Black not beautiful
SATURDAY, 24 DECEMBER 2011 19:22 PIONEER
By Subramanian Swamy : President of the Janata Party, the writer has been a vocal anti-corruption campaigner
Corruption in India is a major concern because of the mind boggling amounts of money illegally appropriated in the Satyam, IPL, CWG and 2G Spectrum scams. India today has one of the most corrupt governance. The unanimous worldwide view is that corruption is no more the tolerable grease or speed money in any system, but a cancer that will cause death of a society unless cured early.
Although ancient India had won the admiration of visiting monks, historians and traders as a nation of honest citizens, we have lost that reputation. Global watchdog, Transparency International Index of Corruption, shames us in India’s rankings. Our citizens’ illegal bank deposits in tax havens abroad are the highest for citizens of any nation — as high as $1.5 trillion. Though India is a signatory to the UN Convention Against Corrupt, it is yet to ratify it. The Convention came into force on December 14, 2005 when 38 nations ratified it. Its asset recovery provision is appealing. Yet, India is yet to sign.
Corruption misallocates resources from the meritorious to the unworthy, most transactions then lead to sub-optimally produced sub-standard goods and services, which would not otherwise have been sold in the open market without law enforcement retribution. The bitter truth is that our corporate world’s success stories are founded on fudged accounts and undisclosed funding through black money held by corrupt politicians and criminals. Since merit today is regarded inferior to acquisition of power, the immoral, criminal, powerful and illegitimately rich achieve social respectability because of this short-cut to wealth. Since elections lead to political power of those with illegal funds, future Governments naturally become bribe-compliant and protect the crooked. The cure for corruption is manifold but the goal cannot be achieved unless there is accountability in governance. Such accountability requires transparent and ethical reporting of the finances of an organisation. I highlight 11 ways:
1 Black money unreported money, neither taxed nor spent openly. Thus, the rich pay minimal taxes relative to their legal dues either due to clever chartered accountants, or by tax avoidance through the agricultural sector which has zero income tax. I advocate a three-year period of zero income tax for all for the first three years of a newly elected Government.
2 Since the corrupt indulge in gross luxurious consumption and bribery, it raises the profitability of non-essential luxury industry. This essentially crowds out investment in other, more essential, industries. In India, the luxury goods sector, directly and indirectly receives 70 per cent of national investment. I advocate that the essential commodities sector receives loans from public sector banks at the international rate of four per cent interest, and be exempted for five years from paying all direct taxes. But, they must pay a flat 25 per cent of the declared profit net of dividend paid.
3 A mathematical analysis based on probability of detection, the cost to the corrupt of such detection, and probability-weighted average with the value of the gain from the corrupt act proves that even if the probability of detection is low, if the cost to the corrupt of detection is some big multiple of the gain from the corrupt act, every rational person would voluntarily choose not to bribe or accept bribe. This is because the expected value of any corrupt transaction then becomes negative. Hence, I advocate focusing on individual cases and making an example out of them to society as I have tried to do through courts with A Raja and P Chidambaram (and later with Sonia Gandhi) and confiscate all their properties post conviction, for effectively fighting corruption.
4 Cronyism and corruption have brought Budgets on verge of bankruptcy. This, too, needs fixing. Based on the ICAI’s Concept Paper on Convergence with IFRS in India, I advocate the adoption of the International Standards of Financial Reporting and Disclosure Standards for FDI flows into India.
5 Though the SEBI has made compliance for listed companies in Corporate Governance Guidelines mandatory from January 1, 2006, about one-fourth (i.e. 1,213) listed companies have not complied for the period ending March 31, 2010. Yet, there has been no action by SEBI, which can de-list these companies on the Stock Exchange.
6 One of the most scandalous frauds on the financial system of India is the derivative called the Participatory Note (PN). According to a conservative estimate, there are over Rs 3,50,000 crore worth of PNs issued abroad which are being actively traded in India, fuelling about 55 per cent of all foreign investments in Indian stock markets. The PNs have no requirement to comply with even the SEBI disclosure rules, to enable laundering. I advocate that all PNs be abolished and SEBI directed to publish names of the secret owners of these PNs.
7 In 2002, India and Mauritius extended the controversial Indo-Mauritius Double Taxation Avoidance Treaty (DTAT) laying down that no resident of Mauritius would be taxed in India on capital gains arising out of sale of securities in India. After DTAT was signed, the Government of Mauritius abolished capital gains tax in their country. Mauritius has, thus, emerged as the largest foreign investor in India since PNs have been routed through that small island nation, and the windfall earned in the stock market exempt from tax. The tax losses to India as a result of DTAT are estimated at Rs 1,00,000 crore to date. I advocate abolition of DTAT.
8 In his address to the 43rd Munich Conference on Security Policy on February 11, 2007, National Security Advisor MK Narayanan listed out ways and means of terror funding in India. He admitted: “Instances of terrorist outfits manipulating stock markets to raise funds for their operations have been reported. Stock exchanges in Mumbai and Chennai have, on occasion, reported that fictitious or notional companies were engaging in stock market operations. Some of these companies were traced to terror outfits”. This is a shocking admission. I advocate death penalty for any stock broker facilitating such a sale of stocks.
9 To bring back all the black money deposited in banks abroad, I advocate that the next Union Government issue an ordinance declaring that all foreign accounts held by Indian nationals abroad are nationalised. If any such holder proves that the account was opened legally and operated with legitimate deposits and withdrawals, then it will be restored. This, under the new UN laws, is permissible as confirmed to me by Fali Nariman. The amount recovered will cover all tax abolitions I have advocated.
