Sucheta Dalal :2009: Congress SEBI Reliance and the BMC
Sucheta Dalal

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2009: Congress, SEBI, Reliance and the BMC  

December 31, 2009

Knee-jerk reactions

The Congress Party has become an expert in knee-jerk reactions and has learnt no lessons from the violence unleashed by the decision to carve out a separate state of Telangana out of Andhra Pradesh. The outrage over the Ruchika molestation case has led to another, even more dangerous knee-jerk action. Instead of examining the cause of Ruchika's suicide, which is the wanton misuse of power by senior police officials, the home ministry has deliberately latched on to a completely unrelated issue and decided to give the same police officials even more unbridled powers.
A mandatory registration of a First Information Report (FIR) without even preliminary inquiries will only lead to a spate of fake complaints and the harassment of innocent people. The Ruchika case is about the outrageous abuse of power by senior police officials and the ready willingness of junior police officials to participate in framing and torturing victims of such abuse. The solution is to levy crippling financial penalties and imprisonment on those who misuse the enormous power and authority vested in them by the State. This would include politicians, civil servants, the investigation and enforcement machinery of the government and police officials. We must also borrow the
US system of levying hefty penalties on the government departments, which collude with rogue officials, as in the Ruchika case.

Between the lines
The Securities and Exchange Board of India's (SEBI) seemingly bold and brave move of exhuming a nine-year-old case against Reliance Industries Ltd (RIL) and dumping it into the lap of the ministry of corporate affairs has evidently not gone down well with Salman Khurshid. SEBI had asked the ministry to take "appropriate action" on alleged routing of money from RIL and (former) Reliance Petroleum Ltd to 34 private companies to enable them to subscribe to RIL’s equity shares leading to a loss to shareholders.

Having said that he plans to take SEBI's letter 'seriously' the minister jibed about the nine-year investigation by the regulator. He also said, "If anybody tries to do post-mortem by digging old graves, then we will rather focus on the work forward than engage in post-mortem." That was not all. The ministry responded in the next couple of days by asking SEBI to provide more details of its own investigation and then declared that SEBI has the power and jurisdiction to act against Reliance Industries under Section 55 of the Companies Act. SEBI has yet to react to this.

Get Reliance trick
Long ago, a senior bureaucrat had told me that when under fire or in trouble, some senior IAS officials tend to dig up long-buried cases against the Reliance group and initiate action. This has several advantages. It buries other issues and creates the false impression that the bureaucrat is being persecuted for acting against a powerful business house. More importantly, it gets the attention of the business house and sometimes allows them to use its clout to resolve other issues—corruption, inefficiency, disputes with seniors or ministers and even avoiding bad postings. Now that the brothers are fighting so bitterly, things have turned a little complicated. But initiating action against one half of the business empire is counterproductive because it leads to speculation that it is instigated by the other sibling. The solution is to initiate regulatory action against both houses of Reliance. Does this work? According to industry watchers, the first attempt to do this has come a cropper. First the cases are either stale or frivolous and the action itself is too roundabout to attract much attention or sympathy.

How come?
The year-end has seen a spate of reports which, once again, show how the law is applied differently to different people. On 5 December 2009, Moneylife held an award function at Horniman Circle Gardens in Mumbai. In the days leading up to it, we experienced the full horror of exploitation by the Brihanmumbai Municipal Corporation (BMC). A slew of licenses were required and none of them were available without grease money. The biggest and most reputed of companies are paying this extortion money without protest, but nobody soils their own hands by actually paying a dirty bribe. It is all 'managed' by "experts" who take care of the permissions for a steep fee of Rs2 lakh plus.

Here is how it works. The BMC charges an already steep Rs1,000 as licence fee for each generator used, which you cannot hope to get in time for the event unless you pay Rs5,000. The same goes for another half-a-dozen licenses required for the event. Even the public parking contractor extracted an unbelievable Rs10,000 to permit the parking of generator vans and buses. Since they cannot be parked anywhere else, organisers cave in and pay. If you argue or refuse, you can forget about holding any event on the date that you have booked the venue. And you cannot apply for licenses unless the venue is booked—it is the perfect Catch 22 for organisers. The licenses to play music, including the copyright fees are much simpler. You fill up a form and pay the fees without a bribe. But it is more strictly applied for outdoor performances.

So imagine our surprise when we are told that large five-star hotels avoid paying the fees and obtaining a license from the copyright body! That is not all. One of the biggest outdoor events in Mumbai's social calendar is the Mumbai Marathon. It is the one time, other than visits by international VIPs, when the BMC spruces up roads and ensures a fresh coat of paint, to make the city look good on television cameras. This year, reports the Indian Express, the civic body does not plan to spend on the preparatory work of the 17th January event unless the event manager Procam International pays last year's dues of a whopping Rs1.30 crore. Our question is, how are there different rules for Procam and the five-star hotels? Does the high power and glamour quotient ensure that they get credit, while the small fry pays up first?
— Sucheta Dalal




-- Sucheta Dalal