Friday, 26 July 2019

Billionaires blame penniless Mexicans for US ills (Pakistan Observer)

M D Nalapat

HALF of the population of the United States detests President Trump while almost the same number adores him. The 45th President of the US is unusually honest for a politician, making no secret of his views, no matter how unpleasant these may be to more than a few. During the 2016 campaign, he repeatedly said that he liked people who had little or no education, as such people would be inclined to vote for him rather than for his opponent. Indeed, the more educated the person, the less likely he is likely to be a supporter of Donald J Trump. During the 2016 presidential campaign, Hillary Clinton termed supporters of Trump as “Deplorables”. Her irrepressible opponent seized on the term and began to call himself and his supporters as “deplorables”, revving up their common hatred of Hillary Clinton. For more than six months, the Clinton campaign had silently but energetically sought to boost Trump against his Republican Party opponents, in the belief that he was the easiest Republican nominee to defeat in the polls.
To the dismay of the Clinton machine, Trump turned out to be a formidable opponent, landing several punches to everyone that he received, and connecting with the imagination of tens of millions of voters. Hillary Clinton made the mistake of underestimating Trump, and as several of those who have done business with him in the past can testify, this is a bad mistake. It was not only his father Fred’s wealth but an innate shrewdness and bulldog determination that earned Donald J Trump his 4-year stay in the White House, and which may assure him another four years, if the US economy continues to do better than expected, and the Democratic Party (still influenced if no longer dominated by the Clinton machine) chooses a cautious and “safe” candidate such as Joe Biden over a Bernie Sanders or an Elizabeth Warren. While he was at his peak during the 2015 struggle for securing the Democratic Party nomination for the presidential contest, during this round, Senator Bernie Sanders seems to have lost some of his appeal, possibly because of the manner in which he joined Barrack Obama in behaving like a cheerleader for the Clintons during much of 2016.
The way in which Bernie Sanders raised the white flag of surrender to Hillary Clinton even after he was cheated of the nomination by a series of dirty tricks by the Clinton-controlled Democratic Party machine, his supporters got dismayed and began to believe that much of his aggression was in words rather than in action. Sanders thought that his forgiving stance would ensure that the “lesser evil” (Hillary Clinton) prevailed over the “greater evil” (Donald Trump). Instead, by strengthening the impression that the Democratic Party was in the pocket of the Clinton machine, Sanders paved the way for Trump to win.
Rather than lead the 2020 field as a candidate of his qualities ought to have, Sanders is behind Joe Biden, the candidate of the Clinton machine, in the opinion polls, and is only a bit ahead of Senator Elizabeth Warren, whose record in fighting the Billionaire Club is as impressive as that of Sanders himself. Another impressive Democratic Party candidate independent of the Billionaire Club is Senator Kamala Harris, who needs to race ahead of the rest of the field during the coming two months if she is to emerge as the presidential or (more likely) the vice-presidential candidate for her party in the 2020 polls. Donald Trump, of course, is a billionaire himself, who makes no secret of his view that billionaires make the best Presidents and Cabinet members, a stance that seems to have resonated with tens of millions of underprivileged voters with European ethnicity who seem to admire billionaires and revel in their being the rulers, despite this small club of hyper-rich individuals ensuring government policies which benefit them at the expense of the rest of the population.
Trump is loyal to the Billionaires Club, which is why he has become a megaphone for the message the latter seek to blare out to the people of the US. This is that the problems being faced by tens of millions of US citizens have been caused not by the predatory greed of the hyper-rich, but by the waves of impoverished Mexicans and other Central Americans trying to enter the US without a visa. Most are family units, often with very young children. What they seek is a job that would enable them to send money to those back home who are destitute. However, the Billionaires Club is relentlessly using the media to portray such intending migrants as a bagful of criminals whose primary purpose is loot, murder and rapine. The hundred million or so US citizens who believe such a nonsensical claim thereby get separated from the fact that toxic policies put in place by Presidents Bill Clinton and George W Bush, policies that were only tinkered with and not discarded by Barrack Obama, are what is responsible for the stagnation in incomes of the middle classes and continuing poverty on a scale that is impossible to conceal.
In the capital of the US, pavements of filling up with desperate individuals holding up plastic cups for passers-by to fling a few coins in. More and more of such unfortunates are of European rather than African ethnicity, hence the utility to the Billionaires Club of having a US President who manages to direct public anger at economic woes away from the Billionaire Club to hundreds of thousands of destitute migrants from south of the US, with a few even coming from North Africa and South Asia. President Trump has diverted public anger away from folks like him, the hyper-rich, which is why the Republican National Committee is getting so much more in donations than the Democratic National Committee. Judging by the confusion over policy and personalities in the Democratic Party, the odds are rising that Trump will secure a second term on November 8, 2020. Should that occur, and should Trump continue with Clinton-Bush policies that give a disproportionate quantum of advantage to the Billionaire Club, his second term is likely to be a stormy one, not so much in the US Congress but on the streets.
The substantive divide within the US is not between “white” and “black” or “coloured” US citizens but between the hyper-rich and the next. Despite efforts by the Billionaires Club to ensure that public fury remains diverted from them to the human tragedy at the southern border of the US, a time of reckoning in the shape of an administration that does not just talk about the poor (as Obama did) but which actually does something for the poor (as Franklin D Roosevelt and Lyndon Baines Johnson did) will dawn, if not in 2020, then latest by 2024.

