Defence Minister in Rajya Sabha: Part 2: Parrikar Waxes Eloquence on AgustaWestland

Part 2

(Speech of the Defence Minister Manohor Parrikar in Rajya Sabha)

These changes in SQRs eliminated the EC-225 helicopter which had met the Operational Requirements earlier and allowed AW-101 helicopter to enter the fray. As highlighted by the CAG in its Report, instead of making the SQRs broadbased to increase the competition, those were made more restrictive, thereby narrowing down the choices to a limited range of helicopters. 

                                   

The purpose of avoidance of resultant single vendor situation could not be met and the acquisition process, again, led to a resultant single vendor situation. 

In effect, by changing the SQRs, a situation was created in which EC-225 helicopter, which had met all Operational Requirements earlier, was eliminated by putting the requirement of 1.858 metres of cabin as an essential criterion from the competition and facilitated emergence of AW-101 as a single vendor. While the RFP was issued to M/s AgustaWestland, Italy, the response to RFP was received from M/s AgustaWestland International Ltd., UK, which was not the entity to whom RFP was issued. Did the then Government examine the serious legal implications of this aspect? 

It later emerged that the Memorandum of Association of M/s AgustaWestland International Ltd., (AWIL) does not provide for any activity of M/s AWIL as an OEM and its Annual Report indicated that its business was coordinated with other group company, wherein its responsibility extended to customer relationship and coordinating customer requirements. I think that is what they did. The bid of M/s AgustaWestland International Ltd., UK, should have been rejected outright as it was not the agency to whom the RFP was issued. But for the logic, purpose and motive best available with the leadership of the then Government, this did not happen. Instead, the relentless push in favour of AWIL continued. 
                                                                                            

In effect, the Government of India was signing an agreement for supply of helicopters with a company that had no OEM capability, which would appear highly irregular. There is also no tangible reason stated for this unusual structure. During the processing of the case, the following deviations from RFP or DPP were approved by the then Raksha Mantri. Now, I come to conduct of field trials abroad. I agree that you initially objected; that is your nature. The CAG Report has highlighted that the Field Evaluation Trial..(Interruptions).. of AW101 of AgustaWestland was conducted on representative helicopters Merlin MK-3A and CIV01 and mock-up of the passenger cabin and not on the actual helicopter, whereas actual S-92 helicopter of Sikorsky was evaluated. Even at the stage of FET, the helicopter offered by AgustaWestland was still in its development phase. 

DPP mandates that FET must be carried out in all conditions where the equipment is likely to be deployed. RFP has categorically stated that FET would be carried out in India-- this was the specific requirement of RFP-- in varying climates, altitude and terrain conditions, on 'no cost no commitment' basis. 

Conduct of trials in India is extremely critical, especially, for helicopters meant to carry VVIPs because the terrain, climate and topographic conditions greatly vary with those of USA and UK. This crucial aspect has been given a go-by by permitting trials in foreign lands. The serious nature of deviations from standard FET conditions for the AW-101 in terms of trials being held outside India and not on the actual helicopter was exacerbated by the fact that even at the time of FET, the Augusta Westland helicopter was in developmental stage. ...Sir, this created some problems when the three helicopters were received and were being put on test trials. 

Blogger

I will just read one para from a file of Air Force where the trials were taking place. 
I will read one para only. I quote, "At Srinagar, 5,400 feet above the sea level, effective payload of this helicopter is nil in OGL configuration at all ranges of temperature. Even in IGE configuration, a reduced payload is to be accepted. The common VVIP sorties to Nehru Helipad cannot be undertaken. Similar is the case of Gulmarg, Pahalgam where VVIP sorties have been flown in the past using Mi-17iv helicopter." 

This file luckily was saved from a devastating fire which took place on 3rd of June, 2014 which burnt down all the records in that particular office. But this file remained in the drawer of the officer. So, it survived. ...(Interruptions)... This could not be further verified because obviously the helicopter was stopped from testing after that. ...(Interruptions)... Additional commercial quotes sought from both the vendors. 

Third, acceptance of the partial compliance of the two SQRs in respect of AW-101 non-VIP version helicopter. Neither S-92 nor AW-101 fully complied with SQR in the FET. However, AW-101 was recommended for induction in spite of emerging as a single vendor by waiving off two parameters, while no such concession was granted to S-92. The warranty of 'three years/2000 hours whichever is earlier' on the airframe and 'three years/1200 hours whichever is earlier' on the engine offered by M/s Sikorsky and 'three years/900 hours whichever is earlier' offered on the whole helicopter by M/s AWIL was accepted instead of RFP stipulation of 'three years/900 hours whichever is later'. 

