The government has defied anticorruption treaties and impeded the conduct of justice.
Simon Jenkins
The Saudi bribes scandal may yet prove a more devastating epilogue to the Blair era than cash for honours. The original deal, reached in 1985 by Margaret Thatcher, doubled the price of a Tornado jet to cover huge commissions to members of the Saudi royal family and their retainers.
It has led the British government to defy international anticorruption treaties and impede the conduct of justice by the Serious Fraud Office (SFO). Last week it emerged that it had also impeded corruption investigators from the Organisation for Economic Cooperation and Development (OECD).
All this was to appease an outlandishly corrupt, authoritarian and brutal dictatorship, embodying everything that Tony Blair claims to detest in his “war of values” and against which his soldiers are dying in Iraq. By his lights Riyadh should be bombed, not sold bombers.
The £43 billion contract for 120 planes and assorted extras was the biggest arms deal in history. Its purpose was obscure, other than to shift vast sums of oil wealth from relieving the condition of the Saudi poor into the pockets of its very rich. The array of costly aerial and naval weaponry mostly depends on foreigners to operate. Unsupported by a plausible land army, it would be of little use against any likely aggressor. It is a massive display of conspicuous consumption.
The contract was reached with the help of Prince Bandar, son of the Saudi defence minister, and the assistance of Wafic Said, a Syrian wheeler-dealer, and went ahead only after Bandar, Saudi ambassador to Washington, realised that the Israeli lobby would not entertain America supplying so big an Arab defence contract. Less crucial, according to a 2005 book by Mark Hollingsworth and Paul Halloran, was an estimated £12m paid to Mark Thatcher on the side.
After years of denial, all sides now acknowledge that commissions were (and still are) being paid and only their status is disputed. A special Bank of England account is used by BAE, the aerospace company, on a double-key basis with the defence ministry, usually through an offshore firm called Red Diamond.
In other words, the government is “complicit”. While SFO documents are said to reveal a morass of payments to Swiss accounts for private jets, villas, gaming clubs and prostitutes, the lion’s share goes to Bandar, roughly £100m a year. This became illegal after Britain’s 2001 counter-terrorism act.
Small “facilities payments” to strictly local agents are allowed under trade department rules, up to 1% of a contract; 5% is regarded as the corruption threshold. Al-Yamamah hovers around 30%. In 1992 the weak-kneed National Audit Office was told by the government to stop asking questions about al-Yamamah bribes and did so. When in 2004 the more independent SFO returned to the stinking trough it was pressured by Blair and BAE three times to desist. It appealed to Lord Goldsmith, the attorney-general, and from January to December last year he supported it in what became its biggest inquiry, costing £2m. In December, when the SFO was closing in on the secret accounts of Bandar and others in Switzerland, the Saudis and BAE went ballistic, despite professing their total innocence.
MI5 and MI6 were asked by Blair to declare the investigation damaging to British security. This they declined to do, leaking only that it might be if the Saudis refused security cooperation. There has been no evidence of such Saudi blackmail, which would be much against Riyadh’s interest. Yet such clear conditionality was omitted from Goldsmith’s statement on security to the House of Lords on December 14, as it has been from all subsequent statements by Blair. The blackmail is stated as a fact.
By December 14 the pressure on Robert Wardle, head of the SFO, was so intense that, although quoted as “wanting to continue”, he called a halt, forced implausibly to say it was his own decision.
Goldsmith’s stated reason was that the evidence of bribery was now so weak that the case would soon collapse. The truth was that the evidence was so strong. Had it been weak, any shrewd politician would have let it collapse rather than incur the odium of interfering with the judicial process. As Blair and his home secretaries always say when introducing more draconian antiterrorism laws, “The innocent have nothing to fear.” Why did he not apply that principle to Bandar and BAE? The answer is obvious.
The decision to halt the SFO inquiry in December devastated Britain’s reputation as a champion of global anticorruption. Article 5 of the OECD convention, ratified by Britain in 1998, states categorically that prosecuting corruption “shall not be influenced by considerations of national economic interest, the potential effect upon relations with another state or the identity of [those] involved”. Whitehall rules also require firms using intermediaries to name them and the commissions paid.
While a provision of the al-Yamamah contract was that its terms be kept secret, there is nothing in the OECD convention excusing past contracts, let alone the £20 billion extension for 72 more planes now pending.
Blair not only signed the OECD convention but also trumpeted Britain’s desire to fight corruption wherever it occurred. Yet he personally intervened in 2001 to save the notorious £28m Tanzanian military radar contract after being told in cabinet by his aid minister and the chancellor that it was a racket, wildly beyond that country’s needs. It turned out that £6m of the contract was a British bribe paid direct into the Swiss bank account of a certain Sailesh Vithlani, who has confirmed it. Despite their opposition, Clare Short and Hilary Benn, the aid ministers, did not resign and Benn was rewarded by Blair with the post of “cabinet anticorruption co-ordinator”. An SFO inquiry into the deal is said to be merely ongoing. In view of all this, Britain’s presence in Jordan last year at a United Nations convention against corruption was like Robert Mugabe turning up at a good governance seminar.
The macho line taken by defence secretaries and others sworn to the al-Yamamah oath of secrecy has been to plead national security and then soup it up with claims that thousands of jobs depend on it and that if Britain did not bribe, others would. That Britain’s security should depend on bribing the Bandars of this world, rather than calling their bluff, is humiliating. As for intelligence, Britain’s needs are concentrated notably in Iran and Pakistan, while Riyadh’s needs are internal. Britain, with a large expatriate Saudi population, has as much intelligence to offer as to lose.
The idea that the Saudis would conceal information on a London bomb because London had stopped bribing Bandar is either ludicrous or confirmation that Saudi Arabia should be no friend of Britain.
As for job losses, they have never been a legitimate reason either for breaching the OECD convention or for condoning crime. Britain’s cocaine business is worth thousands of jobs, but is not permitted on that basis. A 2001 York University study of our subsidised defence industries pointed out that in total they comprise just 2.6% of British exports and 0.4% of employment, while consuming large numbers of skilled workers desperately needed elsewhere. Even so, it is doubtful if the Saudis would switch the new £20 billion contract to France. They value their favoured-state relation with Britain, especially with America cooling towards Riyadh.
The best bet for both sides now would be to come clean, stop the corruption and slash the price of the planes. BAE, with large commercial interests in America, must be at risk from the ferocious Justice Department, or from rivals dragging it before Congress or private litigation. Under its 1977 anticorruption law, the federal government has embarked on 50 such prosecutions. Under the OECD convention, France has managed eight. Britain has prosecuted nobody. The reason is that the attorney-general and the SFO are agents of a political executive, not the judiciary.
If the legal position of the British government as complicit in the bribery is untenable, its moral position is laughable. It has inflated the price of an export to win a contract by corruption. It has been forced to use the dictator’s defence, that resulting embarrassment should be shrouded by “national security”. And it must tell African and Asian regimes that its much-trumpeted stance against corruption is meant to apply only to the poor and the weak. Such hypocrisy in Britain’s name is outrageous.
“Blessed is the nation that doesn’t need heroes" Goethe. “Hero-worship is strongest where there is least regard for human freedom.” Herbert Spencer
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Sunday 10 June 2007
Saturday 9 June 2007
Close Encounters of the Police Kind
A recently released report by Transparency International shows that India's lower judiciary took Rs. 2630 crores in bribes last year. Add to that what the recent sting against RK Anand showed. Is that why the general public is willing to go along with the police's murderous ways?
MOHAN GURUSWAMY
Just as we were getting our fill about the "encounter" between the Gujarat Police and an alleged terrorist Sohrabuddin Sheikh who was allegedly gunned down in cold blood, the movie Shootout at Lokhandwala about the 1991 slaying of the gangster Maya Dolas by the Bombay Police brings into focus state-sanctioned extra-judicial killings by the police. Staged encounters have become fairly common all over the country and no state can claim to have a better record than another. In fact there is good reason to believe that there is now considerable support for them among the general public, which could be a main reason for their prevalence, and even portrayal in films. This does not make it right, but it is a telling commentary on the state of affairs prevailing in the country.
A recently released report by Transparency International documents that India’s lower judiciary took Rs. 2630 crores in bribes last year, which might offer us a good inkling as to why the general public is willing to go along with the police’s murderous ways. Lower judiciary generally refers to the trial courts, the kind that found Manu Sharma innocent of killing Jessica Lal despite having shot her in front of scores of people including an IPS officer. The trial courts are where evidence is recorded and justice is dispensed, and the rule of law is supposed to be upheld. Add to that the implications of the major drama that unfolded around us with the NDTV sting on RK Anand and IU Khan, both well known lawyers with a good track record of getting their clients off. RK Anand is the same lawyer who had defended PV Narasimha Rao on the JMM MP’s bribery case. Now we learn that RK Anand doesn’t entirely rely on his legal acumen but takes recourse to other means as well, which possibly accounts for his track record. In this case we see all the concerned parties -- the police, prosecutor and witnesses -- colluding with the accused to get him off. All this, and often with a little help from our judges, ensures that criminals usually get away with crimes, unless of course they cannot afford the high costs that "justice" entails.
Facts suggest that our trial courts are quite murderer-friendly. According to the Chief Justice of the Patna High Court, Justice JN Bhatt, only about 6.5% of murder trials result in a conviction. In 2005 there were 32,719 recorded murders all over India and 28,031 attempts to murder. This track record not only speaks volumes about incompetence of the police but also suggests a very low level of integrity. No wonder, the recently elected UP MLA, DP Yadav feels that his son Vikas Yadav, Manu Sharma’s co-accused in the Jessica Lal case and the main accused in the Nitish Katara murder case, feels victimized by the state’s extra diligent prosecution of his son. Given this state of affairs it is little wonder that the public applauds the Dirty Harry methods of the police.
But this leads to another more serious consequence. Many individuals in the police then take to contract killings, either to please their bosses or for money. In fact it is now not uncommon for gangland bosses to contract killings out to the uniformed "encounter specialists". In Mumbai the topmost killer policeman, Inspector Daya Nayak, who is now facing charges of corruption, has long been suspected of liquidating smalltime hoodlums at the behest of certain dons. Even ACP AA Khan, the main protagonist of Shootout at Lokhandwala has been suspected of killing Maya Dolas, incidentally brilliantly portrayed by Vivek Oberoi, on the instructions of Dawood Ibrahim from Dubai.This too has been depicted in the movie.