Thursday, 18 July 2019

President Trump focuses on second term (Pakistan Observer)

M D Nalapat

FORMER Prime Minister Manmohan Singh is known in India as the “accidental” Prime Minister. His former Information Advisor, Sanjaya Baru, has written a very readable book called the “Accidental Prime Minister”, which was later made into a Bollywood movie. Baru wanted his boss to take advantage of the immense powers of the Prime Ministership and ensure that it was Manmohan Singh and not Sonia Gandhi who steered the ship of State. However, there was nothing even remotely “accidental” in the decision of Congress supremo Sonia Gandhi to select Manmohan Singh as the Prime Minister, given that her taking over the job would have given the BJP a juicy target to derive political mileage from. Atal Behari Vajpayee as Prime Minister believed that as long as a Catholic of European descent led the principal opposition party, the BJP was safe. Genial to friends and unforgiving to enemies, Vajpayee went out of his way to ensure that Sonia Gandhi was protected from the darts thrown in her direction, many from within his own party.
Those who maintained good relations with Sonia Gandhi within the BJP, such as the always charming Arun Jaitley, were promoted while critics such as Govindacharya were marginalized within the BJP. The most persistent critic of Sonia Gandhi, former Harvard professor Subramanian Swamy, was kept out of the BJP by Vajpayee, joining the party only after Narendra Modi emerged as the prime ministerial candidate of the country’s biggest party. However, Vajpayee’s calculations went wrong when his government lost its mandate to a coalition led by Sonia Gandhi in 2004. The defeat came as a surprise to Vajpayee and to his ministers, who did not even remove the computers they had been using while in ministerial office before handing over charge to the nominees of the Congress Party and its allies. Certainly the computers would have yielded a treasure trove of information about the Vajpayee ministry. In contrast, after the Congress Party lost the 2014 parliamentary polls to a supercharged BJP led by Narendra Modi, they were given ten days to “clean up” and to make decisions to the last day in power that would benefit them.
The BJP won the election on May 16 and waited until May 26 before swearing in Narendra Modi in the presence of SAARC leaders, including then Prime Minister Nawaz Sharif of Pakistan. Up to now, Prime Minister Modi has shown great forbearance where his predecessors are concerned, giving a clean chit to former PM Manmohan Singh (who held charge of the Coal Ministry when several criminal transactions took place that were later punished by the courts. The incoming government took the view that the Prime Minister’s Office under Manmohan Singh was blameless despite several dubious decisions having been cleared during that period. It needs to be said the Manmohan Singh is known to be personally honest, but regarded as having turned a blind eye to wrongdoing sanctioned by Congress Party leaders. The Modi government could have taken the view that Manmohan Singh as Prime Minister was culpable for wrong decisions taken, even though he personally did not derive any pecuniary benefit from such actions.