Acceptance of option clause for three years instead of five years. Inclusion of additional items such as Traffic Collision and Avoidance System, Enhanced Ground Proximity Warning System for all 12 helicopters and Medevac system for 8 VVIP helicopters at CNC stage. ...(Interruptions)... Deletion of Active Missile Approach Warning System, Incorporation of Rear Air Stairs in 04 non-VVIP helicopters. ...(Interruptions)... Completion of helicopter delivery in 39 months instead of 36 months. The accepted principle in procurement is that deviations must be approved only under exceptional circumstances, for robust rationale and exercising extreme caution. ...

                            

The numerous deviations approved appear to flout this norm, as has also been pointed out by the Comptroller and Auditor General in their report. That CAG Report has highlighted that the allowed offsets were not compliant with DPP and many Indian Offset Partners were not eligible. Augusta Westland gave a year-wise breakup of work from 2011 to 2014 to be executed by IDS Infotech under this offset programme even though the work has been completed well before the conclusion of the contract in 2010. 

Now, this is very important. Investigation in the matter so far revealed involvement of IDS Infotech as a conduit for transfer of bribe money. We have already got court orders on that too. I would explain what action we have taken on that. The benchmark cost arrived by CNC was unreasonably high and had provided no realistic basis for price negotiations. The benchmark cost as worked out by CNC was Euro 727 million, approximately, Rs. 4,877.50 cores, which is six times the estimated total project cost of Rs. 793 crores, in January, 2006, wherein the estimated unit cost of AW-101 – this is very important – was considered as Rs. 100 crore, approximately Euro 15 million, at the time of SOC. When the recommendation was given for acceptance of RFP, this was the price quoted by the Air Force – Rs. 100 crores, that is, Euro 15 million. 

The CAG Report has stated that the base price of US $ 27 million for the year 2000 was adopted by CNC, while the base price of AW- 101 VIP helicopter was US $ 18.2 million in the year 2010, as seen from the Internet. SHRI ANAND SHARMA: Internet? 

Even the Air Force has estimated it as 15 million dollars in 2006. It is there on the records. ....I am reading from the CAG Report. I would provide whatever clarifications you may need later. ...(Interruptions)... MoF, in their observation on CCS note, stated that they are unable to support the proposal. 

The Ministry of Finance also asked that a response to the letter of the MP, Shri Nathubhai G. Patel to the CVC may be incorporated in the final CCS note along with MoD’s response thereon. The salient observations of MoF were based on following aspects: Final negotiated price being high as compared to the estimated AoN cost; SQRs not being broad-based; while the proposal of M/s ROE was rejected for want of EMD and Integrity Pact, the other two were considered despite certain features of both proposals not conforming to RFP requirements. The remaining two vendors were allowed to submit additional commercial quotes and later, M/s AWIL was allowed to make corrections in its EMD and Integrity Pact. 
FET not conducted in Indian  conditions. 

During FET/SE, the helicopter offered from M/s Sikorsky was not accepted due to noncompliance with certain requirements and partial compliance with certain others while the helicopters offered by M/s AWIL were accepted despite partial compliance with certain requirements; and changes to the technical requirements made after opening of price bid and changes to certain terms and conditions of RFP made. Similar concerns were raised by the MP before the CVC, stating that the case is in violation of CVC norms. The CCS approved the proposal for procurement of 12 VVIP and VIP helicopters from Messrs Augusta Westland, UK, in the meeting held on 18th January, 2010, for the following reasons: 

(i) Augusta Westland helicopters have been selected after multivendor competition bid, for which RFPs have been issued to six vendors, out of which only two vendors responded. (ii) Augusta Westland helicopter was the only helicopter that met the SQRs framed for the VVIP version and the operational requirements of the IAF. 

The other helicopters participating in the trial did not meet the SQR. (iii) The present fleet of VVIP helicopters will complete their total technical life in the year 2010.

The RFPs for the present procurement was issued on 27th September, 2006 and any further delay would jeopardize the requirement. ...(Interruptions)... (v) Now that considerable time has elapsed, it is likely that a fresh tender would lead to further escalation of costs. ...

The CCS approval for the decision appears predicated primarily on Augusta Westland being the “only helicopter” meeting the SQRs and multiple deviations from the SQRs including shortfalls were approved. ...(Interruptions).

The matter started about corruption appearing in the various media in Italy from February, 2012. The Government of India, instead of taking action on the company, adopted 4 Uncorrected / Not for Publication 04.05.2016 a route of writing to the Ministry of External Affairs, to the Embassy, to the Court,...(Interruptions)... 

Media reports of alleged wrongdoing and unethical conduct by M/s. Finmeccanica, parent company of M/s. AWIL, UK, in connection with the purchase of VVIP helicopters and initiation of preliminary investigation against the company in Italy started surfacing since February, 2012. ...(Interruptions)... While Embassy in Rome was approached to get credible information regarding the status of investigation and authenticity of the documents/records being cited in various reports, however, no explanation was asked from the company and the operation of the said agreement continued. ...(Interruptions)...

Even the deliveries of three helicopters were accepted in December, 2012. ...(Interruptions)... Only on receiving the reports of arrests of M/s. Finmeccanica Chief, Mr. Orsi, the Ministry of Defence, on 12th February, 2013, asked the CBI to conduct an inquiry into the matter. ...

