Story of India‘s 60 Years

LOK PAL AND LOK AYUKTA

It was proposed to set up the institution of Lok Pal

and Lok Ayukta to fight corruption in administration

and public life. As many as five Bills (Bills of 1971,

1977, 1985, 1989, 1991) were introduced. There was

no success in passing the Lok Pal Bills .

There was no agreement on (a) the inclusion of the office of

PM in the definition of ―public servant,‖ (b) the definition of

―criminal misconduct,'' and c) the constitutional status of the

institution. Meanwhile from 1970 to 1985 as many as 10

States passed the Lok Ayukta laws.

April, 9, 2011 . ANNA HAZARE WINS ANTI-

GRAFT BILL DEMANDS, ENDS HUNGER STRIKE

LOKPAL BILL WAS INTRODUCED 8 TIMES

UNSUCCESSFULLY EARLIER

The adoption of the Lokpal bill [LKPB] alone will not

end the menace of corruption but it will help fill the

lacunae in our system. N. Vittal

“As of now, we have a deadline to the LKPB: June 30 &

Aug 15. We can’t say whether these deadlines will

be met.”

INDIA’S POPULATION IS A PARADOX:

• India enjoys a large balanced demographics

in terms of age (54% of the population is

below 25 years of age)

• It is imbalanced in terms of income inequality

and gender.

• India faces tasks of: feeding, educating,

training and employing its youth.

COSTS AND RISKS FOR POLICY MAKERS

- IN THE SHORT TERM

The pace of

• upward mobility,

• urbanization and

• industrialization

poses significant adjustment costs and risks to

policy makers

IN THE LONG TERM, INDIA FACES THE

CHALLENGE OF MANAGING

• Aging population with inadequate care taking

facilities

• Skewed demographic picture with lack of

harmony that a joint family brings

• Potential social and public health problem.

The strategy adopted by the Government to tackle the

menace of illicit funds is five-fold. This consists of:

i) Joining Global crusade against ‗black money‘;

ii) Creating an appropriate legislative framework;

iii) Setting up institutions for dealing with Illicit Funds;

iv) Developing systems for implementation; and

v) Imparting skills to the manpower for effective action.

Illicit Funds: The Government‘s Strategy

(India Current Affairs)

THE CLOUDS INTERRUPTING SUNSHINE

LIC scam & Jeep scam

The history of corruption in post-Independence India starts with

the Jeep scandal in 1948, when a transaction concerning

purchase of jeeps for the army needed for Kashmir operation

was entered into by V.K.Krishna Menon, the then High

Commissioner for India in London with a foreign firm without

observing normal procedure. Further Corruption charges in

cases were Mudgal case (1951), Mundra deals (1957-58),

Malaviya-Sirajuddin scandal (1963), and Pratap Singh Kairon

case (1963)

Nehru‘s tolerance of corruption among his ministers legitimized

this malady; Indira Gandhi institutionalized it as she held both

the posts of the Prime Minister and party president and

controlled the party funds, which gave birth to the money power

in politics. The famous V. P. Malhotra (Chief Cashier of State

Bank of India) case in which he got a telephone call believing

from Indira Gandhi to pay Rs,60 lakhs to one Nagarwal remained

a mystery. Corruption cases like Fairfax, HBJ Pipeline, and HDW

Submarine deal came up since then.

Narsimha Rao was the first Prime Minister being

prosecuted in corruption charges. Cases like Rs.2500

crore -Airbus A-320 deal with France involving kickback

(1990), Harshad Mehta security scam (1992), Gold Star

Steel and Alloys controversy (1992), JMM bribery case,

Hawala scam of Rs. 65 crore and Urea scam (1996)

came during the period of Narsimha Rao Government.

How effective are our laws to combat

corruption?

THE SANTHANAM Committee Report 1964 defined

corruption as a complex problem having roots and

ramifications in society as a whole. In its widest

connotation, corruption includes improper or selfish

exercise of power and influence attached to a public

office.

