Sitaram Yechury
The so-called Action Taken Report (ATR) placed by the government on the JPC’s recommendations regarding the bank/securities scam is a shameless defence of the culprits who perpetrated the worst ever fraud in independent India. The Janakiraman Committee had estimated a loss to the country to the tune of Rs. 4,024 crore while the CBI has placed the figure at Rs. 8,338 crore. A fraud of such gigantic dimension coming alongwith the public sector disinvestment fraud and the sugar scandal has looted the country of thousands of crores — much more than all the loans taken together from the IMF. Since the new economic policy has been initiated, the CPI(M) has all along pointed out to the unholy nexus between the ruling class politician-bureaucrat and brokers which has been unscrupulously utilising the new atmosphere to perpetrate such gigantic loot.
Apart from defending the culprits, the Action Taken Report is a travesty of parliamentary institutions. The government has treated the JPC’s unanimous report with contempt. Its arrogance reflected in the ATR borders on obscenity making a mockery of the principle of ministerial responsibility and accountability. The government has brushed aside the concrete evidence put forward by the JPC. The JPC had made 273 observations and recommendations of which 107 were specific. The JPC with a Congress chairman and majority was so constituted as to reflect in its composition all the major political parties represented in the parliament. Its report was not meant to be discussed. The government was obliged to come before the House and the country on what action it had taken on these recommendations. The Action Taken Report, however, leaves out three crucial players of the scam, viz. the ministers, the bureaucrats and the foreign banks. By leaving these out. the government has virtually allowed the perpetrators to go scot free.
It is for these two reasons — shameless defence of the culprits and making a mockery of parliamentary institutions — that the CPI(M) decided to resign its membership from all parliamentary committees and boycott the rest of the monsoon session in protest.
The two volume JPC report is a severe indictment on the entire system of financial institutions in our country presided over by the finance minister. This is what the JPC stated concluding its investigations :
“While replying to the Call Attention Motion on the strike by share brokers, the Finance Minister had stated in Lok Sabha on 30th April, 1992 that though he did not have a fool-proof answer as to what determines the stock market prices, Government was interested in a healthy functioning of the stock markets. He further said, it seems in a lighter vein, that, “But that does not mean that I should lose my sleep simply because stock market goes up one day and falls next day”. Similarly the Committee would like to observe that, `it is good to have a Finance Minister who does not lose his sleep easily but one would wish that when such cataclysmic changes take place all around some alarm would ring to disturb his slumber.’
Further, “The Committee are included to conclude that despite MoF (Ministry of Finance) being aware of what was happening in the stock market did not address themselves seriously to check the unhealthy trend believing this phenomenon to be a beneficial consequence of their policy. Even after holding the market behaviour as unreasonable, the MoF did not act decisively” (JPC Report, Para 16.15 and 16.16)
Thus clearly holding the minister of finance responsible for not acting decisively in the matter.
Curiously, the Action Taken Report endorses the five specific areas where the finance ministry is responsible viz (i) failure to anticipate the problem (ii) to respond to it purposefully when it surfaced (iii) to manage adequately thereafter the consequences of it (iv) apply the needed corrective with dispatch (v) punish the guilty in time and resolutely. The ATR goes further to state the government has at no stage denied the responsibility or accountability of the minister of finance to parliament. Further it goes on record to state that the crucial file regarding the scam was brought to the attention of the finance minister only after the news of the scam broke out and was discussed in the parliament. This gross delay in putting up this file warrants serious action against those responsible. The government however suggests nothing in this direction. The net result is that even after such glaring acts of omission and commission which the ATR accepts, nobody in the finance ministry leave alone the finance minister is held accountable for what had happened.
With regard to the role of union minister Shankaranand, the JPC had come down strongly in the manner in which the Oil Industry Development Board surplus funds were utilised and played a crucial part in the scam. In this crucial investigation the committee was told by Shankaranand that 91 percent of the funds of the O.I.D.B. were invested in just two institutions and gave details of how the offers from various banks were manipulated. This crucial observations contained in paras 14.167 and 14.175 regarding the conduct of Shankaranand, the ATR is completely silent. The JPC observed Mr. Shankaranand’s conduct as “uncalled for”. Yet the ATR does not make any observation regarding the accountability of the minister.
