“Corruption is an evil that can depress the nation’s mood and sap its progress. We cannot allow our progress to be hijacked by the greed of a few,” Pranab Mukherjee said in his acceptance speech after assuming office as the 13th President
New Delhi: Assuming office as the 13th President, Pranab Mukherjee on Wednesday pledged to protect the Constitution not just in word but also in spirit as the office demands he rises above personal or partisan interests, reports PTI.
Making a brief acceptance speech after being sworn in as President in the Central Hall of Parliament, he termed corruption as an ‘evil’ and said the greed of a few cannot be allowed to hijack the progress of the nation.
“The principal responsibility of this office is to function as the guardian of our Constitution. I will strive, as I said on oath, to preserve, protect and defend our Constitution not just in word but also in spirit,” Mr Mukherjee said in his acceptance speech after he assumed the highest constitutional post at an impressive ceremony.
His speech was punctuated by repeated thumping of desks and applause.
“I am deeply moved by the high honour you have accorded to me. Such honour exalts the occupant of this office, even as it demands that he rises above personal or partisan interests in the service of the national good,” he said.
“There is no greater reward for a public servant than to be elected the first citizen of our republic,” Mr Mukherjee said.
The veteran leader reminded the gathering whose majority included top leaders of political parties, MPs, chief ministers and governors that “We are all, across the divide of party and region, partners at the altar of our motherland”.
“A modern nation is built on some basic fundamentals: democracy or equal rights for every citizen; secularism or equal freedom to every faith; equality of every region and language; gender equality and perhaps most important of all economic equity. For our development to be real, the poorest of our land must feel that they are part of the narrative of rising India,” Mr Mukherjee said.
Touching on the issue of corruption, he said the weight of office sometimes becomes a burden on dreams. The news is not always cheerful.
“Corruption is an evil that can depress the nation's mood and sap its progress. We cannot allow our progress to be hijacked by the greed of a few,” he said.
Calling for erasing poverty from the dictionary of modern India, he said, “There is no humiliation more abusive than hunger. Trickle-down theories do not address the legitimate aspirations of the poor. We must lift those at the bottom.
“Our national mission must continue to be what it was when the generation of Mahatma Gandhi, Jawaharlal Nehru, Sardar Vallabhai Patel, Rajendra Prasad, B R Ambedkar and Maulana Azad offered us a tryst with destiny: to eliminate the curse of poverty, and create such opportunities for the young that they can take India forward by quantum leap,” he said.
He stressed that India's true story is the partnership of people maintaining “our wealth has been created by farmers and workers, industrialists and service-providers, soldiers and civilians.”
Dubbing terrorism as the “fourth world war”, Mr Mukherjee said it is a world war because it can raise its head anywhere in the world.
There is an urgent need for BIS certification especially in context with safety of high-power consuming electrical appliances in India. The authorities need to re-introduce ISI certification for home consumer electricals urgently
In the early days of emission reduction in motor vehicles made and sold in India there was a very simple trick used by the few manufacturers and workshops. They simply ‘adjusted’ the air-fuel mixture manually to ‘pass’ the tests. Once clear, the air-fuel mixture was set back to what was required, and everybody went about their business. Except for the air quality, which simply grew worse as we may recall.
Something like that appears to be happening with the home consumer electrical, refrigeration, washing machine and air-conditioning industry lately. India has a very complex BEE (Bureau of Energy Efficiency) scheme for rating new consumer air-conditioners, refrigerators and other electrical appliances on the basis of their power consumption—but as of now there are absolutely no standards on their safety in usage for the same consumers. If you look closely at the washing machines, refrigerators and air-conditioners sold in India, you will not find any ISI or BIS mark or reference, on the body of the product or in the owner's manual.
A quick examination of the owner’s manuals of over half a dozen leading brands of air-conditioners sold in India revealed that they have simply stopped carrying any safety related technical specifications in them, beyond vague and unclear mentions for ‘caution’.
This was not always so. In the eighties, when ‘local’ brands existed, electrical appliances carried ISI marks of a variety of sorts covering almost all aspects of consumer products. Washing machines with/without heaters, refrigerators and air-conditioners had ISI marks. And their owner’s manuals listed these out, so that consumers could double check if required.
When and how this changed, nobody knows, but there is some evidence to believe that this was made ‘optional’ by BIS in line with liberalisation, thus making it a total free for all. Manufacturers were supposed to be responsible enough to protect their brands—but in actual fact, it simply became a method to remove all accountability.
