A report in the Caravan published last Friday written by Nileena M S and Aathira Konikkara that created a political storm pertains to diaries allegedly maintained by Bookanakere Siddalingappa Yeddyurappa, leader of the Opposition in the Karnataka legislative assembly and former Chief Minister of the state belonging to the Bharatiya Janata Party. The diaries reportedly indicate pay-offs made by the controversial politician to several members of the BJP’s top brass – besides ₹1,000 crore to the party’s central committee, the list includes alleged payments of ₹150 crore each to Finance Minister Arun Jaitley and Road Transport and Highways Minister Nitin Gadkari; ₹100 crore to Home Minister Rajnath Singh and ₹50 crore each to senior BJP leaders Lal Krishna Advani and Murli Manohar Joshi – along with unnamed judges and lawyers, over and above serving and former ministers and political leaders from Karnataka from the BJP, the Janata Dal (Secular) and the Congress.
The total amount involved is around ₹1,800 crore. The diaries were apparently written from 2011 onwards when Yeddyurappa, former Chief Minister of the state over three terms, had fallen out with the leadership of the BJP. He was jailed for 23 days by the Central Bureau of Investigation (CBI) after the state’s anti-corruption ombudsman, Lokayukta N Santosh Hegde, presented a report that indicted him in a ₹35,000-crore illegal iron-ore mining and export scandal popularly known as the Belekeri port case.
In the purported diaries, Yeddyurappa mentions Gali Janardhana Reddy as the “key person” responsible for him becoming the Chief Minister of Karnataka in 2008 following members of the legislative assembly (MLAs) switching sides. Janardhana Reddy, who was an important minister in Yeddyurappa’s government, is widely considered to have been the mastermind behind the illegal iron ore mining and export scandal. After he had been jailed for three years in 2011-14 and then released on bail, Janardhana Reddy splurged on his daughter’s wedding in November 2016 – during demonetisation – in a manner never witnessed in Bengaluru (or for that matter in most parts of the country) ever before.
As for Yeddyurappa, he was expelled from the BJP, then became part of a different political outfit and returned to the folds of the party before the 2014 Lok Sabha elections at the instance of Narendra Modi (who was then the BJP’s Prime Ministerial candidate) and his right-hand man Amit Shah.
Photocopied pages from his alleged diaries were retrieved by the Income Tax (IT) department, under the Central Board of Direct Taxes (CBDT) of the Union Finance Ministry, after a raid was conducted on Congress leader D K Shivakumar’s residence in Bangalore in 2017. This was around the time the wealthy Congress politician was trying to ensure that several MLAs from his party did not defect.
Following the Caravan report, the Congress called for an inquiry into the episode by the newly-appointed Lokpal or people’s ombudsman in New Delhi while the BJP expectedly rubbished the claims in the report. Yeddyurappa described the alleged diaries as “forged” and threatened legal action against those publicising the report. The CBDT issued a “clarification” the day the Caravan report was published and claimed that Yeddyurappa had given a sample of his handwriting during the IT department’s investigations but that the Central Forensic Science Laboratory in Hyderabad, Telangana, under the Union Home Ministry, had been unable to verify the authenticity of the photocopied pages since the original papers were not unavailable.
The IT department’s efforts to track the original documents, “if the original writings exist,” had been in vain. “The same loose sheets (retrieved from Shivakumar’s residence) prima facie appear to be of a doubtful nature and were given by the person who was being raided for tax violations,” the CBDT’s statement concluded.
The Caravan report also mentions an interesting addendum to the diary: an unsigned note supposedly written by an unnamed senior tax official in the CBDT to Finance Minister Jaitley claiming that the IT department had “protected the interests of the BJP leaders… of Karnataka and also in Delhi (and that) no further investigation has been done till date.”
The note also attached a January 2017 letter by Yeddyurappa to Sushil Chandra, then heading the CBDT, urging him to take action against Shivakumar for his “irregularities and corruption” on the basis of his 2013 assembly election affidavit. It also urged a deeper investigation by the Enforcement Directorate (ED) into possible violation of laws relating to the use of foreign currency and prevention of money laundering. More about Chandra comes later in this article.
Several questions relating to the CBDT’s impartiality in the episode and the Union Finance Minister’s apparent inaction – which is hardly a surprise if the contents of the diary are to be believed, given that it alleges that Jaitley received bribes – remain unanswered. The biggest question of them all: Where are the original Yeddyurappa diaries, assuming they exist in the first place?
