Friday, November 19, 2010

Scandals & Scams ->> Made in India - Part I

According to Transparency International "With governments committing huge sums to tackle the world's most pressing problems, from the instability of financial markets to climate change and poverty, corruption remains an obstacle to achieving much needed progress". And according to it's 2010 Annual Corruption Perception Index, India's ranks 87, out of the 180 countries in the world. Some of the countries in India's range of the index are - Albania, Jamaica, Malawi or Gambia. Unlike India, none of these countries are neither seen as raising Economic powers nor great democracies.

Since Indian independence in 1947, the nation is rocked by many scams and scandals. The alarming trend is - according various reports, the these scams and scandals have been accelerating for the past 20-25 years.

One of the amazing fact of these scandals, is no one was proven guilty in most of the cases. All the politicians in most of the case if were cornered due to circumstances - they would have resigned from Public office - only to return into public life after some gap. Even shocking is, the wider of acceptance of these tainted politicians or public servants by citizens of the country. In most of the case, these class were re-elected to their respective state Assemblies or to the India parliament. Needless to mention the saying, "In a democracy people would always get a government they deserve"

Average Indian, perhaps did not have time to remember all these deep rooted scam beyond accepting -"it is order of the day". Public memory is always poor. And, the Indian Democratic system is a catalyst for, a nexus between the political class and business class. As a result, either side have benefited enormously. And the trend is political power is seen as a best security for the protection of business interests. Today, Indian elected houses have record number of business people. The huge wealth - supported their political growth and the political system accommodated their business interests. And this is the naked truth.

Barring a few green shoots here and there - Indians have no faith in the political system. The nation today is hungry for great Leaders not politicians. As we have seen in the current Federal Government having a good man like, Manmohan Singh on top would not necessary result in any good Governance. It is neither raising any hope for a good Governance. On either side of the political spectrum, corruption is rampant. Once in the system, hunger for power would never die. Every one, irrespective of their credentials are keen to serve public. The nation is virtually split on the caste, religion and regional lines. We have seats reserved officially and unofficially for all categories of people. In most of the cases, the entry into a public elected house is decided - either by their birth or wealth.

The truth of the moment is - Indian politicians, Bureaucrats, public servants, judiciary have mastered the art of surviving in the system. They made it complex. They all knew how to milk the system, seamlessly work with the like minded and exit without even any bruises. Hence forget getting convicted.

Before getting into the list of Great Indian Scams and Scandals that looted billions of dollars - that benefited the custodians of the democratic systems I am reminded of the Sir Winston Churchill quote on India, prior to Indian Independence in 1947 "Power will go to the hands of rascals, rogues and freebooters. All Indian leaders will be of low calibre and men of straw. They will have sweet tongues and silly hearts. They will fight amongst themselves for power and India will be lost in political squabbles".

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1. Bofors Scandal - the mother of modern Indian Scandals
Estimated $400 million (as per 1980's value), is mother of all the scandals of modern India. This scandal is related to the Bofors AB, Swedish guns purchase for the Indian Army. This scandal revelation is a tribute to investigative Indian journalism of The Hindu, a highly respected Madras based national English Newspaper and Indian Express, widely circulated English daily. The tragedy of this scandal is - one of the prime accused Rajiv Gandhi, then Prime Minister of India - who was seen as one of the cleanest politicians of the time with highly progressive views on the national development. The crux of the scandals was, millions of dollars were paid by Bofors AB to middlemen to secure the contract. This is illegal as per the Indian law. And in turn, these middlemen have paid huge sums (popularly called kickbacks) to various politicians and bureaucrats of the time including Rajiv Gandhi. An Italian Businessman Ottavio Quattrocchi (it is pertinent note that Sonia Gandhi, the most powerful UPA chairperson and widow of Rajiv Gandhi, is an Italian by Birth), a powerful UK based Indian business family (Hinduja's) are seen middlemen in addition to a number of New Delhi based power brokers. Unfortunately Rajiv Gandhi could never come clean from this scandal (in public eye) and he lost the next public elections and  the power. The net result of decades of investigation by the federal prosecutors, is no one is found guilty. In a nutshell case is closed. 

Bofors scandal is a landmark scandal. This is a test case for the future scandals that rocked the nation in later years. First, this case shown the way for the System operators the means and opportunities on how to escape, exit, twist the allegations and come out "clean" with any proven involvement. 

Kargil Coffin Scam
The scam amount involved in relative terms is small mainly because the coffins count was 500. Yet, this scandal is an example of how far the custodians of the system could go down to make money - even out of the dead bodies of the fallen Soldiers. The Comptroller and Auditor General (CAG), the auditor of public funds found - during the 1999 Kargil war, Defence Ministry brought inferior Coffins at 3x times the normal price for USA. Fernandes, the Defence Minister until then, was considered Mr.Clean. Strangely, unlike many other politicians - Fernandes was a  Heroic trade Union Leader  fought against Government in 1970's to bring it to the knees. 

Power sucks any one - and even some one like George could never escape from the corrupted system of Power brokers and Middleman. Kickbacks were rumoured to have been paid to the Indian Embassy at Washington DC and of course the charge sheet names Army officers of them, one Major General. George Fernandes escaped from the prosecution (or charges) but his reputation was tainted forever.

First India Telecom Scandal
This soft scandal is all about, ditching the Government rules midway and then favouring certain telecom operators. Net result is Government lost significant amount of money (exact amount could not be assessed but it would run in Rs 100's of Crores [1 Crore = 10 million] based on 2001 prices). After bidding for the licenses as per the 1994 Telecom disinvestment guidelines, the winning Telco's (Telcom operators), realised they have paid exorbitant prices for a nascent telecom market of late 1990's India. First, the tough and strict acting Telecom Minister Jag Mohan was sacked. Then, the 1999 Telecom policy was redrafted (under the guidance of Atal Behari Vajpayee). To accommodate the Winning Telco's losses due to high license costs, a new Revenue sharing policy was introduced. This resulted in significant loss to Government. Finally, it was alleged that 1999 Telecom policy and Pramod Mahajan, the new IT& Telecom Minister "push" helped Reliance (and few other operators) substantially to roll out their national wide mobile services by not paying rightful license costs (estimated loss to Government at Rs 1,400 Crores). Pramod Mahajan was known backroom operator with significant connections to all the India business houses (to collect party funds). Opposition Congress cried foul against the BJP Government of the day

This scandal is a significant milestone for the future Telecom scandals of India - importantly for the 2008-10, 2G scandal, considered to be the biggest scandal in India to the date. Here the roles just exchanged Congress in power and the BJP in opposition, crying foul of the scandal!


More Scandals in Part -II

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