The Shocking Extent Of Crony Capitalism in India

Aam Aadmi Party

The Supreme Court has ordered a court monitored CBI investigation in 14 cases of criminality and corruption which are apparent from the corporate Broker/fixer Niira Radia's phone conversations recorded by the Income Tax department, some of which got leaked into the public domain. In these conversations, Radia, who was the paid lobbyist employed by Mukesh Ambani and Ratan Tata among others, is talking about fixing cabinet berths, influencing important policy and other decisions of the government, fixing the appointment of regulators, bribing regulators, corruptly influencing the judiciary, planting stories in the media, and even influencing discussions on bills in Parliament. 

The Radia Tapes provide a unique glimpse to the people of India on how the entire ruling establishment of the country has virtually become a puppet in the hands of large corporates like Ambani and Tata who are being able to control appointments of the cabinet, senior officials, regulators, and are able to control important decisions of the government, including laws and policies. The tapes also show how the mainstream parties like the Congress and the BJP have also become puppets in the hands of these corrupt corporates. In one conversation with Radia, Vajpayee's son in law Ranjan Bhattacharya narrates how Mukesh Ambani tells him that the Congress party has now become Ambani's shop. There is another conversation between Radia and former Finance Secretary N.K. Singh, where they successfully conspire to prevail on the BJP leadership to replace Arun Shourie with former BJP president Venkaiah Naidu in a Rajya Sabha debate to ensure the passage of a huge retrospective tax concession to Reliance Industries. All this not only shows the serious threat that corruption poses to democracy, but also why the Congress and the BJP conspired to thwart the Jan Lokpal Bill and have also ensured there are no proper Lokayuktas in the States, including in Gujarat and Delhi.

The dust that has been kicked up by the political class and the so called captains of Industry about the latest FIR against K.M. Birla and the former coal secretary in the coal mine allotment scam, and the targeting of the judiciary for pursuing this investigation, and for putting the brakes on various other mining scams in Goa and Karnataka, is indicative of the panic among this class, as they begin to feel the initial stings of accountability for this loot.

The Aam Aadmi Party wishes to make it clear that it is committed to putting an end to this loot and crony capitalism that has brought the country to economic, social and environmental ruin and has put democracy itself under threat. We believe that the bulk of the industry has been strangulated by this crony capitalism and loot and would like to be liberated from this corruption. It is only some corporates who have grown big on this loot and corruption and who currently control substantial sections of the establishment who are crying foul about the laudable actions of the judiciary to check this corruption. They must realize that this loot cannot and will not be allowed to go on. A political revolution is in the offing which will sweep away not just these corrupt political parties but also these crony capitalist if they do not mend their ways.

Obama's rogue state tramples over every law it demands others uphold

For 67 years the US has pursued its own interests at the expense of global justice – no wonder people are sceptical now

BETA

• 
• • George Monbiot
  • The Guardian, Monday 9 September 2013 20.30 BST

US troops fire a white phosphorous mortar towards a Taliban position on 3 April 2009 in Helmand province, Afghanistan. Photograph: John Moore/Getty

You could almost pity these people. For 67 years successive US governments have resisted calls to reform the UN security council. They've defended a system which grants five nations a veto over world affairs, reducing all others to impotent spectators. They have abused the powers and trust with which they have been vested. They have collaborated with the other four permanent members (the UK, Russia, China and France) in a colonial carve-up, through which these nations can pursue their own corrupt interests at the expense of peace and global justice.

Eighty-three times the US has exercised its veto. On 42 of these occasions it has done so to prevent Israel's treatment of the Palestinians being censured. On the last occasion, 130 nations supported the resolution but Barack Obama spiked it. Though veto powers have been used less often since the Soviet Union collapsed in 1991, the US has exercised them 14 times in the interim (in 13 cases to shield Israel), while Russia has used them nine times. Increasingly the permanent members have used the threat of a veto to prevent a resolution being discussed. They have bullied the rest of the world into silence.

Through this tyrannical dispensation – created at a time when other nations were either broken or voiceless – the great warmongers of the past 60 years remain responsible for global peace. The biggest weapons traders are tasked with global disarmament. Those who trample international law control the administration of justice.

But now, as the veto powers of two permanent members (Russia and China) obstruct its attempt to pour petrol on another Middle Eastern fire, the US suddenly decides that the system is illegitimate. Obama says: "If we end up using the UN security council not as a means of enforcing international norms and international law, but rather as a barrier … then I think people rightly are going to be pretty skeptical about the system." Well, yes.