On the Sahara-Birla diaries
This is not the first time that “loose sheets” of paper retrieved by the IT department in search-and-seize raids have pointed towards humungous “off-the-book” transactions involving prominent political personalities. If precedent is anything to go by, it is unlikely that the recent revelations will lead to any substantive overhaul of the country’s political economy. This is indeed regrettable.
In November 2016, another report published in Caravan and Economic & Political Weekly (by one of these writers) had revealed the names of several top politicians, mostly from the BJP, who allegedly received ₹115 crore over a period of ten months between May 2013 and March 2014 from employees of the Subroto Roy-led Sahara India Parivar, a group of companies with a chequered track record. The founder and “managing worker” of the group, Roy was imprisoned for two years.
The Caravan-EPW report suggested that Narendra Modi, during his tenure as Chief Minister of Gujarat, had received ₹55.2 crore over several instalments from the Sahara conglomerate’s “Marcomm,” or marketing and communications department. Other payments made included ₹10 crore to the then BJP Chief Minister of Madhya Pradesh Shivraj Singh Chouhan; ₹4 crore to Raman Singh, his counterpart in Chhattisgarh; and ₹5 crore each to the BJP’s treasurer in Maharashtra Shaina NC and former Chief Minister of Delhi from the Congress Sheila Dixit. (Unlike the others, Dixit denied that she had received any such payment when asked by the Indian Express.)
While the papers retrieved by the tax officials from the Sahara group, along with ₹137 crore in “unaccounted” cash, apparently suggested that illegal payments may have have been made to a host of top politicians from parties across the political spectrum, three spreadsheets listing transactions involving the five individuals named above included details of the time and place the payments were supposedly made and the names of the individuals who acted as couriers of the moneys. These documents had been retrieved on 22 November 2014 from various premises owned by the Sahara group in the National Capital Region.
The documents seized were signed by Ankita Pandey, Deputy Director, Income Tax (Investigation) and counter-signed by other government officials along with a representative from the Sahara India Pariwar. When one of the authors of this piece spoke to Pandey over the phone on 3 November 2016, she said she was on long leave. She added that she was not authorised to speak to the media and could, therefore, neither confirm nor deny the authenticity of the documents. However, a comparison of Pandey’s signatures revealed that the signatures on the documents “appear to be written by one and the same person” – or so says a report of the Regional Forensic Science Laboratory under the government of the National Capital Territory of Delhi. The authenticity of the documents has not been denied by the CBDT till date.
The documents had also reached the Income Tax Settlement Commission (ITSC), under the Union Ministry of Finance. Executives of the Sahara group claimed before the appellate body that the spreadsheets were fabricated by a disgruntled employee seeking to wreak revenge on his employers for making him work long hours. The ITSC rejected the evidentiary value of the documents seized by tax officials. Its 50-page verdict had been the fastest to be delivered by the appellate body in the last five years.
Writing in the Indian Express, Ritu Sarin revealed that a number of procedures were overlooked during the ITSC’s proceedings while Josy Joseph reported in The Hindu about the contentious transfers of Indian Revenue Service (IRS) officials that took place before the principal bench of the ITSC heard the case relating to the group headed by Roy.
The Sahara papers reached the Supreme Court on 15 November 2016 along with four tranches of documents that were part of the CBDT’s interim report on raids conducted in October 2013 on companies in the Aditya Birla group. These were part of an interlocutory application challenging the appointment of Kosaraju Veerayya Chowdary as Chief Vigilance Commissioner of India in June 2015 – the Central Vigilance Commission, or CVC, is the statutory authority investigating allegations of corruption against government officials in different ministries and al authorities including the CBI and ED. Chowdary had been in charge of the CBDT during investigations into both the Sahara India and the Aditya Birla groups.
The petitioners, Common Cause, a public interest litigator, argued for a Supreme Court-monitored probe while claiming that both investigations had been compromised under Chowdary’s tenure. (Disclosure: one of the writers of this article, Paranjoy, is on the governing council of Common Cause.) The petitioners questioned whether Chowdary’s appointment had met the test of “impeccable integrity” laid down in the law. Chowdary was the first officer of the Indian Revenue Service who was appointed to head the CVC under the tenure of the present Narendra Modi-led regime.
In an interesting parallel, Sushil Chandra who was heading the CBDT when the IT department raided Shivakumar’s residence and found copies of Yeddyurappa’s diary, is now an Election Commissioner. The Caravan report noted: “Yeddyurappa’s letter, which the IT official submitted to Jaitley as proof of the former chief minister’s signature, was addressed to Chandra. He was due to retire on May this year, but in February, the Modi government promoted him. Chandra is only the second officer from the revenue services to be appointed to the election commission.”