However, he was excused. In fact, no Minister in the Manmohan Singh government has been sent to jail under Narendra Modi, who has allowed anti-corruption agencies to take their own time investigating some of the many corruption charges that the BJP had levelled against the Manmohan Ministry during the latter’s decade in office. In fact, as Prime Minister, Manmohan Singh had sent one of his own Cabinet Ministers to prison and was about to send another when he was defeated in 2004. After the new government took office, the jailed minister was released from prison and the minister who was about to enter the portals of prison was given a reprieve from such a fate. Although a former minister, P Chidambaram, is being investigated by the anti-corruption agencies on multiple charges of wrongdoing, he has been granted bail more than two dozen times by the courts, who seem unconvinced by the Government of India’s case against him.President Trump too has shown mercy towards his rival in the 2016 presidential contest, Hillary Rodham Clinton. Rejecting the advice of several of his supporters, Trump refused to launch prosecution against Hillary Clinton, not even investigating the funding of the Clinton Foundation or retrieving through data systems the several thousand emails that the former Secretary of State deleted before they could be accessed by investigative agencies. Interestingly, Hillary Clinton has repaid this act of grace of President Trump by unleashing her many supporters on the 45th President of the US. A campaign that can only be described as frenzied erupted in the US the day that the new Head of State vetoed suggestions that the Clintons be formally investigated. That campaign has continued without pause since Trump was sworn in on January 20, 2016 and this is despite the inability of a clearly biased Special Counsel (Robert Mueller) to dig up anything that could criminally compromise Donald J Trump, who seems only to have been further energized by the unprecedented attacks on him.
In a desperate effort to further persecute (if not successful in legally prosecuting) President Trump, a motion has been moved in the House of Representatives to impeach the President. This is unlikely to be adopted, as the majority of even Democratic Party members in the House of Representatives understand that such a process would make Trump even more a hero to nearly half the voters of his country. President Trump is deliberately and conscientiously pursuing a line of action designed to attract his base even as it angers those who would anyway never vote for him. Given the confusion within the Democratic Party, only a war with Iran could derail Trump, and the New York billionaire understands this well.
However, those in the Administration who want war – such as National Security Advisor John Bolton – are ensuring that partners of the US adopt lines of action that are designed to provoke Iran into a reaction that could lead to war. An example was the UK seizing an Iranian oil tanker, an act of folly that would never have taken place had Prime Minister Teresa May not been so completely distracted by her impending exit from office. The war of 1914-1919 began as a consequence of mistakes and accidents. Hopefully, the world will avoid a repeat of the conditions which created such a conflagration. US voters like tough talk but recoil from body bags, something that Trump understands perfectly. Hopefully therefore, the standoff between Washington and Teheran will cool rather than overheat during coming weeks. Such a damping down of tensions would assist President Trump to win a second term in 2020.