In Delhi the escapades of ACP Rajbir Singh of the Special Cell are well known. But most notorious of them was the Ansal Plaza shootings in which two purported Pakistani terrorists were killed in the basement parking lot of the capital's toniest mall. So brazen was the encounter that the NHRC was forced to take notice of it, but even three years later the wheels of justice have not even begun their slow grind forward. In the meantime, Rajbir Singh got the President's Medal for distinguished service and gallantry. But sometimes the police does act motivated by its sense of infantile justice, as we saw in the Barakhamba Road shooting incident where a Delhi Police team gunned down a perfectly respectable businessman and his nephew under the mistaken belief that they were the two notorious killers they were trailing. Nevertheless, it is still murder and the trial is supposedly progressing. Another ACP, in the meantime, has been sentenced to death for an "encounter" killing over a decade ago when he was still a SHO. The fellow recently retired as an ACP, no doubt earning his promotion for "distinguished service and gallantry".
Encounter killings have been an instrument of state policy right from the day of independence. The first ordered killings by the state took place in the Telangana region of the erstwhile Hyderabad state within months of independence when the Indian Army and the state police gunned down hundreds of persons on the pretext that they were insurgents intent on overthrowing the new government and installing the dictatorship of the proletariat. This indeed was the official line of the Communist Party of India then, championed by its General Secretary, BT Ranadive. Poor Ranadive, who had a reputation of being a bit of a Stalinist, had the plug pulled from underneath when Josef Stalin himself decided that the insurgency was not viable and was the worse kind of adventurism, and hence refused to support it. It is said that when Telangana was pointed out to Stalin on a map, he just said that it had no coast line and supplying it with arms and military material was impossible. We know that that was not true. The Australian aviator Sidney Cotton supplied the Razakars in Hyderabad with Pakistani arms by air. Cotton was a former officer of the British Secret Intelligence Service who got hold of a fleet of retired RAF Lancaster bombers for his gun running. This tells us a bit about British intentions also. Like the Communist rebels, many Razakars were terminated with extreme prejudice. The policy of the state being the judge and executioner emanated from the office of Sardar Patel, India’s first home minister and the role model for many a home minister after that.
The next major outbreak of state killings was in the Naga Hills in early 1956 when the Indian Army literally ran amuck killing, raping and pillaging in the remotest region of the erstwhile Assam state. It has been widely reported that the Indian Army even shot and then publicly displayed bodies to serve as an object lesson. The military action in the Naga Hills was ordered by the ministry of external affairs and the minister heading it was none other than Jawaharlal Nehru. The army has come a long way since 1956 and now has a more sophisticated and nuanced appreciation of human rights and values. So much so that generally people in insurgency hit areas prefer the deployment of the Indian Army to the para-military and state armed police forces.One does not hold a brief for the Indian Army, but clearly it is now deemed the lesser of the two evils.
During the 1960s, extra-judicial killings became the order of the day whenever the state was confronted by an uprising, popular or otherwise. The brutal Naxalite violence in pursuit of the class annihilation policy of its leader Charu Mazumdar was met by just as brutal methods by the police. Custodial killings were the norm and the then Chief Minister of West Bengal, Siddhartha Shankar Ray, a reputed barrister thus earned his spurs to high national office as a result. In 1966, the Gond people in Bastar revolted against the corrupt and exploitative ways of the Madhya Pradesh Congress government of DP Mishra. Pandit DP Mishra, a Sanskrit scholar of some repute, had few qualms in unleashing the police on the Adivasis who congregated in Jagdalpur to pay the customary Dussera homage to their Raja, Pravinchandra Bhanjdeo. Not only did the MP police kill scores of Adivasis, but they also shot down the Raja in cold blood. Soon after this incident, central forces were deployed in Bastar and one got a first hand look at the havoc they wrought.
During the Emergency, Sanjay Gandhi’s handpicked Chief Minister of UP, VP Singh, resorted to extra-legal killings in the districts bordering MP apparently to rid the state of a reign of terror unleashed by dacoits. It’s a matter of conjecture as to whether VP Singh did this to avenge the shooting of his older brother, CPN Singh, a High Court judge who was out on a night-time poaching expedition in the badlands of Mainpuri in UP. The dacoit Chabiram, who had the reputation of being a bit of a Robin Hood, was killed in VP Singh’s retaliation. The seeds of Singh's continuing conflict with Mulayam Singh Yadav were sown here. But then this was during the Emergency and at a time when the then Attorney General, Niren De, informed the Supreme Court that people did not have a constitutional right to life and liberty and the four out of five learned Justices even concurred with this. So why blame poor VP Singh for thinking he was God?
The troubles in the Punjab, abetted by our Pakistani friends, saw state-sponsored terrorism rise to new levels. Under the redoubtable KPS Gill, who had honed his skills during the Assam crisis, the Punjab Police unleashed a reign of terror. The details of this are well documented and also well known. Millions were given away as rewards for killing wanted terrorists and many of the so-called dreaded terrorists have now been found to be alive and well. This means that many innocents were killed and the state exchequer defrauded. Incidentally, when the then Governor of Punjab, a former intelligence officer, died in an air-crash, suitcases filled with currency notes were recovered from the crash site.
I recall that when the then Prime Minister, Chandra Shekhar, sent me to Punjab to talk with some Sikh extremist groups who had got in touch with him, I asked for some protection. Chandra Shekhar told me to proceed without it as I faced a greater threat from the police as counter-insurgency had become a lucrative proposition for them. Nevertheless, KPS Gill emerged as a national hero for having rid the nation of a scourge. He seemed destined for higher office and greater honours till the controversy regarding his inebriated fondling the derriere of a lady IAS officer hit the headlines. He now runs the Indian Hockey Federation, pretty much the same way but with far less success.
In more recent times we have seen the state continuing to meet terror with terror in Kashmir and Andhra Pradesh. The killing of innocents continues unabated. The most recent one was the killing of Abdul Rahman Padder, a 35 year old carpenter from Kupwara who was lured to Srinagar by a policeman with the promise of a job.For a onetime payment of Rs.20000, paid in advance. Once in Srinagar on December 8, Padder disappeared only to reappear as a news item in the local newspapers on December 10 as a Lashkar-e-Taiba (LeT) terrorist who was gunned down in an encounter with a Ganderbal police party headed by the SSP Hans Raj Parihar, a much decorated officer. Rewards and honors were generously bestowed by a grateful state. The matter would have ended here but for the zeal displayed by the police to publicize its valour. A photograph of the supposed slain terrorist was published in some local papers and this was shown to Ghulam Rasool Padder, Abdul Rahman’s father. Due to the effort of local human rights groups, Padder’s body was exhumed in February this year and the DNA test confirmed his identity. Parihar has since been arrested and investigations are still underway, which means the odds are still very much in his favor. The police can be quite inventive when it comes to fudging evidence. After a similar incident in Chiitisinghpora where five shepherds were picked up and cold-bloodedly killed, the blood samples of the parents were called for to help in DNA identification. The J&K Police sent the blood of some farm animals instead. Justice is still awaited.
So by all means go and see Shootout at Lokhandwala. It should make you think. It’s also a true story, even though the director claims otherwise. Abhishek Bachchan has done the best acting of his life. Mercifully, his role lasts about a minute half of which is taken up by his death throes.
MOHAN GURUSWAMY
Just as we were getting our fill about the "encounter" between the Gujarat Police and an alleged terrorist Sohrabuddin Sheikh who was allegedly gunned down in cold blood, the movie Shootout at Lokhandwala about the 1991 slaying of the gangster Maya Dolas by the Bombay Police brings into focus state-sanctioned extra-judicial killings by the police. Staged encounters have become fairly common all over the country and no state can claim to have a better record than another. In fact there is good reason to believe that there is now considerable support for them among the general public, which could be a main reason for their prevalence, and even portrayal in films. This does not make it right, but it is a telling commentary on the state of affairs prevailing in the country.
A recently released report by Transparency International documents that India’s lower judiciary took Rs. 2630 crores in bribes last year, which might offer us a good inkling as to why the general public is willing to go along with the police’s murderous ways. Lower judiciary generally refers to the trial courts, the kind that found Manu Sharma innocent of killing Jessica Lal despite having shot her in front of scores of people including an IPS officer. The trial courts are where evidence is recorded and justice is dispensed, and the rule of law is supposed to be upheld. Add to that the implications of the major drama that unfolded around us with the NDTV sting on RK Anand and IU Khan, both well known lawyers with a good track record of getting their clients off. RK Anand is the same lawyer who had defended PV Narasimha Rao on the JMM MP’s bribery case. Now we learn that RK Anand doesn’t entirely rely on his legal acumen but takes recourse to other means as well, which possibly accounts for his track record. In this case we see all the concerned parties -- the police, prosecutor and witnesses -- colluding with the accused to get him off. All this, and often with a little help from our judges, ensures that criminals usually get away with crimes, unless of course they cannot afford the high costs that "justice" entails.
Facts suggest that our trial courts are quite murderer-friendly. According to the Chief Justice of the Patna High Court, Justice JN Bhatt, only about 6.5% of murder trials result in a conviction. In 2005 there were 32,719 recorded murders all over India and 28,031 attempts to murder. This track record not only speaks volumes about incompetence of the police but also suggests a very low level of integrity. No wonder, the recently elected UP MLA, DP Yadav feels that his son Vikas Yadav, Manu Sharma’s co-accused in the Jessica Lal case and the main accused in the Nitish Katara murder case, feels victimized by the state’s extra diligent prosecution of his son. Given this state of affairs it is little wonder that the public applauds the Dirty Harry methods of the police.
But this leads to another more serious consequence. Many individuals in the police then take to contract killings, either to please their bosses or for money. In fact it is now not uncommon for gangland bosses to contract killings out to the uniformed "encounter specialists". In Mumbai the topmost killer policeman, Inspector Daya Nayak, who is now facing charges of corruption, has long been suspected of liquidating smalltime hoodlums at the behest of certain dons. Even ACP AA Khan, the main protagonist of Shootout at Lokhandwala has been suspected of killing Maya Dolas, incidentally brilliantly portrayed by Vivek Oberoi, on the instructions of Dawood Ibrahim from Dubai.This too has been depicted in the movie.
In Delhi the escapades of ACP Rajbir Singh of the Special Cell are well known. But most notorious of them was the Ansal Plaza shootings in which two purported Pakistani terrorists were killed in the basement parking lot of the capital's toniest mall. So brazen was the encounter that the NHRC was forced to take notice of it, but even three years later the wheels of justice have not even begun their slow grind forward. In the meantime, Rajbir Singh got the President's Medal for distinguished service and gallantry. But sometimes the police does act motivated by its sense of infantile justice, as we saw in the Barakhamba Road shooting incident where a Delhi Police team gunned down a perfectly respectable businessman and his nephew under the mistaken belief that they were the two notorious killers they were trailing. Nevertheless, it is still murder and the trial is supposedly progressing. Another ACP, in the meantime, has been sentenced to death for an "encounter" killing over a decade ago when he was still a SHO. The fellow recently retired as an ACP, no doubt earning his promotion for "distinguished service and gallantry".
