Corruption in Armed Forces: Sort out the Generals first

BY SHAILESH RANADE

The past two years have been a disaster for the Armed Forces, especially the Army. The drubbing they have received is worse than nuclear explosion over Hiroshima during WWII. In five years flat, Japan was up and running and catching up with the developed economies. The Indian Armed Forces are not likely to recover any time soon. In fact the situation is likely to get worse. This is because the destruction is not of government property like ships, tanks, and aircraft but of the only asset that the military officer has – moral fibre. When the officer loses his moral fibre, he is not in the military anymore. He only dresses like a military officer.

I hear arguments like, “the officers and men come from the same decaying Indian Society”. We don’t expect them to be honest, “when there is muck all around”. All these arguments are completely flawed. When a person joins the Academy as a Cadet, he is exposed to a culture which is completely different from the other careers that he can choose. If the same person were to choose Engineering, IT, Medical, Mass Media, Bollywood etc, he is in effect a part of the same decaying, scheming society that is run by the mafia and black money where cheating is the norm.

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Everything the military man does is different. He stays separate from civilian populations. His mess is different. He dresses differently. His eating habits are different. He excels in table manners. His hospitals will be of better standards. He has no problem with availability of bread and water. His cantonment will be the most beautiful and cleanest place in town. His justice system is different and more efficient. More importantly, his work is different. Often 24x7x365. He can be recalled from leave if required. In disturbed areas or in times of war, he may not return home to his family. He also gets a gun salute at his funeral and flags will be flown at half mast.

The military man is made of different stuff and needs to be different. How is it that an “honest” Cadet turns into a “thief” General in 30 years? In fact I am willing to stick my neck out by stating that there are a lot more thieves in the higher ranks than have come out in the media. These are NOT aberrations any more. It is a trend. A disturbing trend, indeed.

The fish rots at the head first. So it is with the Armed Forces. (In this piece, Generals also include Admirals and Air Marshals. There are many more corrupt Generals than the latter two, hence the generalization). To win the war on corruption, the country needs to sort out the Generals first.

Thieving: It is often believed that Generals do not follow the rule book. When an Officer reaches the Flag Rank; he is free to do as he pleases. In fact it is his privilege, as some of his personal staff will mention. Mess Secretaries will often complain that Generals will take along tooth brush, toothpaste and bath room slippers when they vacate their rooms. When they vacate their houses, they will take along the carpets, curtains, and paintings etc which have been bought from Unit Funds. If the civilians don’t believe this, just watch what happens when the Flag Officers vacate their bungalows. It is brazen daylight robbery. Most Generals are simply petty thieves.

Punishment: Generals are often not punished for their misdemeanors or professional misconduct. Punishment is restricted to middle levels like Brigadiers and Colonels. Enough cases come to my mind. The loss of INS Andaman and Vindhyagiri in peacetime did not see any Admirals sink. The Kargil War did not see any Generals get the boot. The crash of 482 MiGs over the last 40 years has not grounded any Air Marshal.

ACRs: If a junior officer is ambitious to make it to Flag Rank, only two options are available.  Either he has to be the son of a senior military or government officer or he has to hitch a ride on the shoulders on a General by becoming his Staff Officer or ADC. The other attributes in the ACR do not matter. To have an outstanding ACR, you need to please only one person – your boss. The reviewing officers who “concur” would probably not know the officer on whom the ACR is rendered or he is not being honest. It would be a good idea, to have 360 degree reporting. The men who you Command should know what kind of a person they are promoting to General rank. ACRs should also be publicized. If an officer has done some good work, then the Unit, Division or Command should know about it.

Pay and Allowances: Military is the only career in the world where you can start only at the bottom. A person can never join the military at the level of a Brigadier or a Colonel. The reverse is possible. Enough military men have joined as Vice Presidents, General Managers, and Directors etc. Some have become entrepreneurs. I know of a JCO who is now a MD and employs 200 people. A few have joined politics. While a military man can join any profession he chooses, the reverse will almost certainly end in failure. Imagine hiring a Vice President from a top MNC Bank and making him the GOC of a Strike Corps or a Carrier Captain. The poor chap wouldn’t have a clue. The military man, by nature of his training is vastly superior and is often the last resort for any assistance. His pay and allowances therefore should not be linked to other sundry and mundane government jobs. If the military needs more pay, just give it without asking questions. Only a fool will chop his right hand. Can our Service Chiefs please speak up and convince the government? Incidentally, anyone ever heard of a Service Chief resigning to uphold the honour of his service or the welfare of his men?

Warrant of Precedence (WoP): Much is said about the WoP. A four star General is currently at No 12. Does it really matter whether he is at 12 or 25? In the US, the Chairman, Joint Chiefs of Staff is at 50. In the UK, thanks to the Royalty, the Chief of Defence Staff is way behind. Since these are only Ceremonial positions, the pay and perks should not be linked to the Order of Precedence. It does not matter whether the General sits in the 1st row or 10th row. If a General who leads a million men into battle feels belittled, he may not attend such a function. But then he may forego his ambassadorship or governorship (next point).

