Supreme Court rejects Lalu Prasad’s plea in fodder scam
In a big blow to RJD chief Lalu Prasad, the apex court rejected his plea to transfer the judge hearing the fodder scam and also directed the trial court pronounce the verdict at the earliest
 
The Supreme Court on Tuesday rejected plea of Rashtriya Janata Dal (RJD) chief Lalu Prasad Yadav for transfer of the special Central Bureau of Investigation (CBI) judge hearing the fodder scam case against him in Jharkhand. The apex court also asked the trial court to pronounce the verdict as soon as possible.
 
A Bench headed by Chief Justice P Sathasivam dismissed the allegations of RJD chief that the trial judge, being a relative of a minister in the Nitish Kumar Government, is biased against him and questioned Lalu Prasad’s move to raise the issue at the fag-end of the trial.
 
The apex court also set a timeframe for concluding the proceedings granting five days’ time to CBI and 15 days to accused persons to wrap up their final arguments in the case.
 
The Bench, also comprising justices Ranjana Desai and Ranjan Gogoi, said that it was not inclined to entertain the allegations levelled against the judge and vacated its stay on the trial court proceedings
 
The Bench had earlier virtually agreed to transfer the judge and had asked the CBI and Lalu’s counsel to name an alternate judge to hear the case.
 
The apex court had on 23rd July said it would pass order either directing the High Court to appoint a new judge or would itself do so if there is consensus among the parties on name of the judge who is to hear the case.
 
It had also asked the parties to evolve a consensus on the name of the judge by 6th August.
 
However, on the next date of hearing, the bench refrained from passing any order in view of stiff opposition from JD(U) leader Rajiv Ranjan who had submitted that it would be a “travesty of justice” if the judge is transferred at the fag end of the trial. 
 

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COMMENTS

Vaibhav Dhoka

4 years ago

Supreme court justices have rightly said that most of its time is taken by mighty and wealthy people and hardly they spare time for common man.It is travesty of JUSTICE.All tricks are played to derail Justice system.A shameful act by handful people.

Vaibhav Dhoka

4 years ago

Supreme court justices have rightly said that most of its time is taken by mighty and wealthy people and hardly they spare time for common man.It is travesty of JUSTICE.All tricks are played to derail Justice system.A shameful act by handful people.

Does the US pay families when drones kill innocent Yemenis?

ProPublica requested information on how the US handles condolence payments for civilian drone strike deaths in Yemen. But the military won't reveal a thing.

There have been nine drone strikes reported in Yemen in the past two weeks – an uptick apparently connected to the Al Qaeda threat that shut down U.S. embassies across the Middle East and Africa. As many as six civilian deaths have also been reported.

President Obama has promised increased transparency around drones, but when asked about the strikes on Friday, Obama wouldn’t even confirm U.S. involvement.
 

“I will not have a discussion about operational issues,” he said.
 

The military is also following that line, refusing to release details about what happens when civilians are harmed in these strikes, including if and how families of innocent victims are compensated.
 

In response to a Freedom of Information Act request, U.S. Central Command told ProPublica it has 33 pages somehow related to condolence payments in Yemen – but it won’t release any of them, or detail what they are.
 

The military’s letter rejecting our FOIA cites a series of reasons, including classified national security information. (Here’s the letter.)
 

There’s no way to know what the military is withholding. A Pentagon spokesman told us they haven’t actually made condolence payments in Yemen. But CIA director John Brennan said during his confirmation process in February that the U.S. does offer condolence payments to the families of civilians killed in U.S. strikes. (Both the military and CIA fly drones over Yemen.)
 

In May, the White House released new guidelines for targeted killing, saying that there must be a “near certainty that non-combatants will not be injured or killed.” But the administration has said little about how civilian deaths are assessed or handled when they do occur. It has refused to address the U.S. role in almost any particular death – including that of a 10-year-old boy, killed a few weeks after Obama’s promise of increased transparency.
 

Outside reporting on drone strike deaths is spotty and often conflicted. On Sunday, a Yemeni activist and journalist named three civilians who had been injured, “just hanging arnd n thir neighborhood.” Another recent strike killed up to five “militants,” according to Reuters and other news agencies. But Yemenis reported on Twitter that a child was also killed. (The White House declined to comment to ProPublica on the recent strikes or on condolence payments.)
 

