Sucheta Dalal :Regulation: People's wrath
Sucheta Dalal

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Regulation: People's wrath  

September 30, 2011

The public is disgusted and angry over rampant corruption. Will politicians listen?

Sucheta Dalal

All the Congress chickens seem to be coming home to roost, all together. But worse, they seem determined to stop at the prime minister’s (PM) door. Only recently, a former telecom minister (A Raja) and a Member of Parliament (MK Kanimozhi) threatened to call the PM as a witness in the scandal over allocation of 2G spectrum licences. Then a former whole-time member (WTM) of the board of SEBI (the Securities and Exchange Board of India) claims to be a ‘whistleblower’ and accuses the PM, or his office, of disclosing his identity and putting himself and his family under ‘grave risk’. Dr KM Abraham had written to the PM, levelling serious allegations against the finance minister (FM), several of the ministry’s top officials and SEBI chairman UK Sinha.

Someone else has filed a public interest litigation (PIL) questioning the selection process for the post of SEBI chairman and WTMs.

This column has already written about the damage caused to financial institutions and regulatory bodies by thoughtless appointments to key posts. In many cases, the buck, indeed, stops at the PM’s office, since the appointments carry his signature. The arrogant and controversial appointment of the Central Vigilance Commissioner PJ Thomas, the SEBI chairman and heads of public sector insurance giants (LIC chairman TS Vijayan was suspended and demoted while M Ramadoss has been suspended as chairman of New India Assurance Corporation for issues pertaining to his stint at Oriental Insurance) are examples. Then there is Ramnath Pradeep, chairman & managing director of Corporation Bank, who was appointed ignoring the two-year residual service rule and now has strictures passed against him by the Central Vigilance Commission (CVC).

Bilking of financial institutions, deliberate weakening of regulators and the misuse of government investigation and enforcement bodies is a daily affair in India. What is less known is the dangerous expropriation of public & private property that was happening all over the country. In Maharashtra, the Adarsh housing society scam exposed how politicians, senior bureaucrats and army officials colluded to waive rules and grab extremely lucrative defence land. The scandal has forced out one Congress chief minister and two others are in the dock. Mumbai, which is one of the most expensive places in the world for property, faces repeated politician-backed attempts to grab prime land in the name of redevelopment. One such was a controversial proposal to redevelop the famous Crawford Market in contravention of heritage rules. After holding out for six long years, the proposal has, finally, been scrapped in what is seen as a reaction to the Anna Hazare agitation.

There are similar stories all over the country; but it is only in times of a political transition that the media summons up the courage to publish them. This is evident in both Andhra Pradesh and Tamil Nadu, where thousands of cases of usurping land and perverting infrastructure rules remained buried under powerful chief ministers.

In Tamil Nadu, J Jayalalithaa’s landslide victory is attributed to the five-year reign of terror and lawlessness of DMK’s (Dravida Munnettra Kazhagam) ruling family. Influential politicians had been grabbing land and businesses through coercion, filing fake cases and falsification of documents. They even grabbed land belonging to trusts and temples. Chief minister (CM) Ms Jayalalithaa has followed up on her poll-promise to initiate legal and police action by setting up special, anti-land grabbing cells. Her government has registered over 2,500 cases. While the DMK accuses her of political vendetta after a former minister and hundreds of DMK functionaries were arrested, Moneylife writers, indeed, have personal knowledge of many cases of coercion rampant in the earlier regime. CM Ms Jayalalithaa says that over Rs400 crore worth of land has already been restored to rightful owners and it is clear that her action on this front has enormous popular support.

The Andhra Pradesh story is even worse. Under the now-deified YSR Reddy, almost anybody could be targeted and arrested. The police as well as parts of the judiciary were co-opted in this harassment and people were simply too terrified to speak. Ironically, it is the latest WikiLeaks disclosure of US government cables of 2007 that puts it most succinctly. One titled “Corruption beyond the pale, even for India” says, “widespread corruption in the Congress government seems to be an open secret in Andhra Pradesh, but the political impact is unclear.” It quotes sources which apparently said that corruption was acceptable to people so long as some money flowed to them. If this is the political wisdom that was flowing to the top, is it any wonder then that the Congress-led UPA (United Progressive Alliance) miserably failed to grasp the extent of public anger and disgust about rampant corruption?
Sadly, things have only worsened since the 2007 cables. Over the past few weeks, EAS Sarma, former finance secretary and one of India’s finest bureaucrats, who is now based in Visakhapatnam has been sending the PM a series of letters seeking action against mega-scams involving the loot of public funds or natural resources.

Here are a few issues that he flagged to the PM in the last week of August alone. First, he said, “the government has either unwittingly or otherwise cleared a mind boggling number of private coal-based power projects far in excess of the demand (projects sanctioned or being approved are equal to thrice the demand projected by the Planning Commission for the year 2032).” The genesis of the scam, says Mr Sarma, is apparently the allotment of “a large number of captive coal blocks to private parties using non-transparent procedures.” He further alleges that the government is deliberately ignoring “dubious sources of funding” as well as “clandestinely concluded shipping contracts and unauthorised coal linkages.” He warned the PM that “the entire merchant power capacity in the pipeline is concentrated in the hands of a few influential industrial families who have formed a strong cartel to arm-twist the government to reopen concluded Power Purchase Agreements on highly questionable grounds.” He calls the merchant power policy a “scam of the proportion of 2G spectrum scandal or even larger than it!” Yet, this issue has not even made it to the national media. Nor is there any indication that the PM is ready to order the inquiries and investigations requested by Mr Sarma.

Interestingly, around the same time, the Central Bureau of Investigation (CBI) raided the properties of Jaganmohan Reddy, the extremely controversial son of YSR Reddy; but only after he fell out with the Congress government. So questions about his sudden access to stupendous wealth are, finally, being asked by an official investigation agency. This had happened often enough in the past. Even the Bharatiya Janata Party, during its short stints of political power, chose to drag or bury scams perpetrated by its political opponents. Will it be any different this time? Well, parts of the Establishment and the intelligentsia, mostly those who enjoy political patronage, continue to live in denial and quibble over details of the Hazare campaign. And, indeed, the long-term political impact of Anna Hazare’s August kranti is unclear; but one thing is certain—people across the country have made it clear that corruption is no longer acceptable. On 30th August, even a Supreme Court Bench was irked enough at the poor preparedness of government; it remarked that unless things changed “the people will teach you a lesson.” It remains to be seen whether this will happen.

Sucheta Dalal is the managing editor of Moneylife. Subscribers get free help in resolving their problems with select providers of financial services. She can be reached at
[email protected]


-- Sucheta Dalal