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HC dismisses petitions against Mayawati in Taj Corridor case

Passing the order, the High Court said all petitions filed against Mayawati in the Taj corridor case were devoid of merit

Lucknow: In a major relief for Uttar Pradesh's former chief minister and BSP supremo Mayawati, the Allahabad High Court on Monday dismissed petitions against her in the Taj Corridor case, reports PTI.

 

The Lucknow bench of the court also dismissed the petitions against her cabinet colleague Naseemuddin Siddiqui.

 

Passing the order, the bench comprising justices Imtiyaz Murtaza and Ashwani Kumar Singh said all petitions were devoid of merit and were accordingly being dismissed.

 

BSP leader and Mayawati's counsel Satish Chandra Mishra termed the petitions filed in the case as "politically motivated" and pursued with "malafide intention".

 

"There are no offences against Mayawati in the Taj Corridor case," he told reporters after the court delivered a 74-page verdict.

 

The bench had on 12th September reserved its judgement on the PILs seeking direction for initiation of proceedings of criminal case against Mayawati and Siddiqui.

 

The special CBI court had in June 2007 dropped proceedings against Mayawati and Siddiqui for lack of prosecution sanction, which was not granted by the then Governor.

 

After this, three PILs were filed in 2009 challenging the decision of the CBI court. Later three more PILs were filed in this connection.

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Why the petroleum ministry is reluctant for a CAG audit of RIL?

According to the former secretary to the GoI, activities of RIL in the KG basin have a long-term bearing on the public exchequer and therefore the petroleum ministry should allow the company’s accounts to be audited by the CAG 

EAS Sarma, former secretary to the Government of India (GoI) has reiterated the demand to conduct a performance audit of Reliance Industries (RIL) and the Krishna Godavari (KG) Basin. In a letter sent to prime minister Dr Manmohan Singh and petroleum minister Veerappa Moily, the former secretary raised several issues related with RIL’s operations in the KG Basin while reinterring the need for conduction audit by Comptroller and Auditor General (CAG).

 

“The exploration and development effort put in by RIL in the KG Basin, the technology adopted, the resources discovered, the costs incurred, the claims made on pricing of gas and the costs to be reimbursed are all matters that impinge directly and indirectly on the public exchequer. All such matters should be subject to public scrutiny and RIL should be held accountable to the public,” Mr Sarma said in his letters.

 

Last week, RIL, in a statement, said it had never contested the government’s right to get the company’s spending on KG-D6 gas fields audited by the CAG but hoped it will not be subjected to a performance audit. Stating that it was a private operator functioning under a Production Sharing Contract (PSC), RIL said it ‘appreciates’ CAG's reported statement that it does not conduct performance audit of private firms.

 

”We appreciate the fact that the CAG is in agreement that it does not conduct performance audit of private operators and expect that no such performance related audit issues applicable to the government will be applied to any such audit,” RIL said.

 

The ministry of petroleum & natural gas, which continues to withhold permissions for RIL’s investment proposals, postponed a kick-off meeting scheduled for the CAG to begin audit of spending in the KG-D6 block by the Mukesh Ambani-led company. The CAG had called an Entry Conference with RIL and the oil ministry to begin its second round of audit that is to cover RIL’s spending on KG-D6 gas fields during 2008-09 to 2011-12. However, on 29th October, the ministry wrote letters calling off the 31st October meeting, sources told to PTI.

 

According to the PTI report, the meeting was called off due to differences over the nature and scope of audit to be conducted by the CAG. RIL has sought written assurance that the CAG scrutiny would be an “audit of accounting books and records” as provided under the production sharing contract (PSC) and that the company would not be “required to provide documents, information or any clarification of matters which go beyond scope of audit under Section 1.9 of the Accounting Procedure of the PSC.”

 

Also, RIL wants the audit to be carried at its premises and audit report to be submitted to the oil ministry, as provided under PSC, and not to the Parliament.

 

Mr Sarma, in his letter to the petroleum minister, said, that from the reports appearing in the press, he understands that the ministry has some reservations on asking the CAG to conduct a performance audit of RIL’s operations. In this connection, the former secretary has raised following points of relevance...