Sunday, 14 July 2019

Modi’s idea of India replaces Nehru’s construct (Sunday Guardian)

By M D Nalapat

The Nehruvian construct has long lost its popular resonance, support. 

The objective of almost all politicians is simply to win the next election. This was true even of Indira Gandhi, who was described in divinely lyrical terms by A.B. Vajpayee in 1971. In contrast, Jawaharlal Nehru sought to achieve much more than just another term in office. Nehru had been chosen by Mahatma Gandhi for the PM’s job because he would (in the saint’s view) be the leader best able to transform into reality Gandhian precepts. India was indeed transformed during 1947-64, the period when Nehru occupied the Prime Minister’s room in South Block. Central planning and the eclipse of the Indian private sector by state-owned behemoths took place, as did the putting into place of a social policy that aimed to re-assure the biggest minority community through the state, in effect, treating them as the majority and Hindus as the minority. While substantial social changes were introduced by law made applicable by Nehru to the Hindus, the Muslim community was untouched by reformative legislation. Despite having large numbers still in thrall  to the “Two Nation” Partition mindset, which steadily gained ground from the early 1930s despite the efforts of the Mahatma, the Muslim community was left to past practices, many not compatible with the requirements and thought streams of the 20th century. The Nehruvian education system took away the state-funded window for the teaching of the English language to the poor, restricting fluency in that language and its global advantages to the relatively affluent. Science and technology were regarded as best left to state institutions, while foreign policy was transformed as comprehensively as the nation’s economic and social patterns were. Nehru changed India in a way that was gently sought to be altered by the homespun vision of Lal Bahadur Shastri, but whose premature death took away this danger to the Nehruvian construct. Despite some changes at the margin during the periods in office of P.V. Narasimha Rao and A.B. Vajpayee, the Nehruvian construct continued its sway over the “Idea of India”. For Vajpayee himself was far from being a Ram Manohar Lohia, who had little positive to say about Nehru and the changes made in the country by the policies adopted by one of the two most powerful Prime Ministers in free India’s history. The second was not Indira Gandhi, for her period of awesome power (1975-77) was based not on popular consent but on coercion.
Rather, the second mega-powerful PM after Nehru is Narendra Modi, who was not pitchforked into the job by a patron, but who stepped into it (and has retained it) as a consequence of grassroots support. Just as Nehru did, Modi too wishes to fashion a country that would better fit his standards and vision. During the five years of Modi 1.0, this columnist was explicit that a second term for Modi would see immense changes in the country that he for decades travelled and saw the hard way, on foot and by road. The Nehruvian Idea of India is being replaced by the Modivian Idea of India since 2014, and this change is what has accelerated since the verdict of the 2019 Lok Sabha polls. Given that the Nehruvian construct had long since lost its popular resonance, the battle cry of the opposition that their aim was to retrieve Nehruviana  back into India’s dominant reality was another of their many self-goals in a country hungry for change. In particular, the more Rahul Gandhi clothed himself in the raiments of his great-grandfather and his grandmother rather than as his own self, the less he resonated against a wholly self-made Modi. Unless the economy enters into a tailspin during the next three years, a Modi 3.0 in 2024 will complete a process of change in India that would long outlast the Prime Minister. Among the differences with the past is that Modi has joined hands with the rulers of the UAE and Saudi Arabia to roll back Wahhabism rather than pander to it the way his predecessors did.
That politicians in India understand the paradigm change in India caused by Modi is clear from the flood away from opposition parties to the BJP. Taking the example of Karnataka, it would be difficult to argue that those in charge of either the JD(S) or the Congress Party in the state lack resources. The movement from JD(S) and Congress in Karnataka cannot therefore be explained solely by money, for if so, the resourceful D.K. Shivakumar would have been welcomed by the MLAs staying in a Mumbai hotel rather than get blocked by the police as a consequence of their complaint. The MLAs are shifting along with the tide that is flowing in favour of Narendra Modi and the alternative Idea of India represented by him. All this with an opposition phalanx that remains anchored to the past rather than acknowledging the needs of the future. The challenge to the supremacy of the Prime Minister in India’s political and policy space is from within his government. North Block has historically sought to raise its relative rather than absolute share in the country’s financial resources. This has meant taxes that are both too high as well as susceptible to harassment of the business community by officials. Modi has sought to eliminate business malpractice through administrative action. A less disruptive option would be to ensure that technology becomes pervasive enough to dry up wells of malpractice. For instance, once digital governance spreads across the spectrum of administrative action, and once 5G becomes commonplace in India, the changes that this would introduce would be phenomenal, provided that they are managed not by the state (as during the Nehruvian era), but by the private sector. North Block has to change its ways so as to increase its absolute take in taxes, rather than resort to the high rates and coercive action favoured by Finance Minister Chidambaram to squeeze resources out of private hands so as to feed bloated spending. Should India continue to grow at less than double digits for the next three years, there may indeed be widespread opposition to Modi, not from politicians but from the street. However, should the Prime Minister ensure that his economic ministries implement policies which guarantee a high Modi 2.0 growth rate, Modi 3.0 may break Rajiv Gandhi’s 1984 record in Lok Sabha seats in 2024.

Sunday, 7 July 2019

Rahul should beware of the ‘Partition Mindset’ (Sunday Guardian)

By M D Nalapat

Pandering to those who misused the name of religion for divisive purposes led to India’s partition. That warning from history ought to be heeded by Congress leaders.

