Would be an interesting read in the CG context.
Raman
London Calling probes the home affairs of an Indian minister - and
the company he keeps
Vedanta on Trial
Published Date: 30-11-2009
Source: Nostromo Research
Published at:
http://www.minesand communities. org/article. php?a=9688
P Chidambaram, India's Home Affairs Minister since late 2008, is
arguably the most powerful Indian politician. Not because he "sways the
masses" either in villages or towns. (In the interview quoted below, he
claims to wield far less influence on decisions made at individual state
level than many think he does - or should).
Rather, Chidambaram is fast being recognised as the sharpest
intellectual force behind the project to thoroughly "modernise" his home
country. He also holds court in some important international forums; and
he seems able to mollify a few vociferous domestic critics, thanks to
the breadth and depth of his knowledge and experience.
Despite early nurturing as a socialist trade unionist, by middle age
Chidambaram was on a backward path, just like numerous "revolutionaries"
who raised their flags in the sixties and seventies; he became a
convinced advocate of free market capitalism. (Britons have observed a
similar trajectory during the last 12 years, as the old Labour party
offered itself up on the altar of Blairism).
Some ingredients of Chidambaram' s early commitments do appear still
intact. (For example he says he rejects the creation of neo liberal
special economic zones). But, when you scrutinise the decisions this 64
year old has made since turning forty, there's little doubting his
fundamental objective. He wants to transform India into an
industrialised society on quasi-western lines; declaring as much last
year in an interview with the English-language, left-leaning, Tehelkar
magazine:
"My vision of a poverty-free India will be an India where a vast
majority, something like 85 percent, will eventually live in cities."
[Tehelka, 31 May 2008]:
Home-bred "terrorism"
A year on, and Chidambaram has given another lengthy interview to
Tehelka [21 November 2009]. See:
http://www.tehelka. com/story_ main43.asp? filename=
In this interview PC makes great play of his intention to "peacefully"
resolve the recent massive upsurge of civil violence in India's
central-eastern rural areas. Yet he discounts the significant
responsibility he himself bears for unleashing state-sponsored attacks
("terrorism" isn't too strong a description) against so-called Naxalites
or Maoists - ones which have resulted in the killing and wounding of
many non-combatants.
The most recent of these occurred on November 20 2009, when police
opened fire, killing three people participating in an unarmed rally by
Orissa Adivasis (Indigenous Peoples) who were seeking to reclaim their
filched territory. [Statement by Campaign for Survival and Dignity, 24
November 2009].
True, Mr Chidambaram has now put himself on record as "prepared to
request the Prime Minister to freeze all... MOUs [Memorandums of
Agreement with private companies] and order a comprehensive review of
all the MOUs that have been signed in Jharkhand, Chhattisgarh, Orissa
and South Bihar." This is encouraging so far as it goes. But that would
seem to be back to the government, in order that it can decide "which
MOU should be implemented, with or without modification. "
So, not much hope there.
Achilles heel?
Shoma Chaudhury, the journalist who interviewed the minister for
Tehelkar, fairly successfully exposes Chidambaram' s hitherto-unqualifie d
support for mining. Much of the bloody warfare he claims to eschew
centres around the seizure of mineral-rich territory from farming
communities who strenuously resist surrendering it. And Indian mining
companies (notably Tata and Essar Steel) have benefited from, if not
actively supported, recent bloody interventions by state-backed forces.
However, it's the Home Minister's role in promoting London-based miner,
Vedanta Resources plc (which on numerous occasions has escaped penalties
for violating Indian laws) that may prove his ultimate Achilles Heel.
Chidambaram qualified as an MBA at Harvard's prestigious Business School
in 1968 - incidentally a year of unprecedented European student-worker
revolts against their governments. But what really marks him out is his
acute legal mind. Unfortunately (in common with former British prime
minister, Tony Bliar, who also trained as a lawyer) PC has employed his
gifts largely to back corporate enterprises; not to enable aggreived
social movements to better access their constitutional rights.
He advised the ill-fated US energy corporation, Enron, when it tried
extending its criminal reach to India during the nineties [Frontline,
Mumbai, 11 August 1995].