  1. The natural gas resources found in the KG Basin are public resources belonging to the people of the country, as reiterated time and again by the courts. Article 39(b) of the Constitution requires the State to ensure that “the ownership and control of the material resources of the community are so distributed as best to subserve the common good”. All executive actions and instruments, including the Production Sharing Contract (PSC) signed by your ministry with RIL are subject his Directive Principle. While the PSC may define the relationship between petroleum ministry and RIL, to the extent it comes in conflict with Article 39, it should be deemed to be void.
  1. The exploration and development effort put in by RIL in the KG Basin, the technology adopted, the resources discovered, the costs incurred and the claims made on pricing of gas and the costs to be reimbursed are all matters that impinge directly and indirectly on the public exchequer. They also have a direct bearing on the “common good” envisaged in Article 39. As such, all such matters should be subject to public scrutiny and RIL should be held accountable to the public.
  1. Under Article 149, “the Comptroller and Auditor General shall perform such duties and exercise such powers in relation to the accounts of the Union and of the States and of any other authority or body as may be prescribed by or under any law made by Parliament.” In 1971, the Parliament enacted the CAG’s (Duties, Powers and Conditions of Service) Act, 1971. Section 13 of that Act empowers the CAG to “audit all transactions of the Union.....relating to ...public accounts”. Under this provision, the CAG is empowered to conduct a performance audit of RIL in relation to the activities referred at Item 2 above viz. the exploration and development effort put in by RIL in KG Basin, the technology adopted, the resources discovered, the costs incurred and the claims made on the pricing gas and the costs to be reimbursed, as all such matters impinge directly and indirectly on the public exchequer. In fact, the ministry of finance examined this aspect separately and reiterated this position vide DEA 6(5)-B(R)/99 dated 13-6-2006. In view of this, it is mandatory that RIL’s accounts are submitted for a comprehensive and unconditional performance audit by C&AG. There should be no hesitation on this, on the part of the petroleum ministry.
  1. I had earlier written to PM with copies to your ministry that the so-called ‘independent’ external evaluators that RIL had commissioned to evaluate its capital expenditure were RIL’s own clients, which meant that they had a clear conflict of interest. RIL appeared to have “gold-plated” its accounts to the detriment of the public interest. Unfortunately, the regulator who was expected to safeguard the public interest had apparently connived with the company and some of these concerns were deliberately obfuscated.
  1. I have a copy of the note circulated for EGoM that fixed the gas price at $4.20 per mmBtu indexed to crude price. I obtained it under RTI Act. It clearly showed that the EGoM had ignored an earlier offer made by RIL to NTPC to supply gas at $2.34/ mmBtu. It ignored the disclosures made by RIL to DGH that the unit cost of gas from the KG Basin was not more than $1/ mmBtu. The stance thus taken by the government and the EGoM had compromised the interests of NTPC in particular and the public interest in general. In my view, the manner in which the EGoM had fixed the price then should be got investigated by an independent agency and corrective action taken to protect the public interest. I will not be surprised if there is a serious vigilance aspect to it.

“I request you to keep all these concerns in view and entrust the CAG with the task of a comprehensive performance audit of RIL’s accounts for the KG Basin operations. It should be unconditional. I believe that such an action on your part will inspire confidence in all of us and protect the public interest,” Mr Sarma concluded.

 

Here is the letter written by Mr Sarma to the Prime Minister…
 

 

 

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COMMENTS

Suiketu Shah

4 years ago

The facts in this article proves proves what Kejiwal said that Mr Ambani rules the country.

NSriramamurty

4 years ago

RIL's continuous objection to CAG Perfomance Audit itself is to be viewed that RIL is Conceiling vital Data and trying to extract More Public Money.Ministry is acting as though only RIL can Extract Gas from KG Basinand no-body else.Something seriously Fishy.
( 2 )All PPP Projects Should be under the Purview of CAG Audit fully unlimitedly.( 3 )Many Scams are coming out in PPPs,as quid pro quos.Even if GOI erred in signing contract with Conditions,they will be void,if CAG Performance Audit is objected citing those conditions. Hats off to Mr. Sarma for Boldly taking up with Ministry/PM.

Vaibhav Dhoka

4 years ago

Now it is high time for firm action.The corruption should be dealt with steel hand.Now it should be ne talk only action is need of hour.

Sunil

4 years ago

Wow , I do hope that the GAG if permitted to audit RIL uses Mr. EAS Sarma as a advisor.

sivaraman anant narayan

4 years ago

Excellent!

