BY ARUN AGRAWAL

The appointment of the present Chief Information Commissioner by selecting the senior most Information Commissioner in a selection process in which all the Information Commissioners were applicants confirms the suspicion that the country is moving towards an era of a committed Central Information Commission (CIC), loyal to the government. This selection process has a far reaching consequences for a government accused of being a government of crony capitalists.

This government has a vested interest in weakening institutions like CIC to conform to the Gujarat model of government. By delayed appointment of Chief Commissioner and three Information Commissioners, the government has already created a pendency of over 40,000 cases which means that an appeal to the CIC has a waiting period of over three years. Information which was to be provided for Rs 10 in a period of thirty days will now take almost four years. This is because all meaningful information involving corruption and crony capitalism invariably have to be appealed to the CIC as the information is not available due to an uncooperative bureaucracy.

The CIC is already packed with ex-bureaucrats who are easily persuaded by government’s arguments and even disregard the precedents of the higher courts. Appeal to the CIC involves three years wait. If the CIC too is compromised because its members are in conflict of interest of having to apply to the government become the Chief Information Commissioner, then the decisions of the CIC will have to be appealed to the High Court. Ninty-nine percent of RTI applicants, who are denied information by the CIC arbitrarily, do not appeal to the High Court because the applicants do not have the resources of lacs of rupees and the stamina of years to appeal to the High Court. If the RTI applicant appeals to the High Court, then a minimum of three years of time is taken by the High Court but if the Government agency or the Corporate appeals against an order of the CIC in favour of the RTI Applicant then stay is granted immediately and then the case is not taken up for years. The same can be verified from data on SEBI, UTI AMC and RIL.

This six year wait renders the RTI meaningless and is a triumph for a government perceived as being one of crony capitalists.

The title of being a crony capitalist government is as bad if not worse than a corruption ridden government. The difference between the two is that in crony capitalism you are perceived as being corrupt irrespective of whether you are actually corrupt. That is why the suit boot Sarkar accusation from a corrupt Congress resonates with the masses.

Current Process of Selecting the CIC followed by the NDA Government

The Chief Commissioner was selected so far by elevating the senior most Information Commissioner as the Chief information Commissioner. This is a process followed by the election commission and also in the appointment of the Hon’ble Chief Justice of India. In a radical departure from the current selection process, the government decided to advertise the post and throw it open to all who could apply after meeting the laid down criteria. There were more than 200 applicants for the post. Among the applicants were all the existing Information Commissioners.

This created a huge conflict of interest among the Information Commissioners. Few Information Commissioner would like to upset the government and jeopardise their elevation prospect by passing orders which the government may not like. It also leads to an apprehension that an existing Information Commissioner may not be elevated if it does not toe the government line. This is exactly what happened in the appointment of the Chief Justice of India in the 70s when the government of the day chose to appoint the CJI by breaching the seniority principle. Four judges of the Supreme Court resigned on being superseded.

Any order by any of the Commissioners of the CIC unduly favouring the government or powers close to it, will now be attributed to this huge conflict of interest which has now manifested in the functioning of the Information Commissioners.

This allegation of the information Commissioners having a pro- establishment slant is best illustrated with a real example of an appeal involving Reliance (RIL) which was decided by a three member bench during the period when the selection of the Chief Commissioner was taking place. Unfortunately it involved the current Chief Information Commissioner who appeared to be in sympathy the applicant point of view at this stage of hearing.

The Reliance Case

Two cases, among others relating to insider trading of RIL were remanded back to the CIC for hearing by the Delhi High Court. The first related to revealing the inquiry report of SEBI on the insider trading by Reliance (RIL) etc while the second RTI application related to the revealing the names of the brokers who had done the short sales deals on the insider trading on behalf of RIL front companies.

This insider trading had taken place in November 2007 in which RIL had profited by 513 crores (as revealed in the decision of the Securities Appellate Tribunal). RIL insider trading escaped the attention of the super computers of SEBI and the stock exchanges. It came into the public domain when Amar Singh MP, agitated the matter in Parliament and went on to reveal the name of the parties involved and the amount earned by them through the print media. The inquiry was ordered one year after the insider trading had taken place. The allegation of Amar Singh were found to be true and the amount by which RIL profited was Rs 513 crores. Two compromises were offered by RIL for Rs 2 and Rs 10 crores to settle the matter of 513 crores without any admission of guilt.

