The recent Delhi case does not even scratch the surface of this menace which has been going on for decades
Over 25 people have been arrested at the time of going to print, in what is known as the ‘espionage’ scandal at the petroleum ministry. The scandal has rapidly engulfed the coal, power and the environment ministries as well. Yet, the only ones surprised at the extent of the leaks, and sale of confidential government information, are probably those who believe that their morning paper or prime time television actually gives them all the news that is fit to print or debate! Or, that regulators and investigation agencies spring into action due on media exposé.
Everybody else, who is connected with the media, business or government interaction, knows that far worse happens in government—with impunity and arrogance. And the sporadic investigations and arrests over the years have been mere blips with high drama that did not lead to any concrete action. From the Adarsh building scam, to Coalgate, 2G and Sahara, only court-directed hearings and judgements have actually led to some serious action—like cancellation of licences. In fact, there are hardly any surprises in the names of companies that have cropped up for getting systematic access to documents through forgery, impersonation and creation of fake identities.
Any action to stem the organised leak of official secrets and confidential documents is commendable. It acts as a strong deterrent and leads to a temporary clean-up. In this case, there was a large gang of operators involved in stealing, copying and selling documents; some had a neat façade of websites, research outfits, conference and think-tanks. However, let’s not kid ourselves; this has been going on for decades. Also, the government has not, yet, attacked the biggest source of leaks which are connected with defence-related purchases and contracts.
Delhi’s arms-dealers and middlemen are all extremely well-known. They flash their stupendous and unexplained wealth without any fear. Subrata Roy, of the Sahara group, also did it with impunity and nobody questioned his geyser of money until the Supreme Court of India dealt with his lofty disregard for the law and courts very effectively. As with Sahara, India’s top politicians, celebrities and corporate czars are happy to be on the same social page as such pimps. They are mandatory guests at the lavish parties and extravagant weddings. Notice how little has changed after the famous exposé of defence deals by the now discredited Tehelka.
The leak of government documents marked ‘top secret’ or ‘confidential’ purchased by corporate houses is so routine that most business journalists, don’t even give a thought to the violation of Official Secrets Act—especially when they have travelled down to Mumbai. A few of us have found such documents slipped under our door in unmarked brown covers.
Some of the worst stories of corporate venality and sharp manipulation that I have heard in the past two decades have been told to me by regulators, most of whom were IAS officers. I have also discovered that most senior bureaucrats and investigators will either remain mute spectators or actively support corrupt actions of their political masters, even if it involves unleashing untold harassment or framing false charges against people. None of this could be written about.
A few of my own experiences will probably explain why one remains cynical about whether the arrests in the alleged ‘espionage’ scandal will lead to any change at all.
The biggest story buried in 2007, by a newspaper that boasted about its journalistic ‘courage’, is that of Stock Holding Corporation of India Limited (SHCIL). It was a case of the daylight robbery of SHCIL, a quasi-government company (set up by government-owned financial institutions), by its managing director and CEO. SHCIL, under the benign watch of regulators, created a subsidiary which was a mirror image of the parent and was selling off a 76% stake to private and foreign entities who would, eventually, have controlled the entire e-stamping operation in India. The core of the business, e-stamping software contract to a Singapore-based company called Crimson Logic, was routed through layers of private entities, owned by two individuals who ran SHCIL like a private fiefdom and were very close friends of the then chairman of the Securities and Exchange Board of India (SEBI).
Remember, e-stamping was being introduced as an alternative to physical stamps after another mega scandal, called the Thelgi scam in the late 1990s. In effect, a new scam was being perpetrated at the very initiation of a system that was touted as a clean and transparent replacement for the easy-to-forge physical revenue stamps and stamp paper business of over Rs50,000 crore! The matter was investigated by the Intelligence Bureau and brought to the attention of the prime minister. But nothing much happened. After all, those involved in burying the scandal included a retired police chief, a powerful cabinet minister and the capital market regulator.
The only ones who paid a price for persistently trying to expose the scam, for over a year, were the whistleblower and I. Those interested can read the entire story on our website (Loot & Scoot). Nothing has happened to SHCIL or most officials involved in this and other scams dating back to Ketan Parekh’s market manipulations in 2000.
Several years before SEBI began to investigate Sahara Pariwar, a market regulator told me in great detail how the group allegedly created fictitious investors. At that time, the Reserve Bank of India (RBI) had already been investigating Sahara’s massive fund-raising through the residuary non-banking finance company. Why the regulators did not find anything substantive, when they knew so much, is no mystery. Given Mr Roy’s powerful connections, the strings pulled probably went all the way to the top.
An industrialist gleefully told me how a rival industrialist did not believe in wasteful expenditure of bribing ministers and bureaucrats. He operated at the level of secretaries and typists, with deadly effect. He would ensure that small errors were inserted in the final draft of rules or legislation creating a loophole for him to exploit in dubious deals.
A bureaucrat in the finance ministry, who later became a regulator, narrated a similar experience, where the legal head of a corporate house tried to influence the wording of a government circular by quoting a Section and Sub-section of a highly rated classic text on banking legislation. He even handed over a copy of his book for the bureaucrat to verify the relevant Section. Although almost convinced, the bureaucrat, quite by chance, asked to see his office copy of the book. To his shock, the wording of the Section was entirely different. It then became clear that the lobbyist was trying to trick our babu, with a cleverly forged page, inserted into a classic reference book!
I have seen this game played out in the framing SEBI’s takeover and acquisition code in the mid-1990s. A powerful and articulate member of the committee, which had drafted the code, had left a gaping loophole. He, later, exploited this very loophole for a high-profile merger between two giant blue-chip companies, to the detriment of retail investors. Since the corporate houses were powerful and influential, all my articles pointing to the mischief were simply ignored.
I have narrated small examples from Mumbai. Bribes and espionage involved in defence or to grab natural resources like oil and mines are much more heinous. Let’s hope the Modi government does not stop at a few headline-grabbing arrests but puts in place a system of transparent decision-making, televised hearings of parliamentary committees and e-auctions. This will ensure a permanent clean-up and also fulfil the election promise of better governance.
(Sucheta Dalal is the managing editor of Moneylife. She was awarded the Padma Shri in 2006 for her outstanding contribution to journalism. She can be reached at [email protected]