Encounter killings have been an instrument of state policy right from the day of independence. The first ordered killings by the state took place in the Telangana region of the erstwhile Hyderabad state within months of independence when the Indian Army and the state police gunned down hundreds of persons on the pretext that they were insurgents intent on overthrowing the new government and installing the dictatorship of the proletariat. This indeed was the official line of the Communist Party of India then, championed by its General Secretary, BT Ranadive. Poor Ranadive, who had a reputation of being a bit of a Stalinist, had the plug pulled from underneath when Josef Stalin himself decided that the insurgency was not viable and was the worse kind of adventurism, and hence refused to support it. It is said that when Telangana was pointed out to Stalin on a map, he just said that it had no coast line and supplying it with arms and military material was impossible. We know that that was not true. The Australian aviator Sidney Cotton supplied the Razakars in Hyderabad with Pakistani arms by air. Cotton was a former officer of the British Secret Intelligence Service who got hold of a fleet of retired RAF Lancaster bombers for his gun running. This tells us a bit about British intentions also. Like the Communist rebels, many Razakars were terminated with extreme prejudice. The policy of the state being the judge and executioner emanated from the office of Sardar Patel, India’s first home minister and the role model for many a home minister after that.
The next major outbreak of state killings was in the Naga Hills in early 1956 when the Indian Army literally ran amuck killing, raping and pillaging in the remotest region of the erstwhile Assam state. It has been widely reported that the Indian Army even shot and then publicly displayed bodies to serve as an object lesson. The military action in the Naga Hills was ordered by the ministry of external affairs and the minister heading it was none other than Jawaharlal Nehru. The army has come a long way since 1956 and now has a more sophisticated and nuanced appreciation of human rights and values. So much so that generally people in insurgency hit areas prefer the deployment of the Indian Army to the para-military and state armed police forces.One does not hold a brief for the Indian Army, but clearly it is now deemed the lesser of the two evils.
During the 1960s, extra-judicial killings became the order of the day whenever the state was confronted by an uprising, popular or otherwise. The brutal Naxalite violence in pursuit of the class annihilation policy of its leader Charu Mazumdar was met by just as brutal methods by the police. Custodial killings were the norm and the then Chief Minister of West Bengal, Siddhartha Shankar Ray, a reputed barrister thus earned his spurs to high national office as a result. In 1966, the Gond people in Bastar revolted against the corrupt and exploitative ways of the Madhya Pradesh Congress government of DP Mishra. Pandit DP Mishra, a Sanskrit scholar of some repute, had few qualms in unleashing the police on the Adivasis who congregated in Jagdalpur to pay the customary Dussera homage to their Raja, Pravinchandra Bhanjdeo. Not only did the MP police kill scores of Adivasis, but they also shot down the Raja in cold blood. Soon after this incident, central forces were deployed in Bastar and one got a first hand look at the havoc they wrought.
During the Emergency, Sanjay Gandhi’s handpicked Chief Minister of UP, VP Singh, resorted to extra-legal killings in the districts bordering MP apparently to rid the state of a reign of terror unleashed by dacoits. It’s a matter of conjecture as to whether VP Singh did this to avenge the shooting of his older brother, CPN Singh, a High Court judge who was out on a night-time poaching expedition in the badlands of Mainpuri in UP. The dacoit Chabiram, who had the reputation of being a bit of a Robin Hood, was killed in VP Singh’s retaliation. The seeds of Singh's continuing conflict with Mulayam Singh Yadav were sown here. But then this was during the Emergency and at a time when the then Attorney General, Niren De, informed the Supreme Court that people did not have a constitutional right to life and liberty and the four out of five learned Justices even concurred with this. So why blame poor VP Singh for thinking he was God?
The troubles in the Punjab, abetted by our Pakistani friends, saw state-sponsored terrorism rise to new levels. Under the redoubtable KPS Gill, who had honed his skills during the Assam crisis, the Punjab Police unleashed a reign of terror. The details of this are well documented and also well known. Millions were given away as rewards for killing wanted terrorists and many of the so-called dreaded terrorists have now been found to be alive and well. This means that many innocents were killed and the state exchequer defrauded. Incidentally, when the then Governor of Punjab, a former intelligence officer, died in an air-crash, suitcases filled with currency notes were recovered from the crash site.
I recall that when the then Prime Minister, Chandra Shekhar, sent me to Punjab to talk with some Sikh extremist groups who had got in touch with him, I asked for some protection. Chandra Shekhar told me to proceed without it as I faced a greater threat from the police as counter-insurgency had become a lucrative proposition for them. Nevertheless, KPS Gill emerged as a national hero for having rid the nation of a scourge. He seemed destined for higher office and greater honours till the controversy regarding his inebriated fondling the derriere of a lady IAS officer hit the headlines. He now runs the Indian Hockey Federation, pretty much the same way but with far less success.
In more recent times we have seen the state continuing to meet terror with terror in Kashmir and Andhra Pradesh. The killing of innocents continues unabated. The most recent one was the killing of Abdul Rahman Padder, a 35 year old carpenter from Kupwara who was lured to Srinagar by a policeman with the promise of a job.For a onetime payment of Rs.20000, paid in advance. Once in Srinagar on December 8, Padder disappeared only to reappear as a news item in the local newspapers on December 10 as a Lashkar-e-Taiba (LeT) terrorist who was gunned down in an encounter with a Ganderbal police party headed by the SSP Hans Raj Parihar, a much decorated officer. Rewards and honors were generously bestowed by a grateful state. The matter would have ended here but for the zeal displayed by the police to publicize its valour. A photograph of the supposed slain terrorist was published in some local papers and this was shown to Ghulam Rasool Padder, Abdul Rahman’s father. Due to the effort of local human rights groups, Padder’s body was exhumed in February this year and the DNA test confirmed his identity. Parihar has since been arrested and investigations are still underway, which means the odds are still very much in his favor. The police can be quite inventive when it comes to fudging evidence. After a similar incident in Chiitisinghpora where five shepherds were picked up and cold-bloodedly killed, the blood samples of the parents were called for to help in DNA identification. The J&K Police sent the blood of some farm animals instead. Justice is still awaited.
So by all means go and see Shootout at Lokhandwala. It should make you think. It’s also a true story, even though the director claims otherwise. Abhishek Bachchan has done the best acting of his life. Mercifully, his role lasts about a minute half of which is taken up by his death throes.
Thursday 7 June 2007
Marks Of Insecurity
Why do top results-- in boards, JEE or UPSC-- matter to us so much?
KANTI BAJPAI
Judging by the hoopla surrounding the board examination results, Indian school education is in decline. What we are witnessing is a kind of decadence. The media is only helping construct this decadence. It has little or no understanding of education, focuses on the most sensational and trivial aspects of school life, and is fetishising learning. Unfortunately, it is not just the media. The government, the examining boards, school managements, teachers, and, yes, parents have combined to bring Indian education to this pass.
We think that Indian schools are world-class institutions in the making, that our science and mathematics are the envy of others, and that Indian students are smarter and harder working than anyone else. None of this is true. Indian schools are in a shambles; our science and mathematics teaching are appalling; and our students, while intelligent and diligent, are of the same genetic material as other human beings and, given the burden of our curriculum, are in danger of losing their creativity and energy by the time they "succeed" in school examinations.
Our annual board results, IIT results and civil service examination results are feeding the frenzy over the search for the smartest and the most likely to succeed. This year, the frenzy over who "topped" the exams, which school produced the best results, how many students got into engineering colleges or got the best SAT results (the US college entrance test which is a 10th standard exam, at best!), and who headed the IIT entrance lists has been worse than ever.
The question is: how can it possibly be interesting educationally that student X got 95.6 per cent and was at the top of an examination list when it is likely that the next person, who never features in the public adulation, got 95.5 per cent? Does anyone seriously think that there can be any difference intellectually and in terms of life chances and attainments based on these infinitesimal differences? Indeed, is there much difference between someone who scored 95 per cent and 89 per cent? Has anyone bothered to track all these "toppers"? Where do they end up on the scales of life�income, professional satisfaction, social status, personal happiness? What do they contribute to the good of society around them?
This is not to denigrate those who have topped. It is to ask what this frenzy of interest is about. It is not about education, whatever else it is about. It is a circus, without a circus master. Each of us helps make this spectacle, though some are more responsible than others. For instance, why does the CBSE, the most reported board, splash the name of the toppers around and feed media comparisons relating to this year's average as against last year's, how many passed and how many did not, and so on? Why do school principals like me and school managements tell the media who amongst our students topped the results and what our averages are? Why do school managements base their judgement of their school's success so massively on the board results? Why do parents, most of whom did not do particularly well themselves in the board examination in their own day, and who know that school examination results do not count for much in the game of life, become so drunken over the results, losing all sense of proportion?
One reason for this fetish relating to marks and averages is scarcity. In a country of scarcities, even a marginal difference, we conclude, can make an enormous difference to our children: that extra mark will mean extra consideration when colleges admit (somewhat true, at least in India) and when employers hire (largely not true).
Another reason for the fetish of results is our paranoia. We are convinced that people out there are conspiring to deny our meritorious children what they rightly deserve.What can stop them from doing so except a marksheet in front of them? After all, who can quarrel with the numbers? It is another matter that the numbers we fetishise are only one indication of the quality of a student's mind, and no one, with any sense, would go only by numbers, at least for the purpose of hiring.
Finally, we urban, "educated", middle-class Indians have made the board results into a fetish because we need a clear, simple and apparently unassailable index of success. So much in India seems second-rate and bleak (it is not, but we have persuaded ourselves that our country is a collective failure) that we must have some golden eggs. It does not matter that the eggs are in someone else's basket, that someone else's son or daughter has topped. We hunger for an affirmation that there are "successes" amongst us capable of transcending the "mediocrity" around. We are in search of supermen so that we can feel better.
(The author is the Headmaster of the Doon School.)
KANTI BAJPAI
Judging by the hoopla surrounding the board examination results, Indian school education is in decline. What we are witnessing is a kind of decadence. The media is only helping construct this decadence. It has little or no understanding of education, focuses on the most sensational and trivial aspects of school life, and is fetishising learning. Unfortunately, it is not just the media. The government, the examining boards, school managements, teachers, and, yes, parents have combined to bring Indian education to this pass.
