December 04, 2020
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How The Government Protects A Politician From Prosecution

The curious case of corruption against B. Shankaranand

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How The Government Protects A Politician From Prosecution
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Who remembers Baburao Shankaranand, former Union Minister in successive Congress governments who created a record by getting elected from the Chikodi Lok Sabha constituency in Karnataka no less than six times?

Well, Shankaranand's name came up recently in an official document prepared by the Banking Division of the Ministry of Finance for the members of the Joint Parliamentary Committee (JPC) that is inquiring into the stockmarket scandal.

The document in question is the government's June 13 action taken report (ATR) on another ATR presented in December 1994 which, in turn, succeeded yet another ATR submitted in July 1994. The last-mentioned ATR was given in response to an earlier JPC report on the 1992 stockmarket scam that had been submitted in Parliament in December 1993.

As far as the corruption case against Shankaranand is concerned, the latest ATR has the following statement on page 165: "Investigations into deployment of funds by (the) OIDB (Oil Industry Development Board) revealed (the) involvement of Shri B. Shankaranand, former Minister for Petroleum & Natural Gas for violation of (the) OIDB Act for (the) prosecution of which sanction of the Government is required."

The ATR goes on to state that the Central Bureau of Investigation (CBI) had sought sanction for prosecuting the former Minister under the OIDB Act, but the Union government has not given its sanction.

Behind this bland statement couched in typical bureaucratic language lies a sordid story of how influential political leaders and powerful bureaucrats successfully prevent one of their own kind from being prosecuted even where there is considerable evidence to initiate such punitive measures.

In 1992 and 1993, thirty MPs belonging to the JPC headed by Ram Niwas Mirdha spent many days scrutinising OIDB documents relating to the manner in which the Board's funds were parked in two public sector bodies, Syndicate Bank and Canbank Financial Services (Canfina), a subsidiary of Canara Bank.

The JPC found that Shankaranand (the then Petroleum Minister and OIDB Chairman) had manipulated tender norms to favour these two organisations, which, in turn, had passed on large amounts of money belonging to the OIDB to two particular private corporate groups, Fairgrowth and Essar. The violation of procedures had led to the public exchequer losing an amount no less than Rs 130 crore.

The JPC report, submitted on December 21, 1993, had the following to remark: "It had become a usual practice to entertain revised offers after the last date of submission of quotations and after the files had been submitted to the Chairman, OIDB, for final orders. Such practices make a mockery of the tender system and violate the norms of prudent financial management."

Further, the report added in no uncertain terms: "Unavoidably, such actions have created doubts that some institutions had received preferential treatment at the hands of the OIDB. Unfortunately, the explanations offered by both the then Chairman (Shankaranand) and others from OIDB have in no way helped in dispelling such suspicions."

Before the JPC report had been submitted, two important developments had taken place. In January 1993, Shankaranand's portfolio was changed by the then Prime Minister P V Narasimha Rao: from Minister for Petroleum & Natural Gas, he became Minister for Health.

Then, in September 1993, an inspector of the CBI filed a detailed 101-page report on the basis of a complaint filed by Syndicate Bank. The report accused Shankaranand of entering into a criminal conspiracy resulting in a huge loss to the exchequer and recommended that he be prosecuted.

The CBI report was leaked to newspapers in early-December, a few weeks  before the JPC report was submitted. Two Communist Party of India MPs, (the late) Indrajit Gupta and Gurudas Dasgupta distributed copies of the report to all who wanted to read it.

Three days before the JPC report was submitted to Parliament on December 21, 1993, the then Finance Minister Manmohan Singh offered to resign, but not Shankaranand. Instead, on December 30 that year, he put up a spirited defence of his actions in the Lok Sabha.

Shankaranand claimed he had acted in the best interests of the IODB by placing its funds with the organisation that offered it the highest rate of return. The CBI, however, argued that the OIDB, on explicit instructions from its Chairman Shankaranand had deliberately manipulated tender norms to favour particular organisations.

The latest June 13 ATR states that Canara Bank had reached an understanding with the OIDB to enable Canfina to repay its dues to the Board and that the OIDB had revised its procedures to ensure that investment decisions were taken by a committee not an individual. The December 1994 ATR had stated that all Union Ministers had been advised that it would be best for them to dissociate themselves from any committee or institution or organisation responsible for investing public funds.

The story does not end here. A full year after the JPC report had been submitted, in December 1994, Shankaranand was asked to resign from the post of Health Minister. That year, the Department of Personnel (headed by Narasimha Rao himself) issued a directive stating that any request for permission to investigate or prosecute a Union Minister would now have to be referred directly to the Prime Minister.

As the years went by, Shankaranand, a representative of the Scheduled Castes who had won six Lok Sabha elections continuously from Chikodi since March 1967, was humbled at the hustings by a relatively unknown Janata Dal candidate (Rathnamala Dhareshwar Savanoor) in the May 1996 general elections. The story was repeated in the March 1998 elections; this time he lost to a Lok Shakti candidate.

Shankaranand's son, who was the Congress candidate from the same constituency in Karnataka in the October 1999 elections, also lost. The magic had clearly worn off by then.  Meanwhile, three years after Shankaranand had been asked to put in his papers, in December 1997, the Ministry of Home Affairs asked the Law Ministry to "reconsider" its advice that there was "no case for prosecution" against the former Minister in the OIDB case.

In February 1998, the President of India K R Narayanan asked the Union government to "reconsider" the case of corruption against Shankaranand.  There is an obvious question that still remains unanswered.

It may be quite understandable why the Congress government under Narasimha Rao was reluctant to initiate punitive action against Shankaranand. It could be argued that since the two United Front governments under H D Deve Gowda and I K Gujral were dependent on Congress support, the corruption case against Shankaranand remained in cold storage.

What is inexplicable is why the Atal Behari Vajpayee government, which has been in power since March 1998, has not found it fit to pursue this particular corruption case against one of its political opponents.


The author is Director, School of Convergence @ International Management Institute and anchor, "India Talks" on the CNBC India television channel.


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