The operation of the agreement was put on hold and payments stopped with issuance of the first Show Cause Notice (SCN) to M/s. AWIL, UK, on 15.02.2013. ...

The Italian authorities commenced criminal proceedings from 19th June, 2013, at the Court of Busto Arsizio, Milan, in this case. (Contd. by 4P - GSP) GSP-PSV-4P-7.05 SHRI MANOHAR PARRIKAR (CONTD.): The documents obtained through these proceedings have been shared with the CBI and the ED. ...(Interruptions)... Some of the documents so received were used in taking action for cancellation of contract. ...(Interruptions)... These documents included a classified document titled 'Revised Operational Requirements for VVIP helicopters'. ...(Interruptions)... After consultation with ASG, a Second SCN was issued to M/s AWIL, UK on 21.10.2013. M/s AWIL, UK raised the issue of going for arbitration in the letter dated 4.10.2013, and, again in the response dated 25.11.2013. 

                                             

The AG, inter-alia, advised that in view of the fact that on 4.12.2013, M/s AWIL, UK has given notice to nominate an Arbitrator within thirty days and the consequences of not appointing an Arbitrator would be quite serious, therefore, there does not appear to be any choice but to nominate an arbitrator. ...(Interruptions)... He stated that it is also necessary at this stage to issue termination/cancellation letter simultaneously or even prior to nomination of an Arbitrator. ...(Interruptions)... Accordingly, as per the advice of the AG, the contract was cancelled on 1.1.2014 and all the guarantees / bonds were invoked. ...(Interruptions)... The warranty bond, the performance bond, the IPBG were encashed in full after court proceedings. However, against an advance payment of Euro 250.32 million given to M/s AWIL, only an amount of Euro 199.62 million towards delivery of three helicopters, were recovered. 

In addition, the Government also suffered an estimated loss and damages of Euro 398.21 million. ...(Interruptions)... From the appearance of media reports about alleged wrongdoings in February, 2012... ..

It took nearly two years to cancel the contract, and, that too, primarily as a response to an arbitration request by the supplier. .

 In fact, the very delivery of the first 3 aircrafts could have been avoided. ...(Interruptions)... We must ask ourselves as to why... ...(Interruptions)... 9 Uncorrected / Not for Publication 04.05.2016 

When even though the reports of wrongdoing and unethical conduct by M/s Finmeccanica in connection with the purchase of these helicopters and initiation of preliminary investigation against the company in Italy surfaced since February, 2012... ...(Interruptions)... 

.....followed by a report of arrest of M/s Finmeccanica Chief, ...(Interruptions)... the action of putting on hold all procurement/acquisition cases in the pipeline with the entire Finmeccanica Group of Companies and other companies figuring in CBI FIR was approved on file by the then RM only on 12.05.2014 towards the fag end of the then Government's tenure. 

As regards the issue of alleged substantial disregard and extensive delay in providing necessary documents by the Ministry in the Criminal court proceedings at Milan, it is stated that the documents were not in the custody of the MoD but in the custody of CBI before MoD became a civil party to the criminal proceedings at Milan. ...

Sir, vide its letter dated 12.02.2014, it has executed the LRs received from Italy on 27.01.2014. ...(Interruptions)... As far as the investigation by the CBI and the ED is concerned, it is strange that the CBI which registered an FIR in the matter on 12th March, 2013, based on the reference made by the 11 Uncorrected / Not for Publication 04.05.2016 Ministry of Defence on 12th February, 2013, did not bother to forward a copy of the FIR to Enforcement Directorate for nine months. ...(Interruptions)... It was only in December, 2013, that is, after a gap of nine months, CBI forwarded the FIR to Enforcement Directorate. 

Even more strangely, the Enforcement Directorate did not act on the FIR in July, 2014. It appears that invincible hand was guiding the actions or inactions by CBI and ED. 

 After the present Government took over, CBI and Enforcement Directorate have been vigorously pursuing all aspects of the investigation ..........including the arrests and/or extradition of three foreign nationals, namely, Mr. Carlo Gerosa, Mr. Guido Haschke and Mr. Christian Michel James. 

Red Corner Notices were issued in December, 2015 and January, 2016 ....Extradition request has also been made for Mr. Christian Michel James. ..(Interruptions).. One of the agencies has arrested an Indian national and attached property worth Rs. 11 13 Uncorrected / Not for Publication 04.05.2016 crores belonging to Indian nationals and Mr. Christian Michel James. ..

Pursuant to the judgment of Milan Appellate Court, Ministry of Defence have written to both the ED and the CBI to take into account the contents of the judgment and conclude the investigations expeditiously. ..(Interruptions).. MoD is initiating the process of blacklisting the concerned companies.

