Sucheta Dalal :The new political nexus
Sucheta Dalal

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The new political nexus  

October 29, 2012

If you were wondering why most of the recent major cases of corruption have not been exposed by opposition parties, especially the BJP, now you have the answer: they are all in it together.

Sucheta Dalal

I am ready for any inquiry,” repeated Nitin Gadkari on every television channel where he brazenly defended the dubious shell companies and land allotment that propelled the growth of his ballooning ‘social entrepreneurship’.

The irony is that Nitin Gadkari is, indeed, the minister responsible for Mumbai’s rapid infrastructure growth in the late 1990s. He set up the Maharashtra State Road Development Corporation (MSRDC), got the maverick RC Sinha to head it, built 42 flyovers and the spectacular Mumbai-Pune Expressway (MPE) in record time. I have followed the MPE very closely, from the time the Madhav Jog committee proposed it, to getting an educative tour during its construction. Through those projects, Mumbai set a new benchmark for low project cost, high quality and ahead of time delivery of large infrastructure through the use of expensive and sophisticated infrastructure & techniques. Mr Gadkari, cut red-tape, amended rules and re-wrote concession agreements with a reward-penalty system that was effectively implemented by Mr Sinha.

A dozen years later, it is tragic that the same Mr Gadkari is under public scrutiny for fostering his own burgeoning business empire in a dubious manner. I would like to call his transformation the ‘Enron effect’. That dead and discredited US company ‘educated’ Indian politicians on how to co-opt the media and political opposition by sharing some of the loot (or mota maal) from large infrastructure development contracts. Enron’s PR and liaison team worked with clinical efficiency to ‘silence’ all opposition until the few activists and journalists pursuing its expensive power project became an irrelevant minority. Enron’s infamous Dabhol power project, which had been “dumped into the Arabian sea” (Gopinath Munde of BJP, then deputy chief minister Maharashtra), was resurrected at thrice the original size plus benefits for it, based on a report by Dr Kirit Parikh (still a close advisor of Dr Manmohan Singh).

Politicians soon adopted this modus operandi at a national level to share the spoils of telecom spectrum, coal and steel mines, land deals and education institutions. The effect on Mr Gadkari is obvious. As an opposition leader who transformed Maharashtra’s infrastructure, he ought to have been a powerful watchdog. After Sharad Pawar took control of the ministry under the Congress-NCP coalition, he quickly privatised the toll-collection and maintenance contract for MPE, which was bagged by the unknown Mhaiskars of Ideal Road Builders (IRB). It was imperative for IRB to co-opt Mr Gadkari and ensure his silence, since the original project itself was drastically modified and the escalation in toll was structured to ensure massive profits. IRB was soon bagging toll contracts all over Maharashtra. It was even making plans to sell equity in IRB to an Australian company and had come up with a expensive plan to change MPE’s alignment at a massive Rs3,000+ crore.

I happened to run into Mr Gadkari on the Worli Seaface in Mumbai and asked him about his silence on what I thought was the destruction of MPE. He seemed very surprised when I told him about IRB’s divestment plans. Strangely, the very next morning, chairman Mhaiskar of IRB was on the phone line wanting to explain things to me. That was my first indicator of how nicely Mr Gadkari had been co-opted. Of course, I had no idea that it involved equity investment and loans that ran into a few hundred crores through a maze of shell companies with his driver and employees as directors.

But the Mhaiskars and IRB are only incidental. The real co-option was by the NCP-Congress alliance (even closer friends of IRB). Mr Gadkari was a silent complicit in every controversial infrastructure and toll project in Maharashtra which ripped off people and gave massive profits (reported and unreported) to business. Let’s look at his own constituency—Nagpur.

When Praful Patel, as civil aviation minister, put dozens of roadblocks in transferring the Nagpur airport to the ambitious MIHAN (Multi-modal International Cargo Hub and Airport at Nagpur) project, Mr Gadkari, the opposition leader, was silent. MIHAN aimed to leverage Nagpur’s unique geographical location at the centre of India to create a road, rail and air transport hub for movement of goods east-west-north-south. The project was quickly sucked into controversy over land acquisition and remained at a standstill. It is another example of how a cabal of politicians put their own interests above that of the country. This was possible because mainstream media is happy to accept big advertising campaigns and event sponsorships for turning a blind eye. Praful Patel’s role is not even mentioned in connection with MIHAN, and rarely discussed even in the context of his systematic destruction of Air India and its being pushed it into a debt trap.

Mumbai is the pot of gold for all Maharashtra politicians who have realty at the centre of their social-entrepreneurship. Keeping property prices sky-high by squeezing demand is the modus operandi supported by them all. It explains why the trans-harbour bridge linking the island of Mumbai to the hinterland has been languishing for 50 years. It didn’t happen even during the burst of infrastructure development when BJP-Shiv Sena was in power. It explains why the land given to Ajit Gulabchand’s Lavasa project was exposed by Medha Patkar and YP Singh and not our politicians. It also explains why the BJP never raised the big profits ripped off by Surpiya Sule and her husband through their investment in Lavasa. Every single bridge, flyover and sea-link (Worli-Bandra in Mumbai) and skywalk, after MPE, has been far more expensive, of poor quality and delayed. Isn’t it something that a serious, knowledgeable and watchful opposition leader should have pounced upon? As for the irrigation scam, a serious investigation would show that Mr Gadkari’s Purti group was just one of the many political beneficiaries.

In two decades of liberalisation, political parties have refined the rules of collusion and engagement. There is a token opposition to issues, followed by silence; family (read Robert Vadra, Supriya Sule, Ranjan Bhattacharya) will not be dragged in. While we, the people, are being fooled by the frequent disruption and boycott of parliament. In between the protests, the same opposition parties allow dozens of crucial Bills to be passed without opposition. Most worryingly, deal-making has shifted to the corridors of parliament. Ask Rahul Bajaj and he will tell you that he is no longer in Rajya Sabha because he wasn’t willing to pay for the seat. Those who did, expect returns. Vijay Mallya used this effectively to get loans and concessions from banks.

Mr Gadkari and his Purti group, is just an example of this phenomenon. Now that India Against Corruption’s strategy of targeting politicians across parties is paying dividends, the dirt is quickly rising to the surface. Pramod Mittal of the Ispat group, whose man was caught bribing Himachal Pradesh chief minister Virbhadra Singh, had managed to extract thousands of crores of rupees of bank funding in Ispat Industries which he ran to the ground. The education empires of many Maharashtra political heavyweights—Chhagan Bhujbal (and his Armstrong group) ‘Padmashree DY Patil’, Vishwanath Karad, Patangrao Kadam—are examples of lucrative social-entrepreneurship giving them access to land and money.

Notice how, despite the shocking revelations about Mr Gadkari, the minister of corporate affairs, Veerappa Moily has only ordered a ‘discreet inquiry’. The Reserve Bank of India and the finance ministry are still silent about the fact that IRB was raising massive loans on its books and lending them to Mr Gadkari’s Purti group. How were banks persuaded to ignore this nice money-lending operation? Did IRB’s heavyweight political connections silence them? Is Mr Gadkari banking on exactly this political support when he says “I am ready for any inquiry?” We would be foolish to let the political class get away with a sham inquiry this time.

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