BINAYAK DATTA
GAYLORD Nelson, famed US Senator in the 1960s and one of the first environmentalists and founder of the Earth Day, in his inaugural address at the Senate in June 1962 had observed: “The ultimate test of man’s conscience may be his willingness to sacrifice something today for future generations whose words of thanks will not be heard.” I thought I could not agree more to put an end to the gigantic bank frauds which seem routine now. We need sustained willingness! Willingness to act and to sacrifice! Let me explain this closely.
Middle-management syndrome
In my long years of working with banks, I have invariably seen a chronic lethargy in certain senior and middle management (not the ‘top management’) cadres of government banks. These officers desperately need willingness to improve themselves professionally in modern-day banking, modern-day controls and modern-day fraud prevention techniques. Most importantly, they need to read and understand circulars from Reserve Bank of India or the Union finance ministry and not completely be guided by juniors, surrendering even their passwords. I think a lot of this depends upon the attitudes and willingness to relearn.
The second aspect is ‘behold-the-celebrity syndrome’. And here our prevalent feudalistic mindset most often does the trick. If a junior manager or a bank clerk beholds a multibillion-dollar celebrity who features in pictures at important official gatherings, with the top-most echelons of the national hierarchy or say happens to be someone referred quite affectionately as ‘bhai’ amongst topmost levels of the order then he starts believing (logically) that he is immune for all wrongs he partners. So the bypass on controls, compounded with the apathy and unwillingness of the senior and middle management to exert itself, turns out to be a deadly breeding ground for big crime. A study report (quite dated though) by a deputy governor of the RBI shows that in a span of five years it is only the big-ticket frauds (above Rs 50 crore each) which increased by a whopping 61 per cent!
Now, let us turn to audits. In PNB’s last annual report they mention eight different types of audit they have every year, and the last reports were all reviewed by the board on March 28 last year! Can I say then we need more audits? Actually we need willingness to do a good audit, the willingness of the senior and middle management to take corrective actions fast – and the willingness of the top management to act with speed if the lower level staff don’t work!
Fugitive economic offenders bill
I am all for a new law if that would help. But why did we not pass it last year itself when it was made? Why, if we thought it would help us in getting hold of the properties of the fugitive defaulter. Did we wait more than a year for Nirav Modi with his uncle and their families in tow to first make themselves scarce and then royally bring in this bill? For offences exceeding Rs 100 crore, the bill says the government shall have right to confiscate all property of the economic offender on the run. This is a good proposition. But hasn’t this already been there in the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002; the Recovery of Debts Due to Banks and Financial Institutions Act; the Insolvency and Bankruptcy Code and the Prevention of Money Laundering Act? In Nirav Modi’s case, he has reportedly filed a bankruptcy petition in the US; all his assets in the US stay frozen! The new law has no answer!
I think what was more required was the willingness to apply the provisions of current laws, perhaps with the UN convention on corruption related cases – and with speed, rather than bringing in newer and newer legislations, discussions, select committees, standing committees and so on when the fugitive for all purposes enjoys his ‘retired’ life in his private island perhaps. It is good for diverting public attention, of course. But again there should be willingness to enforce laws. If we must have a new law, so be it, but let’s act fast.
Political funding
I saw an ADR report in public domain and in the Election Commission website, which shows tremendous increase in corporate donations to political parties. And it says that in the last three years these donations added upto a staggering Rs 956 crore – up 2.5 times of the seven years preceding! Of this, Rs 705 crore went to just one party. My simple question now is: how do you ever conceive of a company, one of these huge donors, being prosecuted by a government which might be run by the gratified political party? That brings me to the all-important question: why does a political party need crores of rupees in this country of ours, with a hunger index of 100 out of 119 nations and where the per capita income is not even $150 a month?
In my view, all canvassing of any nature should be banned. The only canvassing should be party’s performance or its programme and ideologies. Again, it’s the willingness to act. Recent actions of doing away of whatever limits existed of donations (all tax-free) through mysterious bodies of ‘electoral trusts’ and with legalised secrecy as to identities of donors was probably only the last straw in opacity.
In the last 10 years the taxpayer pumped in Rs 2.6 trillion to these banks; they are shortly going to pump another Rs 86, 000 crore. As on date, our banks sit on Rs 9.50 trillion of bad loans, up 4 times of what they had been four years ago. Whilst some might be due to change in recognition norms, others are results of the continuing malaise in the system. To change, willingness to sacrifice, as Nelson put it half a century ago, is what would be called for. Otherwise it’s just scraping the surface!