Never have Obama or his predecessors attempted a serious reform of this system. Never have they sought to replace a corrupt global oligarchy with a democratic body. Never do they lament this injustice – until they object to the outcome. The same goes for every aspect of global governance.

Obama warned last week that Syria's use of poisoned gas "threatens to unravel the international norm against chemical weapons embraced by 189 nations". Unravelling the international norm is the US president's job.

In 1997 the US agreed to decommission the 31,000 tonnes of sarin, VX, mustard gas and other agents it possessed within 10 years. In 2007 it requested the maximum extension of the deadline permitted by the Chemical Weapons Convention – five years. Again it failed to keep its promise, and in 2012 it claimed they would be gone by 2021. Russia yesterday urged Syria to place its chemical weapons under international control. Perhaps it should press the US to do the same.

In 1998 the Clinton administration pushed a law through Congress which forbade international weapons inspectors from taking samples of chemicals in the US and allowed the president to refuse unannounced inspections. In 2002 the Bush government forced the sacking of José Maurício Bustani, the director general of the Organisation for the Prohibition of Chemical Weapons. He had committed two unforgiveable crimes: seeking a rigorous inspection of US facilities; and pressing Saddam Hussein to sign the Chemical Weapons Convention, to help prevent the war George Bush was itching to wage.

The US used millions of gallons of chemical weapons in Vietnam, Laos and Cambodia. It also used them during its destruction of Falluja in 2004, then lied about it. The Reagan government helped Saddam Hussein to wage war with Iran in the 1980s while aware that he was using nerve and mustard gas. (The Bush administration then cited this deployment as an excuse to attack Iraq, 15 years later).

Smallpox has been eliminated from the human population, but two nations – the US and Russia – insist on keeping the pathogen in cold storage. They claim their purpose is to develop defences against possible biological weapons attack, but most experts in the field consider this to be nonsense. While raising concerns about each other's possession of the disease, they have worked together to bludgeon the other members of the World Health Organisation, which have pressed them to destroy their stocks.

In 2001 the New York Times reported that, without either Congressional oversight or a declaration to the Biological Weapons Convention, "the Pentagon has built a germ factory that could make enough lethal microbes to wipe out entire cities". The Pentagon claimed the purpose was defensive but, developed in contravention of international law, it didn't look good. The Bush government also sought to destroy the Biological Weapons Convention as an effective instrument by scuttling negotiations over the verification protocol required to make it work.

Looming over all this is the great unmentionable: the cover the US provides for Israel's weapons of mass destruction. It's not just that Israel – which refuses to ratify the Chemical Weapons Convention – has used white phosphorus as a weapon in Gaza (when deployed against people, phosphorus meets the convention's definition of "any chemical which through its chemical action on life processes can cause death, temporary incapacitation or permanent harm").

It's also that, as the Washington Post points out: "Syria's chemical weapons stockpile results from a never-acknowledged gentleman's agreement in the Middle East that as long as Israel had nuclear weapons, Syria's pursuit of chemical weapons would not attract much public acknowledgement or criticism." Israel has developed its nuclear arsenal in defiance of the non-proliferation treaty, and the US supports it in defiance of its own law, which forbids the disbursement of aid to a country with unauthorised weapons of mass destruction.

As for the norms of international law, let's remind ourselves where the US stands. It remains outside the jurisdiction of the International Criminal Court, after declaring its citizens immune from prosecution. The crime of aggression it committed in Iraq – defined by the Nuremberg tribunal as "the supreme international crime" – goes not just unpunished but also unmentioned by anyone in government. The same applies to most of the subsidiary war crimes US troops committed during the invasion and occupation. Guantánamo Bay raises a finger to any notions of justice between nations.

None of this is to exonerate Bashar al-Assad's government – or its opponents – of a long series of hideous crimes, including the use of chemical weapons. Nor is it to suggest that there is an easy answer to the horrors in Syria.

But Obama's failure to be honest about his nation's record of destroying international norms and undermining international law, his myth-making about the role of the US in world affairs, and his one-sided interventions in the Middle East, all render the crisis in Syria even harder to resolve. Until there is some candour about past crimes and current injustices, until there is an effort to address the inequalities over which the US presides, everything it attempts – even if it doesn't involve guns and bombs – will stoke the cynicism and anger the president says he wants to quench.

During his first inauguration speech Barack Obama promised to "set aside childish things". We all knew what he meant. He hasn't done it.