This was brought home to me in no uncertain manner when delving deeper into fires caused at homes of friends and the family over the last few years. In all cases, the fires started because of electrical problems with air-conditioners, refrigerators and washing machines. What’s common with all three is—they work on electricity, have high humidity levels or direct interaction with water, and most of all, have varying power loads in the course of operations leading to huge surges at times. And none of them carry any sort of ISI or BIS or any other national or international safety certification for products manufactured or imported, and then sold in India.
It is not as though the same brands and manufacturers do not adhere to stringent regulations for their products in other markets—there is the IECEE-CB certification which most interestingly the BIS in India certifies products for export from India on. There are the NRTL in the US, the SCC in Canada and the CCC in China for example—all of which harmonise with the internationally acceptable IECEE-CB for their domestic consumers. But we have nothing from BIS for the Indian consumer of new age high-power consumer electricals in India.
In short, as of now, barring some old BIS-ISI standards for hot water heaters (geysers), everything and anything goes. Including fiddling with basic safety features to “improve performance” after the product has been certified by BEE—which in turn increases the power consumption. And if your electrical installation is not able to cope up, causes fire.
Is this being alarmist? No, it is not. We bought a new air-conditioner of a famous Japanese brand. After a few days, we noted that it was simply not cooling as well as it should, so we called the customer support service, which immediately despatched a person who fiddled inside the machine, and ‘improved’ the cooling. However, there was now a much louder noise and a much heavier draw on power, especially during surges when the compressor “took load”. In turn, the wiring started getting hot, and the joint that had been provided using insulation tape started smoking, leaving a telltale odour.
When we complained to the company again, and escalated issues, their senior-most person for North India told us that this is how it was. If we wanted BEE star rating, then we had to accept that they would make these ‘alterations’. What were these alterations? Oh well, certain limiter switches, preferential trips and fuses would have to be bye-passed. Please note—I am aware of the safety hazards such steps cause. And we are not even talking about the issue of suspect electrical installation at this juncture, using insulation taped joints, which is also relevant.
There is an urgent need for BIS certification especially in context with safety of high-power consuming electrical appliances in India. They are already doing this in the case of electrical appliances manufactured in India being exported to other countries where such IECEE-CB certification is essential. The authorities need to re-introduce ISI certification for home consumer electricals urgently, using the same IECEE-CB validations urgently, otherwise it is like a circus out there with everybody selling anything they want and without cogent accountabilities.
And the authorities also need to make it clear that the BEE certification is not a substitute for the ISI and safety related certifications. Go to any electrical consumer goods shop, and chances are that the salespersons will try their best to convince you that this is the case, when it is not.
(Veeresh Malik had a long career in the Merchant Navy, which he left in 1983. He has qualifications in ship-broking and chartering, loves to travel, and has been in print and electronic media for over two decades. After starting and selling a couple of companies, is now back to his first love—writing.)
Using paper companies, the little-known pharma company’s CMD created huge wealth that was unearthed following a tip-off to the Income Tax department. The company’s modus operandi also finds a mention in the “White Paper of Black Money”
Mumbai-based Genom Biotech Pvt Ltd and its promoter and directors may not be known in their neighbourhood but their modus operandi of using paper companies abroad for creating wealth has found mention in the “White Paper on Black Money”, prepared and submitted by the Indian government in the Parliament.
Genom Biotech is manufacturer and exporter of pharmaceutical products. It is promoted by Binod Kumar, who is also the company's chairman and managing director. The company is operating in Ukraine, Cyprus and UK and claimed a huge amount for advertising and marketing expenses for marketing its products in these countries. It claimed the payments to be made to the Cyprus and UK companies as reimbursements of the expenses of the Ukrainian company.
Here is what the “White Paper on Black Money” says about a company and its modus operandi...
