The CBI's record in the Jain hawala case was disappointing. But there are powerful elements in favour of unravelling the truth in the 2G spectrum scam.

On December 16, 2010, the Supreme Court (Justices G.S. Singhvi and Asok Kumar Ganguly, ) ordered a comprehensive and thorough investigation by the Central Bureau of Investigation and the Enforcement Directorate into what has become notorious as “the 2G scam.” The investigation, into spectrum allocation from 2001 to 2008, would be monitored by the judges.

One is reminded of the Jain hawala case (Vineet Narain vs UOI) in which the author was counsel for the petitioners and later designated as amicus curiae. In that case, the CBI chargeesheeted three Central Cabinet Ministers and the then Leader of the Opposition in January 1996 leading to their resignation. In May 1996, the serving Governors of Kerala and Uttar Pradesh were forced to resign and were charged. The fallout of all these resignations was described by the BBC as “the biggest political earthquake to have hit independent India.” In the April 1996 elections, the Congress was reduced to 130-odd seats in the Lok Sabha and was voted out of office. However, all the prosecutions failed and most of the accused were discharged by the trial courts before the final judgment was delivered on December 18, 1997. (1998) 1 SCC 226).

The Supreme Court observed: “The recent experience in the field of prosecution is also discouraging. To emphasise this point, some reference has to be made to a large number of prosecutions launched as a result of monitoring by the court in this matter which have resulted in discharge of the accused at the threshold … These facts are sufficient to indicate that either the investigation or the prosecution or both were lacking” (Page 264-265, Para 50).

The 2G scam has an equally explosive potential and should not result in a similar denouement. It is instructive to revisit some of the principal shortcomings of the investigations and the lessons from the past.


Considerable effort was made in the Jain hawala judgment (Justices C.J. Verma, Bharucha and Sen) to insulate the CBI and the Chief Vigilance Commissioner from political influence and make them autonomous. But the guidelines and directions given have been circumvented and have failed to achieve that result.

Many CBI officers, past and serving, are handicapped and cannot act independently and fearlessly, being subordinate to the political executive and bureaucrats — the same set of persons who are suspects.

Where powerful persons are involved, the CBI's track record is abysmal and hopeless. Justice Santosh Hegde in the CPIL vs . UOI: (2000) 8 SCC 606, 625 = Panna-Mukta Case observed that the CBI had resorted to ‘suggestio falsi' and ‘suppressio veri' and noted that files were destroyed unauthorisedly with an ulterior motive by its officers.

An equally trenchant criticism came in the Taj Corridor Scam case ((2007) 1 SCC 110 at 133), in which Justice Kapadia observed: “We reject the status report dated 31-12-2004 as it is a charade of the performance of duty by CBI” (Para 33).

“In matters after matters, we find that the efficacy and ethics of the governmental authorities are progressively coming under challenge before this Court by way of PIL for failure to perform their statutory duties. If this continues, a day might come when the rule of law will stand reduced to ‘a rope of sand'” (Para 35).

The CBI's track record in the Jain hawala case: The CBI's record in the Jain hawala case was equally disappointing. Sanjay Kapoor's first story in the Blitz on August 10, 1991 under the caption “Top Politicos in Multi-Crore Hawala Scandal” evoked no reaction from the investigating agencies. However, while investigating terrorist funding, the CBI on May 3, 1991 carried out simultaneous raids and searches all over India. Accidentally, diaries and documents were seized from the Jains, in addition to substantial cash and foreign exchange. The diaries contained hawala entries of payment in foreign exchange made abroad and equivalent rupee payments made in India to prominent and powerful politicians, bureaucrats and businessmen easily identifiable by the initials mentioned. The diaries were a ticking time bomb which could suddenly explode and had to be covered up. The cover-up was commenced by suspending the DIG-CBI in-charge, on the allegation that he was asking for a bribe — a trap laid by the CBI with the cooperation of the Jains who, ironically, instead of being the accused, became star witnesses. The unintended and unforeseen result was that the incriminating diaries were preserved. The time bomb was only temporarily defused.