Then, in 2003, he represented Sterlite Industries (Vedanta's Trojan
horse into the London Stock Exchange) before the Mumbai High Court, when
it faced charges of avoiding customs duties and tax evasion [See
"Vedanta on Trial (1)" -
http://www.minesand communities. org/article. php?a=9685
Shortly afterwards, PC became a director of Vedanta itself under the
executive chairpersonship of the notorious Anil Agarwal. Chidambaram
only surrendered this position on 22 May 2004 - just a day before taking
up the position of Finance Minister in the Congress-Left UPA central
government. (Actually, Vedanta Resources' then-chairman, Brian
Gilbertson, informed shareholders in June 2004 that Chidambaram resigned
from the board "//following //his appointment as Finance Minister in the
new Indian Government" [Vedanta Resources plc Annual Report 2004, page
5, our italics.]
While still in that key post, P Chidambaram sanctioned
Vedanta-Sterlite' s controversial takeover of the premier iron ore
exporter, Sesa Goa, in April 2007 [See:
http://www.minesand communities. org/article. php?a=1538
A tangled plot
The Home Affairs Minister's involvement with the UK company provided a
tangled sub-plot to an expose of the company's alleged fiscal crimes,
published in 2006 by Mr Rohit Poddar of California.
Called "Vedanta's Billion$" (sic), this self-published work bears the
subtitle: "The Inside story: How Anil Agarwal built a fortune by listing
this company on the London Stock Exchange and Manipulating Stocks in
India". (We have been informed that the book is now banned for
distribution in India, but there's no evidence Chidambaram prompted the
ban).
Poddar's exegesis suffers from some lack of credibility, given the
absence of many key references. However, the author includes a telling
letter, addressed by him to Chidambaram in early 2006. Poddar asks the
then-Finance Minister why he failed to take any action "against the
dealings of Sterlite Industries in 2003 to ramp up the value of the
company in India and then raid the LSE with impunity" [Podder to
Chidambaram, 14 January 2006, in " Vedanta's Billion$", page 76].
Specifically, Poddar accused Agarwal of using two Sterlite funding
vehicles, Twinstar Holdings and Volcan Investments, to "raid...the
market for his own gains and not in the interests of the Nation."
Unsurprisingly, Chidambaram didn't deign to answer the allegation; no
doubt others also considered them ill-placed, if not ill-founded, at the
time. After all, the UK's Financial Services Agency (FSA) had supposedly
investigated Vedanta's antecedents and financial records prior to the
London Stock Exchange (LSE) listing in late 2003, and found little
amiss. (More likely, the FSA chose not to divulge any misgivings it
might have had. The London Times of December 10th 2003 quoted a London
stock exchange source confirming that Vedanta's listing had succeeded
"only after a 'quiet word in many ears'".
[
http://www.minesand <
http://www.minesandcommunities.org/article.php?a=70>
communities. org/article. php?a=70
. And the
Financial Times' columnist, Lex, on December 5th pointedly observed that
"Sterlite has a complicated structure and a chequered corporate
governance history"- for which we might reasonably read: "a bewildering
structure and a highly dubious reputation." )
Silence in court?
However, on March 31st this year, allegations re-surfaced in Delhi's
High Court that Sterlite's prime movers - Anil Agarwal, brother Naveen
and father D P Agarwal - had, between 1993 and 1999, illegally acquired
and transferred foreign currency amounting to around US$420 million
without permission from the Reserve Bank of India. The Agarwal clan was
also accused of having"gifted" just under US$47 million to their holding
company, Twinstar.
In 2002, following an investigation of these transactions, India's
Enforcement Directorate (ED) found the Agarwals guilty of serious
violations of the country's Foreign Exchange Management Act (FEMA). Two
years later, in August 2004 (nearly nine months after Sterlite
re-invented itself as Vedanta on the LSE, and three months after
Chidambaram took up his role as India's Finance Minister), the ED
imposed a smacking US$ 70 million penalty on the accused. [See: "London
Calling asks if Vedanta's guilty of a massive money laundering racket":
http://www.minesand communities. org/article. php?a=9278
The Agarwals lodged an appeal against this judgment, refusing to deposit
the penalty until the case was resolved. However, the judge in the March
31st High Court hearing ruled that they should pay up now.
