Saturday 13 December 2014

‘Swiss club’ delays Modi’s reform drive (Sunday Guardian)

11 politicians, 16 serving and retired senior officials, four lawyers and six business executives form the core of the ‘Club’.
MADHAV NALAPAT  New Delhi | 13th Dec 2014
Key officials and others are working overtime to block, or at a minimum, delay, Prime Minister Narendra Modi's reform agenda. These individuals are part of the "Swiss Club" whose core consists of 11 politicians, 16 serving and retired senior officials, four lawyers and six business executives, each having substantial illicit accounts in offshore havens, and who have for decades acted as agents for foreign entities eager to dump overpriced products in India. The existence of the club was first revealed in the 2 November 2014 issue of this newspaper (Officials confident PM Modi will prevail over 'Swiss Club'). While honest officials committed to Prime Minister Modi's reform agenda are seeking to undo the attempted sabotage of the Modi reforms by the "Swiss Club", the latter are concentrating on tarnishing the reputation for probity and efficiency of Prime Minister Modi. "The political base of the NDA government rests on a single brick, which is public faith in the integrity and commitment of Modi, and it is this that is planned to come under attack. "
To generate scandals about the Modi government, selective leaks are being planned of those instances where the "Swiss Club", taking advantage of the lack of administrative experience of several ministers, is conniving at short-circuiting of procedures, which then could be subject to adverse interpretation in the courts. An official gave the example of some coal allocations (including that made through a government trading entity), which has reportedly "dispensed with the earlier policy of allocating coal to the first three bidders, with L1 getting 60%, L2 25% and L3 the balance 15%". This, officials say, has been altered to give the top bidder (L1) the entire allocation, a change in policy which has angered entities left out of the allocations. Although such decisions may have been based on merit, yet "it would be easy to levy charges of favouritism in Parliament and the media", these officials warn. Another claim is that "there has been a delay in filing FIRs against some of those named in the HSBC list of account holders". The real purpose behind such leaks would be to "slow down decision-making once again to the crawl that was present during the UPA decade", said a senior official, who pointed out that there was a much higher level of efficiency shown by the Modi PMO as compared to the Manmohan Singh PMO. Another attempted scandal-in-the-making concerns a senior opposition politician, who has been reported by officials as trying to ensure that a Mumbai-based construction mogul escapes from legal difficulties connected to the 2G scam. The ex-minister has reportedly warned that he would expose individuals in the present dispensation if the construction mogul as well as two reputed hawala operators now under arrest were not let off. Officials committed to the PM's programme say that they are confident that "PM Modi will reject any pressure" and that he would allow the law and the facts to dictate the decisions of the government, no matter who gets affected, even if they be from his own party.
The "Swiss Club" is busy seeking a season of scandal commencing early next year to recreate the Commonwealth scam period, this time with the NDA government in the dock. It may be noted that members of the "Swiss Club" abuse each other in public, but work jointly in private to protect each other and their friends. They are also active in tarnishing the reputations of those opposed to them, often by using their influence in the Income-Tax Department, CBI and other agencies for the purpose, besides of course the media. An official claimed that the club began its work of sabotaging the Modi government immediately after the 16 May 2014 poll victory of the BJP, "when information about individuals being considered for top posts was deliberately doctored, so that those close to the 'Swiss Club' had their records expunged of misdemeanours, while those opposed to the club were accused of wrongdoing of which they were innocent". Naturally, as such assessments were secret, those against whom false allegations were made were unable to defend themselves, especially as such charges made in secret were usually followed by false information fed to media channels to publicly blacken the names and records of those opposed to the Swiss Club. Officials warn that the influence of the club on tainted elements in the government's investigating and reporting machinery gets used to try and ensure that only those regarded as favourable to the Swiss Club get into key positions after vetting, with those outside the club's influence excluded by untruths and innuendo retailed in secret. Those officials eager to assist Prime Minister Modi to succeed in his reforms claim that PM Modi is aware of the efforts at sabotaging his quest for the best and the cleanest to serve in his team, and has been keeping a watch on all key officials to ensure that "bad apples" get replaced with honest officials.
