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Knick Knack, Paddy Whack by Saikat Datta

Subterfuge is the favourite tool of the corrupt, when caught. That seems to be the case as the Union ministry of commerce and industry proceeds at an elephantine pace in its “inquiry” into the Rs 2,500-crore rice export scam reported in Outlook. Last year, on July 30, Parliament erupted in a furore over the revelation that despite a strict ban on exports, tonnes of 25 per cent broken, non-Basmati rice were sold to African nations by UPA-I. The newly appointed commerce minister, Anand Sharma,  had promised to inquire into the scam. “This matter is being looked into. Inquiries will be held; responsibility will be fixed and remedial action shall be taken,” Sharma had stated in response to a calling attention motion in the Lok Sabha.

But while the Adarsh Housing scam in Mumbai and the CWG scam in Delhi saw swift reaction from the Congress, a much bigger scam was buried by the Union commerce minister in the garb of an “inquiry”. In February this year, seven months after Sharma’s promise to the Lok Sabha, Outlook received a strange reply under the Right to Information Act from T. Srinidhi, a senior commerce ministry official. In his response to a question about whether an inquiry had been instituted, Srinidhi wrote, “We have no information regarding holding of an inquiry nor are we aware of any inquiry being conducted by any other division.”

Curiously, while Srinidhi claimed ignorance, in his capacity as a director-level officer in the ministry, he was very much involved with the case. Just two weeks later, on February 18, Srinidhi issued detailed “guidelines” for exporting rice and copies were sent to all the ministries involved, including the prime minister’s office and the principal secretary to the prime minister, T.K. Nair. The guidelines, a copy of which is available with Outlook, confirms every aspect of the rice scam as was reported earlier.

But was there an inquiry after all? When Brinda Karat, CPI(M) Rajya Sabha MP, took up the issue with Anand Sharma on August 4 this year, he wrote back on August 17, finally admitting that there was an inquiry. “The inquiry report has since been submitted which is currently under examination,” Sharma wrote. Interestingly, he also stated that “appropriate action in the matter, as deemed necessary in accordance with law, will be taken once the examination of the inquiry report is complete.”

Sharma did not respond to detailed questionnaires sent to him by Outlook, nor did former commerce ministry official R. Gopalan.

But was the inquiry a cover-up? Consider this:

A Sham Inquiry

The inquiry was conducted by P.K. Chaudhery, a 1977-batch IAS officer of the Haryana cadre who joined the commerce ministry as an additional secretary on May 27, 2008, and served a year under then minister Kamal Nath. To Chaudhery fell the onerous task of inquiring into the acts of commission and omission of various participants in the elaborate scam, including the Union minister himself.

The inquiry’s terms of reference are not known, but what is known is that Chaudhery never got access to any of the principal characters who had already moved out of the ministry of commerce and industry. Kamal Nath had moved away to the Union ministry of surface transport, the then commerce secretary G.K. Pillai had moved as the Union home secretary and the man directly in charge of the division dealing with the exports, R. Gopalan, was now the secretary (financial services) in the Union ministry of finance.

“Is this a joke?” asked Sharad Yadav, NDA convenor and president of the Janata Dal (United) who had raised the issue in Parliament a year ago. “We have never heard of an additional secretary inquiring into the role of a minister or his superiors. He even served under Kamal Nath. How can this be a fair and impartial inquiry? Did he get any access to the files of the other ministries involved in the scam?” While Sharad Yadav criticises the tardy pace of the inquiry, he still chafes at the subterfuge employed in the scam. “Here is a case where rice was taken away from millions of starving people. While states kept asking for rice for the PDS, the government made money through illegal exports. This is shocking.”

When contacted, the Union commerce secretary, Rahul Khullar, had only this to offer: “We are taking action. I have already spoken to my minister and you can tell your editor that he can print whatever he likes.”

Sources in the commerce ministry told Outlook that the inquiry report has recommended action against the private export companies, led by Amira Foods (I) Pvt Ltd, by “black-listing” them. But the fact is that while the scam can easily attract the provisions of the Prevention of Corruption Act, the case has already been diluted considerably. Ample time has been given to the private players to wipe out evidence and bank accounts, while a more neutral investigation agency like the Central Vigilance Commission (CVC) or the CBI has never been involved in the inquiry.