Post Retirement Sinecure: A scrutiny of the list of Governors in India tells one a lot about the kind of people occupying these positions. Are these “gifts” for services already rendered? Frankly would a General really relish the job of a Governor where he is not better than a glorified servant? A few years ago, an Admiral willfully demoted himself to the level of a lowly Joint Secretary to occupy a position in New Zealand. What happened to the honor code? What hints are the men in uniform getting? And then they have the gall to crib about Warrant of Precedence?

Post Retirement Jobs: Senior Officers are expected to do something respectable once they hang their boots. They are expected to join professional bodies, give opinions, lecture on strategic issues, guide the youth, work for the under privileged etc. Instead we find that they have no qualms about pimping for arms lobbies and all kinds of nefarious activities. Flag Officers should be banned from positions in the Government and Private Sector. Give them a decent pension till they kick the bucket. If they want to make money as honest citizens, please leave the fauj as Colonels.

Land/Estates: Senior Officers have suddenly become dalals when it comes to land deals. The Adarsh, Sukhna land scams are well known. There are other areas too where defence land has been grabbed by private parties only because the lording General was hand in glove with vested interests. Apart from the odd Colonel in Adarsh, all the Officers involved are Flag Officers. In fact there are 3 Service Chiefs in the Adarsh Scam. “At no time did they know what Adarsh was about” says one Chief. Really? How innocent?  Speaks volumes about their situational awareness. These senior officers had the power to punish and dismiss personnel. Now they themselves are being marched before a Judicial Commission.

Statutory Complaints and Court Cases: Ask any Major General or equivalent. He will say that the military is a glorious profession. And when he is not promoted further, all hell breaks loose. A glorious profession suddenly becomes the worst profession in town. Generals too miss promotions and choice appointments. What follows is a flurry of complaints and court cases. Why be a bad loser and wash dirty linen? Not getting promoted does not mean the end of life. But it shows our senior officers as selfish, self serving individuals.

Generals are supposed to be held in awe. His every word is a Command. An order may even lead a jawan to his death. However, jawans these days are quite news conscious. They see their Generals spread-eagled on the front covers of national magazines. The Generals’ lack of morals greatly affects the morale of his juniors. In the future, jawans may begin to question every word of their senior officers. In fact the next war may have already been lost. The situation is critical. The next generation of Generals may well imbibe Tagore’s: “Where the mind is without fear and the head is held high”. Time to forget Chetwode.

I am sorry if this piece hurts honest Generals. I am sure there would be a few still left.

(Shailesh Ranade is a Guest Blogger with the Canary Trap. The opinions expressed by the author and those providing comments are theirs alone, and do not reflect the opinions of Canary Trap or any employee thereof)

Pranab Mukherjee, Omita Paul and corruption in Finance Ministry

BY ARUN AGRAWAL

Is the role of Omita Paul, India’s Presidential candidate Pranab Mukherjee’s confidant over long years and the de facto No 2 in every Ministry that the latter has occupied in the last eight years, that of a fixer?

Does she act on her own behalf or on behalf of Mukherjee? Is she a lobby centre for corrupt corporations? Or is she a buffer to take the heat off any scandal/wrong doing? And what is the reason for Mukherjee’s silence when blatant act of her nepotism and corruption are reported in the press? Is he helpless or being helpless?

Whatever be the reason, the former Finance Minister is constructively responsible for all acts of Omita Paul.

First the obvious question: What is the reason for the appointment of Paul in the number two position in the three key Ministries that Mukherjee has been a Minister.

Paul has been continuously appointed as an advisor with the rank of Secretary in the three key Ministries — Foreign, Defnece and Finance — which has been co-terminus with the tenure of Mukherjee. Her appointment as Advisor in three different ministries is without precedent in independent India and it is not because of her specialized knowledge on the subject matter of any of the three Ministries.

All attempts to get information on the law/guidelines under which she was appointed and the papers relating to her appointment under the RTI have been in vain. Hers was an arbitrary appointment for arbitrary goals. Even the Secretary of the Ministry was subordinate to her.

Though there have been extra-constitutional authorities and power centres in the past, the country has not known an official power centre like that of Paul. It may be mentioned that Paul was also appointed as Information Commissioner at the time of election between UPA-I and UPA-II and that the then Leader of Opposition L K Advani and the Prime Minister on May 9, 2012 found time to select her as Information Commissioner for five years. The post of Information Commissioner was an insurance cover in case the Congress lost the election. She worked for eight days and disposed a total of 58 cases before re-joining as Advisor-cum-Secretary in the Ministry of Finance once UPA came back to power.

