioners here in, had made a detailed complaint as to how Ruia is the real face of Loop. Now the Enforcement Directorate and the Reserve Bank of India have already confirmed this,’ said Bhushan.

The CBI officers who want to go by the rule book argue: ‘Who can do business of more than Rs 200 crore (Rs 2 billion) in a matter of two-three days without directions from the highest level? We know these so-called living legends of the corporate world are neck-deep in the issue. As of today the 2G spectrum case is handled by many agencies and institutions. We hope the Income-Tax Department, the Enforcement Directorate, the Supreme Court, the lower court, the Joint Parliamentary Committee or our own agency, at the highest level and at an appropriate time, will debate threadbare the issue of Anil Ambani and Ratan Tata’s actual involvement in the 2G scam.’

CAG is sticking to its guns that country has suffered a loss of Rs 1,76,000 crore revenue in its testimony before JPC hence the problems for India’s best known business leaders are just about to start. The outcome of the 2G scam can be a bench mark for governance pattern in India, and fair trail leading to punishment to guilty people will boost the confidence of common person on the rule of law.

-J GOPIKRSHNAN for Opinion Express