The fissure between Narasimha Rao and Sonia Gandhi ensured the defeat of the Congress Party in 1996 and the emergence of the BJP as the principal national party. There had till then been a psychological barrier against a BJP Prime Minister amongst many voters, but this got removed when President Shankar Dayal Sharma swore in A.B. Vajpayee as Prime Minister, albeit for two weeks. Three years later, the Indian military’s performance at Kargil ensured the victory of Vajpayee. However, he refused to approve a covert operation masterminded by Pramod Mahajan to split the Congress, a show of magnanimity that cost him his chair two years later. In 2014, it was an unequal contest between the unpopularity of Sonia Gandhi and the popularity of Narendra Modi, with Manmohan Singh not even in the political frame. The UPA-era PM ought to have stepped aside soon after his multiple bypass surgery, but he continued in office despite his health not being up to the strain involved in being Prime Minister of a democracy of 1.2 billion citizens. Given his health, it is no wonder that Manmohan Singh’s second innings was a disappointment. Had he left in the glow of the 2009 Lok Sabha triumph caused by his still good name, Manmohan Singh’s place in history would have shone rather than become smudged by scams that he had no power to prevent.
In the case of Rahul Gandhi, despite his refusal to demonstrate his administrative abilities by assuming ministerial office during the UPA period, another opportunity to prove his talents presented itself in 2014. Had Rahul rather than Mallikarjun Kharge taken over as the Leader of the Congress Parliamentary Party in the Lok Sabha, it would have been the Nehru scion constantly challenging Prime Minister Modi in the Lok Sabha. Instead, the only challenges Rahul made were in miscellaneous fora across the country, some scarcely worthy of the presence of a genuine national leader. His consistent passing of the baton of responsibility to others weakened the perception that Rahul was the primary challenger to Modi. Had the newly anointed AICC President declared early in 2018 that he was not in the race for the Prime Ministership in 2019, it would have helped Congress’ prospects, given his lack of practical experience in governance. Instead, it was made clear to the voters that Rahul would be PM, were Congress to win enough seats. When it came to choosing between PM Modi and a future PM Rahul, the overwhelming mandate was in favour of the former. Among the consequences of Rahul’s perceived eagerness for the Prime Ministership (not by 2024 it in 2019 itself) was the defeat of the Congress Party at the hands of the BJP in almost all the contests in which they were the principal contenders. Now once again, by resigning from the AICC Presidentship, Rahul Gandhi has added to the BJP’s leadership advantage. It is a commentary on the sentimentalism of many voters in India (especially in the north and the south more than in the east and west of the country) that effectively the most popular substitute for Rahul Gandhi is Priyanka rather than someone outside the Nehru clan.
Despite being reticent during the UPA days, after the 2014 Lok Sabha polls, Rahul Gandhi adopted several stances that are in tune with 21st century needs. These included his backing for the de-criminalisation of gay relationships and the need to do away with criminal defamation. Should Rahul campaign for more transparency in government and in the need to legislatively expand personal and civil liberties and nudge the Congress Party to press for such changes in Parliament, he may do more good than he has in his former office. Worryingly, Rahul Gandhi seems to believe that Indira Gandhi’s economics is the way towards the social justice only fast growth can ensure, when the fact is that many of the distortions still present in the system owe their origins to Indiranomics. Rahul needs to  take seriously his own experience in both India and abroad, that show the need for systems that transfer power to the individual rather than to the state, and which expand rather than constrict the boundaries of personal and societal freedoms. Rahul has yet to accept that “Nehruvian secularism” has promoted communalism rather than kept it at bay. He ought to have leapt to the defense of TMC MP Nusrat Jahan when she was attacked by the Wahabbi establishment. As Prime Minister, it was Rajiv Gandhi’s surrender to the Wahabbis over Shah Bano that began his descent into political purgatory. Rahul Gandhi needs to show he is aware of the dangers posed by all—repeat all—forms of religious intolerance.
The India of 2019 calls for backing only those having a modern, moderate mindset. The sooner this gets actioned on, the better for the country. Those genuinely secular need to support Nusrat Jahan in her defense of an India where people are free to express their devotion to the Almighty in varied ways rather than in the restrictive way Zaira Wasim now favours. This despite the fact that Wasim’s movies portrayed her as a young woman of moral courage and self-confidence, qualities unlikely to lead to disappointment in the afterlife. Nusrat’s traducers, who claim to speak on behalf of the Almighty, are themselves guilty of blasphemy, for claiming to know in advance as to who will go to hell and who to heaven in the afterlife. According to them, that of course depends on the food eaten, the rituals followed and the dress worn. Pandering to such individuals, who misused the name of religion to sow division in the 1920s and 1930s, led to the partition of 1947. That warning from history ought to be heeded rather than remain ignored in practice by the Congress Party leadership, particularly Rahul Gandhi.

Saturday, 6 July 2019

PM Modi will ensure Lutyens Looters get punished (Sunday Guardian)

By M D Nalapat

Those looking towards a financial market in India that rewards not insider traders and ‘fixers’ but the retail investor are hopeful that justice will be done during Modi 2.0.

