Implosion (41 page)

The alarming point about this story was not just that a cabinet minister had conducted these deals, but that he was not stopped for more than two years, despite the wide and critical publicity, and was reappointed after the 2009 election. It emerged later that reservations had been voiced by the PMO and the finance ministry about the allocation method, though the fact that neither Manmohan Singh nor Chidambaram stopped the licences brought allegations later that they had wilfully condoned the corruption. Arun Shourie, who was the telecommunications minister in the previous BJP government, was given documents by a ministry official that proved Raja’s dealings with the companies involved. Shourie told me that he personally offered the documents to Manmohan Singh in October 2009 and warned him that it was a ‘massive corruption scandal that would explode’. Shourie says that the prime minister touched his turban in apparent despair and exclaimed, ‘What can be done!’ The prime minister’s office failed to follow up on Shourie’s offer of a briefing.
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Police and other inquires began in 2009, and the story blew up into a major scandal when the CAG estimated in a report in November 2010 that there had been a notional loss to the government of Rs 176,000 crore.
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That was an inflated figure based on notional assumptions of lost government income, and it was reduced later to Rs 69,626 crore and then to Rs 57,666 crore. Raja was quickly dismissed and the Supreme Court criticized Manmohan Singh for the government’s ‘inaction and silence’.
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In its report, the CAG found that as many as 85 out of 122 new licenses issued to 13 companies in 2008 did not satisfy eligibility conditions.
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Raja was arrested along with a senior bureaucrat and others, including Shahid Balwa, the promoter of DB Realty, who was charged with others of channelling Raja’s bribe money into real estate – a money trail showed that payments of Rs 200 crore had been made by DB Realty to Kalaignar TV, a company in which the family of the Tamil Nadu chief minister had stakes.
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Investigations involved other companies, but all the 13 people who were arrested, including Raja, were released on bail in 2012.

Spin-off ramifications from this scandal reached across the Indian establishment with the publication of private taped mobile phone conversations centred on Nira Radia, a lobbyist and public relations consultant. They revealed networks of politicians, officials, fixers and a few excited journalists discussing 2009 cabinet formation during its ‘horse-trading’ phase as well as other policy issues. Ratan Tata, who was then the head of the Tata group, was embarrassed because he had personally made Radia the group’s main public relations consultant and his trusted adviser, and was heard speaking with her on the tapes. Other contacts and associates caught (some apparently innocently gossiping) in the conversations included N.K. Singh, a wealthy former top finance ministry and PMO bureaucrat; Tarun Das, creator and ex-head of the Confederation of Indian Industry; and Pradip Baijal, a retired senior bureaucrat who worked for Radia’s firm.
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Coalgate

The coal scandal – dubbed Coalgate by the media – began with a leaked draft report in March 2012 from the CAG that alleged the government had lost Rs 10.6 lakh crores ($210bn) by allocating mining licences to around 100 private and public sector companies without competitive tendering. This focused on the years 2004– 2009, when Manmohan Singh held the coal minister’s portfolio. Licences had been allocated since coal mining was opened to the private sector in 1993. Competitive bidding was first proposed in 2004, but was not implemented till 2010. Five months after its first report, the CAG cut the figure to Rs 1.86 lakh crore ($37bn), based on an assessment of the gains that could have been made by private sector companies that were allotted 57 coal blocks, including nationally significant names such as Tata, Reliance (Anil Ambani’s group), and the Jindal family-controlled mining and steel group.
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The more important loss, at a time when coal was urgently needed to boost serious power shortages, was that many of the companies had failed to start mining and instead sat on the assets, waiting for their value to rise. Some companies had filed inaccurate information and were not even eligible to be awarded captive mines or capable of doing so.
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The CAG said that a screening committee of officials that allotted coal blocks was responsible for the decisions, but the BJP blamed Singh and demanded his resignation.
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The Congress fought back by arguing that states ruled by the BJP such as Rajasthan, Jharkhand and Madhya Pradesh had opposed competitive bidding. The coal ministry cancelled many of the allocations, but the controversy expanded. The CBI investigated the claims and began by registering charges against relatively small companies. In May 2013, there were allegations of a cover-up by the law minister (who had to resign), and by officials in the prime minister’s office, who were apparently trying to protect the prime minister’s reputation by influencing the drafting of CBI documents to be presented to the Supreme Court.
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In June 2013, Naveen Jindal, head of one of his family’s businesses and a Congress member of parliament, was accused, along with a former minister of state for coal, of fraud and corruption in the allocation of a coal licence for Jindal Steel & Power.

This illustrated how, once investigations begin into a sector of Indian business, all sorts of potentially dubious and allegedly corrupt links emerge. Jindal, a Delhi socialite and polo player, was well connected with Congress leaders, so it was significant that the CBI felt free to investigate him. The CBI later filed a case suggesting that Kumar Mangalam Birla, chairman of the respected Aditya Birla group, had met a top coal ministry official and wrongfully persuaded him, after seeing the prime minister, to allocate a coal block in Orissa that had been reserved for the public sector.
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This created a furore because Birla had been regarded as beyond reproach, and the lobbying he appeared to have been doing was normal business practice in any country. This led Manmohan Singh to break his customary silence and his office issued a statement saying he considered the allocation of the block to Birla as ‘entirely appropriate’.
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The prime minister did indeed have a reasonably sound case, which he had spelt out in parliament in August 2012,
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but his words did not resonate for long in the furore and clamour generated by a parliamentary opposition bent on undermining the government and by an over-excited media. Singh’s line was that coal was urgently needed for power projects and the quickest way to mine it was to award licences and contracts on a select basis with favourable terms for private sector companies that would quickly generate electricity. As Singh said in parliament, the allocations were not regarded as ‘revenue-generating activity’ but a way of boosting electricity supplies – according to that argument, the CAG’s calculations of losses were wrongly based.