We think that Indian schools are world-class institutions in the making, that our science and mathematics are the envy of others, and that Indian students are smarter and harder working than anyone else. None of this is true. Indian schools are in a shambles; our science and mathematics teaching are appalling; and our students, while intelligent and diligent, are of the same genetic material as other human beings and, given the burden of our curriculum, are in danger of losing their creativity and energy by the time they "succeed" in school examinations.
Our annual board results, IIT results and civil service examination results are feeding the frenzy over the search for the smartest and the most likely to succeed. This year, the frenzy over who "topped" the exams, which school produced the best results, how many students got into engineering colleges or got the best SAT results (the US college entrance test which is a 10th standard exam, at best!), and who headed the IIT entrance lists has been worse than ever.
The question is: how can it possibly be interesting educationally that student X got 95.6 per cent and was at the top of an examination list when it is likely that the next person, who never features in the public adulation, got 95.5 per cent? Does anyone seriously think that there can be any difference intellectually and in terms of life chances and attainments based on these infinitesimal differences? Indeed, is there much difference between someone who scored 95 per cent and 89 per cent? Has anyone bothered to track all these "toppers"? Where do they end up on the scales of life�income, professional satisfaction, social status, personal happiness? What do they contribute to the good of society around them?
This is not to denigrate those who have topped. It is to ask what this frenzy of interest is about. It is not about education, whatever else it is about. It is a circus, without a circus master. Each of us helps make this spectacle, though some are more responsible than others. For instance, why does the CBSE, the most reported board, splash the name of the toppers around and feed media comparisons relating to this year's average as against last year's, how many passed and how many did not, and so on? Why do school principals like me and school managements tell the media who amongst our students topped the results and what our averages are? Why do school managements base their judgement of their school's success so massively on the board results? Why do parents, most of whom did not do particularly well themselves in the board examination in their own day, and who know that school examination results do not count for much in the game of life, become so drunken over the results, losing all sense of proportion?
One reason for this fetish relating to marks and averages is scarcity. In a country of scarcities, even a marginal difference, we conclude, can make an enormous difference to our children: that extra mark will mean extra consideration when colleges admit (somewhat true, at least in India) and when employers hire (largely not true).
Another reason for the fetish of results is our paranoia. We are convinced that people out there are conspiring to deny our meritorious children what they rightly deserve.What can stop them from doing so except a marksheet in front of them? After all, who can quarrel with the numbers? It is another matter that the numbers we fetishise are only one indication of the quality of a student's mind, and no one, with any sense, would go only by numbers, at least for the purpose of hiring.
Finally, we urban, "educated", middle-class Indians have made the board results into a fetish because we need a clear, simple and apparently unassailable index of success. So much in India seems second-rate and bleak (it is not, but we have persuaded ourselves that our country is a collective failure) that we must have some golden eggs. It does not matter that the eggs are in someone else's basket, that someone else's son or daughter has topped. We hunger for an affirmation that there are "successes" amongst us capable of transcending the "mediocrity" around. We are in search of supermen so that we can feel better.
(The author is the Headmaster of the Doon School.)
Tuesday 5 June 2007
The Disappearing Act Of A Character Called Sukhi Lala
By Jawed Naqvi
04 June, 2007
The Dawn
Unlike India, where it is difficult to tell these days when a Congress-led coalition has paved the way for a BJP led alliance and vice versa, political groups in Pakistan seem to have a lacerating relationship. The army, the mullahs, the PPP and Nawaz Sharif's Muslim League are complemented in their hostile aloofness towards each other by a marked regional fervour of the Baloch, the Pashtuns, the Punjabis, and the Sindhis, with the MQM bringing up a vengeful tail. Also, unlike India, where the media has allowed itself to follow a consensus on most key issues, both foreign and domestic, the absence of a common perspective on most key issues in Pakistan makes it difficult, perhaps even impossible, for the media to pursue a consensus simply because it is just not there at the political level.
Journalists are creatures of their politics and it is a bit of a myth that they pursue 'objectivity', if such a creature truly exists, beyond a reasonable flexibility around their given ideals. To the Indian eye, therefore, the relatively unbending Pakistani media is more akin to the regional media in India, say like Tamil Nadu, where the political contradictions are actually played out more nakedly, and viciously. In Uttar Pradesh, Sahara TV, aligned with Mulayam Singh Yadav, is unlikely to present his successor, Ms Mayawati in fair light. Such antagonisms are a fact in practically every state.
But at the federal level all this changes quite magically. The Left Front's support for the Congress, despite their bitter feud in West Bengal, is a case in point.
Violent contradictions at the state level and a consensual political platform at the federal level define Indian politics and, in a sense, the media too. When a newspaper has switched sides, from supporting the BJP to brazenly idolising the Congress, or in rare cases when a newspaper or a TV channel has shifted from a left-liberal corner to the hard-line centre, or from the right to the centre and back again to its original posture, is difficult to tell. I asked a sagacious uncle how senior journalists who would swear by Atal Behari Vajpayee when he was prime minister had switched their loyalty to Manmohan Singh. A notable example, though not the only one, is Manmohan Singh's media adviser who once had described Vajpayee as a latter day Nehru.
The uncle's reply was in Urdu and it deserves to be recorded accurately. "Ye log badalte nahi hain beta, ye log hotey hi aise hain." (These people do not change, son. They just happen to be made this way.) This is not to say that politicians in Pakistan do not switch sides or that journalists do not change political corners. In fact, even sitting in far away Delhi one can make out that the present ruling party in Pakistan has generously poached people from different ideological corners. In this malleability there is hardly any difference between an Indian ruling coalition, be it led by the Congress or the BJP, and the current coalition of poached leaders that is ruling Pakistan. In fact, it seems easier for people to become a notable figure in a rival party before making a transition to the current one.
Take Shankar Singh Vaghela for example, who heads the Congress party's strategy in Gujarat. He is a former leader of the RSS/BJP stock. He switched sides to spite the current state chief minister Narendra Modi. Well-known ideologue of the intellectual right Sudheendra Kulkarni came to the BJP from a communist corner. Devi Prasad Tripathi was in the RSS stable before he became a senior member of the Communist Party of India-Marxist. He even went to jail as a comrade during Indira Gandhi's emergency rule. It is another matter that Tripathi later joined the same Congress that once threw him into prison. He is currently a leader of the breakaway National Congress Party. Likewise with the BJP. It has senior leaders, like Najma Heptullah, who once adorned the Congress.
So how has India, at least to the naked eye, evolved a seemingly consensual (some would say incestuous) politics as opposed to Pakistan, or Bangladesh or Sri Lanka — the list can be easily extended to virtually all the South Asian countries because political rivalries there are like a fight unto death?
The answer perhaps lies in India's case in the consensus of Sukhi Lala. Let me explain this idiom. In the early days of the Indian cinema, in the 1940s, 50s and to an extent up to the 1960s, the arch villain in a movie was the avaricious moneylender who wreaked havoc on innocent village folks with his greed. In the classic Do Bigha Zameen and the magnum opus Mother India, the forced alienation of the peasant from his land by the moneylender was widely appreciated theme that reflected a political and economic reality of the newly independent nation. Similar themes were also the burden of the literature of that period, Prem Chand being the best recognised of the campaigners who highlighted rural distress and exploitation.
In Mother India, the nasty moneylender was called Sukhi Lala, who stole the land from an illiterate peasant family by fudging records of a loan he had once advanced to the peasant family's head. Over a period of time the villain mutated from moneylender into a gambler who played 'satta', popular pejorative for the stock market. With time this moneylender-satta-player duo gave way to the gun-toting smuggler and the rise of the underworld don. More recently Indian cinema has created the ubiquitous 'terrorist' as the chief villain who sports a beard and speaks like a Pathan or a Kashmiri. At some point, with the rise of the non-resident Indians' profile in the affairs of the home country, the remaining vestiges of Sukhi Lala disappeared. In fact in a popular genre of current cinema the villain himself has vanished. In fact, in the Guru, released some months ago, which is supposed to be a story based on the life of a powerful Indian tycoon, you would notice that the villain Sukhi Lala has mutated into a hero.
It is this Sukhi Lala who supports Narendra Modi in Gujarat as the model chief minister, then strikes a deal for various industrial projects with the communists in West Bengal. He controls the politics of Uttar Pradesh and Haryana that surround Delhi. He has his liaison officers masquerading as party apparatchiks in the Congress, BJP and most regional parties. Therefore, even though Sukhi Lala of Mother India is still going about his business, plundering economically vulnerable village folk, in his new avatar he is no longer regarded as a villain but the harbinger of a world order of which India would be an integral part.
As I read the news report about the proposed censorship by the Cable Operators Association of Pakistan (CAP) of politically unsavoury news telecasts, it reminded me of the delicate balancing act that Sukhi Lala everywhere has to perform before he is in any position to swamp the society.
"We have decided that we'll not become part of any campaign which goes against the armed forces, judiciary and integrity of Pakistan and will virtually boycott the channels, which indulge in such acts," said CAP chairman Khalid Shaikh at the Karachi Press Club. Now we all know that it would require daunting political calisthenics for anyone at this point in time to defend the judiciary in Pakistan without offending the army and vice versa. But once this consensus is achieved, as Mr Shaikh is striving hard to put together, Pakistan may go India's way.
The once evocative slogan of Roti, Kapda Aur Makan would be muffled by its own former patrons. And Sukhi Lala, the quick change artist that he is, is waiting for precisely this moment.
04 June, 2007
The Dawn
Unlike India, where it is difficult to tell these days when a Congress-led coalition has paved the way for a BJP led alliance and vice versa, political groups in Pakistan seem to have a lacerating relationship. The army, the mullahs, the PPP and Nawaz Sharif's Muslim League are complemented in their hostile aloofness towards each other by a marked regional fervour of the Baloch, the Pashtuns, the Punjabis, and the Sindhis, with the MQM bringing up a vengeful tail. Also, unlike India, where the media has allowed itself to follow a consensus on most key issues, both foreign and domestic, the absence of a common perspective on most key issues in Pakistan makes it difficult, perhaps even impossible, for the media to pursue a consensus simply because it is just not there at the political level.
Journalists are creatures of their politics and it is a bit of a myth that they pursue 'objectivity', if such a creature truly exists, beyond a reasonable flexibility around their given ideals. To the Indian eye, therefore, the relatively unbending Pakistani media is more akin to the regional media in India, say like Tamil Nadu, where the political contradictions are actually played out more nakedly, and viciously. In Uttar Pradesh, Sahara TV, aligned with Mulayam Singh Yadav, is unlikely to present his successor, Ms Mayawati in fair light. Such antagonisms are a fact in practically every state.
