Swindlers are not new to either this country or to both developing as well as developed nations around the world. Diamond merchant turned jewel thief Nirav Modi has given the slip to the authorities by exposing the chinks in our banking system and defrauding Punjab National Bank plus a dozen other banks of several thousand crores of rupees. After Lalit Modi and Vijay Mallya, Nirav is the most prominent fugitive from India whose extradition is going to be sought by the Union government. However, by doing a Houdini on the establishment—first disappearing from the country on the New Year’s Day and later, vanishing once again, after posing at Davos with the Prime Minister and other corporate honchos in a group photograph shortly before Republic Day, he has outwitted the enforcement agencies and banks which were subservient to his wishes. In fact, Nirav’s deeds have, once again, brought the focus on to our banking system and the issue of granting autonomy to public sector banks which continue to be used by powerful politicians who gain control over their management by appointing pliable directors on their boards. The Nirav Modi scandal has highlighted how the internal and external auditors of the Punjab National Bank and the controls of the Reserve Bank failed to detect the massive fraud. To blame it on a few corrupt individuals in the affected banks would be insufficient unless the political dimension of the scam is fine-combed many times over.

On expected lines, the BJP and the Congress have gone into the allegation and counter-allegation mode. The BJP has attempted to shift the blame on the UPA government by claiming that the loans were processed and approved in 2011, while the Congress has charged the present government of doing precious little to prevent the scamster from fleeing the country even though the matter had been brought to the notice of the Prime Minister’s Office by a whistle-blower last year itself.

However, unless the banking system, which normally works on the basis of trust, is fortified and set free from government control, it would be extremely difficult to prevent further occurrences of a similar nature from happening in the future. The ramifications of the double-dealing and financial embezzlement have put a question mark on the functioning of the Indian banks whose credibility is at its lowest ebb.

Big time financial irregularities have taken place during the regimes of virtually every Indian Prime Minister. In the Nehru era, the Mundhra scandal had broken out, leading to the resignation of the then Finance Minister, T.T. Krishnamachari, after Feroze Gandhi, the Prime Minister’s son-in-law, and fiery Parliamentarian, brought to fore how the LIC had been coerced to purchase fraudulent shares.

Dr Dharam Teja, shipping magnate, owner of the Jayanti Shipping Corporation, well-known for leading an ostentatious lifestyle, attended a party hosted by the Indian ambassador to the United Nations to felicitate Prime Minister Indira Gandhi at New York in the 1960s. He had amassed a fleet of ships procured from Japan by paying only the first installment. He was finally caught and served a jail sentence in India.

The infamous Nagarwala case, involving an ex-serviceman, Rustam Nagarwala who hoodwinked the State Bank of India by allegedly telephonically impersonating Indira Gandhi’s voice, instructing the chief cashier Ved Prakash Malhotra to hand over Rs 60 lakh, hit the headlines on 24 May 1971. Nagarwala, who suffered from partial face paralysis, was nabbed shortly afterwards from the Anjuman-e-Parsi guest house on Delhi Gate leading to the recovery of the money. He was convicted in one of the swiftest trials. He passed away at the G.B. Pant Hospital on 2 March 1972 on his 51st birthday. Curiously, some of those connected with the investigation of the case such as D.K. Kashyap, an assistant superintendent of police, died under mysterious circumstances, though the investigating officer, Pandit Hari Dev, the then SHO of Chanakyapuri, is in his nineties and resides in Saket.

The Bofors scandal led to the ouster of Rajiv Gandhi and some years later, P.V. Narasimha Rao faced allegations of accepting a crore of rupees from stockbroker and conman Harshad Mehta. Mehta’s lawyer had claimed that he had paid the money to the Prime Minister’s Office, and a Congress MP along with his son, a prominent industrialist, were aware of the transaction. According to Mehta, he had stashed the money in two suitcases and it was transferred from his suite at the Holiday Inn to the PMO. Rao’s office assertively denied the accusation stating that no money had been received from Mehta. The stockbroker, while languishing in jail, passed away. However, there remained wide speculation on how some powerful persons benefited by maintaining their silence and, thus, receiving government patronage. 

The Satyam scam took the financial institutions by surprise and exposed many fault lines in their functioning. Subsequently, in another instance, the 2G saga proved to be a damp squib after a CBI judge concluded that there was no rip off while acquitting the accused persons including former Union minister A. Raja.

Questions have been raised on how bureaucrats oblige their political masters and themselves by bending rules to generously disburse the tax-payers’ money. The timing of the Nirav Modi case, in all probability is likely to hurt the present government, given that the public perception in this matter is against it. Therefore, the immediacy of the hour for the Centre is to clear the air. Between us.

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