“This is a ridiculous mockery of an investigation. Clearly, the additional secretary will not keep his job if he were to begin investigating a Union cabinet minister. There is prima facie evidence and the government must initiate criminal prosecution of all those involved,” Brinda Karat told Outlook.

There Is Evidence

The rice scam is a case where a lot of documentary evidence is already available. Outlook accessed over 400 pages that clearly show questionable decisions and nail culpability.

    * Commerce ministry file notings available with Outlook clearly show that Kamal Nath personally took the decisions on which PSU would handle a country’s allotted share of rice: “...before notification is issued Commerce and Industry Minister (Kamal Nath) needs to decide as to which country is to be allocated to which PSU for export.” Clearly, Kamal Nath knew about the involvement of private companies and also took the decisions on allocation of the exports. There are also letters from various African countries such as Sierra Leone which have been addressed to Kamal Nath, stating that the rice exports be directed through private companies such as Amira Foods (I) Ltd. This despite the fact that the norms for such exports are absolutely clear that they could only be undertaken by one of three PSUs—STC, MMTC or PEC.
    * File notings available with Outlook also record a telephone call from then commerce secretary G.K. Pillai to a joint secretary in the food ministry stating that a notification to export rice was being pushed through. Such notifications could be issued only after mandatory clearance from the food ministry, but this was ignored and the notification issued.
    * Documents with Outlook show there was very little rice for the PDS in that period. File notings and notes of the food ministry officials repeatedly warned there was no rice left to export and barely enough to supply the PDS meant for below poverty line families. Concern was also expressed by then finance minister P. Chidambaram and supported by food minister Sharad Pawar. While letters from states seeking more rice piled up, the commerce ministry ignored them. Instead, not only did they export a banned essential commodity, they allowed private firms to come in and make a killing.

BJD MP from Orissa, Bhartruhari Mahtab, who had also raised the issue in Parliament, is shocked at the proportions of the scam. “This scam took place when millions of people in eastern India were going to bed starving. The Congress speaks of aam admi and then they make money by punching the aam  aadmi in the stomach. The inquiry is a complete sham.”

Investigations In Ghana

While Indian officials continued to drag their feet, Ghana, one of the buyer countries, conducted a major investigation into the scam last year. For the first time in the history of independent India, a foreign country was now asking India to probe the role of its Union cabinet minister and the commerce ministry along with private entities such as Amira Foods (I) Ltd.

Ghana sought help since the major part of the evidence lies buried in the files of the Union commerce ministry. The African nation even sent a seven-page letter (a copy is available with Outlook) to the Indian government on August 13 last year seeking its help but that has been ignored by the prime minister and the external affairs minister so far. So while Ghana has not been able to make any headway into the investigation for lack of cooperation from India, the inquiry here continues to hide more than it reveals.

Warnings Ignored

But did senior officials and the then Union commerce minister know that something wrong was going on? While the exports were taking place, letters from MMTC and STC available with Outlook clearly show there were several such warnings. While STC had pointed out that private players had muscled into a deal meant to be strictly between governments and PSUs, MMTC suffered a major financial loss. They proposed to export the rice to the Union of Comoros for $495 per tonne with a profit margin of $20 per tonne. Comoros turned it down stating it was too expensive and they couldn’t afford it. A month later, MMTC received an already signed agreement where private players were the exporters and Comoros willing to buy the same quantity of rice at $640 a tonne! Within a month, not only was MMTC’s offer of $495 a tonne no longer expensive, Comoros was, in fact, willing to pay $145 more per tonne. MMTC, which would have earned a profit of $20 per tonne was now reduced to being a marginal player and would only get $5 per tonne.

The government is banking on the hope that no one will ask any tough questions. Not only will that help it sweep the truth under the carpet, it will also ensure that the guilty men of the rice scam of 2008-2010 remain far beyond the reach of a credible investigation.