 It is most obvious to the entire nation that M/s AWIL was favoured at every stage. ..(Interruptions).. Even after the conclusion of the contract, when reports of wrong doing and unethical practices started appearing in February, 2012 and thereafter, ..(Interruptions).. 14 Uncorrected / Not for Publication 04.05.2016 SHRI ANAND SHARMA: Sir, after 6 o'clock, you have to take the sense of the House. ..(Interruptions).. When will the Members seek clarifications on the Statement? 

It was only after the arrest of Mr. Orsi by Italian Authorities, the matter was referred to CBI for investigation. .. Even after handing over the matter to CBI ..(Interruptions).. no concrete action was taken to terminate the contract till January, 2014. ..(Interruptions).. 

 MoD had no option but to cancel the contract based on legal advice ..(Interruptions).. 

On the verge of completion of the 2014 general election. ..(Interruptions).. If the then Government had acted in right earnest and took proactive action immediately after appearance of reports of wrong doing ..

... the country would not have been saddled with delivery of three helicopters in December, 2012 and the entire advance payment could have been recovered. 

The previoius Government recognized this and approved putting on hold of the group in May, 2014 and the present Government passed the order. ..(Interruptions).. The Italian court judgement also unequivocally accepts and on that basis has passed jail sentences against involved individuals that the deal involved bribery and corruption. 

The Italian court judgement has outlined the payment of bribes to decision makers in India, in the bureaucracy, political establishment and the Air Force. The text of the judgement also makes reference to various individuals such as Tyagi family as well as some bureaucrats. 

The central matter in this issue is that of corrupt practices. Hence the main action required is to trace, detect and unmask the means of these corrupt practices and bribery through a thorough enquiry and investigation by agencies.

Given the above background, this inquiry
will necessarily focus on the roles of those named in the judgement of
the Italian court. ..(Interruptions).. It is also important for ensuring a
comprehensive investigation that any individuals with involvement in the
AgustaWestland deal, even in tertiary manner, are removed from any direct or indirect role in investigation. ..


The Government will leave no stone
unturned to bring to justice those that have committed this corrupt act
against our national interest. 
(ends) 

Manohor Parrikar in Rajya Sabha: Waxes Eloquence on Agustawestland VVIP chopper deal (May 4, 2016)

Part 1 

(Speech of the Defence Minister Manohor Parrikar)

Sir, let me first make it very clear that whatever I am now putting before the House, if 

you require, I will authenticate it, I will certify it. It comes from the Ministry 

files. I will not take any names so that you don't get a reason for disturbing. I expected Mr. Singhvi to be present here.

 He must have lost lakhs of rupees in arguing a free case today. ...(Interruptions)... 

 I am, actually, praising him. You don't want him to be praised. ...(Interruptions)... 

 He is a very good lawyer and he puts up the case very strongly. So strongly that for quite some time, even I was getting convinced by the argument. Probably, I now understand how convincing he is. But, Sir, many times it so happens that if the...(Interruptions)... 

 He is a very good lawyer and he puts up the case very strongly. So strongly that for quite some time, even I was getting convinced by the argument. Probably, I now understand how convincing he is.

Sober but Raksha Mantri put across his point

                                  

But if the brief is very weak, even the best advocate can't win the case. 

While I was listening to him, I remembered a story which I had read in my childhood of Badshah Akbar and Birbal. One day it happened that a golden spoon was stolen from Badshah's mahal. He didn't want it to be given for criminal investigation at that time because that would put him in a very embarrassing situation. So he called Birbal and told him that someone has stolen a golden spoon from his cutlery. 

What do I do? 

Birbal told him, 'I will find out the solution. Get all the servants.' He called all the servants and gave them one feet long piece of bamboo and told them that it was a magic bamboo. He told them to take it home,  He told them that it was a magical bamboo piece. Everyone believed Birbal and they went home. 

The one who had stolen the golden spoon, was a worried man. He could not sleep up to 2 o' clock. Then he suddenly got an idea. He got up at 2 o'clock, brought a knife and cut his bamboo by four inches, .......(interruptions ....)

Next day morning, of course, he got caught. What I find in their argument is that they have cut all their bamboos by four inches. ...(Interruptions)... Sir, I am placing herein the statement of facts of the case in detail. .... A litany of omissions and commissions at various stages of the decision-making process indicates mala fide and corrupt actions, driven by the goal to favour a particular vendor. 

This has been recognised by the Italian court in their judgement. At the outset, it may be useful to highlight to hon. Members, some of the salient issues. ... 

                                                                                                                  

Creation of a single vendor scenario. At various stages from March, 2005 onwards, and despite specific direction to the contrary, ORs (Operational Requirements) and SQRs were set, amended and processes influenced to make AWIL, the "only alternative". Violation of accepted norms of procurement processes. Unusually, a 

large number of deviations approved, counter-party to the supply agreements and exceptional dilution of FET standards.

......for the then Indian authority to ask the CBI to investigate. ...(Interruptions)... 