Box 4.2 Evidence Found during Search Operations
Supplemented by Information Received from Abroad
A search and seizure operation was conducted on the Indian company G Ltd. In the course of the operation, evidence was collected that indicated the use of international entities for tax evasion. G Ltd was a private limited company with Mr X being its managing director and major decision maker. G Ltd was engaged in the pharmaceuticals business with exports to the Ukraine, Cyprus, and Russia. G Ltd claimed bogus marketing expenses through dummy companies in the Ukraine, Cyprus, and the UK. It claimed the payments to be made to the Cyprus and UK companies as reimbursements of the expenses of the Ukraine company. These funds were diverted to the personal accounts of Mr X who accumulated wealth in foreign countries. In the course of search and seizure operation, the marketing/business promotion expenses were found to be unusually high at 50 per cent of the turnover. The Cyprus and Ukraine-based companies had previously been owned by Mr X. The seals and stamps of these companies were found on the premises of G Ltd. Some of the employees of G Ltd were found to be closely linked with the Ukraine and Cyprus companies. Details of huge investments in the name of Mr X and his family members were found on the premises. Enquiries were made from the UK, Germany, Switzerland, Cyprus, and the Ukraine for the following:
• The ownership structure of these companies
Enquiries into the whereabouts of the Ukraine companies revealed the following facts:
Source: “White Paper on Black Money” (http://finmin.nic.in/reports/WhitePaper_BackMoney2012.pdf
Although the White Paper does not name the company involved in this huge tax evasion, similar modus operandi is mentioned by the high court in its judgement about Genom Biotech Pvt Ltd, and its chief Binod Kumar.
Acting on a tip-off, the I-T department, on 14th-15th May 2008 searched the offices and residents of Genom Biotech, its CMD Binod Kumar, and its directors CMP Singh and Amit Kumar and found incriminating documents.
On 24 July 2008 the deputy director of I-T (investigation) issued a notice under section 153A of the Act calling upon the assessee (Genom, its CMD and directors) to file return of income for the past six years. On the same day, the Assistant Commissioner of I-T, Mumbai passed an order under Section 281B(1) of the Act for provisionally attaching the immovable properties of the assessee and also shares of various companies held in demat account by Binod Kumar.
The assessee, then filed a petition in the Bombay High Court. In the petition, Binod Kumar claimed that the investments by him and his family members in India are made from funds transferred from his foreign income brought in the country through proper banking channel. He also said since he is a non-resident Indian (NRI), the income earned by him outside India is not taxable in the country and initiating search and seizure action with a view to tax the amount brought to India as undisclosed income does not arise at all.
The high court said it did not found any merit in this contention. “...the information received in the present case was that during the period from FY 2001-02 to 2007-08 the petitioner No.1 (Genom Biotech) had evaded tax by claiming deduction of business expenditure amounting to Rs170 crore on the ground that the said amounts have been paid to Cyprus/UK based companies towards marketing and advertisement expenses, but in fact the said amount has been credited by the said Cyprus & UK based companies in the private bank account of petitioner No.2 (Binod Kumar) in Cyprus,” the court said.
Genom Biotech used Biogenetica Ltd, Nicocardia Pharma Ltd and Selesta Holdings Co Ltd (all Cyprus based companies having same address) and UK-based Zyus Corp Ltd for claiming tax refunds.
However, during investigations it was found that the payments made by Genom Biotech towards advertisement and marketing expenses never reached their logical destination i.e. advertising agencies in Ukraine.
During the search, the I-T department also recovered incomplete and or unsigned invoices of the foreign companies along with their seals or stamps. “These incriminating documents prima facie establish that large scale tax fraud has been committed,” the court observed.
The I-T department conducted enquiries in foreign countries through tax authorities to independently ascertain the claim on marketing expenditure by Genom Biotech. Confidential investigation was conducted through tax authorities in Ukraine to ascertain transactions between advertising agencies in that country, supposed to have entrusted with the advertisement assignments by Cyprus and UK based companies on behalf of Genom Biotech.
The outcome of the investigation in Ukraine revealed that there was no commercial transaction between these companies for the investigation period. These advertising agencies did not issue any invoice to and they did not receive any funds from these Cyprus-based or UK-based companies.
Enquiries also revealed flow of funds from Cyprus and UK based companies into personal account of Binod Kumar. The bogus advertisement expenses and marketing expenses were disallowed by the I-T department. Similarly, the high court also dismissed Genom Biotech and Binod Kumar’s petition, against the I-T department.
It said, “…the argument that the assessee ought to have been permitted to shift the security from one banker to another banker so as to avail higher facilities cannot be accepted, because, the petitioner No.2 who appears to be the brain behind the massive tax evasion is not co-operating with the department in unfolding the truth. As a result of non co-operation the investigation is hampered. Consequently, there is delay in determining the demand."
Since then the I-T department raised demands of Rs100 crore each against Genom Biotech and Binod Kumar. After taking several twists and turns the case is now before the Commissioner of Income Tax (Appeals) (CIT-A).
More about this in the next part...