New Delhi: Unlike during the past, this time around, wrongdoer after wrongdoer is having to come back to India to face justice. Among those soon expected back is Vijay Mallya, “who will have to pay back his dues as well as go to jail for seeking to escape responsibility for so long”, a top official predicted. During Modi 1.0, the Prime Minister had warned “Lutyens Looters” that they would soon be spending sleepless nights. It has taken a while, but at least for some of them, that prediction is coming true. Two recent developments involving a CBI invigorated by new leadership mark a distinct departure from past practice. These are (a) the granting by a Special Court to grant Indrani Mukherjea the status of an “Approver” in the INX matter and (b) persistent CBI pressure on the Ministry of Finance to give approval to the unforgivingly delayed matter of granting approval for the prosecution of four officials who were part of what is known within the bureaucracy as the “PC network” within North and South Block. This very profitable network was formed under a former senior minister in the UPA period who parlayed insider and even strictly confidential knowledge into billions in riches. The INX matter which concerns Mukherjea involves what for new MP Karti Chidambaram (the hugely successful businessman son of the former Union Minister for Finance and later Home) is small change—$1 million—but as per the colonial-era laws still in force, there is scant differentiation between Rs 100,000 and loot of Rs 100,000 crores where legal action is concerned. So far as the request by CBI for sanction to prosecute some senior officials for presumed complicity in the PC network’s many dubious deeds is concerned, from 1947 onwards, a sense of cadre loyalty has ensured that officials belonging to the elite central services almost invariably dismiss as “not proven” even comprehensively documented evidence of graft on the part of their “cadre brothers”, especially if the same happen to be “batchmates”. This presumably explains the tardy manner in which this Chidambaram-linked CBI request for prosecution is being considered in the Ministry of Finance. The argument of those holding back sanction is: once the dam of silence and official inaction breaks, who knows who will get drowned in the flood that may follow. Since Jawaharlal Nehru’s order to drastically reduce the salaries of the higher levels of the bureaucracy (in contrast to Hong Kong, the UK, the US or Singapore, where remuneration levels are much higher), the warning to Nehru of Lee Kuan Yew against his policy of combining low salaries with high discretionary powers has come true. Every schoolchild in India is aware of the manner in which the triumvirate of business, officialdom and politics generate and divide loot on a scale that some estimate matches what the drain from the people was during the colonial period. Once the CVC and the Home Ministry take up with the Finance Ministry the manner in which delay in sanctioning prosecution of the four officials is sabotaging Prime Minister Modi’s efforts at cleaning up the system, it will be difficult for the PC network to sabotage such sanction for much longer.
Illegitimate money flows from India have long been the primary business of a group of insider traders and system manipulators that may be described as operational associates of the PC network. This is the “Mumbai Financial Force”, a small and secretive group within the financial community in the country’s commercial capital. The MFF may more accurately be described as the Mumbai Financial Fraud Force (MFFF). Given the number of senior officials who have derived monetary and other benefits from the PC-linked MFFF, it is small wonder that any infraction of law that comes to light usually gets described and later compounded as a “procedural lapse”. Harshad Mehta’s Narasimha Rao-era formula for rigging the movement of share prices so as to loot the small investor went unobstructed for years, owing to a “procedural lapse”, according to officials. The co-location shenanigans in the National Stock Exchange (NSE) have yet to yield any of the perpetrators before the portals of justice. Indeed, the matter is being treated—not just even but especially by SEBI—as largely a “procedural lapse”. Live data that no exchange should allow to be shared was handed over by the exchange to a private thinktank by an agreement that has yet to excite official notice. Software created from outside the exchange was utilised for algo trading, with the “keys” being made known to a handful of brokers, who therefore made huge amounts of money in trading, all at the cost of the retail investor. A whistle-blower made available to SEBI full details of the actions committed in order to enable a few to profit at the cost of the many, but the then SEBI chief U.K. Sinha seems to have decided that such revelations were unworthy of  significant remedial action. Even when matters involving co-location and dark fibre transactions became too many to ignore, SEBI simply went in for cosmetic steps, even after a PIL was filed in the Supreme Court pointing lapses out. Once again, the Judiciary stepped in where the Executive refused to tread. There have been proven instances where select brokers have submitted multiple applications under a single name to corner the shares offered in an IPO. These shares were then boosted through what the PC network calls “perception management”, before being sold to retail investors, who very soon saw the shares lose value. Data theft does more damage to investor confidence in a modern economy than other forms. Yet repeated data thefts in India have gone unpunished and the evil continues. By contrast, such offenses are subject to severe fines and prosecution in the US, Singapore and the UK.