The Jains were not even interrogated till the Supreme Court intervened on a PIL petition filed by Vineet Narain, Rajinder Puri, Kamini Jaiswal and Prashant Bhushan. The authenticity of the diaries was confirmed by the CBI after the resourceful journalist Vineet Narain presented their photocopies.

The version of B.R. Lall, former Joint Director, CBI, on how the Jain hawala case was scuttled by Vijaya Ramo Rao (then Director, CBI) is detailed in his book, Who Owns CBI — The Naked Truth.

In sum, the investigations were derailed till the court proceedings. Secondly, defective charge sheets were filed leading to the accused being discharged. Thirdly, the Enforcement Directorate and Income Tax were kept out of the picture from 1991 to about 1995, disabling them from recording statements which are admissible in evidence under FERA and Income Tax unlike those recorded by the police. The entire political establishment (ruling and opposition) closed ranks to save itself.

Skipper Cases

In the Skipper Construction cases, the Supreme Court, through a series of orders and with a continuous “hands-on” approach by Justice Jeevan Reddy, forced the investigating agencies to achieve substantial success. Some innovative approaches in those cases are worth recalling. If, prima facie, there was a case of bribe or loss caused by public officials by breach of the fiduciary duty or violation of law, the court attached the properties of the suspects, their spouses and dependants. ((1996) 1 SCC 272; (1996) 4 SCC 622, (1997 (1) Scale 532).

Peep into the future

The 2G scam case may acquire contours similar to the Jain hawala case as very powerful industrial and banking lobbies will exert influence to undermine the investigations.

But in contrast, there are powerful elements in favour of unravelling the truth. The Supreme Court has adopted a “no-nonsense” approach; the CAG report cannot be wished away; the Opposition is in full cry; the electronic and print media are doing a commendable job — and it is the unremitting pressure and the continuing debate in the media that can tilt the balance and become decisive factors.

The media, however, have their faults and excesses. To recall the famous words of Chief Justice Hughes of the U.S. Supreme Court: “Some degree of abuse is inseparable from the proper use of everything, and in no instance is this more true than in that of the Press … it is better to leave a few of its noxious branches to their luxuriant growth, than, by pruning them away, to injure the vigour of those yielding the proper fruits. “

The media as a professional group have an inbuilt self-corrective mechanism promoted by the pressure of competition and the lure of improved ratings and readership. This hydraulic pressure is a self-cleanser and works aggressively even against media icons.

The way forward

First, the innovative steps in the Skipper Cases of attachment of properties for suspected bribes or breach of duty can be a potent judicial tool. Secondly, a key input would be to fashion a leak-proof mechanism (independent of the government and investigating agencies) to collect evidence from ‘whistleblowers' and potential insider ‘approvers' with the assistance of former police officers, CVCs, CECs and others with impeccable integrity.

Thirdly, the money trail through the money laundering, FEMA and Income Tax routes — where statements recorded during investigations are admissible — should be traced.

Our respected Prime Minister in his New Year message has promised to double efforts to make a “course correction” and cleanse our “governing processes” (The Hindu, January 1, 2011).

A long-term solution and course correction to reduce corruption will require parliamentary intervention by setting up an Independent Commission against Corruption (ICAC) with a distinct cadre of investigative officials and with an autonomous status and constitutional protection equivalent to the higher judiciary, the CAG and the CEC. A Director of Public Prosecution with similar status and protection must also be appointed. Other measures would merely be a charade.

Prime Minister Manmohan Singh, in his address to the CBI in August 2009, exhorted the agency to aggressively pursue high level corruption and change the perception that while petty cases were quickly tackled, the “big fish escaped punishment” (The Hindu, August 27, 2009). Will the investigating agencies live up to that exhortation? Can they catch the big fish? The litmus test is whether they will receive vigorous and unstinted support from the highest quarters. Otherwise, the fish will continue to feed on our national wealth.

(Anil Divan is a senior advocate.

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