On July 20 2009, the case returned to the court. (Coincidentally, this
came just four days after Sterlite raised over US$1.5 billion through
issuing ADRs - American Depository Receipts - on the New York Stock
Exchange.In a submission to the US Securities Exchange Commission (SEC),
the company stated that "third party" claims, amounting to US$94.5
million as of the March 31st hearing, were not being recorded as a
liability. Cravenly endorsing this erroneous statement were the US
investment banks, JP Morgan and Morgan Stanley, whose job it was to
evaluate Sterlite's financial risks). The July hearing was adjourned
thrice, finally to be entertained last month.
Curiously, in the meantime, the hearing judge was replaced - and so was
Mr Sanjay Katyal, the "advocate on record" who had appeared earlier to
put the case for the Enforcement Directorate. Katyal is described by
Delhi journalist, Paranoy Guha Thakurta, as having "a reputation for
integrity, honesty and diligence." His replacement was Sachin Datta who,
according to Thakurta "happens to have been a briefing counsel for
P.Chidambaram. ..at a time when [Chidambaram] was practicing as a lawyer
and was also serving on the board of directors of Sterlite, that is,
before he became Union Finance Minister in May 2004." [Paranjoy Guha
Thakurta, "Vedanta's Questionable Resources", Current, 2 November 2009].
"Two important questions remain unanswered", comments Mr Thakurta: "Is
pressure being exerted on officials of the Enforcement Directorate by an
invisible hand outside the Ministry of Finance? Is the Prime Minister
and Finance Minister (FM) Pranab Mukherjee aware of the circumstances
under which lawyers have been replaced in this money-laundering case at
a time when prominent political leaders (including the FM) are waxing
eloquent on the need to bring back the illegal funds that have been
stashed away by Indians outside the country?"
Good questions.
Now, it may sometimes seem that there are almost as many conspiracy
theories circulating in India as members of its population. (Mind you,
this could demonstrate a healthier civic consciousness among Indians
than prevails in the UK, where companies like Vedanta and British
Aerospace get away with daylight robbery, but few citizens seem to be
outraged.)
London Calling doesn't seek to link P Chidambaram directly with any
suspect manoeuvres in the present High Court case. Nonetheless, he's
done nothing to counter an increasing elision between India's judiciary
and its executive - something that jeopardises the quality of justice
meted out on behalf of its poorest citizens.
Last month it was revealed that Justice S H Kapadia - next in line for
the post of India's Chief Justice - held shares in Sterlite, even while
he was hearing the critical Nyamgiri-Lanjigarh case, mounted at the
Supreme Court's Central Empowerment Committee hearings. Kapadia had then
ruled for the company, critically shifting the balance in favour of this
much-censured project. He claims to have informed lawyers for both
parties about his shareholding, offering to "recuse" himself from the
case, but that no one objected. ["SC judge fumes over conflict of
interest allegation", Dhananjay Mahapatra, Times of India, 6 October 2009]
To pay Kapadia some due, he has since withdrawn from hearing two further
cases; one of which concerned Vedanta-Sterlite' s acquisition of iron ore
giant, Sesa Goa.. ["Justice Kapadia recuses himself from ITC Case",
Times of India, 17 November 2009]. But the judicial system still depends
on such initiatives for withdrawal being taken by individual lawyers,
many of whom are reluctant to challenge the "old boys' network" on which
they depend.
A Sustainable Blueprint for Indian mining - or just a free hand?
Asked this month, by Tehelkar's Shoma Chaudhary, to provide a "more
equitable and sustainable" blueprint for Indian mining, Chidambaram' s
response was, to say the least, disingenuous.
He maintained that "every single concern [mentioned by the interviewer]
is already accommodated under the present law. No one can mine unless a
mining plan is approved by a competent authority. How much you can mine,
how you'll restore the land, how much you'll be taxed, all these things
are stipulated and worked out."
In fact, the sorry history of Vedanta in Orissa demonstrates the exact
opposite: the company's mining plan for Nyamgiri, and its construction
of the associated Lanjigarh alumina refinery, was allowed to proceed "on
the hoof" as it were - and in clear violation of strictures made by a
Supreme Court sub-committee.
The Home Affairs Minister blames such abject failures on "the
executive", claiming that: "People get away with impunity by cheating or
bribing or violating the plan because the executive is weak."