During the post-independence period, several cases

of economic corruption have come to public notice

due to the vigilant press, efforts of public spirited

persons and a proactive judiciary.

The Bofors gun, Airbus deal, ABB loco deal, Jain

hawala racket, sugar scam, telecom scam, securities

scam, urea scam and fodder scam in Bihar were a few

instances. The scams which surfaced were only the

tip of the iceberg.

A majority of the scams related to “public expenditure''

by the Central and State Governments. The basic

criteria in detecting corruption in public expenditure

was the prevalent market value of item purchased,

though such a yardstick presents certain difficulties in

detecting corruption in defence purchases.

The cases of corruption in the collection of

“public revenues'' and arrears thereof are not

detected on a significant scale. It is not

anybody's case that there is no corruption in the

realisation of “public revenues,'' the direct and

indirect taxes.

Defaulting on bank loans is a penal offence

without provision of attachment of properties.

Yet another corruption is and money laundering

in the banking sector. The securities scam

alone involved a loss of Rs. 1,28,534 crores

according to the JPC which probed the matter.

Former Jharkhand Chief Minister Madhu Koda has

been booked by the Enforcement Directorate under

the Prevention of Money Laundering Act for allegedly

diverting state funds and making huge investments

abroad.

Senior officials of the ED said Koda, who ironically is

the first Chief Minister to be booked under PMLA, is

alleged to have made huge investments abroad

besides those in India.

ED books former Jharkhand CM

Madhu Koda under PMLA

The Hawala case to the tune of $18 million bribery

scandal, which came in the open in 1996, involved

payments allegedly received by country‘s leading

politicians through hawala brokers. From the list of

those accused also included Lal Krishna Advani who

was then the Leader of Opposition.

It gave a feeling of open loot all around the public,

involving all the major political players being accused of

having accepted bribes and also alleged connections

about payments being channelled to Hizbul Mujahideen

militants in Kashmir

The Top Scams in India

If you haven‘t heard of Bihar‘s fodder scam of 1996, you

might still be able to recognize it by the name of ―Chara

Ghotala ,‖ as it is popularly known. In this corruption

scandal worth Rs.900 crore, an unholy nexus was traced

involved in fabrication of ―vast herds of fictitious

livestock‖ for which fodder, medicine and animal

husbandry equipment was supposedly procured

It imposes financial institutions obligation to

verify identities of clients, maintain records and

furnish information to FIU-IND. It gives punitive

power against 'ML'.

ANTI MONEY LAUNDERING REGIME IN INDIA

NDPSA-1985, UAPA -2004, PMLA - 2005

Harshad Mehta & Ketan Parekh

Stock Market Scam

Stock Market Scam

Although not corruption scams, these have affected

many people. There is no way that the investor

community could forget the unfortunate Rs. 4000 crore

Harshad Mehta scam and over Rs. 1000 crore Ketan

Parekh scam which eroded the shareholders wealth in

form of big market jolt.

Income tax arrears in 1993 stood at Rs. 6,000 crores.

This is in respect of assessed tax. Under-assessed tax

accounts for some thousands of crores of tax losses. So

is the case in relation to indirect taxes - central excise

duties. Another angle of revenue loss relates to non-

recovery of bank loans from the industrialists

accounting for nearly Rs. 50,000 crores.

2G Spectrum Scam

This scam involved the process of allocating

unified access service licenses. At the heart of this

Rs.1.76-lakh crore worth of scam is the former

Telecom minister A Raja – who according to the

CAG, has evaded norms at every level as he carried

out the dubious 2G license awards in 2008 at a

throw-away price which were pegged at 2001

prices.

The Top Scams in India

Commonwealth Games Scam: It is estimated that out of

Rs. 70000 crore spent on the Games, only half the said

amount was spent on Indian sportspersons.

