Saturday, 28 May, 2022
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Mera loot mahaan

Cooking of books so that promoters can siphon off large fortunes overseas is so common that we are no longer even outraged by it.

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There is this very special Indian trait of reacting with smug superiority to somebody else’s problem saying this could never happen to me because I am so smart. Just take note of a whole series of tsk-tsk statements from our political and corporate leaders, expressing concern at the corporate scandals in the US and exhorting us to ensure such a thing never happened here. That most such cooking of books is so routine in India that it does not even qualify to be scandalous is a fact lost on everybody, including the prime minister. He warned his so-called advisory council on trade and industry against such ‘‘ethical deficit’’ and said: ‘‘Recent reports of accounting scandals elsewhere in the world are beginning to worry people about the bombshells hidden in a boom-time economy.’’

A good line that, and also further evidence of Vajpayee’s speech-writer’s facility with alliterative purple prose. But it would have sounded a bit silly to Vajpayee himself if he had looked up to count some such ‘‘bombshells’’ sitting at his own table. He’s been in public life long enough to know which ones of these gentlemen have habitually cooked their books and survived censure from our regulators, such as they are, which ones have defaulted on their loans consistently, criminally and (willfully or not) brazenly, and got some Mr Fastfingers on the phone from the finance or the prime minister’s office to intimidate the banks or the institutions to look the other way. And then, which ones have already raped their share-holders, vacuum-cleaned their companies and are now asking his government (at the same meeting) to dilute the new legislation on recovering bad loans by making a subjective distinction between ‘‘willful’’ defaulters and those who simply went bust.

In any country which swears by free market reforms such an appeal would be laughed out of the room. Here, they even got an assurance from the new finance minister that the government had no inclination to become ‘‘expropriatory’’ and would review the law. And what horrors did this apparently draconian piece of legislation contain? Just that the lending institution should be able to take over companies that fail to pay their debts.

This, mind you, is seen to be unduly tough in a country where nearly a seventh of the lendings of the national banking and financial sector have already become non-performing assets. If the lenders (who basically use my money and yours, the hard-earned surpluses and savings of the tax-payer and the small-saver) are to first figure out whether a default was willful or, for matters beyond the borrower’s control, like weather, tariffs, incompetence or adverse market, planetary, numerological conditions and so on, not a hundred crores will ever get recovered from our NPAs that total more than 70,000 crores, or a three per cent of our GDP, or exactly the equivalent of our defence budget for this year. And we are not even talking about the NPAs of the states’ institutions, cooperative banks, etc.

Also read: My encounters with Vajpayee, a statesman who could smile even in a tough situation 

The PM can keep on sounding his notes of caution but anybody who has done business in India, or borrowed or lent any industrial finance knows the cooking of books, overstating project costs so that promoters can siphon off large fortunes overseas, is so common that we are no longer even outraged by that.

The PM warned his trade advisory council of ‘‘ethical deficit.’’ If only he had looked around his table and counted the gentlemen who have habitually cooked their books, raped their share-holders, vacuum-cleaned their companies. And who are now asking him (at the same meeting) to dilute a new law on recovering bad loans The ICICI and IDBI may have begun to get their act together in the nick of time but one institution, the IFCI, has sunk simply under the weight of NPAs directly traceable to inflated project costs and creative accounting/auditing. And while the institutions have gone under, have any of the promoters been pauperised? Some of them can still afford to hire private jets to fly to Japan to watch the FIFA World Cup final! Has anyone asked why our so-called industrialists seem to get richer as their share-holders and lenders get bankrupted? Has anyone asked why none of our own auditors who assessed/cleared these projections and then signed cooked up balance sheets has ever been exposed or disqualified?

Enron, despite its political connections, has gone bankrupt. Arthur Andersen has ceased to exist. Both were exposed by instruments of a genuine free market system, not by some government spook. The scandal in WorldCom was spotted by a woman called Cynthia Cooper who was one of its internal auditors. Any such examples from our own corporate world? Also, are all our audit firms so pristine as to have never done anything dishonest or is it just that we follow different, Indianised standards of accounting — and accountability?

What are the basic elements on which a free market survives? Sanctity of the taxpayer’s money is at the top. Here Shourie is openly attacked by his own Cabinet colleagues for questioning the loot of taxpayers’ money in the PSUs. Yashwant Sinha does not see the need to explain the UTI scam and is now happily promoting trade in Maldives At the release of his latest book Courts and their Judgements, Disinvestment Minister Arun Shourie had made a telling point when asked why he was raising questions on the holiest of our holy cows, the judiciary. The problem in India, he said, was that no profession was willing to introspect, to self-regulate, to cleanse and correct its own infirmities.

Then, he said somewhat prophetically, if only our chartered accountants had been doing their job, would so many banks have collapsed? Have the venerable CAs or their institutions been reflecting on this? That’s why the most ludicrous claim of this silly season came from Amit Mitra, the secretary-general of FICCI, who said the active involvement of Indian business families in day-to-day operations instead of relying on professionals will act as a safeguard against accounting irregularities of the kind detected in the US. He could begin by listing FICCI topshots whose books would survive a genuine audit or who are not in default to lenders, willful or not.

Also read: Not growth & jobs but nationalism, Hindutva, corruption will drive Modi’s push to 2019

Let’s return now to the prime minister’s table, or rather his real workplace, the Parliament, where the fate of his billion-plus subjects is decided. How many defaulting businessmen have won nominations to the Rajya Sabha? How many of these then sit on the finance ministry’s committees dealing with the very banks and institutions to whom they are in default. Even the current SEBI chairman G.N. Bajpai once had the mortification in his former job as the chairman of LIC of deposing before such an august committee that included one of his star — and chronic, if not ‘willful’ — defaulters.

That such things do not even raise eyebrows here underline the very different, subterranean standards we have set for ourselves. What are the basic elements on which a free market survives, the issues that are shaking the US and world markets? Sanctity of the taxpayer’s money is at the top. But here an Shourie is openly attacked by his own cabinet colleagues for questioning the loot of taxpayers’ money in the PSUs. The other issues are investor confidence, accountability, conflict of interest. Why go far then?

A Yashwant Sinha does not see the need to convincingly explain the UTI scam or even his own dealing with Flex Industries and is now happily promoting trade in Maldives. Later he will be sitting across the table with the Pakistanis and Americans to decide the future of Kashmir and our children. Defaulters sit not only in our Parliament but also on the finance ministry’s committees and the prime minister’s advisory councils. Who is the PM cautioning then and against what, when we have found our own way of dealing with such scandals? Just make sure they end happily in bailouts and rehabilitation packages, with a few friendly phone calls from Raisina Hill and at the cost of tens of thousands of crores of your hard-earned money and mine.

Also read: Your turn to strike, Mr Prime Minister 


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