In Afghanistan, the U.S. has long given out condolence payments, which military leaders have come to see as a key part of the battle for hearts and minds. What might seem like a callous exercise – assigning a dollar amount to a human life – is also embraced by many humanitarian groups. The Center for Civilians in Conflict, for example, sees it as a way to help families financially and as “a gesture of respect.” In fiscal year 2012, condolence payments in Afghanistan totaled nearly a million dollars.
 

It’s likely harder to do that in the drone war. Military and intelligence leaders have expressed concern about “blowback” from local populations resentful of the strikes. But the U.S. has no visible troops on the ground in countries like Yemen or Pakistan, and almost never acknowledges specific strikes.
 

Despite the recent surge, overall there have been far fewer drone strikes and civilian deaths alleged in 2013 than in previous years.
 

For more on the U.S.’ shadowy drone war, read our latest story, “Who are we at war with? That’s Classified,” our coverage of the controversial practice of “signature strikes”, and our chat with national security reporters on the challenges of covering a remote and secret war.
 

Courtesy: ProPublica.org

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RBI levies penalty on 25 banks: Will it change banking for good?

Time is ripe now for the regulator to protect the bank depositors, customers, the public and the state from the archaic rules and regulations that have outlived their utility

There was wide publicity recently in the media about the penalty levied by Reserve Bank of India (RBI) on 25 commercial banks totally amounting to Rs60 crore for violation of banking regulations in the aftermath of Cobrapost sting operation exposing the alleged role of banks in money laundering and tax evasion in our country.
 

Names of banks and the extent of penalty levied:
 

The names of banks and the amount of penalty so far levied are as under:
 

Name of the Bank.                        Penalty Amount (Rs in crore)

Axis Bank Ltd.                                                                 5.001

Andhra Bank                                                                    2.50

Bank of Baroda                                                               3.00
Bank of India                                                                  3.00
Canara Bank                                                                    3.001
Central Bank of India                                                  3.00
Deutsche Bank A.G.                                                      1.00
Development Credit Bank Ltd.                                1.00
Dhanlaxmi Bank Ltd.                                                  2.00
HDFC Bank   Ltd.                                                          4.50
ICICI Bank Ltd.                                                            1.001
Indian Overseas Bank.                                              3.002
ING Vysya Bank Ltd.                                                  1.50
Jammu & Kashmir Bank Ltd.                                  2.501
Kotak Mahindra Bank Ltd.                                       1.501
Oriental Bank of Commerce                                     2.00
Punjab & Sind Bank.                                                    2.50
Punjab National Bank.                                               2.50
State Bank of India                                                      3.00
The Federal Bank Ltd.                                                3.00
The Lakshmi Vilas Bank Ltd.                                   2.50
The Ratnakar Bank Ltd.                                             0.50
United Bank of India.                                                 2.50
Vijaya Bank.                                                                  2.00
Yes Bank Ltd.                                                               2.00
*Source: www.rbi.org.in


What were the violations and how they were dealt with?
 

The RBI in its press release dated 15 July 2013 has said that their scrutiny of books of accounts of these banks revealed violation of certain guidelines and instructions issued by RBI. These mainly relate to non-adherence to certain aspects of know your customer (KYC) norms, anti-money laundering guidelines, omission in filing of cash transaction reports, sale of gold coins for cash beyond Rs50,000 and a couple of other violations relating to remittance under liberalized remittance scheme, repatriation of funds from NRO account and non-adherence to instructions on import of gold on consignment basis etc.
 

RBI has clarified that the investigation did not reveal any prima facie evidence of money laundering, which, according to RBI, can be conclusively proved only by an end to end investigation of the transactions by tax and enforcement agencies. However,  RBI has not clarified as to whether such investigation by the tax and enforcement agencies was being carried out and if so, when it is expected to be completed for the sake of putting a lid on this much publicized role of banks in money laundering and tax evasion in our country.
 

No doubt the banks would have quietly paid the penalty and got rid of the Damocles’ sword hanging on their head, but are these penalties deterrent enough to ensure that the rules and regulations will be followed scrupulously both in letter and sprit at least in future?
 

What did the UK banking regulator do when the biggest banking scam surfaced there?
 

The biggest banking scam that surfaced in UK recently was with regard to manipulation of London Inter Bank Offered Rate (LIBOR), which caused a crisis of confidence in the banking system in the western world.
 

In June 2012, Barclays Bank Plc, one of the largest banks in the UK agreed to pay a penalty of $453 million (about Rs2,700 crore) to US and UK authorities to settle allegations of rigging while fixing LIBOR, the benchmark interest rate, that caused political storm in the UK. This scandal, which cost Barclay’s CEO his job, resulted in sweeping changes in the way in which LIBOR is set, as LIBOR benchmark rates are used for trillion of dollars worth of loans around the world.
 