That Paul was an independent power centre, and worked for the benefit of herself, her family members and the corporate lobby and in the process compromised national interest is obvious from the incident relating to appointment of SEBI chief.

Did she not manipulate the entire system in order to have her candidate, U K Sinha, appointed to the post of Chairman of SEBI so that he would favour companies like Reliance and Sahara? It would also enable her to have her brother appointed to the post vacated by Sinha at UTI AMC, which has emoluments of four crores per annum. This despite the fact that her brother did not have required qualification to be appointed to the post.

But first her role in removing honest officials from SEBI to install Sinha:

The decision to give extension to the existing Chairman and members of SEBI by the Secretary and the Minister (approved on 19/10/09) was canceled at her behest (21-22/12/09), the existing members were never considered later for extension (10/8/10), she changed the composition of the committee to select the Chairman, had her own experts nominated to the Committee (25/8/10), ensured that the candidature U K Sinha is by the so-called search route.

The search route was taken to conceal the illegal emoluments of Rs 4 crores (Per Annum) drawn by Sinha in a Public Sector Enterprise (PSE). If his emoluments were revealed he would not have been selected on grounds of lacking integrity as the ceiling of pay for PSE is Rs 1.25 lakh per month. Concealment of emoluments was also necessary for Paul to push the candidature of her brother for the vacant post at UTI AMC so that he could enjoy the lavish salary without others knowing the real reason for the appointment.

After having Sinha selected as Chairman, Paul ensured that even the Appointment Committee of the Cabinet (ACC) does not come to know about the emoluments of Sinha while confirming his appointment. (Refer confidential letter DO no 2/23/2007-RE dated 13/12/2010 of Dr Thomas Mathew, to Est Officer Annexure -1 item 4 (ii) Scale of pay: Not available)

It is obvious that the concealment of Sinha’s emoluments was deliberate and designed to mislead the selection committee and the ACC to presume that he was being paid the maximum pay payable to a PSE chief of Rs 1.25 lakh per month.

Sinha’s emoluments were over Rs 4 crores per annum (Rs 3.62 crores for 10.5 months as per balance sheet of UTI AMC) which is not possible in a public sector organization like UTI AMC. The Establishment Officer vide his order dated 4/1/08 had stated that the deputation was covered under Rule 6 (1) and not 6 (2) (ii) of IAS Cadre Rules. Sinha not only got his emoluments increased after the decision of the Establishment Officer in 2008, but also increased it with retrospective effect from December 2006 and raked in a bonanza of over Rs 10 crores in the process.

Was the purpose of appointing such a person to the sensitive post of SEBI chairman to settle issues of thousands of crores in favour of the concerned companies which had lobbied with Paul?

The allegation of Paul acting on behalf of the corrupt companies is borne by the fact that Dr Abraham as a WTM (Whole Time Member) of SEBI Board had leveled allegation in a letter written on 1/6/2011 to the Prime Minister that Sinha tried to influence him on four cases. One of the cases related to securities fraud of Reliance group and others related to Tayals of Bank of Rajasthan, Sahara, and MCX. While trying to influence him Sinha had stated that these were “engaging the attention of Union Minister for Finance or Mrs Omita Paul, Advisor to the Finance Minister”.

The denial of extension to the then Chairman and members of SEBI by Paul, the fact that extension was stopped when SEBI recommended action against the Reliance group to the Finance Ministry on an eight year complaint by Gurumurthy involving over Rs 25,000 crores of benefit to the promoters, the extraordinary interest taken by Paul in having Sinha appointed as SEBI chairman by suppressing his illegal salary from the selection committee and the Appointment Committee, and the subsequent actions of Sinha all show that Paul was involved in harming national interest by promoting corporate interest of the respective companies.

Sahara was a company taking deposits from small un-bankable people. From 2008 onwards, during the tenure of Mukherjee, it violated the deposit norms under section 58A of Companies Act which allowed it to collect unsecured deposits from debentures for 10% of its own fund. By doing that it could have collected only Rs 230 crores but went on to collect over Rs 20,000 crores. Almost the entire money collected was siphoned out and there were virtually little assets in the company in whose name deposits were taken so that the group could not be compelled to refund the amount. It was the largest ponzi scheme involving two crore poor people.

Dr Abraham had passed orders on the company which were contested by Sahara in the High Court. But by a freak chance the matter came before him for adjudication because the CJI referred the matter to SEBI. He adjudicated the matter at the fag end of the tenure (23/6/11) directing the group to refund the entire money to the investors. His order was upheld by the Tribunal and is likely to be upheld by the Supreme Court also. The order of Dr Abraham is proof of his competency and honesty, while the shenanigans of Sinha at UTI AMC are proof of his cleverness and manipulative skills.