Looking for a party funding scandal? Try David Cameron's Conservatives

We know how much Unite gives Labour, but finding out who writes the cheques for Conservative Central Office is more difficult

• 
• • Aditya Chakrabortty
  • The Guardian, Monday 8 July 2013 20.00 BST

Len McCluskey, general secretary of Unite. Photograph: Sarah Lee for the Guardian

I've just been reading about a political party in hock to shadowy donors who enjoy easy access to its leadership and untold influence over its policies. It's scandalous stuff. That's right: I've just been reading about David Cameron's Conservative party.

Few activities are more congenial to the British commentariat than an afternoon's fox-hunting that can be moralised away as "grownup" debate. So it is with Ed Miliband and Len McCluskey. Even as they fire upon Ed for not being his brother, the pundits insist their real subject is party funding and who runs British politics. Yet mentions of the Tories' paymasters are inevitably brief and come with the gloss of "they're all as bad as each other".

Actually, they're not. Yes, some of the allegations about Falkirk are shaming. And it goes without saying that all three main parties are damagingly dependent on big donors; no Obama-style flood of 20s and 50s on this side of the water. But when it comes to concentration of funding, the opacity over where the cash comes from and the overlap between policy and donor interests, the Conservatives look far more corrupted.

We know how much Unite gives Labour because it's out in the open: all fully checkable on the Electoral Commission's website. Finding out who writes the cheques for Conservative Central Office is far harder. Cameron's funders seem to prefer channeling their money through conduits, or splitting the cash between multiple donors.

Through their forensic investigation into Tory funding, published just after the last general election, Stephen Crone and Stuart Wilks-Heeg discovered that some of the largest contributors would give a few hundred thousand: big, but not big enough to raise eyebrows. But then a funny thing could be spotted in the accounts: their wives and other family members would chip in, as well as their business ventures.

Take the JCB billionaire Sir Anthony Bamford, one of Cameron's favourite businessmen and a regular guest on the PM's trade missions abroad. Between 2001 and summer 2010, Wilks-Heeg and Crone found donations from Anthony Bamford, Mark Bamford, George Bamford, JCB Bamford Excavators, JCB Research, and JCB World Brands. Tot that up and you get a contribution to the Conservative party from the Bamford family of £3,898,900. But you'd need to be an expert sleuth with plenty of time and resources to tot it up.

One family: nearly £4m. Wilks-Heeg and Crone found that 15 of these families or "donor groups" account for almost a third of all Tory funding. They enjoy trips to Chequers, dinners in Downing Street and a friendly prime ministerial ear. Lord Irvine Laidlaw stuffed over £6m into Conservative pockets over a decade and, one of his former staffers told the Mail, liked to boast about his influence over party leaders: "William's [Hague] in my pocket".

Perhaps you're wondering why the Tories talked so tough on banking reform before election but have done so little since. That may have something to do with the money the City gives to them. According to the Bureau of Investigative Journalism, in 2010 donations from financial services accounted for over half of all Tory funding.

Three years ago, spread-betting boss Stuart Wheeler brazenly told MPs that "a party is going to take more notice of somebody who might give them lots of money than somebody who won't". He should know; he once gave the Conservatives a single donation of £5m. And certainly, the City has plenty to show for its investment. Across Europe, Angela Merkel, François Hollande and others are pushing ahead with plans for a Tobin tax or a small levy on financial transactions to start next year. Britain, on the other hand, is part of a small band of refuseniks, along with such other giants of financial regulation as Malta and Luxembourg.

One of the mysteries of this government is why George Osborne made a priority of cutting the 50p tax for the super-rich, thus handing the opposition a stick to beat him with. One possible answer to that is suggested by an FT report from November 2011 on hedge-fund donations to Osborne's party. "There probably aren't many votes in cutting the 50p top rate of tax," one major hedge fund donor told the paper, "but among those that give significant amounts to the party, it's a big issue, and that's probably why it's a big issue for the party too". Just four months later, at the next budget, the 50p rate was scrapped.

What, by contrast, has Uncle Len ever got from Ed Miliband? A promise of an end to the pay freeze for public servants? Nyet. A commitment to break from austerity? Nein. In spring 2010, the Telegraph claimed that Labour ministers "echoed the union's opposition to Kraft's takeover of Cadbury". This would be the takeover that actually went through. There are shades here of the MPs' expenses scandal, when the Tory schemes for lifting money from taxpayers were so baroque that they attracted less opprobrium than Labour parliamentarians claiming for bath plugs and blue movies. So it is with McCluskey's plan to fill Falkirk's constituency Labour party with Unite's Keystone Cops, even while hedgie Michael Hintze puts nearly £40,000 towards the chancellor's expenses alone and reaps the reward of a cut in his taxes.