There was, of course, nothing wrong with allocating licences, provided the policy was clear, and provided strict and fair rules and conditions were set and monitored so that they allowed no favouritism. Unfortunately, in India, corruption and discretionary powers are so deep-rooted that such arrangements are unlikely to be operated ethically and are understandably (and usually correctly) regarded with suspicion. In the 2G case, it was clear from the start that licences were being awarded to unqualified and undeserving companies and, in the coal case, the rules were so loosely drawn and administered that undeserving companies received projects. The responsibility for both cases rested with Manmohan Singh because on 2G he knew what Raja was doing and failed to stop it. On coal, he himself had been the coal minister and therefore presided over the malpractices and resisted moves to switch to competitive bidding. Coal blocks were allocated to undeserving companies and reputable companies were unwilling or unable to complete projects and generate power because of bureaucratic and other delays.

Paid Media

India’s media is often lauded as one of the most free in the world. It is not, however, really free because of widespread corruption which leads to distorted, biased stories and editorial lines. Journalists and editors are also richly rewarded by companies and politicians, and a considerable amount of what appears in the media is ‘planted’ by vested interests. In a
British Journalism Review
article in 2001,
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I wrote that, with some notable exceptions, editors and reporters were not so irreverent towards authority as their counterparts in many other countries, and they were far more flattered by the attention of people in important positions. This made them more vulnerable to accepting planted information favourable to their contacts, and to being persuaded not to run controversial stories. Many journalists welcomed favours offered by politicians and businessmen, often with ‘brown paper envelopes’ and other gifts. One company, which is known to be the most adept at managing political and public opinion, is widely believed to have journalists (as well as politicians and civil servants) on its payroll.

I also told this story: ‘When I was first in India for the
Financial Times
in the 1980s, S.P. Hinduja, the elder of the infamous Hinduja brothers, failed to persuade me to ghost-write articles for him, hinting at fat fees. When I returned in 1995, he and his brothers tried, again unsuccessfully, to get me to ghost-write a book on governments that they had dealt with around the world. Together with other journalists, I was later given a small TV set after a press conference [held in Mumbai’s Taj Hotel where I was staying] by the Hindujas’ cable TV company. I returned the set so fast [once I had got back to my room and saw what I had been given] that I forgot to note down what model it was, so could not put a value on the implied bribe.’
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Such cameos are not in themselves very dramatic; but they illustrate one aspect of the sharp decline that has taken place in the standards of Indian journalism. The quality of the media has worsened, and the opportunity for companies to influence it has increased, with the growth of what is called ‘paid news’ where politicians and businessmen pay for favourable coverage. It surfaced as a scandal in 2008–09, with many reports of politicians paying for favourable stories in a general election, with newspapers and TV stations taking the initiative and offering such coverage in return for substantial payments.

This was especially prevalent with Hindi-language local and regional newspapers and television channels.
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The chief minister of Haryana even admitted it. ‘When I noticed the leading paper of my state printing baseless reports on its front page day after day, I called them up and offered money to print the right picture. The paper in question apologized. They even returned the money taken from my rival to publish news items against me,’ said Hooda.
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The Bennett Coleman group started paid news in its titles that include the
Times of India
, and was followed by others including the
Hindustan Times
and the Bhaskar group, India’s largest local-language newspaper publisher. This was taken a stage further with a system called Private Treaties, where Bennett Coleman accepts smallish equity stakes in companies in lieu of payment for its advertisements. It allegedly gives those companies favourable editorial coverage, though it denies the allegation.

The lines of ethics and professional standards have therefore become blurred in the media, as they have throughout India’s public life with the spread of extortion, fraud and other forms of corruption. There is considerable public discussion about how this should be changed, but little sign of much significant happening.

Revolution 2020

The young are being influenced and harmed by this corrupt world around them in the same way that generations of children in conflict zones such as Kabul or Kashmir grow up assuming that bombs and stone throwing are a normal way of life. Nowhere is this better described than in a novel,
Revolution 2020,
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written by Chetan Bhagat, a bestselling author and popular youth icon in his late thirties, whose stories about ambitious young Indians in places like call centres and technology institutes sell 500,000 copies a year.
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In
Revolution 2020
, subtitled
Love, Corruption, Ambition
, Bhagat exposes rampant corruption, not in the more obvious crony capitalist centres of Delhi and Mumbai, nor in the activities of chief ministers like Mayawati and Yadav, but in the politics and businesses of smaller cities and towns. His story is about India’s tertiary education system that turns out under-educated youth who are ill-equipped for careers. It is also about corruption in provincial politics and local land deals. Gopal, the main character, comes from a poor family in Varanasi, the sacred Hindu city on the River Ganga. He adores his childhood friend, the beautiful Aarti, whose family is better off, but he has a rival in their more self-confident middle-class friend, Raghav. Gopal sets out on a path followed by millions of India’s youth, traipsing round ill-qualified cramming schools and phoney colleges. He fails his degree exams while Raghav succeeds with his studies and makes Aarti his girlfriend. Eventually, Gopal falls into the clutches of a local politician who persuades him to build and run a college (even though he has no degree) on family land that he has unexpectedly inherited. That draws him into a life of deception and corruption with the politician whom Raghav, by now a campaigning journalist, seeks to expose.