14.09.91 *t05

MOTION RE. COLLAPSE OF THE BANK OF CREDIT AND COMMERCE INTERNATIONAL (OVERSEAS) LIMITED-CONTD.

[English]

MR. SPEAKER: Now, we take up item No. 9. Shri Jaswant Singh was on his legs. He may continue his speech now.

15.41 hrs.

[MR. DEPUTY SPEAKER in the Chair]

SHRI JASWANT SINGH (Chittorgarh): Mr. Deputy Speaker, Sir, the hon. Finance Minister has really gone through a very trying ordeal since morning and he looks very tired. So, it would be better that we may break for about 10 or 15 minutes now, so that he can refresh himself and we also can have a cup of coffee.

SHRI SOMNATH CHATTERJEE (Bolpur): Sir, it would be ideal if we adjourn

138 Motion re. collapse of B. C. C. I.

for about 15 minutes now and we can meet again at 4 o'clock.

MR. DEPUTY SPEAKER: The House stands adjourned to meet again at 4 o'clock.

15.42 hrs.

The Lok Sabha then adjourned till Sixteen of the Clock.

------

The Lok Sabha re-assembled at four minutes past Sixteen of the Clock.

[SHRI SHARAD DIGHE in the Chair]

MOTION RE: COLLAPSE OF THE BANK OF CREDIT AND COMMERCE INTERNATIONAL (OVERSEAS) LTD. (BCCI)-CONTD.

[English]

MR. CHAIRMAN: Shri Jaswant Singh.

SHRI JASWANT SINGH (Chittorgarh): Mr. Chairman, sir, we resume the Discussion on the interrupted Motion on BCCI. On Friday last, we adjourned the discussion on a somewhat contentious note, Hon. the Finance Minister has shared some facts about the establishment of BCCI with us and the facts indeed are sacrosanct. I entirely agree with the hon. Finance Minister.

But facts are not, however, open to conveniently selective interpretation of them. I will be verting back to this very shortly.

We have also then witnessed a somewhat perplexing spectacle. The Treasury Benches and the Congress Party had gone into paroxysm of simulated horror at the establishing of a representative's office of BCCI in India in 1979. Of course, personally I welcome this demonstration even if it was fake because we are confronted by a very curious reality. In the face of world wide exposure of the misdeeds of BCCI and indeed an universal condemnation of these misdeeds. The present Government of India and the Congress Party appear to be the only two agencies in India, or elsewhere who are

139 Motion re. collapse of B. C. C. I.

[Sh. Jaswant Singh]

actually standing up for all kinds of established illegalities and criminal acts of the BCCI. I was then on the aspect of our domestic concern so far as the BCCI goes.

Sir, let me very briefly attempt to recapitulate our concerns in the context of India. I had in my intervention on Friday last spoken of these established nexus between the BCCI and Pakistan's ISI, the I Center-Services Intelligence and the report of the 'black network' of BCCI as being inseparable from ISI. We had spoken about the use of BCCI for laundering of drug-money. That is also our concern. Thirdly, we had spoken of the employment of BCCI for weapons trade. Indeed the Bank was acting as an agent for acquisition of weapons for certain countries. I cited the example of acquisition of Mirage aircraft. We are also concerned here about the fact that various terrorist organisations have been exploying the BCCI as their banker. It now stands established that certainly Abu Nidal used the BCCI, London for this purpose. It is open to question whether Abu Nidal or the JKLF or some other Sikh terrorist groups or the LTTE did not enjoy similar facilities. Our concern is also on the aspect of BCCI acting as a kind of intelligence gathering organisation for Pakistan with its headquarters in Karachi. It is a very important aspect.

Then, the question of nuclear angle of BCCI comes. It is now established that the BCCI has provided not just finances but it was acting as virtual attorney-holders and agents for Pakistan and also for Libya and Iran in the procurement of nuclear technology, nuclear wherewithal's, nuclear equipment. Our concern in India so far as BCCI is concerned is about subversion of systems and institutions and, most importantly about the nexus between the politicians, industrialists, the bank and corruption. It is interesting to note that this whole question of entry into India of BCCI became contentious last Friday.