But there's something else going on, too. Westminster and the press are still ruled by the idea that if workers' representatives seek to influence politics they must be bullies; while if capitalists get their way, then that's inevitably good for capitalism. Five years on from the banking crisis and all the evidence to the contrary, that really is a link that needs ending.

With this tax dodger list the Revenue shames only itself

By singling out barbers and pipe fitters, HMRC shows it takes care of the little people, while Amazon looks after itself

• 
• • Marina Hyde
  • The Guardian, Friday 22 February 2013 19.30 GMT

'Public enemy No 1 is a Liverpool hairdresser… Or rather, in the interests of accuracy, he is only one master criminal on a list of nine coveted scalps.' Illustration by Matthew Richardson

Pondering one of the more delicious ironies of 20th century American justice, people always say wryly that they could only pin tax evasion on Al Capone. Pondering HM Revenue and Custom's 21st century name-and-shame list, they will say that they could only pin tax evasion on hairdressers.

If you have spent the past few months – or indeed decades – frothing with righteous indignation at the refusal of various major corporations profiting in the UK to pay so much as 37p in tax, let alone their fair share, you will be encouraged to learn that public enemy No 1 is a Liverpool hairdresser whom the Revenue eventually fined 17 grand for deliberate default. Or rather, in the interests of accuracy, he is only one master criminal on a list of nine coveted scalps. Others include a pipe fitter who settled with them for £10,986 and a Nottinghamshire knitwear firm that was eventually fined £86,765.54. The big kahuna is a wine firm from Mobberley in Cheshire. I'd quite like to see their thrilling stories told in a modern  version of The Untouchables. As the Eliot Ness of the piece, the taxman ought to be played by a clean-cut do-gooder – Ryan Gosling perhaps – with Robert De Niro returning to take the role of the Fife grocer.

As so often in this septic isle, it's the pettiness of it all that's the tragedy. If these are the names, then the shame must be the Revenue's. Yet they seem to have trumpeted this exciting new direction in their tax-hunting activities with similar fanfare to that which must have attended the nailing of Capone. Ladies and gentleman … We got him.

Needless to say, this isn't a defence of the named and shamed, who are no doubt dreadful little chisellers. I'm afraid I'm one of those ineffably dreary sorts who doesn't pay cash in hand, gladly operates as well as submits to PAYE, and really can't be doing with tax avoiders at all. Blah, blah, blah. But for all my easy-won goody goody-ness, I pretty much need to know that every last megacorp doing business in our land has paid every last penny they owe before we start boasting about having nailed Cool Cutz, or Headmasterz, or whatever hair-based pun adorns this chap's salon lintel.

Predictably, this isn't the line HMRC's Treasury overlords have gone with, as Treasury minister David Gauke once again suggested that tax avoiders have nowhere to hide. (Except in plain sight, as some of Britain's most successful companies.)

Are you convinced by Mr Gauke? I can't help feeling that as a former corporate tax lawyer, married to a corporate tax lawyer, and a chap who used taxpayers' money for stamp duty on his second home move, he is somewhat miscast as the Simon Wiesenthal of hunting down tax avoiders.

I suppose he thinks getting on the airwaves to big up the HMRC list counts as Being Seen To Be Doing Something, as do his underlings in the Revenue themselves. Yet, as a piece of political theatre, this outing feels marginally less successful than Sooty and Sweep's production of One for the Road. There has been a huge and exhilarating outpouring of anger over tax avoidance over the past year, as the issue has moved closer to the centre of the stage than it has been in decades. To say that HMRC publishing a list of nine small businesses squanders that goodwill feels something of an understatement.

What is the intended message, if we may flatter the stunt in that way? That if HMRC look after the little people then the big people will look after themselves? You can't deny it's working. The big people seem to be looking after themselves very well indeed, and though this stunningly misdirected exercise stops just shy of congratulating the major multinationals who avoid tax, the indication of where the Revenue's focus lies effectively does just that.

If I were a mischievous billionaire I would stage a piece of political theatre myself. I would find out whichever hotshot tax lawyers act for Starbucks or Google, and hire them at vast expense to defend the likes of the pipe-fitter and the grocer. They'd end up getting a £300,000 rebate, which would make the point about the real problem more eloquently than Gauke and his cabinet seniors ever could. Certainly more than they'd ever care to, on this evidence.