Union Bank of Switzerland (UBS) agreed to pay a total of $1.5 billion (Rs9,000 crore) in fines to various authorities in the US, UK and Switzerland to settle charges of manipulating LIBOR, over the period between 2005 and 2010. UBS had said that it would pay $1.2 billion to the US Department of Justice, 160 million pounds to the Financial Services Authority of the UK and 59 million Swiss francs to the Swiss Financial Market Supervisory Authority.  This is the second bank; after Barclays, to be charged with rigging LIBOR.
 

British Government’s initiative - ‘Changing Banking for Good’
 

Apart from the penalties thus levied on the banks by the regulators, the British Government established in July 2012 a Parliamentary Commission on Banking Standards to conduct an inquiry into professional standards and culture in the UK banking sector and to make recommendations for legislative and other action.  The Parliamentary Commission came out with a detailed report titled “Changing Banking for Good”  in June 2013 recommending sweeping changes in the way in which banks function with a view to ensure high standards to strengthen Britain as a global financial centre.
 

The report contains numerous recommendations that cover several issues, with main areas like: making senior bankers personally responsible, reforming bank governance, creating better functioning and more diverse markets, reinforcing the powers of regulators and making sure they do their job.
 

Commenting on the publication of the Final Report, the Chairman of the Parliamentary Commission Andrew Tyrie, MP, had said as under:
 

“Recent scandals, not least the fixing of the LIBOR rate that prompted Parliament to establish this Commission, have exposed shocking and widespread malpractice. Taxpayers and customers have lost out. The economy has suffered. The reputation of financial sector has been gravely damaged. Trust in banking has fallen to a new low.

 

“A lack of personal responsibility has been commonplace throughout the industry. Senior figures have continued to shelter behind an accountability firewall. Risks and rewards in banking have been out of kilter. Given the misalignment of incentives, it should be no surprise that deep lapses in banking standards have been commonplace.”
 

“The health and reputation of the banking industry itself is at stake. Many junior staff who may have done nothing wrong have been impugned by the actions of their seniors. This has to end. Where the standards of individuals, especially those in senior roles, have fallen short, clear lines of accountability and enforceable sanctions are needed. They have both been lacking.”  
                                             

“It is not just bankers that need to change. The actions of regulators and Governments have contributed to the decline in standards. Governments need to get on with the job of implementing these reforms. Regulators and supervisors need rigorously to enforce them. We need better regulation: this may mean less, not more. And we need a better functioning and more competitive banking industry. The Final Report contains a package of recommendations that, together, change banking for good. We must get on and do what is right for the UK.”
 

The key recommendations of the Commission are based on the following five themes to restore trust in banking:
 

a.   making individual responsibility in banking a reality, especially at the  most senior levels;

b.    reforming governance within banks to reinforce each bank’s responsibility for its own safety and soundness and for the maintenance of standards;

c.    creating better functioning and more diverse banking markets in order to empower consumers and provide greater discipline on banks to raise standards;

d.    reinforcing the responsibilities of regulators in the exercise of judgement in deploying their current and proposed new powers; and

e.     specifying the responsibilities of the Government and of future Governments and Parliaments.
 

Source: www.parliament.uk.
 

The Commission’s recommendations are tailored to the needs of British banking industry, as the ramifications of the banking scam relating to rigging of LIBOR have no parallel anywhere else in the world. But the observations of the Chairman of the Parliamentary Commission echoes the level of malpractice existing in the banking industry that require far reaching changes in the interest of restoring public confidence and faith in the banking institutions all over the world.
 

Can we ‘Change Banking for Good’ in India too?
 

In so far as Indian banking is concerned, as the RBI investigations have revealed, there exists considerable laxity in complying with the regulatory guidelines, rampant flouting of rules coupled with unhealthy practices of mis-selling with a view to benefit from the misplaced incentives that are increasingly built into the system. And these malpractices apart from exposing the banks to unprotected risks, affect the reputation of the banks and their credibility with the banking public. 
 

Read: RBI Punishes Banks, but Gently

 

It is appropriate to repeat here what Sucheta Dalal, Founder-Trustee, Moneylife Foundation said in her monthly letter dated 7 August 2013 addressed to the large body of members of the Moneylife Foundation with regard to plight of bank customers in our country. She rues as under: 
 

“Let me share with you something that was categorically told to us by the Reserve Bank of India (RBI), Deputy Governor this week. He said that the RBI simply does not have the regulatory framework for customer protection. It only implements the Banking Ombudsman Scheme, which is limited to simple banking products. It does not address all customer-related issues or mis-selling of third party products or a host of other problems that hurt your interest, or mine, as a bank customer. So, while he may personally sympathise with consumer issues, there is little that he can do until the policy issue or regulatory framework is addressed.”
 