Regarding the role of Rameshwar Thakur, Dy. minister of finance, the JPC holds him responsible for delaying a crucial file on the misdoings of Harshad Mehta for nearly a month before putting it up to the finance minister. This deliberate act of delay had allowed the scam to reach the proportions that it had. Yet the ATR doles out flimsy excuses to state that the minister concerned was away on tour and was preoccupied with parliament work during the Budget session and hence the delay. Even the defence of the culprits is not done in a credible manner.What else is this but shamelsss defence of a collaborator of the scam.
With regard to the bureaucrats, the JPC report details a large number of people who for their various acts of omission and commission should have been proceeded against. In Para 15.149 it specifically names the top management of the Reserve Bank of India Venkataraman, the Governor, Janakiraman and Amitava Gosh, Dy. Governors, and N.D. Parameshwaran, Chief Officer of the Department of Banking Operation and Development. Not very strangely, the Action Taken Report does not refer to this crucial observation at all thus shielding many a officer who was party to the perpetration of such a fraud.
With regard to the foreign banks, the JPC report was severely critical of their role. Enquiring specifically into four banks viz ANZ Grindlays, Bank of America, Citi Bank and Standard Chartered Bank, the JPC had concluded that they were crucial players in the scam and the foremost beneficiaries. The JPC has shown that as compared to 1990-91, all these banks showed a massive spurt in the income they earned in 1991-92.
Profits Earned By Foreign Banks
In Crores
Bank 1990-91 1991-92
ANZ Grindlays Bank 92.34 144.92
Bank of America 22.91 66.94
Citibank 50.38 128.27
Stanchart 43.93 81.24
The JPC Report states : “The committee desire that special scrutiny may be carried out by the RBI in all the foreign banks involved in the recent irregularities and the question of disallowing repatriation of profits through irregular securities transactions and other malpractices be considered. It is necessary that stringent penalties, including suspension of their licences are imposed on these banks keeping in view the extent of irregularities indulged into by each of them. Legal action should be pursued both in India and the foreign country concerned.”
In the ATR however, the government has conveniently avoided the reference to the suspension of licences of these banks. The least that it could do was to have accepted the recommendation and saved the country from the loot of the foreign banks and the repatriation of their profits.
The JPC report in Para 16.61 states : “The Committee strongly feel that in view of their conduct and activities in the Scam, the working of foreign banks has to be strictly supervised. In a way, they have been the initiators of the Scam as well as the major players. With their tremendous resources, their undoubled clout, their aggressive policies and posturing, they can if they choose, play havoc with the economy”.
Strangely, the finance minister has argued that such a step would send wrong signals and jeopardise his vision of liberalisation and the new economic policies. Unbridled licence to loot the country cannot constitute an economic policy. On the contrary, every foreign investor would like to have the confidence that in India the economic activity is regulated in accordance with the law of the land. It is this lack of confidence that is strengthened by the government’s inaction against the glaring cases of fraudulent practices. In fact the JPC linking up the scam with the new economic policies commented on the finance minister’s statement :
“The predatory instict inherent in a system of free enterprise does release the entrepreneurial spirit and animal energy. But to make the process of liberalisation a success it is necessary to have strategic checks and effective implementation of regulations. While the mood of the Government is upbeat on liberalisation, their orienation towards strict enforcement has yet to manifest itself. De-regulation without effective checks and balances would be an unmitigated disaster.” (Para 16.64)
Therefore on all these counts of the ministerial accountability, the bureaucratic responsibility and the role of the foreign banks, the government has virtually allowed the main players who perpetrated this scam to go scot free. This refusal to punish the guilty is a clear admission on the part of the government that it seeks to perpetuate a system where the nexus of unscrupulous elements will continue to loot our country. While the new economic policy are imposing unprecedented burdens on the common man at the other end of the spectrum is the unbridled licence being given to vested interests to loot the public assets of our country.
It is against these gigantic frauds that are being committed on the people of our country that the CPI(M) and the Left democratic opposition had decided to quit the parliamentary committees and boycott the rest of the monsoon session and to take the issue to the people. The forthcoming civil disobedience movement initiated by the Left parties against the new economic policies will highlight the unprecedented rise in corruption which accompanies these policies.
The CPI(M) calls upon every Indian patriot to rally together to bring to book the culprits of this gigantic fraud. The Indian people cannot allow the Rao government to go on defending the scamsters with impunity. If the government continues its shameless defence then along with the guilty they shall also be punished by the people.