The second case that interested Paul was the securities fraud of Rs 513 crores of Reliance group (Mukesh Ambani group). Reliance Petroleum shares were short sold for Rs 290 by the group and later bought back when there was a hefty fall in price when the group sold the shares in the cash segment. The Reliance group made Rs 513 crores in five days .The securities fraud took place in November 2007. Such a blatant act of securities fraud by the promoter was unprecedented.

The penalty under the law is three times the amount of the fraud and the total amount involved was Rs 2000 crores along with criminal prosecution.

Reliance tried to settle the matter by paying a fine of only Rs 2 crores and then Rs 8 crores through consent order. It was not even willing to pay back the fraud amount of Rs 513 crores. These meager offers of settlement were made by Reliance to buy time so that the honest officers of SEBI could be replaced by more pliant ones.

Sinha changed the circular on the consent order (25/5/2012) in a manner that favored Reliance group and continue the settlement of the criminal offence through a consent order. This is in sharp contrast with the case of Rajat Gupta whose offence was much less but then he did not have an Omita Paul or U K Sinha to bail him out.

The third case is about the Tayals of Bank of Rajasthan in whose favour the outgoing member Prashant Saran passed a favourable order so that he could be re-appointed. The order only confirmed the allegation of Dr Abraham. Similar conclusion was made by the media. Kindly refer links in Financial Express and Mint on Saran’s order.

The fourth case is related to MCX which wanted to open a parallel stock exchange. The Ministry ensured that Dr Bimal Jalan Committee report is taken up by SEBI after Sinha became the Chairman so that the portion relating to not listing of the shares of the stock exchange company is rejected. This would enable MCX to list the shares of the stock exchange and help in giving market value to the MCX license. Further the terms of complying with other norms too have been diluted.

Other related scandals

On the slot vacated by by Sinha at UTI AMC, Paul wanted her brother to be appointed and though the four financial institutions under her were agreeable the foreign shareholder was not. As a result the post of the CMD remained vacant for fifteen months because Paul wanted to have her brother appointed. Great harm to public interest was done because UTI has around Rs 60,000 crores invested in the financial market and large part of the money comes from government sources.

It was only when the candidature of Mukherjee was considered seriously for the post of President that Paul’s brother withdrew from the race for the post of CMD of UTI AMC. The advertisement released subsequently for the post thereafter shows that neither Paul’s brother nor Sinha had the qualification to take up the post because it states that the person should be a seasoned financial service professional with minimum 20 years of experience. He should also have a degree of MBA from a top university or a CA. Both of them are neither financial service professional nor do they have a day’s experience. In fact, the advertisement which was released for the first time honours the commitment given by the government to the JPC II on securities scam that a professional would be appointed through an advertisement.

Sinha, who had increased his emolument through a rubber stamp Board on the grounds of industry parity, conveniently forgot that he was appointed to an executive post and industry parity is given to persons in non-executive posts like pilots etc. He did not disclose that his deputation was covered under Rule 6(1) of the cadre rules and that the organization was a PSE where the maximum pay that could be drawn was Rs 1.25 lakh per month. It was for this reason he appealed to the High Court against the order of the Information Commission that UTI AMC is covered under the RTI Act. Both Sinha and Paul wanted the illegal emoluments to be a secret for their respective reasons.

The other act of nepotism involved Paul’s husband, who was favored by an unprecedented amendment in the IT Act. The following exemption granted in the year 2011 was notified for being applied retrospectively from the year 2007-08 to cover the entire tenure of Paul in the UPSC Section 10 (45) of the Income Tax Act stated:

(45) Any allowance or perquisite, as may be notified by the Central Government in the Official Gazette in this behalf, paid to the Chairman or a retired Chairman or any other member or retired member of the Union Public Service Commission.

Retrospective amendment to undo a judgment or wrong has been known but never to pass on a benefit like the one above. The amendment was sought to be justified on the basis of sixth pay commission report but there no such recommendation in the report.

Paul, out of sheer vindictiveness, used her influence to initiate disciplinary proceedings of major penalty against an honest officer like Abraham who exposed her corruption and refused to compromise. His order against Sahara is in sharp contrast to the manipulations of Paul and Sinha. In fact there is sufficient material to charge her for offences committed by her under PCA and IPC. Answers are needed on whether all these actions of Paul narrated above were within the knowledge of Mukherjee? Some of them were also covered in the press. He gave official approval whenever the same was required.

Which brings us to the original question: Is he helpless or being helpless?

Paul is the responsibility of Mukherjee. The latest extension given to her on 15/6/2012 states that her tenure is “co -terminus with the tenure of Shri Pranab Mukherjee as Finance Minister”. Speculation is already rife about her being given a position higher than that of Secretary to the President.

(Arun Agrawal is the author of the book Reliance: The Real Natwar. The opinions expressed by the author and those providing comments are theirs alone, and do not reflect the opinions of Canary Trap or any employee thereof)

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