The banking regulator in our country has done a good job of protecting the country’s banks from the international turmoil of 2008 that affected the major banks and economies of the developed countries.  Time is ripe now for the regulator to protect the banks’ depositors, customers, the public and the State from the archaic rules and regulations that have outlived their utility. The changing socio economic environment and growing customer expectations demand a comprehensive change in regulatory framework and call for urgent action to overhaul the entire banking operations to make banks accountable for their actions, responsible for their decisions, responsive to customers’ aspirations and answerable to the regulators for all their misdeeds.
 

The Central Government of our country is holding majority stake in all public sector banks, which control more than 70% of the banking business in the country. It has the moral as well as the legal responsibility to take steps on the lines of the British Government to create a conducive environment for development of banking on healthy lines and ensure safe, secure, pure and simple affordable banking to the large majority of our population whose financial literacy is unfortunately low in a country, where 40% of the population is still outside the ambit of banking. Changing banking for good and for the good of our people, should, therefore, be the priority for our government as well.
 

(The author is a banking analyst and he writes for Moneylife regularly on banking and finance.)

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COMMENTS

S BHASKARA NARAYANA

4 years ago

Whistle blowers within the organisation, who used to highlight the misdeeds in the system, should be protected, rather than being victimised by their top boss.

Dayananda Kamath k

4 years ago

surprisingly corporation bank is not listed, is it becase they are bankers to vadra. otherwise whatever cobrapost sting operation brought out was practiced in corporation since long. multiple cash challans in different names deposited b single person as denominations of notes mentioned of all the challans in a single challan and it is comented in inspection report. hence he inspetor was transferred out of department. when reported to rbi, it says it will not interfere in internal matters. all those who are suspended under cobrapost sting have been reinstated.

J P Shah

4 years ago

If penalty is to be borne by public sector banks and is not recovered from erring staff, then who cares for such deviations and penalties. Ultimately public money is used for penalties.

nagesh kini

4 years ago

Completely agree with the remarks of the Chairman of British Parliamentary Commission on the lack of personal responsibility as well as its recommendations and also Sucheta's write up.
Cobrapost has mercilessly exposed the shortfalls in commercial banking operations in India. RBI has to put on public domain the transgressions for which the banks are fined, may be without the names of the banks.
RBI has been proved to be toothless watch dog that neither barks nor bites, let alone warn.
We do need stricter checks and balances instead of inane Directions and impractical Discussion Papers on Chequeless Banking!
Like UK and USA our penalties ought to be on individual bankers at the top and not the small fry who turn out to be convenient scapegoats for the big guns. Banks pay fines from your and my monies!

nagesh kini

4 years ago

Completely agree with the remarks of the Chairman of British Parliamentary Commission on the lack of personal responsibility as well as its recommendations and also Sucheta's write up.
Cobrapost has mercilessly exposed the shortfalls in commercial banking operations in India. RBI has to put on public domain the transgressions for which the banks are fined, may be without the names of the banks.
RBI has been proved to be toothless watch dog that neither barks nor bites, let alone warn.
We do need stricter checks and balances instead of inane Directions and impractical Discussion Papers on Chequeless Banking!
Like UK and USA our penalties ought to be on individual bankers at the top and not the small fry who turn out to be convenient scapegoats for the big guns. Banks pay fines from your and my monies!

Vinayak Bhimarao Mudholkar

4 years ago

If the banks became too big too fail then who could dare to touch them?

R Balakrishnan

4 years ago

The fines are so small, that it is no deterrent. In fact, as a banker, I would include a decent amount in my Business Plan itself. For a deterrent, the fine should be at least half or more of a full year profit. And since RBI has control over the pay cheques of CEOs, they can ensure that no key executive get bonus or ESOP when there is a violation of any banking laws.

REPLY

nagesh kini

In Reply to R Balakrishnan 4 years ago

An extremely do-able solution Mr. Balakrishnan.

nagesh kini

In Reply to R Balakrishnan 4 years ago

An extremely do-able solution Mr. Balakrishnan.

nagesh kini

In Reply to R Balakrishnan 4 years ago

An extremely do-able solution Mr. Balakrishnan.

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