But, just who is the executive in all of this (and many other)
instances? It's not some dingy little office in a backwater of Orissa or
Chhattisgarh, but the Ministry of Environment and Forests in Delhi.
And it is the Home Minister's official duty to "ensure that the
government of every State is carried on in accordance with the
provisions of the Constitution" , while "enforc[ing] the rule of law and
provide timely justice."
Perhaps the most telling indication of Chidambaram' s "vision" of a
future India, accompanied by an enormously increased dependency on
mining, comes in response to Ms Chaudhury's assertion that "private
companies, both Indian and international, are literally bleeding the
land for private gain."
Chidambaram concedes "there are bad examples" and "we have to find a
model where mineral wealth can be exploited without detriment to the
environment and without affecting the livelihood of the people."
Nonetheless, he backs a policy under which private companies must access
70 percent of land directly, while only then "can the State intervene to
take over the remaining 30 percent."
Ironically, when asked to show examples of communities unequivocally
benefiting from mining, Chidambaram mentions just one: the Neyveli
lignite mine in the southern Indian state of Tamil Nadu.
India's "lost years"
The irony lies not so much in the reality that "constructing" Neyveli
required the relocation of a considerable number of farmers; is still
plagued by the consequences of mining below the water table; and evinces
high levels of ambient air pollution.
It's the fact that the mine is, and always has been, state-controlled.
Neyveli was Pandit Nehru's flagship project for a new India, formally
inaugurated in 1957. Undoubtedly it has provided social security and
other benefits for three generations of workers and their dependents
(This author has spent pleasant times with members of all three).
Yet this is precisely the type of mineral enterprise now precluded from
the free- trading, privatised India, towards which Mr Chidambaram seems
so eager to drag a billion of his largely- resistant fellow citizens.
Two years ago, P Chidambaram delivered the Mahindra Lecture at his alma
mater, the Harvard Business School. He was following directly in the
footsteps of Indian defence minister, Pranab Mukherjee, who gave the
inaugural lecture in 2006 [Business Standard, 28 November 2006]. (This
is the same Mr Mukherjee who, as India's current Finance Minister, has
some oversight of the Sterlite money-laundering case).
In his own Harvard address, Chidambaram dubbed the three decades
following India's independence in 1947 as the "lost years", during which
the nation's economy "was directed by the government and closed to the
outside world - with abysmal results."
It wasn't until 1991 - so PC claimed - "that the majority of people
embraced the concept of an open and competitive economy as the means to
a better future."
So it's somewhat puzzling to find him now citing the Neyveli mine as a
benchmark for good mining, when that very enterprise benefited from
India's nationalisation policy which operated (if fitfully) during most
of those allegedly "lost years."
It's also highly disturbing that he was trying to enlist the "majority"
of his fellow citizens in a political project that many millions of them
clearly repudiate.
To his October 2007 US business audience, Chidambaram presented the
picture of his nation "fac[ing] the challenge of leveraging [our] huge
natural and human resources to ensure rapid economic growth."
He asserted that: "Attempts to make quick and efficient use of resources
such as coal, iron ore, bauxite, titanium ore, diamonds, natural gas,
and petroleum are thwarted by local state governments and interest groups."
And he went on to claim that: "The laws in this [regard] are outdated",
while "Parliament has been able to tinker (sic) [with them] only at the
margins." ["India's Finance Minister delivers Mahindra Lecture at
Harvard Business School:,Address on challenges of development" ,
co-sponsored by Harvard South Asia Initiative, Harvard Business school,
HBS website, 5 November 2007.]
Now that, surely, was a thinly-veiled threat to interfere with
constitutionally- established rights?
Whether Chidambaram still wants to do this - or, on the contrary, will
deliver on the promises he recently seemed to make in Tehelkar - is
widely open to question.
If P Chidambaram truly upholds India's constitution, he could start by
repudiating the actions of one of India's worst corporate offenders of
its laws.
[London Calling is published by Nostromo Research. None of the opinions
expressed in this column are necessarily held by any other party,
including the editors of this website. Reproduction is welcomed, so long
as full acknowledgment is given to Nostromo Research, and any sources
quoted in this article.]