It is a fact that a representative's office did get opened in 1979.

The hon. Finance Minister has corrected me and said that the sanction then was granted by the

140 Motion re. collapse of B. C. C. I.

then Government and it was not just for a representative's office but it was, in fact, for a full-fledged Bank. But that really begs a question because the sanction for the opening of a full-fledged bank was granted in 1979 and from 1979 till March 1983, that sanction did not get implemented. Then what happened between 1979-80 to change the Government's mind on this matter? In 1979, sanction was granted for the opening of a bank. And it did not get acted upon because either the Government lost power or was removed from office or lost office.

But between 1979-83, I do not know what positive developments took place for the Government, in 1983, if my recollection serves me right, it was the Congress Government and if my recollection serves me right, the hon. the finance Minister then, in his earlier incarnations, held different responsibility. That really begs the question. What is it that took place in these four years to warrant this change, for what is now clear enough to was an act of ill-thought and ill-advised sanctioning?

I put it to you that in industrialists' group, aided and encouraged the entry of this bank in India in March 1983. This was despite the dissent from the then Governor of the Reserve Bank of India. It was connected with certain proposed changes in law, I remember very clearly that the then Finance Minister indeed went to the extent of introducing in Parliament the laws which required the consent of the Receive Bank to be lifted away from the Reserve Bank and to become the authority of the Finance Ministry. If I recollect right, without wanting to cause any embarrassment the then Governor of Reserve Bank took a very strong stand on this issue. Why did he take a strong stand? What was the difficulty of the then Governor of the Reserve Bank in not wanting to deny entry of this bank into India.

It is now an established fact, not just presumption that one of the industrial houses came under bear hammering on the stock exchange and some Rs. 22 crores came on to the Bombay Stock Exchange by way of foreign monie. These Rs. 22 crores required certain approvals of the then laws in force.

141 Motion re. collapse of B.C. C. I.

These Rs.22 crores came without those approvals. It is an established fact and it very seldom happens that a law,in respect of foreign money coming into India to facilitate the flow of this Rs.22 crores was in fact, changed by a telex message on the 20th of August, 1982. An evening telex message went to various agencies in the country and the law got changed on the 20th August, 1982. I will be happy if the Finance Minister refutes me on this point. And on 21st of August, the very next day, three non-resident Indian complies filed their application for legitimising the Rs. 22 Crores that had flown into the stock exchange. I put it to you that was the beginning of a certain king of a not that set into our system.

Ant about my source, I come to my source injust a little while. I put it that all that came by way of this Rs. 22 crores was an unaccounted secret black money as subsequently established by investigations of the Government of India itself. This very Rs.22 crores in about seven years time, and the shares connected with this Re. 22 crores, were then unloaded on yet another company in India for a sum of Rs. 76 crores. Rs. 22 crores at the then prevailing rates of exchange amounted to something like 20 million US dollars. Those 20 million US dollars of black money, in June 1989, became Rs. 76 crores or at the then prevailing rate of exchange roughly 44 million US dollars. The Government of India, through various changes in laws and conniving with the corrupt, arranged for the conversion of 20 million US dollars to come into the country, for them to then be converted to 44 million US dollars,for black to become white, and for those 44 million US dollars to go back. There was a profit of 24 million US dollars. Whatcame in as 20 million, wentout as 44 million US dollars and it went back to the BCCI. I will come with my evidence on that in a minute. Was all this under RBI,s approval-tacit or implicit? I would request the Finance Minister to clarify this. Because, the subsequent action taken by the Government is even more astounding.