Cancellation of deal spurred by actions of supplier. The Deal was cancelled by the Government of India under advice from the A.S.G., not as a suo motu action, but in response to the vendor, seeking the appointment of an arbitrator. ...(Interruptions)... 

Delay in action against the supplier Group. From the first media report, in February, 2012, the approval to cancel all dealings with the Group was given more than two 

years later on the eve of change in Government. ...(Interruptions)... In fact, 

the final order was given by the present Government. ........ 

It is also significant to note that the judgement of the Italian court which spurred action from the Government of India was... ...(Interruptions)... 

spurred action from Government of India 

was based inter alia on the CAG Report from India. 

...(Interruptions)... 

Conduct of trials in India is 

extremely critical, especially, for helicopters meant to carry VVIPs because the terrain, climate and topographic conditions greatly vary with those of 

USA and UK. This crucial aspect has been given a go-by by permitting trials 

in foreign lands. The serious nature of deviations from standard FET 

conditions for the AW-101 in terms of trials being held outside India and not 

on the actual helicopter was exacerbated by the fact that even at the time of 

FET, the Augusta Westland helicopter was in developmental stage. 

............ 

Mr. Deputy Chairman, Sir, this created some problems when the three 

helicopters were received and were being put on test trials. I will just read 

one para from a file of Air Force where the trials were taking place. I will 

read one para only. I quote, "At Srinagar, 5,400 feet above the sea level, effective payload of this helicopter is nil in OGL configuration at all ranges of temperature. Even in IGE configuration, a reduced payload is to be accepted. The common VVIP sorties to Nehru Helipad cannot be undertaken. Similar is the case of Gulmarg, Pahalgam where VVIP sorties have been flown in the past using Mi-17iv helicopter." This file luckily was saved from a devastating fire which took place on 3rd of June, 2014 which 

burnt down all the records in that particular office. But this file remained in 

the drawer of the officer. 

So, it survived. ...(Interruptions)... This could not 

be further verified because obviously the helicopter was stopped from 

testing after that. ...(Interruptions)... 

 Additional commercial quotes sought from both the vendors. Third, 

acceptance of the partial compliance of the two SQRs in respect of AW-101 

non-VIP version helicopter. Neither S-92 nor AW-101 fully complied with 

SQR in the FET. 

However, AW-101 was recommended for induction in spite 

of emerging as a single vendor by waiving off two parameters, while no such 

concession was granted to S-92. The warranty of 'three years/2000 hours 

whichever is earlier' on the airframe and 'three years/1200 hours whichever is 

earlier' on the engine offered by M/s Sikorsky and 'three years/900 hours 

whichever is earlier' offered on the whole helicopter by M/s AWIL was 

accepted instead of RFP stipulation of 'three years/900 hours whichever is later'. Acceptance of option clause for three years instead of five years. 

Inclusion of additional items such as Traffic Collision and Avoidance System, 

Enhanced Ground Proximity Warning System for all 12 helicopters and 

Medevac system for 8 VVIP helicopters at CNC stage. ...(Interruptions)... 

Deletion of Active Missile Approach Warning System, Incorporation of Rear 

Air Stairs in 04 non-VVIP helicopters. ...(Interruptions)... Completion of 

helicopter delivery in 39 months instead of 36 months. 

The accepted principle in procurement is that deviations must be approved only under exceptional circumstances, for robust rationale and exercising extreme caution. ...(Interruptions)... The numerous deviations approved appear to flout this norm, as has also been pointed out by the Comptroller and Auditor General in their report. 

That CAG Report has highlighted that the allowed offsets were not compliant with DPP and many Indian Offset Partners were not eligible. Augusta Westland gave a year-wise breakup of work from 2011 to 2014 to be executed by IDS Infotech under this 

offset programme even though the work has been completed well before the 

conclusion of the contract in 2010. 

Now, this is very important. Investigation in the matter so far revealed involvement of IDS Infotech as a conduit for transfer of bribe money. We have already got court orders on that too. I would explain what action we have taken on that. 

 The benchmark cost arrived by CNC was unreasonably high and had 

provided no realistic basis for price negotiations. The benchmark cost as 

worked out by CNC was Euro 727 million, approximately, Rs. 4,877.50 

cores, which is six times the estimated total project cost of Rs. 793 crores, 

in January, 2006, wherein the estimated unit cost of AW-101 – this is very 

important – was considered as Rs. 100 crore, approximately Euro 15 million, 

at the time of SOC. When the recommendation was given for acceptance of 

RFP, this was the price quoted by the Air Force – Rs. 100 crores, that is, 

Euro 15 million. The CAG Report has stated that the base price of US $ 27 

million for the year 2000 was adopted by CNC, while the base price of AW- 101 VIP helicopter was US $ 18.2 million in the year 2010, as seen from the Internet. 

                                               

                                                      (BJP MP created Swamy-phobia in Rajya Sabha)  

Even the Air Force has estimated it as 15  million dollars in 2006. It is there on the records....