During the period when Chidambaram was Union Minister for Finance, nationalised banks were made to sell loan assets at throwaway prices to a very few investors. These loans were before long resold to others at a huge profit. Thus far, no forensic audit has been undertaken of such loan asset sales by Public Sector banks during the Chidambaram period. Given the pervasive culture of cadre and batch protection within the elite services, it is no surprise that criminal charges were not filed in the matter despite the wide spread between what the public banks got and what the same loan assets were subsequently sold for by select private financiers, nor was even a criminal investigation initiated. Co-location and dark fibre data leakage that ruined millions of retail investors also was treated not as a criminal but as a “procedural” matter. SEBI seems unaware of the fact that in an age of advanced technology, log sheets that may have been erased by wrongdoers within any exchange can easily be regenerated, so that deleted data gets traced. No such effort has been made in this direction. Those who now head NSE seem as unconcerned about the damaging impact of the co-location scam on the reputation of the exchange as their predecessors.
Among the most successful operations of the PC network was the Multi Commodity Exchange (MCX) matter. The then MD of MCX was the classmate of an individual at the heart of the algo transactions, and he was reported to have shared live data with his classmate for the benefit of select clients. Such activity makes nonsense of regulations meant to ensure a clean and transparent exchange. However, so far as official agencies were concerned, the issue was “merely procedural”. A well regarded Chartered Accounant, T.R. Chadha, researched and presented a detailed forensic report on several of the actions that took place in MCX. Thus far, neither the present MCX Chairman or the SEBI Chairman seem in any hurry to take action on the basis of the Chadha report. Meanwhile, the PC network is known by senior officials to be active in an effort to merge NSE with MCX that would create a monolith with a history of not being held suitably accountable for its actions by SEBI, for reasons that await a comprehensive investigation. Such an enquiry needs to include the circumstances where relaxation of rules was serially given to a few favoured players in the darker corners of the share market, by not merely SEBI but the RBI, and why such leniency shown during that period took place. Two senior officials, Ramesh Abhishek and K.P. Krishnan, have been extensively mentioned by whistle blowers as being very close to P. Chidambaram, and of being responsible for several suspicious decisions involving MCX as well as the National Spot Exchange Limited (NSEL). Both bureaucrats continue to enjoy stellar careers, so it is clear that their seniors do not regard the charges against them as worthy of notice. The two are not alone. There is a network of present and former officials regarded by their peers as having facilitated the operations of the MFFF and the PC network. Only a CBI enquiry into the PC-MFFF nexus would unearth the truth, but those complicit in past scams have sought to create a perception that action against them would spook the share market, when in fact strong action would greatly increase global investor confidence in India. As for SEBI, while it has declared the subsidiaries of some brokerage firms to be “not fit and proper”, the regulator has avoided a similar verdict on the actual brokers involved. Of course, the tradition of subordinates being punished for the crimes committed by their superiors has long been extant in India. In this case, the “punishment” for grave betrayal of investor trust cannot be described as anything other than cosmetic, as indeed have been several other orders that await a comprehensive forensic investigation by a team motivated by Modi 2.0 to rid the regulators of those who are in cahoots with the very wrongdoers they are meant to police.
Those looking towards a financial market in India that rewards not insider traders and “fixers” but the retail investor are hopeful that justice will be done during Modi 2.0. Both during the Narasimha Rao as well as the Vajpayee period, stock market scams that went unaddressed resulted in horrendous losses to small investors, and to the defeat of the Congress and the BJP respectively in the 1996 and 2004 Lok Sabha polls. Prime Minister Modi is known to have studied the legacy of the past carefully, and to have instructed the PMO to ensure a Zero Tolerance doctrine for the many mega financial scams that took place since the UPA came to power. Officials are happy at Indrani Mukherjea turning approver in the INX matter and the moves being made on officials in the Finance Ministry to no longer continue to deny sanction for prosecution of Chidambaram-linked officers. They are confident that the PMO together with Union Home Minister Amit Shah will ensure that the orders passed by Prime Minister Modi to clean the financial regulatory system of crooked elements will soon bear fruit even in the matter of the misdeeds of the hyper powerful PC network. It has been estimated that the loss to the public of lack of sincere regulation has led to more than 71 per cent of the NPAs incurred since 2001 by banks run by the government. Only 29 per cent of NPAs have been caused by genuine borrowers whose failure to pay was based on the market rather than on collusion.