The Central Vigilance Commission, involved in probing

the alleged corruption in various Commonwealth Games-

related projects, has found discrepancies in tenders –

like payment to non-existent parties, willful delays in

execution of contracts, over-inflated price and bungling in

purchase of equipment through tendering – and

misappropriation of funds

The Top Scams in India

Abdul Karim Telgi forged in printing duplicate stamp

papers and sold them to banks and other institutions. The

fake stamp and stamp paper case penetrated 12 states

and was estimated at a whooping Rs. 20000 crore plus.

The Telgi clearly had a lot of support from government

departments that were responsible for the production and

sale of high security stamps.

The Top Scams in India

Satyam is the biggest fraud in the corporate history to the

tune of Rs. 14000 crore. The company‘s disgraced

former chairman Ramalinga Raju for a decade fudged

the books of accounts for several years and inflating

revenues and profit figures of Satyam. Finally, the

company was taken over by the Tech Mahindra which has

done wonderfully well to revive the brand Satyam.

The Top Scams in India

The chief minister of Maharashtra has resigned over his

alleged role in a scam involving homes for war widows.

Ashok Chavan was ordered by the ruling Congress party

to tender his resignation.

Mr Chavan's relatives, army officers and bureaucrats are

among those who allegedly acquired apartments in the

Adarsh Cooperative Housing Society in Mumbai's

upmarket Colaba area. The housing society in Mumbai

was originally planned as a six- storey building for war

widows. But it was changed to a 31-storey building

allegedly without the requisite environmental clearances.

IPL Scam

The recent scam in IPL and embezzlement with

respect to bidding for various franchisees. The

scandal already claimed the portfolios of two big-

wigs in the form of Shashi Tharoor and former

IPL chief Lalit Modi.

WASHINGTON: Indian students , mostly from Andhra Pradesh ,

face the prospect of deportation from the US after authorities

raided and shut down the Tri-Valley University in Pleasanton, a

major suburb in San Francisco Bay Area, on charges of a massive

immigration fraud . It has been charged by federal investigating

authorities with being part of an effort to defraud, misuse visa

permits and indulge in money laundering and other crimes.

According to a federal complaint filed in a California court, the

University, which was raided and shut down last week, helped

foreign nationals illegally acquire immigration status. The

university is said to have 1,555 students. As many as 95 per cent

of these students are Indian nationals, the complaint said.

25 Jan, 2011, PTI

Immigration fraud: Hundreds of Indian

students may be deported from US

Over one hundred thousand farmers took their

lives across certain regions of India in the past 10

years. The tragedy is that no one is keen to come

to grips with the reasons that led to this never-

ending saga of human suffering. A well-known

German newspaper said: ―The ‗mover and shaker'

Indians are engrossed in themselves, busy

fulfilling their dreams. To them, the 25 per cent of

the world's poor living in India are non-existent.‖

Child labour

An op-ed article in a Bavarian newspaper

said: ―Indians assume that the law will take its

course. But, in the Indian style ‗rule of law',

time is ‗eternal' and it could take another 20

years before the guilty is brought to justice.

TAX HAVENS, BLACK MONEY AND

FINANCIAL FLOW OUTS

Some 70 odd small territories in different locations of

the world endeavor to attract investment from outside

their border offering financial secrecy laws. These are

commonly known as ―tax havens‖, because they also

impose little or no tax on income from sources outside.

So tax havens are ideal lodges for black money of many

countries.

Campaigns against dirty money as high security

risk commenced with the pathbreaking research

done by Raymond W Baker, a Harvard MBA

and a Brookings scholar. He published his

research as a book

Capitalism‘s Achilles Heel: Dirty Money and How

to Renew the Free- Market System.

The book was published in 2005.

• Global Financial Integrity (GFI), a global

watchdog headed by Baker to curtail illicit

money flows, has recently brought out detailed

estimates of the black wealth hoarded in secret

havens from different countries.

• GFI research shows that during the period

2002 to 2006, annually $27.3 billion was

stashed away from India, making a total of

$137.5 billion for the five-year period.

