Reforms and Crony Capitalism

Éxposé I: In March 2001, Tehelka.com released video tapes of a sting operation in which military men, defence officials, and politicians were seen taking money and gifts of hospitality (5 Star hotels, wine, and some women) from a fictitious British arms trader. Among those caught taking money were Bangaru Laxman (BJP) and Jaya Jaitley of (Samata Party – George Fernandes’ party).

Éxposé II: Recently the Indian Express conducted a sting operation and released a VCD in which the Minister of State for Environment and Forests Dilip Singh Judeo was caught accepting wads of currency from a fictitious Australian mining company.

Several years ago, cellular companies bought licences at sky-high rates. Later, they owed the government tens of thousands of crores in licence dues. The Department of Telecommunications (DoT) threatened to encash their bank guarantees. The cellular lobby appealed to the Prime Minister’s Office (PMO). The PMO sent a letter asking the DoT to lay off the cellular companies to which the latter promptly refused. Vajpayee then invited top DoT officials to the PMO for negotiations. The DoT case had a strong case and they would not budge. So, Vajpayee offerred the DoT officials an opportunity to tour Western countries to “study” their communications infrastructure and practices. Their travel and star-hotel accommodation expenses would be picked up by the government. This is the history of the current revenue-sharing model for cellular companies,

When the Congress government tried to pass the Enron project, BJP along with Shiv Sena opposed it vehemently. The subsequent cabinet led by Atal Behari Vajpayee lasted only 13 days. Just hours before the government fell, Jaswant Singh (Minister of Finance) passed the project. Enron asked for huge commitments for the project including guarantees on profit and got them. Rebecca Mark, (Enron CEO), met Bal Thackeray (Shiv Sena) and he gave his blessings to the deal. Current shareholders of Enron (GE, Bechtel, etc.) and foreign lenders are now planning to sue the Indian government for billions of dollars in compensation.

The disinvestment process is often called “reforms” and the Minister of Disinvestment Arurn Shouri was called “honest.” Most companies that the government tries to sell are so huge that no Indian company can make a decent offer to buy them. Only foreign multinationals have the financial muscle to buy them. When Indian Petrochemicals Corporation Limited (IPCL) was put on the block, many foreign companies expressed interest but no sale was made. The foreign companies withdrew their bids after waiting for what seemed an eternity. The “disinvestment process” then started moving in right earnest. Reliance was awarded the company.

A raid by Delhi Police at the office of a Reliance official recovered minutes of a cabinet meeting on disinvestment. A case was been registered under Official Secrets Act. The Union Goverment argued that the documents did not deal with national security and hence the Reliance official should be freed.

Arun Shourie is now the Minister for Telecommunications. He replaced a minister who created serious problems for Reliance Infocomm. Mr. Shourie recently showed great alacrity to create the unified licencing scheme without which Reliance Infocomm would not be able to offer roaming services for its users.

Fiction: A short story by Jeffrey Archer describes a scam for money laundering. A rich guy showers a lot of abuse on an unemployed friend at a club and pretends to leave in a huff. The friend jots down everything that the friend had said on a piece of paper and gets it attested by witnesses at the club. He launches a libel suit on and wins. The rich guy shows the libel damages as a legitimate expense in his tax returns and the friends gets some much needed cash.

Fact: When Narasimha Rao was Prime Minister, a lot of “reforms” were initiated in the telecom sector. Sukh Ram was at the forefront of this so-called reforms as he was the Minister for Telecommunications. An European trade publication published an article alleging that the minister was accepting bribes in the telecom deals. Sukh Ram sued the publisher and won more than £40,000 as damages. Several years later, when Central Bureau of Investigation (CBI) raided his house, they found a modern day version of Alladin’c cave with money and jewellery stuffed into every nook and corner of the house.