But at the federal level all this changes quite magically. The Left Front's support for the Congress, despite their bitter feud in West Bengal, is a case in point.
Violent contradictions at the state level and a consensual political platform at the federal level define Indian politics and, in a sense, the media too. When a newspaper has switched sides, from supporting the BJP to brazenly idolising the Congress, or in rare cases when a newspaper or a TV channel has shifted from a left-liberal corner to the hard-line centre, or from the right to the centre and back again to its original posture, is difficult to tell. I asked a sagacious uncle how senior journalists who would swear by Atal Behari Vajpayee when he was prime minister had switched their loyalty to Manmohan Singh. A notable example, though not the only one, is Manmohan Singh's media adviser who once had described Vajpayee as a latter day Nehru.
The uncle's reply was in Urdu and it deserves to be recorded accurately. "Ye log badalte nahi hain beta, ye log hotey hi aise hain." (These people do not change, son. They just happen to be made this way.) This is not to say that politicians in Pakistan do not switch sides or that journalists do not change political corners. In fact, even sitting in far away Delhi one can make out that the present ruling party in Pakistan has generously poached people from different ideological corners. In this malleability there is hardly any difference between an Indian ruling coalition, be it led by the Congress or the BJP, and the current coalition of poached leaders that is ruling Pakistan. In fact, it seems easier for people to become a notable figure in a rival party before making a transition to the current one.
Take Shankar Singh Vaghela for example, who heads the Congress party's strategy in Gujarat. He is a former leader of the RSS/BJP stock. He switched sides to spite the current state chief minister Narendra Modi. Well-known ideologue of the intellectual right Sudheendra Kulkarni came to the BJP from a communist corner. Devi Prasad Tripathi was in the RSS stable before he became a senior member of the Communist Party of India-Marxist. He even went to jail as a comrade during Indira Gandhi's emergency rule. It is another matter that Tripathi later joined the same Congress that once threw him into prison. He is currently a leader of the breakaway National Congress Party. Likewise with the BJP. It has senior leaders, like Najma Heptullah, who once adorned the Congress.
So how has India, at least to the naked eye, evolved a seemingly consensual (some would say incestuous) politics as opposed to Pakistan, or Bangladesh or Sri Lanka — the list can be easily extended to virtually all the South Asian countries because political rivalries there are like a fight unto death?
The answer perhaps lies in India's case in the consensus of Sukhi Lala. Let me explain this idiom. In the early days of the Indian cinema, in the 1940s, 50s and to an extent up to the 1960s, the arch villain in a movie was the avaricious moneylender who wreaked havoc on innocent village folks with his greed. In the classic Do Bigha Zameen and the magnum opus Mother India, the forced alienation of the peasant from his land by the moneylender was widely appreciated theme that reflected a political and economic reality of the newly independent nation. Similar themes were also the burden of the literature of that period, Prem Chand being the best recognised of the campaigners who highlighted rural distress and exploitation.
In Mother India, the nasty moneylender was called Sukhi Lala, who stole the land from an illiterate peasant family by fudging records of a loan he had once advanced to the peasant family's head. Over a period of time the villain mutated from moneylender into a gambler who played 'satta', popular pejorative for the stock market. With time this moneylender-satta-player duo gave way to the gun-toting smuggler and the rise of the underworld don. More recently Indian cinema has created the ubiquitous 'terrorist' as the chief villain who sports a beard and speaks like a Pathan or a Kashmiri. At some point, with the rise of the non-resident Indians' profile in the affairs of the home country, the remaining vestiges of Sukhi Lala disappeared. In fact in a popular genre of current cinema the villain himself has vanished. In fact, in the Guru, released some months ago, which is supposed to be a story based on the life of a powerful Indian tycoon, you would notice that the villain Sukhi Lala has mutated into a hero.
It is this Sukhi Lala who supports Narendra Modi in Gujarat as the model chief minister, then strikes a deal for various industrial projects with the communists in West Bengal. He controls the politics of Uttar Pradesh and Haryana that surround Delhi. He has his liaison officers masquerading as party apparatchiks in the Congress, BJP and most regional parties. Therefore, even though Sukhi Lala of Mother India is still going about his business, plundering economically vulnerable village folk, in his new avatar he is no longer regarded as a villain but the harbinger of a world order of which India would be an integral part.
As I read the news report about the proposed censorship by the Cable Operators Association of Pakistan (CAP) of politically unsavoury news telecasts, it reminded me of the delicate balancing act that Sukhi Lala everywhere has to perform before he is in any position to swamp the society.
"We have decided that we'll not become part of any campaign which goes against the armed forces, judiciary and integrity of Pakistan and will virtually boycott the channels, which indulge in such acts," said CAP chairman Khalid Shaikh at the Karachi Press Club. Now we all know that it would require daunting political calisthenics for anyone at this point in time to defend the judiciary in Pakistan without offending the army and vice versa. But once this consensus is achieved, as Mr Shaikh is striving hard to put together, Pakistan may go India's way.
The once evocative slogan of Roti, Kapda Aur Makan would be muffled by its own former patrons. And Sukhi Lala, the quick change artist that he is, is waiting for precisely this moment.
Tuesday 29 May 2007
The Growing Abuse Of Transfer Pricing By TNCs
By Kavaljit Singh
28 May, 2007
Countercurrents.org
The large-scale tax avoidance practices used by transnational corporations (TNCs) came into public notice recently when the giant drug TNC, GlaxoSmithKline, agreed to pay the US government $3.4 billion to settle a long-running dispute over its tax dealings between the UK parent company and its American subsidiary. This was the largest settlement of a tax dispute in the US. The investigations carried out by Internal Revenue Service found that the American subsidiary of GlaxoSmithKline overpaid its UK parent company for drug supplies during 1989-2005 period, mainly its blockbuster drug, Zantac. These overpayments were meant to reduce the company's profit in the US and thereby its tax bill. The IRS charged the Europe’s largest drugs company for engaging in manipulative “transfer pricing.”
What is transfer pricing? Transfer pricing is the price charged by one associate of a corporation to another associate of the same corporation. When one subsidiary of a corporation in one country sells goods, services or know-how to another subsidiary in another country, the price charged for these goods or services is called the transfer price. All kinds of transactions within the corporations are subject to transfer pricing including raw material, finished products, and payments such as management fees, intellectual property royalties, loans, interest on loans, payments for technical assistance and know-how, and other transactions. The rules on transfer pricing requires TNCs to conduct business between their affiliates and subsidiaries on an “arm's length” basis, which means that any transaction between two entities of the same TNC should be priced as if the transaction was conducted between two unrelated parties.
Transfer pricing, one of the most controversial and complex issues, requires closer scrutiny not only by the critics of TNCs but also by the tax authorities in the poor and the developing world. Transfer pricing is a strategy frequently used by TNCs to book huge profits through illegal means. The transfer price could be purely arbitrary or fictitious, therefore different from the price that unrelated firms would have had to pay. By manipulating a few entries in the account books, TNCs are able to reap obscene profits with no actual change in the physical capital. For instance, a Korean firm manufactures a MP3 player for $100, but its US subsidiary buys it for $199, and then sells it for $200. By doing this, the firm’s bottom line does not change but the taxable profit in the US is drastically reduced. At a 30 per cent tax rate, the firm’s tax liability in the US would be just 30 cents instead of $30.
TNCs derive several benefits from transfer pricing. Since each country has different tax rates, they can increase their profits with the help of transfer pricing. By lowering prices in countries where tax rates are high and raising them in countries with a lower tax rate, TNCs can reduce their overall tax burden, thereby boosting their overall profits. That is why one often finds that corporations located in high tax countries hardly pay any corporate taxes.
A study conducted by Simon J. Pak of Pennsylvania State University and John S. Zdanowicz of Florida State University found that US corporations used manipulative pricing schemes to avoid over $53 billion in taxes in 2001. Based on US import and export data, the authors found several examples of abnormally priced transactions such as toothbrushes imported from the UK into the US for a price of $5,655 each, flash lights imported from Japan for $5,000 each, cotton dishtowels imported from Pakistan for $153 each, briefs and panties imported from Hungary for $739 a dozen, car seats exported to Belgium for $1.66 each, and missile and rocket launchers exported to Israel for just $52 each.
With the removal of restrictions on capital flows, manipulative transfer pricing has increased manifold. According to UNCTAD’s World Investment Report 1996, one-third of world trade is basically intra-firm trade. Because of mergers and acquisitions, intra-firm trade, both in numbers and value terms, has increased considerably in recent years. Given that there are over 77,000 parent TNCs with over 770,000 foreign affiliates, the number of transactions taking place within these entities is unimaginable. Hence, it makes the task of tax authorities extremely difficult to monitor and control each and every transaction taking place within a particular TNC. The rapid expansion of Internet-based trading (E-commerce) has further complicated the task of national tax authorities.
Not only do TNCs reap higher profits by manipulating transfer pricing: there is also a substantial loss of tax revenue to countries, particularly developing ones, that rely more on corporate income tax to finance their development programs. Besides, governments are under pressure to lower taxes as a means of attracting investment or retaining a corporation’s operation in their country. This leads to a heavier tax burden on ordinary citizens for financing social and developmental programs. Although several instances of fictitious transfer pricing have come to public notice in recent years, there are no reliable estimates of the loss of tax revenue globally. The Indian tax authorities are expecting to garner an additional US$111 million each year from TNCs with the help of new regulations on transfer pricing introduced in 2001.
In addition, fictitious transfer pricing creates a substantial loss of foreign exchange and engenders economic distortions through fictitious entries of profits and losses. In countries where there are government regulations preventing companies from setting product retail prices above a certain percentage of prices of imported goods or the cost of production, TNCs can inflate import costs from their subsidiaries and then charge higher retail prices. Additionally, TNCs can use overpriced imports or underpriced exports to circumvent governmental ceilings on profit repatriation, thereby causing a drain of foreign exchange. For instance, if a parent TNC has a profitable subsidiary in a country where the parent does not wish to re-invest the profits, it can remit them by overpricing imports into that country. During the 1970s, investigations revealed that average overpricing by parent firms on imports by their Latin American subsidiaries in the pharmaceutical industry was as high as 155 per cent, while imports of dyestuff raw materials by TNC affiliates in India were overpriced in the range of 124 to 147 per cent.