Life Exclusive
Chinese princelings: Wen Jiabao’s family fortune

At the end of October the New York Times published an article concerning the “hidden wealth” of China’s prime minister Wen Jiabao’s family. The story provides an excellent example of how business is done in China specifically and in emerging markets in general

At the end of October the New York Times caused a small sensation in an article it published concerning the “hidden wealth” of China’s prime minister Wen Jiabao’s family.  The article alleged that Wen’s family had amassed a fortune of over $2.7 billion. Two Hong Kong lawyers purporting to represent the family denied the existence of any such wealth and threatened to sue the Times. The Wen story is interesting, but why should investors care? For the simple reason that the story provides an excellent example of how business is done in China specifically and in emerging markets in general.

 

The first point to understand about the Wen story is the fact that elite power in emerging markets has been institutionalized. Certainly developed countries have their own aristocracies which are often based around the best educational institutions, but they are nowhere near as extensive or pervasive. In China the elites are based on relationships within the Chinese Communist Party. The party favours its own, especially the descendants of the founders of the People’s Republic of China. These individuals are known as taizidang ("princelings"). They include not only children, but often members of the extended family including wives, siblings, uncles and even in-laws. In fact the disgraced Bo Xilai’s father, Bo Yibo—one of the “Eight Immortals”, supported a process where only one member of each powerful clan could enter politics, leaving the other relatives free to make money.

 

Family connections in China are especially important and not only for cultural reasons. In countries where law might be given lip service, the only way to enforce bargains is to do business with people you trust. The people you trust are those with whom you have the strongest relationships—often family members, but could include members of the party, members of the same religion, sect or caste. What makes the process particularly prevalent in China is the extent to which the government controls the country’s economy. More unrestricted government power provides more opportunities to amass riches. So club membership goes way beyond connections to get in an elite school or a good job. It allows members to control entire industries.

 

Read: The illusion of China's stimulus

 

Wen’s wife, Zhang Beili, provides an excellent example. Zhang Beili’s specialty was jewellery and gemstones. So with her husband’s power and connections, she was able to create two powerful state entities create the National Gemstone Testing Center in Beijing, and the Shanghai Diamond Exchange. Both of these institutions were the official gate-keepers. They formulated rules that required any diamond seller to buy certificates of authenticity for any diamond sold in China, from their government-run testing centre.

 

Under these rules, if you wanted to get into the jewellery or diamond business in China, you had to deal with Ms Zhang. So Ms Zhang became quite popular with the likes of Cartier or De Beers, who would happily work with the family to have the privilege of entering a growing market.

 

Maintaining control over the rules also allowed princelings to take advantage of bits of state property as they were privatized. It was a tremendous advantage to know which companies would be privatized so that the relatives could get in early and often purchase dominant positions. Once the privatization had gone through, the new private owners could be sure that competition would be limited.

 

The most important competitive advantage for the well-placed in China was and is access to capital. State-owned banks do not lend to just any qualified borrower, but only to the largest and best connected. Listing on exchanges is also restricted.

 

But why is this a problem? Certainly connections help in every market. The reason is has to do with certainty and transparency. Any investment is a bet on the future. If the legal and regulatory process is dependent upon connections it can easily change. Rich businessmen and foreign companies try to outdo one another to curry the favour of the connected. But the connected as rent seekers are always looking for more. For example several princelings including George and Jeffrey Li, Wilson Feng, Jeffrey Zeng, and Li Tong have all left their foreign banking employers and set up their own investment houses. If you have the power, why share?

 

The other problem is that without legal protections, property rights and power can disappear. When Deng Xiaoping died in February 1997, his son and son-in-law became subject of an investigation. When Hu Jintao became president in 2003, took revenge on his predecessor, Jiang Zemin’s cronies in Shanghai.

 

But the real problem is transparency. If scare resources are allocated according to connections and the relationships are unclear, the allocations cannot be efficient. So the fact that a lot of wealth ended up with Wen’s family means that much of that same wealth was diverted from the Chinese people or more importantly, investors.

 

To read more articles by the writer, please click here.

 

(William Gamble is president of Emerging Market Strategies. An international lawyer and economist, he developed his theories beginning with his first hand experience and business dealings in the Russia starting in 1993. Mr Gamble holds two graduate law degrees. He was educated at Institute D'Etudes Politique, Trinity College, University of Miami School of Law, and University of Virginia Darden Graduate School of Business Administration. He was a member of the bar in three states, over four different federal courts and has spoken four languages. Mr Gamble can be contacted at [email protected] or [email protected].)

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