The Taxation Laws Amendment Act

142 Motion re. collapse of B.C.C.I

of 1989 contains the provision that this gain of 24 million US dollars, black being converted into white, be exempted from top. This fradulent gain, a fraud played on our banking system, on the establishments, on our institutions, was then, by a subsequent enactment, by this very Congress Government in 1989, permitted to become tax exempt. I have given these examples, so as to establish, firstly, the aspect of the dubious entry of BCCI into India and secondly, the aspect of its nexus with our public financial institutions. That is why, it is a matter of such great concern to us.

Let us take up the aspect of public financial institutions. The hon. Finance Minister, concluding the discussions on the Finance Bill, spoke most eloquently and movingly. He spoke of idealism; he spoke of idealism in public life; he spoke of the reforms of banking systems,sothat our banks and our public financial institutions are on par, so far as integrity and conduct goes, with anything that the world can show. I share his idealism in its entirety. But, I put it to the Finance Minister that if it is that kind of idealism; if it is that kind of integrity transparent; if it is that kind of public institutions, whose reputation, whose standing and whose prestige is unquestioned anywhere in the world, if this is the kind institutions that we are thinking in terms of, then all that I have cited, without going into unnecessary details, the bare skeletal outline of it is not in harmony with the hon. Finance Minister's own pronouncements on what he says or aspires or desires to do. What the one public financial institutions that we talk of?They are the nationalised banks and the others are public financial institutions like the Unit Trust, or the life Insurance Corporation or the GIC. And indeed, Sir, it is relevant to point out that firstly, Insurance companies got nationalised because, there was the infamous example of Mundra, playing with Insurance company's money. It is because of that, that Life Insurance got nationalised in the country. And it was because, the public money through public financial institutions got misemploeyed. That was the original motive for the nationalisa- 143 Motion re. collapse of B.C.C.I

[Sh. Jaswant Singh]

tion of institutions like LIC. What motivated the nationalisation of banks in the late 60s the rationale of it, was simple public control over public bodies for public good. I would like the hon. Finance Minister to share this with us. This is just one examples that I have cited and I have got many more such examples. Is this good public conduct? It this public control over public financial institutions for public good, upheld by this kind of misuse of public financial institutions? We have to reflect very deeply over the aspect of the money power that the public financial institutions today have and can employ for the subversion of system. It is enormous wealth thatthe public financial institutions sit on. If the kind of arbitrariness or onesidedness orperversion from on-top that we have witnessed in the decade of the 80's were to persist,then these very public financial institutions sitting on enormous wealth, enormous moneys as public contribution and enormous investments in industrial houses of all hues, could play a very damaging role in the total economy of the country. A truant public financial institution could break the stock exchange. A truant public financial institution could today play ducks and drakes withinvestments that have taken place in various industrial houses. That is what lies at the heart of our suggestion. that unless there be proper guidelines for the conduct of these public financial institutions, guidelines which are punishable, if they are not abided by I have said at the beginning on Friday last, with great pain pointed out that where's for those kind of misconduct any where in the world, there is somebody or the other who is held to account and pays the price, it is only in India that no matter what happens, no matter what kink of scandal we try and bring to your notice, whether it be Bofors or anything else, nobody pays a price. Unless the price begins to be paid,Mr. Finance Minister, Sir, the idealism that you so eloquently speak of, will not be achieved because what happens in the case of public financial institutions is that they are acting with this kind of arbitrariness is which result in the corrosion of the very element of our national course. It is the most objectionable 144 Motion re. collapse of B.C.C.I

and dangerous combination of political and financial power. The consequences for our polity and for our state are in front of all of us, for me not to have to recount or to identify that which is nowself-evident. We would not see what is happening all over the country. If we had stemmed the rot, if we had stood up and said Thus far and no further', if we had stood up for public accountability, and if that we first discerned the very early signs of corrosions of our system.

I am sorry to have to say that public financial institutions today because they answer to the passing whims and fancies of political patronage are totally absent of accountablity and the political system. now speciallises in a deliberate, will ful defliant absence of accountability. If that is what the political system does, then the public financial institutions will act in exactly the same way. If that is how the public financial institutions react, then it does not portend well for the nation using these institutions and that is what we have come to. These institutions are now used for individuals rather than public good. Repeated misuse of them, particularly in the decade of the 80's, has perverted them and at every single instance, justice is thwarted, accountability is prevented. That is why, in the second, part of my motion, I have sought for the establishment of proper guidelines for public financial institutions.