Given the magnitude of manipulative transfer pricing, the Organization for Economic Co-operation and Development (OECD) has issued detailed guidelines. Transfer pricing regulations are extremely stringent in developed countries such as the US, the UK, and Australia. In the US, for instance, regulations related to transfer pricing cover almost 300 pages, which dent the myth that the US espouses “free market” policies.
However, developing countries are lagging behind in enacting regulations to check the abuse of transfer pricing. India framed regulations related to transfer pricing as late as 2001. However, many countries including Bangladesh, Pakistan, and Nepal, tax authorities have yet to enact regulations curbing the abuse of transfer pricing mechanisms. The abuse of transfer pricing mechanisms could be drastically curbed if there is an enhanced international coordination among national tax authorities.
28 May, 2007
Countercurrents.org
The large-scale tax avoidance practices used by transnational corporations (TNCs) came into public notice recently when the giant drug TNC, GlaxoSmithKline, agreed to pay the US government $3.4 billion to settle a long-running dispute over its tax dealings between the UK parent company and its American subsidiary. This was the largest settlement of a tax dispute in the US. The investigations carried out by Internal Revenue Service found that the American subsidiary of GlaxoSmithKline overpaid its UK parent company for drug supplies during 1989-2005 period, mainly its blockbuster drug, Zantac. These overpayments were meant to reduce the company's profit in the US and thereby its tax bill. The IRS charged the Europe’s largest drugs company for engaging in manipulative “transfer pricing.”
What is transfer pricing? Transfer pricing is the price charged by one associate of a corporation to another associate of the same corporation. When one subsidiary of a corporation in one country sells goods, services or know-how to another subsidiary in another country, the price charged for these goods or services is called the transfer price. All kinds of transactions within the corporations are subject to transfer pricing including raw material, finished products, and payments such as management fees, intellectual property royalties, loans, interest on loans, payments for technical assistance and know-how, and other transactions. The rules on transfer pricing requires TNCs to conduct business between their affiliates and subsidiaries on an “arm's length” basis, which means that any transaction between two entities of the same TNC should be priced as if the transaction was conducted between two unrelated parties.
Transfer pricing, one of the most controversial and complex issues, requires closer scrutiny not only by the critics of TNCs but also by the tax authorities in the poor and the developing world. Transfer pricing is a strategy frequently used by TNCs to book huge profits through illegal means. The transfer price could be purely arbitrary or fictitious, therefore different from the price that unrelated firms would have had to pay. By manipulating a few entries in the account books, TNCs are able to reap obscene profits with no actual change in the physical capital. For instance, a Korean firm manufactures a MP3 player for $100, but its US subsidiary buys it for $199, and then sells it for $200. By doing this, the firm’s bottom line does not change but the taxable profit in the US is drastically reduced. At a 30 per cent tax rate, the firm’s tax liability in the US would be just 30 cents instead of $30.
TNCs derive several benefits from transfer pricing. Since each country has different tax rates, they can increase their profits with the help of transfer pricing. By lowering prices in countries where tax rates are high and raising them in countries with a lower tax rate, TNCs can reduce their overall tax burden, thereby boosting their overall profits. That is why one often finds that corporations located in high tax countries hardly pay any corporate taxes.
A study conducted by Simon J. Pak of Pennsylvania State University and John S. Zdanowicz of Florida State University found that US corporations used manipulative pricing schemes to avoid over $53 billion in taxes in 2001. Based on US import and export data, the authors found several examples of abnormally priced transactions such as toothbrushes imported from the UK into the US for a price of $5,655 each, flash lights imported from Japan for $5,000 each, cotton dishtowels imported from Pakistan for $153 each, briefs and panties imported from Hungary for $739 a dozen, car seats exported to Belgium for $1.66 each, and missile and rocket launchers exported to Israel for just $52 each.
With the removal of restrictions on capital flows, manipulative transfer pricing has increased manifold. According to UNCTAD’s World Investment Report 1996, one-third of world trade is basically intra-firm trade. Because of mergers and acquisitions, intra-firm trade, both in numbers and value terms, has increased considerably in recent years. Given that there are over 77,000 parent TNCs with over 770,000 foreign affiliates, the number of transactions taking place within these entities is unimaginable. Hence, it makes the task of tax authorities extremely difficult to monitor and control each and every transaction taking place within a particular TNC. The rapid expansion of Internet-based trading (E-commerce) has further complicated the task of national tax authorities.
Not only do TNCs reap higher profits by manipulating transfer pricing: there is also a substantial loss of tax revenue to countries, particularly developing ones, that rely more on corporate income tax to finance their development programs. Besides, governments are under pressure to lower taxes as a means of attracting investment or retaining a corporation’s operation in their country. This leads to a heavier tax burden on ordinary citizens for financing social and developmental programs. Although several instances of fictitious transfer pricing have come to public notice in recent years, there are no reliable estimates of the loss of tax revenue globally. The Indian tax authorities are expecting to garner an additional US$111 million each year from TNCs with the help of new regulations on transfer pricing introduced in 2001.
In addition, fictitious transfer pricing creates a substantial loss of foreign exchange and engenders economic distortions through fictitious entries of profits and losses. In countries where there are government regulations preventing companies from setting product retail prices above a certain percentage of prices of imported goods or the cost of production, TNCs can inflate import costs from their subsidiaries and then charge higher retail prices. Additionally, TNCs can use overpriced imports or underpriced exports to circumvent governmental ceilings on profit repatriation, thereby causing a drain of foreign exchange. For instance, if a parent TNC has a profitable subsidiary in a country where the parent does not wish to re-invest the profits, it can remit them by overpricing imports into that country. During the 1970s, investigations revealed that average overpricing by parent firms on imports by their Latin American subsidiaries in the pharmaceutical industry was as high as 155 per cent, while imports of dyestuff raw materials by TNC affiliates in India were overpriced in the range of 124 to 147 per cent.
Given the magnitude of manipulative transfer pricing, the Organization for Economic Co-operation and Development (OECD) has issued detailed guidelines. Transfer pricing regulations are extremely stringent in developed countries such as the US, the UK, and Australia. In the US, for instance, regulations related to transfer pricing cover almost 300 pages, which dent the myth that the US espouses “free market” policies.
However, developing countries are lagging behind in enacting regulations to check the abuse of transfer pricing. India framed regulations related to transfer pricing as late as 2001. However, many countries including Bangladesh, Pakistan, and Nepal, tax authorities have yet to enact regulations curbing the abuse of transfer pricing mechanisms. The abuse of transfer pricing mechanisms could be drastically curbed if there is an enhanced international coordination among national tax authorities.
Thursday 10 May 2007
Blair - Bush's Zombie Shuffles Off Stage
By Tariq Ali
10 May, 2007
Counterpunch
Tony Blair's success was limited to winning three general elections in a row. A second-rate actor, he turned out to be a crafty and avaricious politician, but without much substance; bereft of ideas he eagerly grasped and tried to improve upon the legacy of Margaret Thatcher. But though in many ways Blair's programme has been a euphemistic, if bloodier, version of Thatcher's, the style of their departures is very different. Thatcher's overthrow by her fellow-Conservatives was a matter of high drama: an announcement outside the Louvre's glass pyramid during the Paris Congress brokering the end of the Cold War; tears; a crowded House of Commons. Blair makes his unwilling exit against a backdrop of car-bombs and mass carnage in Iraq, with hundreds of thousands left dead or maimed from his policies, and London a prime target for terrorist attack. Thatcher's supporters described themselves afterwards as horror-struck by what they had done. Even Blair's greatest sycophants in the British media: Martin Kettle and Michael White (The Guardian), Andrew Rawnsley (Observer), Philip Stephens (FT) confess to a sense of relief as he finally quits.
A true creature of the Washington Consensus, Blair was always loyal to the various occupants of the White House. In Europe, he preferred Aznar to Zapatero, Merckel to Schroeder, was seriously impressed by to Berlusconi and, most recently, made no secret of his desire that Sarkozy was his candidate in France. He understood that privatisation/deregulation at home were part of the same mechanism as the wars abroad. If this judgement seems unduly harsh let me quote Sir Rodric Braithwaite, a former senior adviser to Blair, writing in the Financial Times on 2, August, 2006:
"A spectre is stalking British television, a frayed and waxy zombie straight from Madame Tussaud's. This one, unusually, seems to live and breathe. Perhaps it comes from the Central Intelligence Agency's box of technical tricks, programmed to spout the language of the White House in an artificial English accent...
Mr Blair has done more damage to British interests in the Middle East than Anthony Eden, who led the UK to disaster in Suez 50 years ago. In the past 100 years--to take the highlights--we have bombed and occupied Egypt and Iraq, put down an Arab uprising in Palestine and overthrown governments in Iran, Iraq and the Gulf. We can no longer do these things on our own, so we do them with the Americans. Mr Blair's total identification with the White House has destroyed his influence in Washington, Europe and the Middle East itself: who bothers with the monkey if he can go straight to the organ-grinder?..."
This, too, is mild compared to what is said about Blair in the British Foreign Office and the Ministry of Defence. Senior diplomats have told me on more than one occasion that it would not upset them too much if Blair were to be tried as a war criminal. More cultured critics sometimes compare him to the Cavaliere Cipolia, the vile hypnotist of fascist Italy, so brilliantly portrayed in Thomas Mann's 1929 novel 'Mario and the Magician'. Blair is certainly not Mussolini, but like the Duce he enjoyed to simultaneously lead and humiliate his supporters.
What much of this reveals is anger and impotence. There is no mechanism to get rid of a sitting Prime Minister unless his or her party loses confidence. The Conservative leadership decided that Thatcher simply had to go because of her negative attitude to Europe. Labour tends to be more sentimental towards its leaders and in this case they owed so much to Blair that nobody close to him wants to be cast in the role of Brutus. In the end he decided to go himself. The disaster in Iraq had made him a much hated politician and slowly support began to ebb. One reason for the slowness was that the country is without a serious opposition. In Parliament, the Conservatives simply followed Blair. The Liberal-Democrats were ineffective. Blair had summed up Britain's attitude to Europe at Nice in 2000:
"It is possible, in our judgement, to fight Britain's corner, get the best out of Europe for Britain and exercise real authority and influence in Europe. That is as it should be. Britain is a world power."
This grotesque, self-serving fantasy that 'Britain is a world power' is to justify that it will always be EU/UK. The real union is with Washington. France and Germany are seen as rivals for Washington's affections, not potential allies in an independent EU. The French decision to re-integrate themselves into NATO and pose as the most vigorous US ally was a serious structural shift which weakened Europe. Britain responded by encouraging a fragmented political order in Europe through expansion and insisted on a permanent US presence on the continent.
