April 05, 2020
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Pound-Wise Friendship

The ED probes media baron Ashok Jain's alleged FERA violations—and the Jain-Kesri 'nexus'

Pound-Wise Friendship

THE Enforcement Directorate's ongoing probe into alleged FERA violations by media baron Ashok Jain has also dragged Congress president Sitaram Kesri into the investigating agency's orbit. The Kesri-Jain link, which is being investigated, goes back nearly three decades. But since the directorate is pursuing the case, it is likely to embarrass the Congress chief no end. And after Kesri's elevation to the top post, his aides are more concerned about the political fallout rather than the legal implications of the probe.

In a written complaint to the Directorate, Madhuresh, a freelance journalist, alleged a Kesri-Jain 'nexus'. On May 27, in a follow-up, the ED faxed a detailed questionnaire to one Sashai Hoon in Toronto. In a potentially damaging disclosure, Hoon asserted that in June 1969, Ashok Jain had arranged a payment of £50,000 through hawala agent Radha Sigetia, who in turn is an associate of the Rurias of Manchester, Jain's England-based jute agents. Of the £50,000, a sum of £10,000 was reportedly handed over to Kesri for personal expenses. Hoon alleges that Kesri had travelled to London on a personal trip and Jain wanted to "bear all his expenses". He also claimed that he took Kesri to Barclays Bank at 45, Park Lane Branch, London, and helped open an account in Kesri's name with a written introduction to the bank manager.

Hoon's faxed reply on May 30 is being seen by investigating officials as a breakthrough of sorts. According to officials, the agency has already moved letters rogatory (LRs) to the British government to help prove that Kesri had opened a bank account in London. It is also preparing papers to access the Congress president's passport details to see whether he had indeed travelled to England in 1969. Further, a team of ED officials will soon travel to Toronto to interrogate Hoon and ascertain the validity of his written response.

But it may not be easy for the ED to file charges against Kesri if Hoon fails to provide crucial papers relating to the Barclays bank account that he has promised. Then, the ED's only option will be to seek the help of the British authorities to assist them. Which, again, is not so easy since transferring foreign exchange is not a criminal offence in England. But ED insiders are optimistic that they will be able to access details from Barclays Bank through the Reserve Bank of India since the former has a branch in India. Also, the RBI could move the Bank of England, with which it has an arrangement to exchange confidential information.

But even if the ED gathers sufficient evidence to launch proceedings, a long process of adjudication will follow. For the time being, the case will provide sufficient fodder to fuel allegations of Jain's political clout. And what makes the situation particularly tricky for Kesri are documents with the ED which prove his links with Jain.

A memorandum of association of the Bharat Overseas Private Ltd—one of Jain's 26 companies as listed in the Monopolies Enquiry Commission Report—which was registered at Calcutta in September 1968, shows that Kesri, MP, was coopted as "additional director" in the company. This document also categorically states: "Shri Kesri holds office upto the date of the ensuing Annual General Meeting and is eligible for re-appointment."

And the links don't stop there. The 14th Annual Directors' Report of Bharat Overseas show that in June '68 the company made two donations, totalling Rs 35,000, to the All India Congress Committee. These may have been genuine donations. But what makes Kesri's association with Bharat Overseas tricky are charges—which are under the scrutiny of the Income Tax department—that Ashoka Marketing Ltd and Jaipur Udyog Ltd (two subsidiary companies of Bharat Overseas Ltd) evaded tax to the tune of Rs 18 lakh in the assessment years 1967-68 and 1968-69. ED insiders point out that the total tax liability, including penalties and interest, adds up to Rs 37 lakh for the two years alone.

Kesri's culpability may be difficult to establish, but one thing is clear: Jain was close to the powers that be. ED insiders are candid. "In no case has an individual dodged summons with such impunity; and in no case has there been this kind of pressure," admits a senior official. That the ED was hamstrung by political pressure on the Jain case is something that cannot be denied. Last week, revenue secretary N.K. Singh stated that he told ED officials to permit Jain to travel abroad in January because of "clear directions from then prime minister H.D. Deve Gowda".

The Jain controversy continues to simmer and ED officials are not sure whether the government is happy with the evidence it is gathering. The ED's dossier on Jain is piling high by the day. Prominent among the cases being probed by the agency are his alleged involvement in transactions amounting to $11.2 million with multinational Hungerford Investments. Jain allegedly bought a 12 per cent equity in Turner Morrison, a subsidiary of Hungerford Investments, but having failed to pay the amount, entered into an agreement with Hungerford that the money would be paid through Handelsbank, Zurich. Jain later pulled out of the agreement, forcing Hoon of Hungerford Investments to move court. Jain is also being probed for:

  •  Opening an account in the name of Rohtas Zug A.G, incorporated in the Canton of Zug, Switzerland, which had to be subsequently closed as per RBI orders;

  •  Transferring US $1.25 million equivalent to Rs 4 crore to an account in a Swiss Bank in 1992-93. This has been confirmed through statements made by Keshav Bangur and Prakash Khaitan;

  •  Operating a bank account in the Union Bank of Switzerland and American Express Bank, Switzerland;
  •  Investing in shares of various companies in Mauritius.

    ED officials cite political interference as the main reason for the slow progress. They point out that finance ministry officials have been uncooperative, putting hurdles wherever possible, an allegation rubbished by the ministry. As for Kesri, he refused to speak on the issue. Now, the case hinges on the ED—on the documents it can finally access—and, more importantly, on the government. It will have to give the green signal to rake up the case against the Congress boss.

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