Spooks and spies, past and present

CORPORATE espionage in India is hardly new. It is also common knowledge that the bureaucracy in the country leaks like a sieve. So what is so special about the arrest by the Delhi Police of 14 individuals —including a journalist, an energy consultant, a clutch of corporate executives and a few junior government employees—while investigating the theft of confidential documents from various economic ministries, including the Ministries of Petroleum & Natural Gas, Coal, and Power?

The sheer scale of the police action is perhaps unprecedented, bringing back into focus the triangular nexus between corrupt sections of politicians, businesspersons and bureaucrats: a nexus that arguably epitomises the roots of corruption in India. Rattled by the leakage of sensitive information days before the presentation of the Union Budget for 2015­16 on February 28, the Narendra Modi government acted against the alleged perpetrators of the pilferage. At the same time, the government’s spin doctors have sought to use the occasion as an opportunity to convey an impression that the powers that be are not excessively beholden to big business interests.

All of which may be clever public relations, but it seems most unlikely that the long arm of the law will extend all the way up to the corporate captains, the “big fish” who head the conglomerates that have employed some of the “small fry” who have been put behind bars.

For decades, lobbyists and so­ called consultants have been deploying the services of moles in government offices. These informants are, more often than not, junior officials such as “lower­division clerks” as they are sometimes described. These underlings in the bureaucracy are regularly bribed by fixers and agents—often for ridiculously small sums of money—for leaking privileged “classified” information to privately owned business groups whose representatives, on occasions, bid against one another to be the first to gain access to information about government decisions and policies that could give them competitive advantage. Regularly and systematically, these “secret” government documents are “bought” for petty amounts from those who rarely realise their true “value”.

Old crime, new technology

While the modus operandi has more or less remained the same over the decades, what is new is the use of modern digital technology. Photocopiers have become old hat, though there are reports that a senior officer in the Petroleum Ministry was alerted when he found a page from a file in a photocopier in his room that had apparently been left behind inadvertently. Scanners are in. The old cardboard files tied in the proverbial red tape still exist. But much more information can be packed into a tiny pen drive. Reams of paper need not be transported from one location to another. Email is simpler.

What has also changed is the greed for insider information with increased private ­sector participation in industries that were once completely dominated by government ­owned corporations. Such sectors include petroleum, coal and power. And the working of all these sectors involve the allocation and pricing of natural resources.

Scandals of the 1980s

In 1986, the late Chitter Venkat Narayan, better known as Coomer Narain, regional manager of SLM Maneklal Industries Limited, was charged with criminal conspiracy and leaking important classified information to foreign agents between 1977 and 1985 in Delhi and Mumbai. He was known to bribe junior government employees in the atomic energy and defence establishments who were on his payroll. He would then hawk the documents obtained to the highest bidder. After he was arrested, he confessed that government officials would drop off documents at the firm’s 16 Hailey Road office in central Delhi. He would photocopy the documents and then return the original papers.

Narain was jocularly called a “non­aligned spy” in an era when the Cold War between the United States and the former Soviet Union was still not over—he did not care whether the photocopied papers he hawked landed up with the KGB or the Central Intelligence Agency (CIA) so long as he got his money. He implicated his boss Yogesh Maneklal in this scandal and claimed he had been collecting information on behalf of his employer who, in turn, would pass it on to his clients. SLM Maneklal Industries used to supply textile machinery to the Soviet Union, Bulgaria and Czechoslovakia.

From textiles, the company diversified into engineering equipment and industrial rubber. It also acted as agents for foreign companies, including two based in Poland that dealt with marine equipment. The firm had technical collaborations or agency agreements with companies in France, Austria, Switzerland, West Germany and Japan. It acted as agents for the supply of sophisticated helium refrigeration equipment for the Atomic Energy Commission and also executed orders for the public sector Bharat Heavy Plates & Vessels for supply of refrigeration equipment and armoured plates for tanks.

Narain acknowledged that he had been in this “business” for at least 25 years. By his own admission, he had at least 30 informants, including assistants and private secretaries, who worked in key Ministries, in the Prime Minister’s Office and in the secretariat of the President’s office in Rashtrapati Bhavan. In the first information report (FIR) lodged by the Delhi Police against him in January 1985, one of the accused was a senior personal assistant to Dr P.C. Alexander, the then Principal Secretary to Prime Minister Rajiv Gandhi.