Blair's half-anointed, half-hated successor, Gordon Brown, is far more intelligent (he reads books) but politically no different. There might be a change of tone, but little else. It is a grim prospect with or without Blair and an alternative politics (anti-war, anti-Trident, defence of public services) is confined to the nationalist parties in Scotland and Wales. Its absence nationally fuels the anger felt by substantial sections of the population, reflected in voting (or not) against those in power.
10 May, 2007
Counterpunch
Tony Blair's success was limited to winning three general elections in a row. A second-rate actor, he turned out to be a crafty and avaricious politician, but without much substance; bereft of ideas he eagerly grasped and tried to improve upon the legacy of Margaret Thatcher. But though in many ways Blair's programme has been a euphemistic, if bloodier, version of Thatcher's, the style of their departures is very different. Thatcher's overthrow by her fellow-Conservatives was a matter of high drama: an announcement outside the Louvre's glass pyramid during the Paris Congress brokering the end of the Cold War; tears; a crowded House of Commons. Blair makes his unwilling exit against a backdrop of car-bombs and mass carnage in Iraq, with hundreds of thousands left dead or maimed from his policies, and London a prime target for terrorist attack. Thatcher's supporters described themselves afterwards as horror-struck by what they had done. Even Blair's greatest sycophants in the British media: Martin Kettle and Michael White (The Guardian), Andrew Rawnsley (Observer), Philip Stephens (FT) confess to a sense of relief as he finally quits.
A true creature of the Washington Consensus, Blair was always loyal to the various occupants of the White House. In Europe, he preferred Aznar to Zapatero, Merckel to Schroeder, was seriously impressed by to Berlusconi and, most recently, made no secret of his desire that Sarkozy was his candidate in France. He understood that privatisation/deregulation at home were part of the same mechanism as the wars abroad. If this judgement seems unduly harsh let me quote Sir Rodric Braithwaite, a former senior adviser to Blair, writing in the Financial Times on 2, August, 2006:
"A spectre is stalking British television, a frayed and waxy zombie straight from Madame Tussaud's. This one, unusually, seems to live and breathe. Perhaps it comes from the Central Intelligence Agency's box of technical tricks, programmed to spout the language of the White House in an artificial English accent...
Mr Blair has done more damage to British interests in the Middle East than Anthony Eden, who led the UK to disaster in Suez 50 years ago. In the past 100 years--to take the highlights--we have bombed and occupied Egypt and Iraq, put down an Arab uprising in Palestine and overthrown governments in Iran, Iraq and the Gulf. We can no longer do these things on our own, so we do them with the Americans. Mr Blair's total identification with the White House has destroyed his influence in Washington, Europe and the Middle East itself: who bothers with the monkey if he can go straight to the organ-grinder?..."
This, too, is mild compared to what is said about Blair in the British Foreign Office and the Ministry of Defence. Senior diplomats have told me on more than one occasion that it would not upset them too much if Blair were to be tried as a war criminal. More cultured critics sometimes compare him to the Cavaliere Cipolia, the vile hypnotist of fascist Italy, so brilliantly portrayed in Thomas Mann's 1929 novel 'Mario and the Magician'. Blair is certainly not Mussolini, but like the Duce he enjoyed to simultaneously lead and humiliate his supporters.
What much of this reveals is anger and impotence. There is no mechanism to get rid of a sitting Prime Minister unless his or her party loses confidence. The Conservative leadership decided that Thatcher simply had to go because of her negative attitude to Europe. Labour tends to be more sentimental towards its leaders and in this case they owed so much to Blair that nobody close to him wants to be cast in the role of Brutus. In the end he decided to go himself. The disaster in Iraq had made him a much hated politician and slowly support began to ebb. One reason for the slowness was that the country is without a serious opposition. In Parliament, the Conservatives simply followed Blair. The Liberal-Democrats were ineffective. Blair had summed up Britain's attitude to Europe at Nice in 2000:
"It is possible, in our judgement, to fight Britain's corner, get the best out of Europe for Britain and exercise real authority and influence in Europe. That is as it should be. Britain is a world power."
This grotesque, self-serving fantasy that 'Britain is a world power' is to justify that it will always be EU/UK. The real union is with Washington. France and Germany are seen as rivals for Washington's affections, not potential allies in an independent EU. The French decision to re-integrate themselves into NATO and pose as the most vigorous US ally was a serious structural shift which weakened Europe. Britain responded by encouraging a fragmented political order in Europe through expansion and insisted on a permanent US presence on the continent.
Blair's half-anointed, half-hated successor, Gordon Brown, is far more intelligent (he reads books) but politically no different. There might be a change of tone, but little else. It is a grim prospect with or without Blair and an alternative politics (anti-war, anti-Trident, defence of public services) is confined to the nationalist parties in Scotland and Wales. Its absence nationally fuels the anger felt by substantial sections of the population, reflected in voting (or not) against those in power.
Sunday 6 May 2007
Yeltsin - Sinister side of the clown
by Mahir Ali; May 05, 2007
SOME of Boris Yeltsin’s worst transgressions barely rated a mention in much of the media coverage that followed his demise last month. The broad tendency was to paint him as Russia’s democratic saviour, a political colossus given to occasional acts of drunken tomfoolery.
In a tribute published in The New York Times last Sunday, Bill Clinton described him as imperfect but “intelligent, passionate, emotional, strong-willed and courageous”, concluding: “Russia and the world were lucky to have him. History will be kind to my friend Boris.”
Among the stock footage favoured by many television networks over the past 10 days is a clip that shows Yeltsin making a remark that prompts an outburst of Clintonian laughter. It dates back to the period when Clinton compared him with Abraham Lincoln, a compliment that coincided with the destruction of Grozny by Russian planes, tanks and missiles.
Apart from the indelible image of Yeltsin berating troops from atop a tank outside the Russian parliament in August 1991, news reports tended to focus on the lighter moments in the former president’s career: Boris the friendly bear dancing on stage with a rock group, Boris the muzhik greeting an unsuspecting woman with a pinch on the backside, Boris the jester pretending to conduct a German orchestra. One almost expected the compilation of clips to be followed by a blurb along the lines of: “I thought Boris Yeltsin was a leading 20th-century political figure, until I discovered Smirnov” (or Stolichnaya, as the case may be).
Hardly any network deemed it worthwhile to visually juxtapose that moment of bravery - or at least bravado - from August 1991, when the coup attempt against Soviet president Mikhail Gorbachev provided Yeltsin with the opportunity to strike a pose that would be recognized by posterity as his finest hour, with the scene some two years later in exactly the same part of Moscow, when Yeltsin ordered a military assault against the same Russian parliament that stood by him in 1991. This instance of state terrorism enjoyed widespread western approbation at the time and continues to be glossed over in retrospect, with leading American newspapers fallaciously describing it as a successful effort to defeat a communist coup attempt.
In certain other contexts, such as the economic “shock therapy” that reduced a large proportion of Russians to penury, liberal western media organs are now prepared to admit that Yeltsin was seriously mistaken, albeit without acknowledging the folly of their uncritical contemporary support. The blanket stamp of approval was somewhat more difficult in the case of the systematic violation of human rights in Chechnya. But then, what’s indefensible can often be ignored, and perhaps it’s not surprising that images of the havoc wreaked in Grozny and the massacres perpetrated in Chechen villages by ill-trained Russian conscripts have generally been absent from recent coverage of the Yeltsin years.
Boris Yeltsin was an unknown quantity when, shortly after the advent of Gorbachev, he was plucked from Sverdlovsk and installed as the metropolitan party leader in Moscow. His populist approach to the job offered a sharp contrast to the cautious conservatism traditionally associated with party bureaucrats, and Muscovites relished the sight of the local party chief travelling on public transport, publicly sounding off about empty shelves in shops, tracking down hoarders and lamenting the slow pace of perestroika. In the reformist atmosphere introduced by Gorbachev, Yeltsin swept through the Soviet capital like a fresh breeze.
His acrimonious rupture with the Communist Party did his popularity no harm. He seemed to represent the future, whereas much of the party, despite all of Gorbachev’s efforts, still seemed to be mired in the past. If Muscovites could have envisaged at that point the sort of future that lay in wait, their attitude may have changed dramatically - as it eventually did: on the eve of his departure from the Kremlin at the end of 1999, Yeltsin’s popularity had dwindled to two per cent.
Ten years earlier, however, his incessant attacks on the privileges enjoyed by the Communist hierarchy and the hurdles in the path of democratic reforms fell on receptive ears. In the first contested elections to the Russian Federation’s Congress of People’s Deputies, Yeltsin stood against a party candidate and won by a huge majority. Those elections, organized while the USSR was very much intact, were arguably the fairest that Russia has witnessed.
The parliament elected Yeltsin as its chairman, but he had set his eyes on a higher goal, and in mid-1991 he achieved his ambition by becoming Russia’s first directly elected president - a platform that strengthened his ability to undermine Gorbachev, whose elevation to the post of the Soviet Union’s first executive president had not been preceded by a popular vote.
A couple of months later, Yeltsin leapt to his rival’s defence when a conspiracy between members of the party hierarchy, the interior ministry and the KGB led to Gorbachev being taken prisoner. The coup-makers, who ostensibly wanted to reverse the reform process, behaved like nervous clowns. A more ruthless and clearly thought-out operation would, at the very least, have entailed Yeltsin’s neutralization. Instead, although tanks were ordered on to the roads, the soldiers manning them were sufficiently confused by their mission to be obeying the traffic lights.
Muscovites reacted to the show of force by pouring on to the streets, determined to resist the backwards lurch, and buoyed no doubt by Yeltsin’s declaration from atop a T-72 tank: “We are dealing with a right-wing, reactionary, anti-constitutional coup d’etat. We appeal to the citizens of Russia to give an appropriate rebuff to the putschists. The legally elected president of the country has been removed from power. We proclaim all decisions and decrees of this committee [formed by the conspirators] to be illegal.”
Chances are that the coup would have floundered anyhow, but it did wonders for Yeltsin’s image - although he found time for other pursuits during those three crucial days: on one occasion, former foreign minister Eduard Shevardnadze found him passed out on the carpet, with an empty bottle of vodka close by. Meanwhile, the coup attempt set the scene for three momentous events: the humiliation of Mikhail Gorbachev, the disbanding of the Communist Party and, within months, the dismemberment of the Soviet Union. Yeltsin was instrumental in each of them.
The final act involved a meeting between Yeltsin and the leaders of Ukraine and Byelorussia in a hunting lodge near the Polish border, where they arbitrarily chose independence for the USSR’s constituent republics, pre-empting a new union treaty that had been all but finalized. The undemocratic and unconstitutional move was effectively another coup against Gorbachev. The theoretical burial of the Soviet Union was followed by a feast that ended in a drunken brawl.
