|India Inc's wake-up call|
|Thursday, 21 April 2011 00:00|
With one promoter of a leading realty firm arrested earlier on, and three senior executives of top firms (plus two more promoters) arrested on Wednesday, India Inc’s in for a rough ride. You can’t think of too many instances when so many top executives of top firms were put in jail. Indeed, more can be expected to join them after April 25, when the CBI produces its second chargesheet. Apart from trying to tie up the money trail, the chargesheet will have to deal with the role of other corporates that find a mention in the CAG report as beneficiaries of jailed ex-telecom minister A Raja. The Ruias’ Loop Telecom never met the eligibility criterion, nor did the Dhoots’ Datacom (in terms of the paid up capital, the articles of association, etc)—yet, they managed to get the telecom ministry to accept their applications and to move them up the queue for the cheap licences. In Loop’s case, there is also the issue of whether the Ruia shareholding is more than 10%, masked through front companies—this is what the Enforcement Directorate is examining. Since the Ruias own 33% of Vodafone-Essar, if true, this means Loop violated the 10% cross-holding cap as well. The important thing to keep in mind is that none of those arrested had to give a bribe in the routine course of business—a bribe to get your import consignment cleared quickly, for instance, is also unacceptable but you can argue mitigating circumstances. In this case, most were in different businesses altogether. So if they gave a bribe, and this needs to be proved in the court, it was as part of a conspiracy to gain a lot more from the exchequer.
For the CBI, the tough part comes now, to prove the charges made. As has been pointed out by this newspaper, the chargesheet is a weak one. Many of the actions Raja took—changing of the definition of First Come First Served, advancing the cutoff date—were cleared by the then Solicitor General, and even defended by him in various courts, including the Supreme Court. Once the lawyers for the accused point out that the government’s top lawyer—one of the CBI’s witnesses—thought that what had been done was legal, a large part of the case falls apart. The big hope then lies in proving the money trail, a quid pro quo for putting them ahead in the line, but the money trail hasn’t been sewn up as yet.