By M D Nalapat
Our ‘A.Q. Khan of Indian Finance’ has moles everywhere.
General
Pervez Musharraf—whose record in conning his masters (whether these be
in Islamabad or Washington) is unparalleled—made out that all
Pakistan-related proliferation was caused by A.Q. Khan, who was retired
and therefore “no longer a government official”. Living up (or down) to
its reputation of being irrationally credulous where its own favourites
were concerned, the CIA apparently bought Musharraf’s story, as did the
US administration. So whatever took place was the consequence of the
independent activities of a single scientist gone rogue, and not part of
a GHQ program to make some extra money through nuclear commerce, adding
to its profits from staples such as the South Asian narcotics and
hawala networks. A.Q. Khan was complicit in the nuclear proliferation
emanating from Pakistan, but as part of a network that comprised
hundreds of retired and serving scientists, military personnel and civil
servants. In India, an “A.Q. Khan network” has been operating since
2004, again with multiple players, but this time in the financial
markets and not the nuclear technology field. As yet, however, the
Government of India has shown no indication that it is aware of this
network and the systemic risk it poses.
The CBI, ED, DRI and RBI claim to have
finally realised that the deliberate defaulting of bank loans through
collusion between businesspersons, politicians and officials has reached
levels that threaten to sharply slow down the Indian growth story. Such
malpractices have coexisted with RBI policies that ensure a lucrative
and risk-free margin to multiple foreign financial institutions, even
while the central bank has been draining large tranches of manufacturing
and service industries of affordable finance. Arbitrage is the name of
the game in India, and North Block has long specialised in incentivising
such activities by those holding foreign currency, while adopting
measures limiting the spread of the bond market. There is indeed a
trillion dollar need for infrastructure, but to rely on middle class
savers to fund such expenses is unrealistic. What is needed is to
replicate what the US did over a century ago while developing its
railroad system, which was to attract large flows of funds from wealthy
overseas investors through the bond market. The clerk or junior manager
in India, who parks his or her meagre savings in LIC, should not be
expected to shoulder the financial burden of ensuring that
infrastructure in India reaches minimally acceptable global standards.
Rather, wealthy pension funds in the EU or in North America should be
incentivised to invest in bonds created for the purpose, rather than
continue to pour money into the equities market and make huge returns
through rigging of prices, in the process cheating the small investor of
his savings. Gitanjali Jewellery is not the only private company in
which the LIC bought shares at peak value, only to suffer losses once
prices inevitably came down to levels better matching fundamentals.
India’s financial “A.Q. Khan network” first drove equity prices higher
and higher through using its influence in the FII community and over
government policy (sometimes simply by official statements of intent of
policy) and thereafter “persuaded” public institutions to purchase such
shares, much of which were held by India’s “Khan” and his cronies.
Profits were assured through insider knowledge, and such moneys were
raised through looting of middle class investors. Given price fixing and
rigging in several of the stock prices in India, a citizen may ask as
to why so much discretion has gone the way of SEBI, an institution where
our own “A.Q. Khan” is said to have got appointed those who did his
bidding. Our “A.Q. Khan of Indian Finance” has moles everywhere,
including in the present dispensation, who give his syndicate real time
information collected by the banking system, by exchanges and by other
agencies, not to mention prior knowledge of impending monetary and
fiscal measures. And yet, it seems that no investigative agency has
connected the dots to unmask India’s own counterpart to A.Q. Khan and
his network, such as by checking on his continuing contacts and past
history with officials manning sensitive agencies. Real time information
still being made available to him by accomplices include data which can
be used to so manipulate equity markets enough to generate close to Rs
75 crore a day of pure profit for him alone, parked abroad through
payment highways created by monetary authorities “so as to meet the
needs of global commerce”. The same authorities who sent the informal
economy into the ICU by choking them of liquidity from 8 November 2016
onwards.
Just as Pakistan’s A.Q. Khan operated
through a network of serving and retired officers, so does his financial
sector counterpart in India. Otherwise it would not have been possible
for him to, inter alia (a) get selected helpful CMDs and EDs of banks,
(b) make government banks sell loans at low rates to private banks,
which almost immediately resold them at a profit, (c) engineer Corporate
Debt Restructuring deals where the money saved by the borrower would be
split with “Khan”, (d) get so-called “watchdogs” to ignore or compound
cases of favourites, while going after those deemed as a threat to the
network’s underground business empire, (e) creating dossiers, including
manufactured data, on target individuals and ensuring that agencies go
after them on the basis of dodgy evidence, and even (f) postpone the
introduction of enhanced security features in India’s currency by many
years, while ensuring that companies blacklisted by the Home Ministry
continued to supply vital items involving currency printing in the
country. Depressingly, this list goes on and on and on.
Prime Minister Narendra Modi needs to be
informed about the activities of the financial “A.Q. Khan network”
operating in India at speed since 2004, and which seems not at all to
have been inconvenienced by the 2014 Lok Sabha election results. India’s
“A.Q. Khan” has damaged the economy severely since 2004, by subverting
critical financial infrastructure so as to ensure that his global and
local moneybag associates increase the zeroes in their offshore holdings
of undeclared money at the expense of a country where 300 million
people go to bed hungry every night. Just as the Pakistan state had “no
knowledge” of the A.Q. Khan network, neither it seems is the Government
of India aware of the domestic financial A.Q. Khan network, comprised of
high roller operators busily sabotaging the future of India.
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