In the brave new Russia, the sudden removal of state subsidies was accompanied by the sale of state assets at throwaway prices. A handful of enterprising folk grew very, very rich while millions saw their savings rendered worthless: in 1992, inflation went up by 2,000 per cent. These policies inevitably invited parliamentary efforts to overturn them, leading to the 1993 confrontation. It seems perverse for the man who ordered military action against his nation’s parliament to be hailed as the father of Russian democracy, but in some eyes Yeltsin could do no serious wrong: he may have been a bit of a monster, but he was a monster who devoured communism and usually obeyed the west.
So who cares that in 1996, faced with the prospect of defeat in his re-election attempt, he seriously toyed with the idea of dispensing with the democratic process, until the crony capitalists he had nurtured came to his aid? Vladimir Putin, who isn’t always prepared to kowtow to the west, is often accused of possessing an authoritarian streak, but it’s seldom noted that he inherited it from Yeltsin - whose choice of successor, incidentally, was guided by one overriding factor: it had to be someone who would guarantee the outgoing president and his family immunity from prosecution. Yeltsin’s distaste for privileges and corruption had not survived the collapse of communism.
Towards the end of his tenure, a pair of scholars, Professor Peter Reddaway and Dmitri Glinski, offered this scathing opinion: “For the first time in recent world history one of the major industrial nations with a highly educated society has dismantled the results of several decades of economic development.” Small wonder, then, that when foreign correspondents took to the streets of Moscow for a vox pop last week, they could hardly find anyone willing to say a kind word about a leader who, whatever Bill Clinton may say, is likely to go down in history as a destroyer rather than a builder. “I think all of Russia is celebrating in silence,” ventured one young man. Gorbachev’s reaction, not surprisingly, was more measured: “A tragic fate,” he noted. “On [his] shoulders rest major events for the good of the country as well as serious mistakes.” Margaret Thatcher, meanwhile, echoed many of her ideological peers - and demonstrated her tenuous grasp of recent history - in describing the deceased as a “patriot and liberator” without whom “Russia would have remained in the grip of communism”.
A week ago, the late Russian leader became the first of his ilk since the days of the tsars to be laid to rest following a church service. Perhaps a suitable epitaph, simply and accurately summarizing the complexities of his political career, could have been: “Here lies Boris Nikolayevich Yeltsin, sober at last...”
SOME of Boris Yeltsin’s worst transgressions barely rated a mention in much of the media coverage that followed his demise last month. The broad tendency was to paint him as Russia’s democratic saviour, a political colossus given to occasional acts of drunken tomfoolery.
In a tribute published in The New York Times last Sunday, Bill Clinton described him as imperfect but “intelligent, passionate, emotional, strong-willed and courageous”, concluding: “Russia and the world were lucky to have him. History will be kind to my friend Boris.”
Among the stock footage favoured by many television networks over the past 10 days is a clip that shows Yeltsin making a remark that prompts an outburst of Clintonian laughter. It dates back to the period when Clinton compared him with Abraham Lincoln, a compliment that coincided with the destruction of Grozny by Russian planes, tanks and missiles.
Apart from the indelible image of Yeltsin berating troops from atop a tank outside the Russian parliament in August 1991, news reports tended to focus on the lighter moments in the former president’s career: Boris the friendly bear dancing on stage with a rock group, Boris the muzhik greeting an unsuspecting woman with a pinch on the backside, Boris the jester pretending to conduct a German orchestra. One almost expected the compilation of clips to be followed by a blurb along the lines of: “I thought Boris Yeltsin was a leading 20th-century political figure, until I discovered Smirnov” (or Stolichnaya, as the case may be).
Hardly any network deemed it worthwhile to visually juxtapose that moment of bravery - or at least bravado - from August 1991, when the coup attempt against Soviet president Mikhail Gorbachev provided Yeltsin with the opportunity to strike a pose that would be recognized by posterity as his finest hour, with the scene some two years later in exactly the same part of Moscow, when Yeltsin ordered a military assault against the same Russian parliament that stood by him in 1991. This instance of state terrorism enjoyed widespread western approbation at the time and continues to be glossed over in retrospect, with leading American newspapers fallaciously describing it as a successful effort to defeat a communist coup attempt.
In certain other contexts, such as the economic “shock therapy” that reduced a large proportion of Russians to penury, liberal western media organs are now prepared to admit that Yeltsin was seriously mistaken, albeit without acknowledging the folly of their uncritical contemporary support. The blanket stamp of approval was somewhat more difficult in the case of the systematic violation of human rights in Chechnya. But then, what’s indefensible can often be ignored, and perhaps it’s not surprising that images of the havoc wreaked in Grozny and the massacres perpetrated in Chechen villages by ill-trained Russian conscripts have generally been absent from recent coverage of the Yeltsin years.
Boris Yeltsin was an unknown quantity when, shortly after the advent of Gorbachev, he was plucked from Sverdlovsk and installed as the metropolitan party leader in Moscow. His populist approach to the job offered a sharp contrast to the cautious conservatism traditionally associated with party bureaucrats, and Muscovites relished the sight of the local party chief travelling on public transport, publicly sounding off about empty shelves in shops, tracking down hoarders and lamenting the slow pace of perestroika. In the reformist atmosphere introduced by Gorbachev, Yeltsin swept through the Soviet capital like a fresh breeze.
His acrimonious rupture with the Communist Party did his popularity no harm. He seemed to represent the future, whereas much of the party, despite all of Gorbachev’s efforts, still seemed to be mired in the past. If Muscovites could have envisaged at that point the sort of future that lay in wait, their attitude may have changed dramatically - as it eventually did: on the eve of his departure from the Kremlin at the end of 1999, Yeltsin’s popularity had dwindled to two per cent.
Ten years earlier, however, his incessant attacks on the privileges enjoyed by the Communist hierarchy and the hurdles in the path of democratic reforms fell on receptive ears. In the first contested elections to the Russian Federation’s Congress of People’s Deputies, Yeltsin stood against a party candidate and won by a huge majority. Those elections, organized while the USSR was very much intact, were arguably the fairest that Russia has witnessed.
The parliament elected Yeltsin as its chairman, but he had set his eyes on a higher goal, and in mid-1991 he achieved his ambition by becoming Russia’s first directly elected president - a platform that strengthened his ability to undermine Gorbachev, whose elevation to the post of the Soviet Union’s first executive president had not been preceded by a popular vote.
A couple of months later, Yeltsin leapt to his rival’s defence when a conspiracy between members of the party hierarchy, the interior ministry and the KGB led to Gorbachev being taken prisoner. The coup-makers, who ostensibly wanted to reverse the reform process, behaved like nervous clowns. A more ruthless and clearly thought-out operation would, at the very least, have entailed Yeltsin’s neutralization. Instead, although tanks were ordered on to the roads, the soldiers manning them were sufficiently confused by their mission to be obeying the traffic lights.
Muscovites reacted to the show of force by pouring on to the streets, determined to resist the backwards lurch, and buoyed no doubt by Yeltsin’s declaration from atop a T-72 tank: “We are dealing with a right-wing, reactionary, anti-constitutional coup d’etat. We appeal to the citizens of Russia to give an appropriate rebuff to the putschists. The legally elected president of the country has been removed from power. We proclaim all decisions and decrees of this committee [formed by the conspirators] to be illegal.”
Chances are that the coup would have floundered anyhow, but it did wonders for Yeltsin’s image - although he found time for other pursuits during those three crucial days: on one occasion, former foreign minister Eduard Shevardnadze found him passed out on the carpet, with an empty bottle of vodka close by. Meanwhile, the coup attempt set the scene for three momentous events: the humiliation of Mikhail Gorbachev, the disbanding of the Communist Party and, within months, the dismemberment of the Soviet Union. Yeltsin was instrumental in each of them.
The final act involved a meeting between Yeltsin and the leaders of Ukraine and Byelorussia in a hunting lodge near the Polish border, where they arbitrarily chose independence for the USSR’s constituent republics, pre-empting a new union treaty that had been all but finalized. The undemocratic and unconstitutional move was effectively another coup against Gorbachev. The theoretical burial of the Soviet Union was followed by a feast that ended in a drunken brawl.
In the brave new Russia, the sudden removal of state subsidies was accompanied by the sale of state assets at throwaway prices. A handful of enterprising folk grew very, very rich while millions saw their savings rendered worthless: in 1992, inflation went up by 2,000 per cent. These policies inevitably invited parliamentary efforts to overturn them, leading to the 1993 confrontation. It seems perverse for the man who ordered military action against his nation’s parliament to be hailed as the father of Russian democracy, but in some eyes Yeltsin could do no serious wrong: he may have been a bit of a monster, but he was a monster who devoured communism and usually obeyed the west.
So who cares that in 1996, faced with the prospect of defeat in his re-election attempt, he seriously toyed with the idea of dispensing with the democratic process, until the crony capitalists he had nurtured came to his aid? Vladimir Putin, who isn’t always prepared to kowtow to the west, is often accused of possessing an authoritarian streak, but it’s seldom noted that he inherited it from Yeltsin - whose choice of successor, incidentally, was guided by one overriding factor: it had to be someone who would guarantee the outgoing president and his family immunity from prosecution. Yeltsin’s distaste for privileges and corruption had not survived the collapse of communism.
Towards the end of his tenure, a pair of scholars, Professor Peter Reddaway and Dmitri Glinski, offered this scathing opinion: “For the first time in recent world history one of the major industrial nations with a highly educated society has dismantled the results of several decades of economic development.” Small wonder, then, that when foreign correspondents took to the streets of Moscow for a vox pop last week, they could hardly find anyone willing to say a kind word about a leader who, whatever Bill Clinton may say, is likely to go down in history as a destroyer rather than a builder. “I think all of Russia is celebrating in silence,” ventured one young man. Gorbachev’s reaction, not surprisingly, was more measured: “A tragic fate,” he noted. “On [his] shoulders rest major events for the good of the country as well as serious mistakes.” Margaret Thatcher, meanwhile, echoed many of her ideological peers - and demonstrated her tenuous grasp of recent history - in describing the deceased as a “patriot and liberator” without whom “Russia would have remained in the grip of communism”.
A week ago, the late Russian leader became the first of his ilk since the days of the tsars to be laid to rest following a church service. Perhaps a suitable epitaph, simply and accurately summarizing the complexities of his political career, could have been: “Here lies Boris Nikolayevich Yeltsin, sober at last...”
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