Global Financial Integrity

1319 18th Street NW, Suite 200

Washington, D.C. 20036

USA

Phone: +1 202.293.0740

Fax: +1 202.293.1720

Email: gfip@gfip.org

Map/Directions

Nearest Metro: Red Line to Dupont Circle (South

Exit).

Contact Us

India has lost nearly a half-trillion dollars in illegal

financial flows out of the country, says a new

study by Global Financial Integrity. So massive

are these illegal outflows, says the study, that the

―total capital flight represents approximately 16.6

per cent of India's GDP as of year-end 2008.‖

The report says, ―the figure represents a

staggering loss of capital.‖ Illegal flight of

capital, it says,

• ―worsens income distribution,

• reduces the effectiveness of external aid, and

• hampers economic development.‖

The study

The GFI study is titled ―The Drivers and Dynamics of Illicit

Financial Flows from India: 1948-2008.‖ Authored by Dr.

Kar, formerly a senior economist at the International

Monetary Fund (IMF) and now Lead Economist at the GFI.

It defines ‗illicit flows' as ―comprised of funds that are

illegally earned, transferred, or utilised — if laws were

broken in the origin, movement, or use of the funds then

they are illicit.‖ Such fund transfers are not recorded in the

country of origin for they typically violate that nation's laws

and banking regulations.

In their website, a detailed report is available (Illicit

Financial Flows from Developing Countries: 2002-2006,

authors Dev Kar and Devon-Cartwright Smith — A project

of Ford Foundation). Page 30 of the full report gives a

clearer picture for India.

(http://www.gfip.org/storage/gfip/executive%20-

%20final%20 version%201-5-09.pdf)

Many thought the launch of market reforms in the

early 1990s and the end of license raj would

reduce corruption. Instead, with the creation of

additional wealth and circulation of more money in

the economy, what one witnessed was an increase

in scale of corruption.

Though the country has grown impressively since

the reforms began, the growth would have been

even more remarkable had corruption been not a

factor.

“I would go to the length of giving the whole congress a decent

burial, rather than put up with the corruption that is rampant.” —

Mahatma Gandhi May 1939 .

This was the outburst of Mahatma Gandhi against rampant

corruption in Congress ministries formed under 1935 Act in six

states in the year 1937. The disciples of Gandhi however,

ignored his concern over corruption in post-Independence India,

when they came to power. Politicians are fully aware of the

corruption and nepotism as the main reasons behind the fall of

Roman empire, the French Revolution, October Revolution in

Russia, fall of Chiang Kai-Shek Government on the mainland of

China and even the defeat of the mighty Congress party in India.

• Misappropriation of public funds and

• acquisition of ill-gotten wealth are clearly

illegal.

However, subtler forms of

• non-material corruption,

• coupled with abuse of power and misuse of

privilege,

are equally prevalent but not often debated.

We still can expect reform and get

the benefits of corruption-free, good

governance in our lifetime.

• Capitalism, globalisation and liberalisation have

increased the pressure to succeed, achieve

targets and acquire wealth quickly.

• The abuse of public power, office and resources for

personal gain is common.

• We still can expect reform and get the benefits of

corruption-free, good governance in our lifetime.

Corruption in any organization or society depends on three factors.

The first is the individual sense of values. The second is the value

cherished by society and the third, of course, is the system of

governance. Thanks to modernization and the tremendous impact

of satellite television and the media and the policy of liberalization,

we are seeing the vigorous growth of the consumer culture.

Lifestyle has become very important. What we can do is to at least

see that certain basic values like integrity, honesty and

compassion are inculcated.

Basis In Self-Sacrifice

Swaraj can be maintained only where there is a

majority of loyal and patriotic people to whom the

good of the nation is paramount above all other

considerations what-ever including their personal

profit. M K G (YI, 28-7-1921, p.238)

If Swaraj was not meant to civilize us,

and to purify and stabilize our civilization,

it would be worth nothing. The very

essence of our civilization is that we give

a paramount place to morality in all our

affairs, public or private.

(MKG, YI, 23-1-1930, p. 26)