India | Demonetization shows India's parliamentary oversight failure

Demonetization shows India’s parliamentary oversight failure

Kadayam Subramanian December 18, 2016 10:13 PM (UTC+8)
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Since the demonetization of high-value currency notes in India on November 8, nearly 80% of the devalued notes are said to have been returned to bank accounts (about US$185 billion). Analysts predict that virtually all the cancelled notes would have been returned by the December 30 deadline.

The RBI has reportedly printed some 1.7 billion new 500- and 2,000-rupee notes, a fraction of the 24 billion individual notes that were withdrawn. Banks continue to struggle with a shortage of cash with long lines of desperate customers.

Searches by tax officials have uncovered huge amounts of the new currency in some states. The RBI has asked banks to keep all CCTV footage from November 8, in a bid to scrutinize depositors. Some bank officials including one from the RBI have been arrested for allegedly laundering old and invalid notes.

The Winter Session of the Indian Parliament, which commenced on November 16 witnessed repeated adjournments over the contested demonetization issue. The session concluded on December 16 without discussing either demonetization issue or the ‘personal corruption’ of Prime Minister Narendra Modi as stridently articulated by Rahul Gandhi, MP and Vice President of the Opposition Congress party.

Both the ruling and Opposition party MPs ensured by their unruly behavior that no discussion of either issue could take place.

Congress Vice President Rahul Gandhi dramatically said in Parliament that the Modi government was obstructing a debate on demonetization because he has information on ‘the personal corruption’ of PM Modi, adding that other political parties were aware of the damaging evidence he had against the Prime Minister. He mentioned no possibility of his placing his evidence in the public domain.

The next session of Parliament, to be held in January 2017, just ahead of the crucial state assembly elections in Uttar Pradesh and other states, may witness a repetition of the disappointing experience.

Rahul Gandhi who repeatedly complained that he was not being allowed to place his evidence of prime ministerial corruption in Parliament echoed the Prime Minister who too was making a similar complaint.

Rahul Gandhi had a clear chance to present his evidence on the last day of the Session (December 16) but strangely and quixotically chose to miss it in the name of leading a party delegation to the Prime Minister to present evidence on the plight of the farmers of Uttar Pradesh, which will soon go to polls along with some other states! Strange indeed are the ways of young men from privileged political families.

The other parties who had come together with him were betrayed.

Everyone in Parliament would have been excited to listen to the scion of a former ruling family on the corrupt activities of Prime Minister of India but Rahul chose to absent himself from Parliament on the last day of its crucial Winter Session. He has managed to alienate all MPs who would have been useful in building a political coalition against the ruling party in Parliament and outside.

Rahul Gandhi’s erratic behavior strengthens the impression among other serious parties that he is not a man with whom they can do business. He can of course improve.

To defeat the Opposition demand in Parliament for a discussion on demonetization and ‘personal corruption’ of the Prime Minister, the ruling BJP resorted to digging up the alleged corruption of the previous Congress party-led government with regard to the purchase of Agustawestland VVIP helicopters (2008-12). A section of the visual media close to the ruling party has been active in kicking up the issue.

Answering the charge that the ruling BJP was obstructing discussion of the demonetization issue, the Congress party spokesman said it was the first time in Indian democratic experience that the ruling party was not ‘letting the Parliament function’. The BJP said it was ready to debate the issue but the Congress must first answer charges of corruption on the Agustawestland helicopter deal by its predecessor government.

Significantly, the ruling BJP government hurriedly and unwarrantedly replaced the serving Director of the Central Bureau of Investigation (CBI) with a man of its choice who arrested the former Air Chief SP Tyagi for his alleged involvement in tweaking the helicopter deal in favor of the UK-based Agustawestland company.

The Congress-led central government in 2012-13, was shaken by allegations of corruption in the helicopter deal for the Indian Air Force (IAF) with Agustawestland, a subsidiary of the Italian air force major Finmeccanica. This led to the recent arrest of the former Air Chief SP Tyagi mentioned above.

In 2010, Agusta-Westland (AW) signed a contract with the government of India for the sale of 12AW101 helicopters at the cost of Rs. 3546 crore for use by the IAF to transport VVIPs. In 2012, Italy started an investigation into the alleged unethical dealings in the sale by the state-backed Finmeccanica. One middleman named Guido Ralfe Haschke was arrested for receiving a huge bribe in Euros. In 2013, Giuseppe Orse, the chairman of Finmeccanica was arrested for having paid huge bribes to Indian intermediaries while in his previous position in AW.
The government of India ordered an investigation by the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED). Some others involved in the deal have been arrested as well.

Christian Michel, another middleman who worked not on contract management but on project implementation with good knowledge of the project was interviewed at length by Sanjay Bragta for an Indian TV channel. I watched the interview and found him persuasive. His detached views indicated the need by investigators to visit Mauritius and Tunisia, the countries through which the huge bribes were routed.

Haschke who was directly involved in the project has gone missing.

Without his interrogation not much progress with investigation can be made. It appears from Michel’s interview that top politicians in India were not involved in the bribes payment. Operations were conducted at lower levels. Most of the money appears to have gone back to people in the Italian company.

Much more investigations need to be done. The Indian TV channel has been using some of the notes, less than reliable, left behind by the disappeared middleman, Haschke, to politically conveniently tarnish the image of top Indian politicians at that time. There is more in Michel’s interview than has been grasped by the Indian TV channel involved. This is a political game.

Kadayam Subramanian
Kadayam Subramanian is former Director, Research and Policy Division, Union Home Ministry, Government of India, and former Director General of Police in Northeast India. He is the author, among others, of Political Violence and the Police in India, Sage, 2007, and State, Policy and Conflicts in Northeast India, Routledge, 2016
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