Season of scams

BOOK: The Insider’s View: Memoirs of a Public Servant

AUTHOR: Javid Chowdhury

PUBLISHER: Penguin

PAGES: 328

PRICE:` 499

YEAR: 2012

Sanjay Kapoor  Delhi 

In 1991, the Central Bureau of investigation (CBI), while investigating the funding of Kashmiri militants, came across a diary detailing pay-offs to the country’s political and bureaucratic elite. The list of beneficiaries was ‘politically neutral’ and had a sprinkling of both ruling party and opposition leaders. The diary lay in the vaults of the CBI till a media expose and a public interest litigation forced the Supreme Court to oversee the probe by investigating agencies. The Jain hawala scandal defined the way the courts and investigating agencies like the CBI and Enforcement Directorate (ED) countenance scandals involving people in high places. Despite the courts providing immunity to the CBI and ED from political interference, this high-profile case came to grief due to the manner of investigation.  

Javid Chowdhury was the Director of Enforcement who saw how the case was subverted from within. In his explosive first book, colourlessly titled The Insider’s View — Memoirs of a Public Servant, Chowdhury cites how investigating officials worked to dilute the case. The Prevention of Corruption (PC) Act needed creative interpretation to slap it on those who were not public servants. Chowdhury writes, “It is beyond my comprehension why the CBI pursued these cases as one under the Prevention of Corruption Act. There was a cut and dried case of violations under the Foreign Exchange Regulation Act.” FERA had stringent provisions and the onus of proving innocence rested on the accused. If they had been booked under FERA, many politicians and bureaucrats would have been put behind bars for long years as some of them, like the late Rajesh Pilot and Devi Lal, had admitted accepting funds from the Jains to the media. Despite all the noise, there were no convictions. 

That was not the only scam Chowdhury investigated. When he was in the revenue ministry, financial scandals were breaking out all around him. The neo-liberal economic policies initiated by the government of PV Narasimha Rao and fathered by Manmohan Singh saw the government on the retreat, allowing stock market bandicoots and the country’s amoral private sector to find ways to earn whopping windfall gains. In 1992, the country was hit by a securities scam when some stock market brokers, in connivance with bankers and public sector managers, illegally began to use public sector funds to bloat the market and enlarge their profit. Manmohan Singh, who was then Finance Minister, had famously said he would not lose sleep over the rise and fall of the stock market. Chowdhury also finds other economic managers of his government displaying a cavalier attitude towards the scandals. Montek Singh Ahluwalia, who has been a powerful voice in Manmohan Singh’s regime, comes up short in his estimation. What comes through in the book is how a section of the government was complicit in many of those and subsequent scams.  

An old-fashioned bureaucrat who believed in strict implementation of the rule of law, Chowdhury found it difficult to digest what was being passed off as economic liberalisation. He is critical of India’s private sector and the media for projecting FERA as an obstacle to the country’s growth. As ED, he knew that most of those who ran a campaign against the foreign exchange regime were FERA violators and wanted to get rid of the law at all costs.  

The country also became poorer by another scam, caused by a trade agreement between India and Russia. Chowdhury says the ED picked up “only a small fraction of the illegal transactions — normally a strike rate of 2 per cent is considered very creditable.” The trade was based on an artificial rupee-rouble exchange rate, hugely overvalued in favour of the rouble. After the collapse of the Soviet Union, its legal inheritor, Russia, was saddled with a colossal rouble credit as the exports from India were limited. The difference in exchange rate between the agreement rate and the market rate gave opportunities to the venal. Dubious businessmen and exporters connived with Russian bureaucrats to switch roubles into dollars. Chowdhury hints why this scam was allowed to perpetuate even when its nature and modus operandi were known at the top. Interestingly, he says that the rupee-rouble trade agreement was, at every stage, negotiated by Manmohan Singh in different capacities.

In many instances, it is apparent that Chowdhury is holding back people’s identity and key information. But many of these worthies have already come under the media glare. 

Chowdhury has an easy pen and shows his penchant for humour when he writes about his visit to Geneva with former CBI Director Joginder Singh. There are other nuggets, too, that make for a great read.