When ‘loose pages’ go to court
The Supreme Court bench hearing Common Cause’s petition seeking an investigation into the Sahara-Birla papers saw an interesting recusal. Justice Jagdish Singh Khehar, who was presiding on the three-member bench, said in court: “Are you relying on Sahara’s documents? They never have genuine documents… Anybody can make a computer entry against a Chief Minister or Prime Minister. Can we order a probe based on all that? Bring better material…”
In December 2016, advocate Prashant Bhushan, arguing for the litigants, sought a postponement of the hearing as Justice Khehar was then in line to be appointed the Chief Justice of India (CJI) and his endorsement by the outgoing CJI was pending before the President. This was argued to be relevant given that the Prime Minister along with several key members of the ruling party, including at least two sitting Chief Ministers, were likely to be affected by the verdict of the bench. Justice Khehar posted the case to be heard on a later date after expressing his contempt over what he perceived to be an allegation of impropriety. However, in the next hearing held in January 2017 after his elevation had been confirmed, the then CJI Khehar was absent from the bench.
The apex court’s orders on Common Cause’s interlocutory application seeking a thorough investigation into the Sahara-Birla papers was delivered by a two-judge bench consisting of Justices Arun Mishra and Amitava Roy on 11 January 2017. The bench dismissed the case, its verdict reading: “In view of the materials which have been placed on record and the peculiar facts and circumstances projected in the case, we find that no case is made out to direct the investigation as prayed for… The applications deserve dismissal and are hereby dismissed.”
In effect, the highest court of India upheld the Union government’s submission that these documents had been “random sheets” and “loose papers” with no evidentiary value.
The gist of the reasoning given by the two-member bench of the Supreme Court was that in evaluating the merit of the documents for ordering an investigation, the court had relied on a 1998 verdict of the Supreme Court. In CBI v. V C Shukla, the court had dismissed evidence submitted by the CBI based on the infamous Jain diaries – papers retrieved in 1991 from a south Delhi farmhouse belonging to the Jain brothers, alleged hawala operators, which included a list of 115 top politicians and bureaucrats of the day.
In 2017, the Supreme Court was upholding precedent laid in 1998 that for papers related to alleged bribery to have any legal standing, it would have to be a “book of account” in bound form “regularly kept” in the “course of business.” In effect, the court was relying on a 125-plus-year-old law, the Indian Evidence Act of 1872, to contend that bribes paid to influential individuals ought to have been recorded in the regular account books of a company.
The reasoning of the court’s order as well as the alleged improprieties on the part of judges hearing the case, thereby questioning the constitution of the bench, have been critiqued by several commentators. In relying on the 1998 verdict dismissing the Jain hawala diaries, in 2017, the court was overlooking another judgement passed by the Supreme Court ten years earlier, in Vineet Narain v. Union of India, which ordered the CBI and the ED to investigate the “evidence” thrown up by the diaries in the first place. What the petitioners argued was not that the Sahara-Birla papers were in themselves enough to establish the guilt of all individuals named but to order an investigation based on the apparent revelations in the papers.
The case of the Sahara-Birla diaries pointed at a unique intersection of business and politics in India, along with the often questionable yet seldom questioned roles of its bureaucracy and its higher judiciary. It is this nexus which allows business-as-usual to continue and ultimately favours the interests of a select few over those of the common good. (These and related cases have been extensively documented in a book launched in November co-authored by the writers of this article titled Loose Pages: Court Cases That Could Have Shaken India – Recalling the Birla-Sahara Papers and Kalikho Pul’s Suicide Note.)
It is obvious that if we are to accept at face value the several “loose pages” that have entered the public domain since the Jain hawala diaries in the mid-1990s, including the most recent Yeddyurappa diaries, then the amounts mentioned in them should not necessarily be seen as lining the pockets of the several major figures named. Rather, much of the black money that runs through the veins of India’s polity and economy are raised through exactly such off-the-book transactions.
In the vast majority of cases, the money that funds politicians, political parties and election campaigns comes from some of the biggest private corporate conglomerates in the country (and some abroad) who have a vested interest in setting policies related to the allocation and pricing of scarce resources – a sort of quid pro quo arrangement.
As the cost of contesting elections continues to balloon, so does the involvement of big business and criminal syndicates in the outcome of our democratic processes. The “cancer of corruption” will not go away any time in the near future unless we address the core issues that contribute to graft and rent-seeking in the country’s political economy in India’s gilded age of crony capitalism.