While the Rs 513 crores was made by RIL in forward trading through 12 front companies who had the information in advance of the impending sale, an additional 20.5 crore shares of RPL were sold by RIL in the cash market. RIL made an additional Rs 4000 crores through actual sale of shares on delivery basis.

However, this additional Rs. 4000 crores was made by RIL on account of price manipulation wherein the price of the RPL shares sold was doubled by the brokers in a short period of two months. Hence the genuine profit without manipulation of the share price would have been only 2000 crores.

Both the manipulation of the share price and the execution of the insider trading was done by the brokers. As the shares were also traded in the speculative section of the stock market, the brokers were able to generate very large volumes which sometimes resulted in outstanding positions of over 10,00,000 crores. By manipulating the share price the brokers made at least around 1000 crores. These brokers were never investigated by either SEBI or the stock exchanges from 2007 onwards because of the heavy bribes paid by them to the concerned authorities. It was for this reason that the scam was uncovered not by the regulatory authorities but by a politician MP.

The second RTI application relating to the name of the brokers was to be decided by the full bench. Since the brokers were never investigated by SEBI (on account of bribes paid) there was no way in which the information could have been denied under any of the exceptions in section 8 (2) of the RTI Act. The information was also in public interest because the investors had been cheated by thousands of crores. In fact, the earlier the Chief Information Commissioner had ordered that the information may be made available both in public interest and also because it was not covered under any of the exceptions of the RTI Act.

Both the applications were heard at great length for almost 14 hours and the parties were asked to submit their written submission. The written submissions were filed with the commission on its direction in the month of August 2014 after the orders had been reserved on the conclusion of the hearing of the matter.

Meanwhile, the then Chief Information Commissioner Shri Rajiv Mathur retired on 22/8/2014 but as per the convention the senior most Information Commissioner Shri Vijay Sharma was not elevated as Chief Information Commissioner. Instead, the post was advertised by the DOPT in late October of 2014. All the information Commissioners applied for the post of Chief Information Commissioner. Hence there was a competition amongst the Information Commissioners to become the Chief Information Commissioner. It may be mentioned that Shri Vijay Sharma was heading the three member bench.

Order delivered after all the Commissioner had applied for the post of CIC

The order relating to the two RTI applications mentioned above was passed by the full bench on 28/11/2014 that is after more than a month of the Information Commissioners having applied for the post of the Chief Information Commissioner. As the government had not decided on the successful candidate their fate was yet to be decided by the government. Could then anyone of the Commissioners alienate the largest corporate wrongly or rightly perceived to be close to the power that had the dominant say in the appointment Chief Commissioner?

In spite of having a watertight case, it did not come as a surprise that all the three commissioners were unanimous in denying the information relating to the revealing of the names of the brokers who were involved in executing the insider trading deals for RIL and for manipulating the share price in which they had made massive money.

The information was denied at the behest of RIL who should not have been made a party in the appeal as the information did not concern RIL but was nevertheless was allowed to be made a party to the appeal for reasons best known.

The order could not be justified either on the basis of the specific provisions of the law or on the basis of precedents decided by superior court.

As these brokers had not been investigation since 2007. They had caused massive losses to the public running into thousands of crores. Public interest was overriding. There was no provision in the RTI Act by which the name of the brokers who carried out the deal for RIL could not have been divulged. In fact the earlier, Chief Information Commissioner had allowed the appeal and stated in his order that the information be made public both in public interest as well as for the reason that the information did not falling within any of the exemption clauses.

It was therefore not surprising that because the commissioners could not justify their denying the information on the name of the brokers they copied the order word for word of the other RTI application relating to the information on the inquiry report on insider trading. This cut-and-paste job was unprecedented and betrayed the fact that the commissioners had not applied their mind and had decided to favour Reliance.

Now that the process of selection has been put in the public domain, the message is loud and clear. Government discretion will be exercised in favour of those who exercise their discretion in favour of the government.

Investors lost Rs 3500 crores to RIL and its brokers on account of insider trading. The government ensured that the matter is not investigated for cheating and fraud inspite of a specific complaint lodges with every conceivable authority in the country by the author. Information on the enquiry report has is not put in the public domain and has also been denied by the CIC. Is this crony capitalism or corruption?

The matter has been appealed in the High Court of Karnataka. It is a moot point as to when it will be finally decided?

(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)