I am reading from the CAG Report. I would provide whatever clarifications you may need later. ...(Interruptions)...  MoF, in their observation on CCS note, stated that they are unable to support the proposal. The Ministry of Finance also asked that a response to the letter of the MP, Nathubhai G. Patel to the CVC may be 

incorporated in the final CCS note along with MoD’s response thereon. 

Similar concerns were raised by the MP before the CVC, stating that 

the case is in violation of CVC norms. The CCS approved the proposal for procurement of 12 VVIP and VIP helicopters from Messrs Augusta Westland, UK, in the meeting held on 18th January, 2010, for the following reasons:

(i) Augusta Westland helicopters have been selected after multivendor competition bid, for which RFPs have been issued to six vendors, out of which only two vendors responded. (ii) Augusta Westland helicopter was the only helicopter that met the SQRs framed for the VVIP version and the operational requirements of the IAF. The other helicopters participating in the trial did not meet the SQR. (iii) The present fleet of VVIP helicopters will complete their total technical life in the year 2010.

How to Curb Money Laundering? Modi Govt. seems to be taking a Methodical but Slow approach

Biju Janata Dal (BJD) floor leader in the Lok Sabha Bhartruhari Mahtab is one of my favourite lawmakers in Parliament. He raised a pertinent question in the lower house of Parliament on April 29, 2016 during question hour and wanted to know if in the wake of reports from SIT and other agencies, the government is proposing any changes in the law to keep an eye on tax evaders.

"....has SIT suggested what new law is to be enacted which will minimise the creation of black money in the country?" he asked.

A smart question and was handled with equal smartness by the Minister of State for Finance, Jayant Sinha – who actually skipped a direct reply. The reasons are many. But the government seems to have started work on this front as well.

In an attempt to prevent ill-gotten money from leaving the country’s shores, the government has asked its economic offences agencies to study the loopholes in the country’s banking laws, according to well-informed sources. With the quantum of black money held by Indians abroad variously estimated at between $466 billion and $1.4 trillion, the idea is to get a fix on how the network operates. 

                                 

Pervading secrecy, cut-throat competition among private and international banks, along with the organised crime models, have all resulted in giving a boost to money laundering both in India and abroad. A large number of foreign and private banks operate in secrecy. In Switzerland and Cyprus, dirty money is often pumped to their financial system via organised channels. Privacy is at the core of the functioning of private banks. So the government is left with few options when it wants to crack down on leads. 

"There is a competition, a number of foreign and private banks also operate in secrecy and jurisdictions like Switzerland. Often dirty money is pumped in financial systems through organised channels, deposit wires and unlawful proceeds," a source said.

Preliminary reports from agencies and departments under the union finance ministry have already reported  that private banks in good number of case studies have failed to show that they have "intimate knowledge" of their clients.

"A multiple layers of secrecy help clients to mask their accounts and transactions," the source said.

A simultaneous directives from the Home ministry and Finance ministry was given to various security agencies last year to study these offences. The departments like Enforcement Directorate, Serious Fraud Investigation Office (SFIO) and Customs and other Indian agencies were asked to study whether and how "pervading secrecy" in the operations of private and foreign banks have contributed to promote money laundering at some quarters.

Snap: Nirmal Deb(Facebook)

Subsequently all these agencies and departments are trying to figure out how some of the existing "weaknesses" in laws are being used by unscrupulous elements for such activities. 

"Private banking industry's basic functioning is marred by a culture of pervading secrecy. And government has fewer options to crack some of the information," a preliminary finding revealed. The sources explain that money laundering involves multiple transactions to disguise the source of financial assets. 

Moreover, money laundering offers challenges to law enforcing agencies both in India and overseas countries as it is "group activity" like organised crime and caters to long term interest and is "most often continuing in nature" with far off and deep reach. These make task of trailing these money very difficult more so in a world of cut throat competition as banks face dual pressures of rivalry and expansion and thus the banks cannot impose strong anti-money laundering rules on their clients.

In this context, another key central government agency in a 100-page report to the government has said that after September 2001 while international response to underground economy has been well coordinated, many countries are still clueless about what to do with off-shore banking havens in Cyprus, Cayman Islands and the Netherlands Antilles. The law enforcing agencies, sources admit, are also confronted with a herculean challenge in the form of cyber mafia. "The power of internet has made it too easy for offences like phishing to flourish," the source said.

Officials said a comprehensive study can also help in understanding how the flow of such money can be curbed while also equipping banks to have a strong anti-money laundering rules for clients, backed by law.

During the latest US visit of Finance Minister Arun Jaitley, coordination and cooperation among various countries to curb money laundering was at the core of his itinerary. Even at the special session of the US on drugs, he dwelt on the nexus between illicit money, drugs and terrorism. India also wants to give inputs to the Organisation of Economic Cooperation and Development to be able to come up with objective criteria soon to identify jurisdictions that did not cooperate towards a transparent financial system.

