The parliamentary committees on the howitzer scam and the stock market scandal protected the powerful and failed to fix accountability. The same is true in the spectrum case

The current political situation brings back memories of 1989. The Prime Minister then was under a cloud in the Bofors scam. Many of his close associates like Lalit Suri and Ajitabh Bachchan were accused of wrong-doing. Today, Prime Minister Manmohan Singh and many around him are under a cloud. The Congress president has been weakened by allegations against her son-in-law. The Joint Parliamentary Committee report on Bofors was rejected by the Opposition. It resigned en masse from Parliament forcing national elections. Presently, the JPC draft report on 2G has been rejected by the entire Opposition.

In 1989, Rajiv Gandhi was protected by the ruling party members in the JPC. The Opposition felt that some key people associated with the Bofors deal were not called to depose or had not been adequately questioned. Now too, A. Raja has not been called to depose, even though he is the key accused in the 2G scam, lest he should implicate the Prime Minister and the Finance Minister.


As in 1989, governance has taken a beating today with the government getting caught in one scam after another. In an attempt to brazen them out, the government is committing mistakes and compounding its problems. The mess created by the former Law Minister vis-à-vis the Central Bureau of Investigation and the Supreme Court, in an attempt to save Dr. Singh (who was also the Coal Minister when the scam took place), has embarrassed the government.

As the Bofors scam unravelled in 1987-88, India’s international standing plummeted. The GATT Uruguay round of negotiations was at a crucial stage with India acting as the leader of developing countries in negotiating with the advanced countries. India’s stand softened perceptibly at that time. Consequently, in 1999, in Seattle, India was not trusted by other developing countries. Today also, India’s stock has declined and its neighbours are taking advantage of the situation.

In 1987, it was the Swedish radio that brought to light the payoffs in the Bofors deal. In Parliament, Rajiv Gandhi denied any wrong-doing. His government argued that Bofors was a good gun but investigators in Sweden revealed that payoffs had been made. The UPA government, too, has denied wrongdoing in the various scams that have come to light and argued that its actions have furthered policy and helped keep prices down. It is the intervention by courts that has led to progress in investigations into scams like the CWG, Hasan Ali case, Liechtenstein disc, 2G and Coalgate.

In the Bofors case, the true beneficiaries could not be identified because of manipulation at the highest levels. This became clear soon enough but the matter was nailed when Madhav Singh Solanki passed on a note to the Swiss Minister — to slow down the case. This led to a furore in Parliament but rather than reveal the content of his note, he preferred to resign. Who sacrifices one’s career unless the stakes are very high? Ottavio Quattrocchi escaped from India and has been repeatedly helped by our agencies (which weakened the case) so that he does not return to India to face trial and questioning.

The Congress has accused the Opposition of playing politics with the Bofors scam saying even when the Opposition was in power, it was not able to unravel the case and find the ultimate recipient of the Bofors money. This is a pointer to how important cases are spoilt so that it becomes difficult even for an Opposition party to solve it when it comes to power. The system works like a mafia — in secrecy and silence. The institutions that should help expose scams are unable to do so because of the silence of those who know. The selection of people for key posts is often based on their pliability. IAS officers like Arun Bhatia or Khemka are marginalised. Some honest individuals who do get to the top typically keep their counsel and avoid ruffling the system much. They become the fig leaf behind which the system can hide its true nature.

In the Coalgate scam, it has emerged that the CBI is not independent of the political authority which it is supposed to investigate. It has now been confirmed that cases against politicians are activated or put on the back burner depending on the needs of the ruling dispensation. It is the Supreme Court that placed the CBI under the Central Vigilance Commission to introduce a degree of autonomy in its functioning. But it has now been proved beyond doubt that the administrative machinery under which the CBI personnel function can twist its arms, undermining its autonomy.

In India, Parliament is the ultimate watchdog to check wrong-doing by the authorities. The increasing number of scams is a testimony to its failure. JPCs are an instrumentality of Parliament and an analysis of their inability to make a dent is a pointer to what is wrong in the system. Their lack of success is due to their inability to pinpoint responsibility in the issues they have investigated, and this is largely due to the partisan attitude of the members of the JPCs. They have acted to protect the powerful. The JPC of 1992 on the stock market scam in which Harshad Mehta was the key player is a case in point.

Mehta played havoc with the financial system, including the RBI. He was the blue-eyed boy of the Finance Ministry at that time. In October 1991, when in spite of the crisis confronting the economy — high inflation, declining growth rate, and the BoP crisis — the stock market kept rising, concerns were raised in Parliament. The then Finance Minister replied that “he would not lose sleep” over the matter. A clear signal to people like Mehta that the government would not check their speculation in the stock market. However, when members of the JPC wanted this to be recorded in the report, the Congress members resisted and the report did not incorporate it. Clearly, accountability could not be established.

The Finance Minister met Mehta a few days before the budget in 1992 and accepted his demand that shares should be exempted from wealth tax. The markets rose sharply on the day of the budget and Mehta made a killing because he had advance information. Mehta was raided by the Income Tax department that day because of the huge amount of funds he had been moving around for some months but the Minister stopped the raid a few hours after it started. So the source of funds could not be traced and the scam could not be prevented. It was never revealed in the JPC who stopped the raid and why, because the officer concerned did not appear before the JPC. Again accountability could not be established.

The Janakiraman Committee report on the scam estimated a loss of Rs.3,128 crore to the public — huge compared to the Bofors scam of Rs. 64 crore. Today, the Coalgate and the 2G scams dwarf all other scams. It is clear that stock market scams have continued because accountability was not fixed in 1993. A large number of people lost their lifetime savings (as in the Saradha chit fund scam). Now again, accountability is not being established in the 2G scam.

Rot runs deep

Waves of scams have occurred in the stock market. Timber companies, granite companies and dotcom companies were floated only to disappear with the public money. It was estimated that 2,500 companies disappeared in the 1990s, leading to huge losses to the public. No one was prosecuted and that emboldened the scamsters. The collapse of the UTI had much to do with the manipulations in the stock market and the pressures from the Ministry of Finance but no responsibility was fixed. The problem is not peculiar to the Congress. Since 1989, almost all parties have been in power but the system has hardly changed. The rot of unaccountability runs deep and is visible in all institutions, including hospitals and universities where the most literate and conscious population of the country works.

Herein lies the lesson for the nation facing an increasing number of scams and breakdown of systems. Those in power are unaccountable since they operate in a system of silence and surround themselves with sycophants. Since little has been learnt on this score since 1989, the scale of disruption has grown manifold. When will we learn to fix responsibility?

(The writer is Sukhamoy Chakravarty Chair Professor, Centre for Economic Studies and Planning, School of Social Sciences, Jawaharlal Nehru University.

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