In August 2015, the chief of the Enforcement Directorate issued a terse circular, one that turned conventional practice on its head. The ED, said acting director Karnail Singh, need not wait for other agencies such as the CBI to probe a case. If the courts have taken cognisance, ED can go ahead and start a probe on its own. In all its existence, ED, which comes under the purview of the Union finance ministry, has taken its cue from that “caged bird”, the Central Bureau of Investigation, which comes under the department of personnel (DoPT), which reports to the PMO.
But it is events leading up to the circular that are more revealing. Just days earlier, Karnail Singh, who was then ED special director, was all set to be transferred to the National Investigation Agency (NIA) following a letter to the finance ministry written by an officer of the income-tax department. The I-T officer, rumoured to be in the race for the ED top job himself, alleged that Karnail Singh and two other officers were going slow in investigating several cases. These cases included two real estate firms, one owned by a Congress politician close to the party top brass, and the other by a BJP leader out of favour with the ruling triumvirate but close to the late Pramod Mahajan.
Around the same time came a decisive salvo fired at the PMO by Subramanian Swamy. The BJP leader accused then ED chief, Rajan Katoch, of closing the National Herald case even though there was a mountain of evidence. The fact that the CBI had not responded to repeated reminders by the ED as also the fact that it had not filed even a preliminary enquiry (PE) report was not good enough. Whether it was the Swamy missive or an administrative decision, Katoch was shifted out and Karnail Singh took over as acting ED chief.
Yet, the irony of all these Machiavellian moves is that neither the CBI nor the ED has filed a formal case so far in the National Herald case. Much of the investigation has been based on information from “sources”. And the ultimate irony is perhaps that even Swamy is not aware of the “pile” of evidence lying with other investigative agencies like the income-tax department or information with the PMO, which is monitoring the case closely.
Take address C-17, Sector 6, Panchkula, for instance. This plot, whose value in 2006 was Rs 59 lakh, was sold to Associated Journals Limited by the Haryana Urban Development Authority (HUDA). Motilal Vora as AJL CMD took possession in 2006 but the conveyance deed was signed only in 2012. Vora mortgaged the plot for Rs 14.60 crore. The fact that it was a Congress government both at the Centre and in the state when the deal was struck will not be lost on anyone. “The mortgage would have been done with prior permission. Whatever allocation has been made to AJL is as per established rules,” says Congress spokesperson Abhishek Manu Singhvi.
In June 2014, after the NDA came to power, the Congress alleged a witch-hunt because the I-T department served notice on AJL. The taxman felt that converting the Rs 90-crore loan AICC had given to AJL over the years into nine crore equity shares of Rs 10 each was not as per law. Since the Rs 90-crore loan was given through banking channels, the repayment should also be done in a similar manner: “It is clear that the assessee (AJL) has contravened the mandatory provisions of (the law) and hence penal provisions are clearly attracted.” The penalty for this tax violation can be as high as the original amount, that is, Rs 90 crore. The loss to the exchequer because of this deal, as per the taxman, was Rs 39.86 lakh.
The contentious Rs 90-crore write-off by the AICC and the change of the debt into equity by AJL was termed a “gift” by the assessing officer, V.S. Negi. “Information regarding the gift of Rs 90,21,68,980 from AICC to M/s Young Indian, New Delhi,” he wrote, “is being sent to the Assessing Officer of M/s Young Indian for taking necessary action as deem fit.” What the Congress chooses to turn a blind eye to is the fact that the assessment order is dated January 17, 2014, when the UPA was still in power.
Two months later, the I-T office in Calcutta recorded a statement of an alleged hawala dealer, Uday Shankar Mahawar. He was the owner of Dotex Merchandise Private Limited, the company that gave a loan of Rs 1 crore to the directors of Young Indian. Mahawar told tax officials, “After raising bogus share capital, this company (Dotex Merchandise) has been sold to the RPG group. The bogus share capital has been raised in this company through unaccounted money received from RPG Group of Kolkata.” “Thus,” he goes on to say, “I helped them in converting their unaccounted black money into white money as share capital.”
The Congress says this loan was returned with interest. In 2013, at the annual general meeting of Young Indian held at 10, Janpath, the managing committee “approved the extension of the loan of Rs 1 crore from Dotex Merchandise Private Limited”. The question is why did the Congress not take this loan from a bank, especially if it intended to pay a steep rate of interest at 14 per cent. The question also is, did a company of the size and reputation of the RPG Group need to turn black money into white? If so, whose money was being laundered?
Mahawar’s statements expose the underbelly of hawala trading and money routed through shell companies. It also exposes how the high and mighty of the land are not above using the services of dodgy hawala dealers. Not that anyone doubted it.