The setting up of Serious Fraud Investigation Office (SFIO) was a crucial step in 2003 during the Vajpayee government. Functioning under the ministry of company affairs, SFIO has done quite a good job vis-a-vis shell companies those are floated only to route fund without doing realtime business. 

In fact the SIT on black money set up by the Modi government in May 2014 could detect with the help of SFIO that over 300 addresses show at least 20 companies "operating from the same place". Over 77,000 companies were found violating the norms relating to directorship.

Minister of State for Finance Jayant Sinha informed members that the appointment of a Special Investigation Team (SIT) by the National Democratic Alliance (NDA) government in 2014 had helped in the purpose of tracking black money both in the country and outside. "SIT is doing a commendable job," he said, adding that recommendations of the SIT had helped investigating agencies and the government, especially with regard to black money stashed overseas. "We have received a wide set of recommendations from the SIT. The recommendations have been included and efforts have been undertaken through the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, which was passed in this august House. This has resulted in a certain level of compliance. "There has been a series of investigations and it is because of disclosures which we got through HSBC as well as through the International Committee of Journalists and most recent has been the Panama Papers, as finance minister has indicated, notices have already been sent out," Sinha said.

He said as far as domestic black money is concerned, a number of suggestions have been provided there including the disclosure of PAN card for transactions of Rs.2 lakh, restrictions on real estate, and so on which have been implemented.

(ends)

                                                        

                                                                             

                                         

Uttarakhand politico-legal battle: And media's very own Crisis of Credibility

Photo: Foreign Policy website

      What is journalism, what does it mean in our lives? Why should it mean anything?

On this backdrop let us take a closer view at Uttarakhand development, the fierce legal battle and the media coverage.

The over enthusiasm among sickular brigade has yet again led us to sub-standard journalism. The question is immaterial as the enthusiasm is linked to Narendra Modi bashing.

 How?

That Uttarakhand High Court verdict was harsh on Narendra Modi made all and sundry happy...especially Namo baiters. And hence the excitement prevailed ---- for them high court verdict was equivalent to sending Modi to gallows.

Even the likes of Subramanian Swamy got an opportunity and lashed out at Attorney General Mukul Rohtagi, no friend of Swamy obviously!

So immature reporting surfaced – almost in the manner 19-year-old Kanhaiya Kumar became a threat to India’s incumbent prime minister! Harish Rawat became instantly a chief minister. Even popular media organizations, supposed to thrive on credibility the vital C of A,B,C of journalism started addressing Harish Rawat as chief minister.

That Rawat has been a good host to the union meet of a news organization workers is another issue to ponder over.

My perception is that the quick conclusion that Harish Rawat 'returns' as CM interpretation itself was wrong. My logic is not based on any scholarly knowledge on legal matters. It was only logical. Rawat could return in official sense only after revokation of President’s Rule by President and there should have been a Governor's order. 

The argument is again logical. Court is only a judiciary, a key pillar of democracy and executive powers are with President and Governor – and a popular government in office – incidentally that’s headed by Narendra Modi.

Rawat himself walked into a trap of media hype and ill-advice by master in that art – Kapil Sibal. To refresh memories, Sibal as the union minister had threatened “we can rein in” Baba Ramdev theory and poor P Chidambaram implemented it. The result is 2014 electoral drubbing – in the ultimate.

But artful self-obsessed intellectuals of national capital do not learn any lesson. Sibal is one of them who even takes credit for losing a battle. So his advice along with Ambika Soni to otherwise innocuous Harish Rawat, the "hill man", was to preside over the reins of power. It is altogether the Governor should not have allowed such a "cabinet meeting". It remains to be found whether Chief Secretary took an approval from the Raj Bhavan before rolling out the red carpet for Rawat's "cabinet meetings". Incidentally, the Congress enthusiasm was so much that they took two cabinet sittings.

A perfect bus!

Worse part is Rawat presided cabinet meetings even without written order from the court. Should not the chief secretary attract disciplinary actions?

By interpretation that high court order was good enough to take charge – my case is, if I win a case against my brother--- the land becomes mine.....is not absurd” ....The court order actually only PAVES MY WAY TO GET THE LAND.

So correct reporting would have been: HC order paves the way for return of Rawat.

But the game was elsewhere -- that was in excitement that Modi has been thrashed by the court orders. Hence, secular intellectuals went ballistic. We forgot courts only have recommendation power. Executives have the liberty to challenge it in higher court or abide without resisting.

Poor standard of English journalism prevailed. Even a former MP Kuldip Nayyar was wrong, I am afraid.

 I spoke to him and filed a story, wherein he told me:

"The ruling makes it clear that Harish Rawat was wrongly removed as chief minister. His position as the leader of the house and the chief minister has been restored now," Nayyar said.

But some other experts I spoke to were reasonable. They were modest guys -- unlike Somnath Chatterjee variety self-righteous intellectuals or Arvind Kejriwal's wisdom school.