10 I advocate that CBI be re-constituted under a Special Act and all foreign exchange transaction offenses under PMLA be made criminal and transferred to CBI.
11 As corruption stems from greed, I advocate that the next Government adopt Integral Humanism as propounded by Deendayal Upadhyaya who said that a society is healthy only if there is a harmonisation of material pursuits and spiritual advancement. In a nutshell, that is through renaissance of sanatan dharma.
Corruption is rooted deep in us, only the level varies from person to person. If a person has Rs 5,000 crore, he does a scam of Rs 1,000 crore. If a person has Rs 1 lakh, he does a scam of Rs 5 lakh. So, instead of pointing fingers at others, we should try to improve ourself. I never break traffic rules so that I can avoid corrupt cops. People are now aware of corruption in India. It’s time for all of us to join hands and fight it —— Rajeev Khandelwal : Host of TV show Sach Ka Saamna: Bhrashtachaar Ke Khilaaf
Battle won, war on
SATURDAY, 24 DECEMBER 2011 19:11 PIONEER
By J Gopikrishnan : The Pioneer investigative journalist who busted the 2G Spectrum scam
2011 will be best remembered as the year of mass uprising against corruption in India. The year started with nationwide raids by the CBI on the 2G Spectrum Scam culprits and the arrest of tainted former Telecom Minister A Raja and DMK patriarch M Karunanidhi’s daughter Kanimozhi, when caught with crystal clear evidence. Unprecedented things like the subsequent arrests and chargesheeting of corporate honchos — though some escaped — boosted the morale of common man to rally against corruption.
India’s summer was really hot for the Government and the rulers, when Anna Hazare kickstarted his strikes from April. Raja, Kanimozhi, CWG’s scamster Suresh Kalmadi and the behind bars corporates must have thought of futility of money at least once in their life, when masses assembled at Tihar jail, demanding the release of Anna Hazare in August. For politicians, this impromptu upsurge was a surprise, especially with no one really paying for a convergence of such numbers.
The year also saw the collapse of mining barons Bellary brothers, after Lok Ayukta Santosh Hegde cracked the whip on them. Of course, there are many more waiting in the wings to be thrown into jails for their corrupt practices, but 2011 was crucial because it opened the jail gates so wide for the first time.
The credit of this goes to the Judiciary which roused itself up from more than five-year-long hibernation as also to the people who tirelessly fought against corruption in the streets and in courts.
However, we should not forget the existence of some mighty forces which protect the corrupt and kill the probe and cases against corruption. Remember the CBI’s U-turn in the Special Court by not opposing the bail of Kanimozhi, just 48 hours after her father met Congress President Sonia Gandhi?
Shockingly, the CBI was forced to change its stand, even after it pledged in Supreme Court that it will oppose the bail plea of all the accused in the Spectrum Scam.
In the CWG investigations, CBI’s action was similar to the surgical strike of armed forces by fixing only Suresh Kalmadi who had alone dealt with around five per cent of the expenditure on the administration and execution of the games. The ones who are still safe can breathe till someone like Subramanian Swamy or Prashant Bhushan carries a crusade against them.
The year 2011 also witnessed the Government’s dirty tricks department at its best nixing crusaders, especially Team Anna. CDs were created to defame people, and hitsquads were bought in. Congress spokesperson Manish Tewari went to the extend of calling Anna’s names, only to apologise under intense public outrage.
Look at the way Delhi Police turned into a demon to deal with Baba Ramdev when he decided to sit on fast. The person who brutally attacked Prashant Bhushan was given an escape route by being charged under weak provisions. Within a day he got bail. On the other hand, the man who slapped Agricultural Minister Sharad Pawar is still languishing in jail. Of course, slapping a Minister is a bigger crime. But what about Ministers kicking protestors in UP?
In India, the law enforcement is still at a nascent stage, when compared to civilised countries. Here the law differs from person to person and case to case. No mediaperson involved with Nira Radia was questioned by any agency or forum.
There was a hue and cry from certain quarters when the Public Accounts Committee made an attempt to call mediapersons involved in Radia-gate. I envy the courage of British Parliament which summoned mighty media mogul Rupert Murdoch and brought him to the book. When will our Parliament and Parliamentarians show such strength? Certain politicians only make false claims that “Parliament is supreme” and force us to believe so too, though fact is that ‘We the people’ make the Constitution supreme. As of now, and with the people on the streets, one can say, the battle has been won, but the war against corruption is far from over. Let us expect more victories in 2012.
Tihar Jail VIPs = 21
A Raja: 2011’s most high-profile Tihar inmate former Telecom Minister A Raja, who is in jail in the 2G Spectrum Scam, pulled in many other big names with him — Kanimozhi, Sharad Kumar (Kalaignar TV MD and CEO), Vinod Goenka (billionaire MD and co-founder of DB Realty), Sanjay Chandra (Unitech MD), Gautam Doshi, Hari Nair and Surendra Pipara (top executives of Reliance – Anil Dhirubhai Ambani Group), Swan Telecom’s Shahid Usman Balwa, Cineyug Film’s Karim Morani, Asif Balwa, Rajeev B Agarwal, Siddhartha Behura (former Telecom secretary), Raja’s former aide RK Chandolia, VK Verma, ASV Prasad, Surjeet Lal (former Government official).
Suresh Kalmadi: Arrested in CWG scam along with Lalit Bhanot, his right hand man and CWG Organising Committee Secretary-General.
86-year-old former Telecom Minister Sukh Ram involved in the 1996 Telecom scam, and Amar Singh held in cash for votes scam, were in and out of jail on health grounds.