Alexander resigned in the wake of the espionage scandal. Another accused was a personal assistant to the Defence Secretary and a junior officer in the Ministries of Commerce, and Shipping & Transport.

Besides information about armaments deals, minutes of Cabinet meetings on the tensions in Punjab and Assam were leaked as were government files on Tamils in Sri Lanka. Narain implicated two Indian exporters, V.K. Aggarwal and Ashok Jaidka, who had been passing on information to diplomats in the Polish and East German embassies. After Narain’s arrest, the government ordered two French diplomats to return home, including Ambassador Serge Boidevaix and his deputy military attache Lt. Col. Alain Bolley, who had allegedly received many documents procured by Narain.

Just two years earlier, two senior retired military officers were accused of spying. In November 1983, Frank Larkins, who retired as a Major General in the Indian Army in 1972, was arrested after he was caught passing military documents to a U.S. national. His brother, Kenneth Larkins, who retired as an Air Vice Marshal in 1980, was arrested the following day. The brothers were charged with passing on information to “Jockey” and “Bud”, two CIA operatives working out of the U.S. Embassy as diplomats. Jockey had apparently befriended Frank Larkins in 1978 at a party and asked him to keep a watch on goings­ on during his visits to the Army Headquarters where he would sell products made by Mohan Meakins, who had employed him after he retired. He had roped in Lt. Col.Jasbir Singh, a retired armoured corps officer, as one of his partners.

The person who was instrumental in the arrests of Coomer Narain and the Larkins brothers was police officer Kalyan Rudra, who was a deputy director with the Intelligence Bureau in charge of counter ­intelligence.

Digital thieves of insider information
The Naval War Room case in 2006 heralded the advent of digital equipment among those who stole secret documents. Over 7,000 pages of sensitive defence information were reportedly pilfered from high­security rooms in South Block on a pen drive. The charge sheet that was filed by the Central Bureau of Investigation (CBI) said that Commander Vijender Rana, one of the accused, transferred the classified material and sent these through email to “unauthorised persons”. An email was sent by Rana to a certain “Vic Branson” who was reportedly connected to the absconding Ravi Shankaran, a former naval officer and alleged kingpin of the scandal who is related to the wife of a former Chief of the Indian Navy. The CBI has charged that Vic Branson was Shankaran himself. It has been alleged that Shankaran and Kulbhushan Parashar, also of the Indian Navy, enticed serving defence officers with gifts and allurements in cash and kind. Part of this conspiracy was the Delhi­ based businessman and arms dealer Abhishek Verma.

In the most recent instance of corporate espionage as well, military establishments have been targeted and a junior officer in the Ministry of Defence has been arrested. This is not surprising as huge amounts are involved in defence deals. Though no pilfered documents have been found so far, the arrested Defence Ministry official worked as a housekeeper and was using a stolen identity card given to him by one of the main accused, Lalta Prasad. Media reports suggest that National Security Adviser Ajit Doval has initiated investigations into the recent theft of documents.

At least three studies on industrial espionage by business associations point to the willingness by companies to access insider information. A 2012 survey by the Associated Chambers of Commerce and Industry of India stated that more than a third of the companies surveyed across different sectors were involved in some form of espionage to gain an advantage over their competitors. The same year, a report by Price WaterhouseCoopers described industrial espionage as India’s new booming sector.

Nearly 80 per cent of the chief executives spoken to had used or were using detective agencies and surveillance systems to spy on both current and former employees. The 2014 annual risk survey by the Federation of Indian Chambers of Commerce and Industry called business espionage the ninth biggest threat to Indian companies. It stated that in spite of the spread of closed­ circuit television cameras and tracking software, only 15­20 per cent of corporate espionage cases actually end up getting detected.

In 1998, a police raid on the residence of V. Balasubramaniam (or Balu), group president of the undivided Reliance group and the chief lobbyist of the Ambani family in the capital, led to the recovery of photocopies of four secret documents from a locked desk drawer. In November 1998, the police filed an FIR against him and two other senior executives of the Reliance group, vice­president A.N.Sethuraman and general manager Shankar Adawal alleging violation of the Official Secrets Act. The CBI took over investigations from the Delhi Police.