Especially those inclined towards the Bharatiya Janata Party and the central government had disagreed on Rawat's status on Thursday (Aprril 21) "pending revocation" of the President's Rule.

 So, that Rawat called midnight cabinet meetings and took several decisions does not mean he had the right. Governor did not act. Actually he remained passively inactive --- this raises bonafide questions about his intentions. K K Paul, is a Congress appointee and so that means he too could be wrong. Why Modi government is soft pedling on replacing Paul, a former Delhi police commissioner, is another puzzle.

The observation made during the hearing in the Supreme Court, by Justice Shiva Kirti Singh: “If I were the High Court judge, I would have made my judgment operational only after three or four days when it is signed and ready. It is more on propriety than legality. Governance of a state cannot be left in the lurch” – is actually a very powerful message. 

This should not be ignored.

ends

Why BJP faces uphill task in "pro-communists" Bengal?

For Bharatiya Janata Party (BJP) and its right wing politics of neo-nationalism, liberal economic policies and even pro-Hindutva religious slant, poll-bound West Bengal offers more than a Herculean challenge and jigsaw puzzle.

Even as the saffron party's electoral fortune surged ahead in 2014 Lok Sabha polls, slowly the party leaders are realising that at several quarters in the on-going assembly polls, more than the organisational weaknesses, the saffron party faces "basic ideological barriers".

Culturally and intellectually, Bengali voters are "essentially pro-Left", say those in the know of things. "The fact that Bengali voters and even other citizens in the state remained pro-Left ideologically, culturally and intellectually it  make things difficult for BJP in West Bengal unlike neighbouring Assam where the pro-Hindutva slant actually always had acceptance among upper caste Assamese voters," says one leader.

                               

Thus the saffron party poll managers believe that while the party is near the striking distance in Assam, despite all efforts to woo the voters as against the non-performance of the Left and even Mamata Banerjee-headed Trinamool Congress, BJP finds the going tough in terms of winning over seats. In Assam, upper caste Hindus could relate to Brahminical appeal of the RSS and the BJP unlike in West Bengal where "ironically upper caste Bhadrolok" have been associated with the Marxist politics for decades now.

In fact, other than BJP leaders, even Janata Dal (United) leader Sharad Yadav, a former associate of BJP and onetime convener of NDA, says, "Indian leftists cold not make much headway in northern states as they could not appeal to backward and lower caste groups. Thus these lesser privileged communities flocked to the socialists block".

In the Bengal context, even the state Governor K.N. Tripathi told a seminar in February this year in Kolkata that while higher educational institutions are becoming hubs of politics, "the role of the students organisations should be changed. It is to inform and to make the students aware through lawful means. This is a factor which needs to be taken care for the larger interest of the society". 

Many see Governor's remarks this as commentary on violence-oriented political culture in West Bengal -- which again largely draws inspiration from communists way of looking at things. Trinamool MP and former union Minister Sishir Adhikari has merits in his analysis: "Under Marxists misrule and when Singur and Nandigram happened, people of Bengal saw us as the genuine followers of communists ideology. That was the turning point of Bengal.

Being New Left: Advantage Mamata

This was when, he pointed out, Trinamool leaders started mocking CPI-M leaders as "pseudo followers" of Karl Marx.

Still lacking mass appeal

"This actually helped the Trinamool to get votes. Slowly people in Maoist-hit areas developed courage and faith in democracy," he said.Thus, when Mamata Banerjee played to the hilt her pro-farmers card against the failed industrialisation attempts of the Left, she appeared to the people as a more genuine political leader than the Marxists.

The result was Maoism almost came to end by 2011-12 especially after Maoist leader Mallojula Koteshwar Rao alias Kishenji died," says Adhikari.

A section of Trinamool leaders also maintain that the Naxal movement had survived on a very weak footing in Bengal's Junglemahal region the then Left government did not allow “any political opposition".

"That was a dangerous trend for a democracy. As a result people’s faith in democracy eroded," said another leader.

This perhaps also made Leftists cadres task easier when enmasse they decided to opt for Didi and her party Trinamool Congress to abandon Marxism.

"Didi's (Mamata Banerjee's) image as a pro-poor leader with a rubber chappal and cotton sari actually challenged Leftits' image of 'sarba-hara (all for sacrifices). But today people know it well while Didi (Mamata) moves around in chappals, her party colleagues are no less than crorepatis (rich)," says BJP's Asansol MP and union minister Babul Supriyo.  

By its inherent contradictions both in economic and social contexts, BJP lacks the leftists slant. Thus though campaigning aggressively, the general apprehension inBengal BJP leaders and poll managers is they may not win many seats as such.

Higher vote share for BJP in 2014 Lok Sabha polls actually helped CPI(M) candidates in many constituencies.

For instance in Raiganj parliamentary seat, CPI(M) nominee Mohammed Salim defeated Deepa Dasmunshi of Congress by a margin of merely 1634  votes, where in BJP candidate Nimu Bhowmick had polled over 2 lakh votes.