As for the Revenue, it takes a special sort of flat-footedness to snatch defeat from the jaws of moral victory – but ultimately we must remember the calibre of the organisation with which we are dealing here. I merely pass on to you the tale of one self-employed friend, who was relentlessly pursued over a mystery cheque of around £2,750 that she had written and could not – a long time after the event – explain. She couldn't find the stub, the bank had somehow lost the details, and the investigating Revenue official was under the impression that she had written it as some kind of tax dodge. What kind was unclear, but he wanted to know what she was hiding. After two or three years of this, he brought his investigation to a graceless close. It had emerged that the cheque in question had in fact been paid to one HMRC, in settlement of income tax. Which should give the likes of Amazon a flavour of the worthiness of their foe.

Kingfisher and India's Crony Capitalism

Ask a small businessman what it’d mean to default on depositing provident fund dues, or to not deposit tax deducted at source, or to default on interest payments on a bank loan. For the first two offences, you can be fined heavily and imprisoned. For the third, you can lose control, first of the business, and then of your personal assets. And yet, nobody expects any of these things to happen to flamboyant liquor baron Vijay Mallya, even though his Kingfisher Airlines is in a similar situation.
Mallya is not only expecting more money from banks to fund his eternally cash-guzzling business, but also a policy change that will help him get a partner with deep pockets. No, of course, that would not mean giving up control—no matter that accumulated losses at Kingfisher by the end of this year would be Rs 7,000 crore. He is a big businessman, he is a Rajya Sabha member, he plays hard. He cannot lose. That’s capitalism, Indian style.

About a decade ago, Raghuram Rajan wrote the path-breaking Saving Capitalism From the Capitalists. The book’s theme was simple: what we label as capitalism is often a distorted version; the true spirit of capitalism is undermined by capitalists themselves—by getting an unfair advantage, as in crony capitalism. India’s airline business is a great example. Interestingly, Rajan is quite comfortable being an advisor to PM Manmohan Singh, whose government has set new standards for crony capitalism. (Rajan prefers to rail against India’s education system, but that’s another story.)
As part of a perverse policy followed by successive governments, Indian private sector entrepreneurs with no experience in the airline business were licensed. This led to the quick entry and exit of many players (some with questionable reputations) like East West Airlines, ModiLuft, Damania Airways, Air Deccan, Air Sahara, Paramount, among others. This was not normal business mortality. While the Indian air carriers were experimenting with business models, the “open skies” policy remained closed to deep-pocketed foreign investors who had real expertise in running airlines unlike chicken kings, liquor lords and sundry egomaniacs.

This policy of admitting the undeserving, while keeping out the deserving, has created a sick industry and harassment for Indian air travellers. Indeed, Kingfisher was not only allowed entry, it could also easily lean on government-owned financial institutions to fund a business that never had any real hope of making money. Later, when the loans turned bad, it could get part of the bank loans converted to equity.

As part of the same kind of capitalism, the aviation ministry wreaked havoc on the national carrier, Air India. Canadian research firm Veritas calls the civil aviation ministry’s attitude to Air India “duplicitous” and observes, “It could be on the diktat of the regulatory authorities involving various ministries of the Government of India that an unviable airline, Kingfisher, which is competing against the incumbent state carrier and siphoning away its passengers on both the domestic and international routes, is being supported via taxpayer-funded financial institutions.” Entry for dubious parties, barring foreign investors who have run airlines, suffocating the state-owned carrier, getting state-owned banks to lend, getting the banks to convert debt to equity—this is copybook crony capitalism.

Since Manmohan Singh’s government will do nothing, redress may come by other, natural means. About three years ago, I was chatting with a foreign institutional investor who has put quite a bit of money into United Breweries. He asked me what I thought of UB. The “story” was great: Indians were getting prosperous and drinking more beer, per capita consumption was low and UB was the biggest player. How could you go wrong? Having seen Indian businessmen from close quarters for 28 years now, I told him UB will go bankrupt before making him rich because that would be Mallya’s only source of funds for the eternally loss-making Kingfisher. He smiled and said: “We are betting on that.”

Mallya had already given up a part of the UB’s spirits and beer business to foreign partners and was running down the rest of the value by using it to fuel his flying adventure. Competitors like Kishore Chhabria and Mallya’s own partners and investors have been biding their time. Has the time come for the tale to play out rapidly to its obvious conclusion, now that respected activists like Aruna Roy or Nikhil Dey have voiced their well-reasoned protest? Or will capitalism continue to be undermined by capitalists, netas and babus?

by Debasis Basu in Outlook India