However, the "Swiss Club" has ensured that the hunt for black money has thus far yielded dismal results, while the "big fish" outed by the BJP as corrupt during the 2014 campaign still enjoy immunity. The club is seeking to divert official attention away from the estimated $1 trillion illegally held abroad to black money in India. The SIT, filled as it is by officials familiar only with the present system rather than outside experts of integrity, is reported to be in the process of recommending yet more regulations and curbs, most of which are likely to do little to curb black money, but will further inhibit the investment climate in India and increase harassment. "The Swiss Club is the channel through which key politicians in all parties secrete cash abroad, so these politicians are united in protecting the members of what is the most powerful club in India, for fear that otherwise they themselves will get exposed", a senior official claimed. His colleague added that "bigwigs in previous governments who were part of the club saw to it that opposition politicians got paid off so as to get immunity even if there was a political upset, as in the 2004 or 2014 Lok Sabha polls". The obstacle facing such elements is Prime Minister Modi, which is why "the club is in overdrive seeking to tarnish the name of the PM, first by targeting a few of his ministers".
During Manmohan Singh's time, there existed a cosy system in the bureaucracy, where the senior-most landed the top posts irrespective of integrity or merit, and afterwards rewarded subordinates with tribunal, commission and other posts. Prime Minister Modi has rejected a calendar-based appointments system and gone for merit instead in key appointments, thereby annoying those who did little but rose far. Such elements are seeking to scare the junior bureaucracy by floating the rumour that PM Modi wants to lower the Central retirement age to 58, just as Chief Minister Manohar Lal Khattar has done in Haryana. The senior official said that "bureaucrats in Delhi are being warned by the Swiss Club that Delhi state will follow Haryana's lead and lower the retirement age, should the BJP come to power after the next Assembly polls".
The six-month extension given to Cabinet Secretary Ajit Seth (on grounds of need and efficacy) has resulted in some 1978 and 1979-batch IAS officers getting uncertain about their prospects. "The fact is that the PM expects performance, and protects those who work hard", an officer pointed out, adding that "for long, deadwood has clogged the system and needs to get replaced". It is precisely such "deadwood" that is working to implement the mandate of the Swiss Club, which is to damage prospects for speedy implementation of the Modi reforms.
Officials say that the PM is, these days, paying significant attention to the Home and Finance Ministries together with his close colleagues, Union ministers Rajnath Singh and Arun Jaitley. Both ministries are crucial to the success of his plans for reform, and are filled with elements close to the "Swiss Club", which is why both have been expert during the UPA days in blocking growth prospects and essential changes in procedures and rules. As yet, change is still too slow for comfort, despite the PMO's efforts. This is largely because of the bureaucratic slowdown created by "Swiss Club" elements, which have, for example, caused the piling up of over 900 personnel files, with even appointments of mid-level officials now being held up for months. The sharp decline in manufacturing last month has combined with the fact that, as a top official warned, "equity investment into India has been steadily declining even after the NDA came to power, while only debt has been rising fast", adding that "high debt flows into India were caused by the RBI policy of super-high interest rates". His colleague said that "only growth in equity investment will bring long-term value. Debt just increases vulnerability to external shocks". An officer pointed out that only 20% of the target of Rs 250,000 crore of extra tax revenue budgeted for the current financial year has been met, while the deficit target was overshot last month.
His colleague warned that "trying to squeeze higher taxes out of a declining production base, the way (former Finance Minister) Chidambaram did, will be toxic for the economy. The only way out is the Modi formula of extensive reforms in processes." However, this is an uphill task, given the "vested interests entrenched within the establishment, especially at senior levels, who have an interest in the present system, which enables leakages and punishes honesty".
By secretly lobbying against the decisive moves made by the PM, the "Swiss Club" is generating confusion in some ministries. In the Environment Ministry for example, there have been abrupt reversals of decisions on genetically modified foods (which are considered safe in the US), and in matters as urgent as the need to generate hydropower in Uttarakhand, which has several rivers ideally suited for the purpose. The effort is to stop or at least delay Prime Minister Modi's reforms, although these are making a significant impact on the overall economic climate, notably in ensuring a lower rate of inflation in essential commodities, more transparent decision-making, the scrapping of archaic laws and cumbersome procedures, the boosting of future employment through changes in labour laws and encouragement to job creation by changing land laws passed by the UPA which make the setting up of manufacturing units impossibly difficult. "But for Modi, the Indian economy would now be in recession", an official pointed out, although adding that the present rate of growth needed to be doubled. His colleague added that "The Swiss Club is only interested in protecting their illegal wealth and in helping the foreign interests which hold them in trust, and these are being threatened by the PM". Hence the developing plan to target the PM and his government within the coming months, so that decisions slow down and changes in procedures get abandoned. "We need a few members of the Swiss Club to be made accountable, and hopefully honest officers will ensure that this takes place", an official said, adding that "the battle between the reformers backing the PM and those seeking to sabotage change is far from won".

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