It was only in April 2012, nearly 14 years after the complaint was first filed, that a Sessions Court framed charges against the executives. An order passed by the court was challenged by Reliance in the Delhi High Court where the appeal remains pending.Among the accused in the present case are five executives of big conglomerates such as Reliance Industries Limited (RIL) led by Mukesh Ambani; the Anil Dhirubhai Ambani Group (ADAG) led by his younger brother Anil Ambani; the Essar group promoted by the Ruia brothers, Ravi and Shashi Ruia; Cairn India, which is a company in the Vedanta group headed by Anil Agarwal; and Jubilant Energy which is led by Shyam S. Bhartia.

RIL said that it was aware that one of its employees had been detained and added that the company had initiated an internal probe as per its robust internal standards. “The matter is under investigation as per law and we are determined to cooperate in every possible manner,” the company stated.

ADAG replied in a similar vein: “The work station of only one specific Reliance Power employee was searched, and no incriminating material of any kind was found. We are not aware of the circumstances leading to the arrest of that employee, and Reliance Power is fully cooperating with the authorities. We are committed to propriety in all our business dealings, and do not support unlawful activities of any nature.”

The Essar group also said that it would launch an internal probe. “We have noted with concern that one of our employees has been arrested by the authorities. We will also launch an internal probe to investigate the matter and in the meanwhile are extending full cooperation to the authorities.”

“Incentives” to steal secret documents
One can highlight the instance of the Ministry of Petroleum & Natural Gas and India’s biggest private corporate entity, RIL, which is engaged in oil and gas exploration among other activities, to illustrate how there is considerable interest in getting to know the government’s thinking on various legal disputes and policy issues. There is clearly a huge “incentive” to gain access to privileged information, including confidential records (such as handwritten notes on files) of internal discussions among Ministers and senior bureaucrats.

The government has to decide what the premium will be on the price of natural gas obtained from discoveries that are termed “deep water” or “ultra deep water” discoveries. These could include the discoveries in the Krishna ­Godavari (KG) basin that could be operated on by a contracting company controlled by RIL. Then, there are various contentious disputes between the government and RIL, some of which are either in court or in different stages of arbitration.

A public interest litigation petition pending in the Supreme Court has alleged that the government and Reliance conspired to lower gas production from a specific area in the KG basin and increase prices in contravention of particular provisions of a production­sharing contract signed between the government and Reliance in April 2000. The company says gas output has come down because of “geological surprises” but sections within the government, including the office of the Comptroller and Auditor General of India, have alleged that the private contractor did not dig enough wells nor explore the entire area it was supposed to explore as a consequence of which gas production has fallen way below anticipated levels.

There are pending arbitration proceedings on the imposition of penalties of nearly $2.4 billion (or nearly Rs.15,000 crore) on the Reliance­led contracting company by the Petroleum Ministry in the form of “disallowance of cost recovery”. Reliance is eligible to recover certain expenses incurred through sales of gas. But there is a dispute as to how much it is eligible to recover and the government has accused the company of recovering much more than what it is eligible to.

Then there is an unprecedented dispute between India’s largest public sector company, the Oil and Natural Gas Corporation (ONGC), and RIL over allegations of theft of natural gas worth nearly $5 billion or Rs.30,000 crore from the KG basin. The dispute between ONGC and RIL is currently under arbitration by a firm based in the U.S. and discussions have reportedly reached an important stage. Media reports claimed that among the documents stolen from the Petroleum Ministry were a two­page note on the national gas grid for inclusion in the Finance Minister’s Budget speech, a letter from Nripendra Mishra, Principal Secretary to the Prime Minister, documents on ONGC Videsh’s plans on oil and gas exploration outside India and a paper on “opportunities in Sri Lanka”.

Government functionaries, including Minister of State for Petroleum & Natural Gas Dharmendra Pradhan and Minister of State for Commerce & Industry Nirmala Sitharaman, have stated that the investigation will not spare anyone, no matter how wealthy or influential the person may be. Nirmala Sitharaman was quoted as saying, “The investigation will tell us whether it is an inherited issue.... We are on the side of keeping processes transparent and not on the side which will lead to corrupt practices.”

Time alone will tell whether the government will initiate action against corporate captains who generously fill the coffers of political parties, especially in the run­up to elections, in the hope of influencing decisions and ensuring a favourable policy regime.

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