There are possible future consequences if we persist with this.

One consequence, which I have referred to earlier, was the thwarting of justice and the appropration of the State for individual good. I have here with me a copy of the report of the Enforcement Directorate.

If you permit me, I will place it on the Table of the House. Am I to interpret your silence as consent?

[Translation]

"Moaunam Sweekaiti Lokshnam".

[English]

MR. CHAIRMAN: You do it as per the rules.

145 Motion re. collapse of B.C.C.I

SHRI JASWANT SINGH: Well, I am doing it as per the rules. I will not labour the patience of the House by quoting extensively from it.

Yet, I will just refer to the misuse that it has lent itself today.

Here is the small quotation.

"Thesetransactions valued at approximately Rs. 22 crores, all the investments initially came to India through the BCCI Bank in London.

Bankers in India were at a loss to explain who had filed the OAC and RPC forms on behalf of the NRIS;"

Sir, it is further said that one Shri Padiyar, Advisor to the BCCI, London was looking after the entire affairs of these investments. During the investigation abroad, we had again to meet Mr.

Peter Henwood who administers the Isle of Man companies.

SHRI DIG VIJAYA SINGH(Raigarh): What is the year of this Report?

SHRI JASWANT SINGH: I have not gotthe date of the Report here. I will just give you as soon as I have completed.

SHRI DIGVIJAYA SINGH: I just want to know the year of that

Report.

SHRI JASWANT SINGH:I am on a different point all together. I think you are sharing my point.

SHRI DIGVIJAYA SINGH: I want the year in which the Report of the Directorate of Enforcement was prepared orpresented.

SHRI JASWANT SINGH: I am anticipating your observations. This really underlines point, irrespective of the year in which it was prepared or bywhom it was prepared.It is said that it is prepared by the Directorate of Enforcement. But our systems and institutions should be such that this question should even not arise. But I am very sorry that my good friend, shri Dig Vijaya Singh is asking this question with political overtone.(Interruptions)

SHRI DIGVIJYA SINGH: It is totally

146 Motion re. collapse of B.C.C.I

factual.There is no political overtone.It is a facial information which I want for my own consumption.

SHRI JASWANT SINGH: I will give the year of the Report. Sir, he is really bragging the question that when was the Report prepared. If it was prepared. In a certain year, then it is not acceptable. This applies both ways. I put it to my god friend that it applies both ways. Whether this Report was prepared in 1986 or 1987 or 1990 or 1991 is immaterial as long as it is a Report prepared by the Directorate of Enforcement of India. And both, you and I, should accept the validity of such a Report.(Interruptions)

SHRI ANBARASU ERA (Madras Central): There can be a political motive if it was prepared by other Governments than our Government....(Interruptions)... It was prepared by the Janata Dal Government. (Interruptions)

SHRI JASWANT SINGH: that is precisely the point. Whether it was prepared during late Rajiv Gandhi's Government or by the Janata Party Government or by the Janata Dal Government, when am institution of India like that of the Enforcement Directorate submits a Report, then the Report itself should carry so much weight that the Government should sit up and take note of it.

Secondly, whether then or subsequently, our institution should not be torn apart by us sitting here and sing them for partisan purposes. That is why, I am most careful and that is why, I am saying that I will lay it on the Table of the House. I am most careful to illustrate the point out of this Report. We had destroyed these institutions to a measure which is unimaginable and we had destroyed them only on account of the nexus between the corrupt politicians, corrupt industrialists and corrupt bankers. And that is at the heart of this Motion that I have moved, Sir. At the heart of this Motion is not one individual or another, and at the heart of this Motion is not one Government or another. I am concerned with the very same 147 Motion re. collapse of B.C.C.I


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