http://www.youtube.com/watch?
ON the surface, these appear innocuous, unrelated figures: Cost of land at Mumbai and Delhi airports at market value – Rs 98,000 crore; cost of construction of new airports at Mumbai and Delhi – Rs 14,300 crore. But, placed under the microscopic scrutiny of investigative reporting, these numbers bespeak a horror story of how the Ministry of Civil Aviation under Mr Praful Patel brazenly gifted India’s most expensive public
Monday, August 16, 2010
Read Praful Patels, land scam of Rs 98000 crore
Wednesday, August 11, 2010
Saturday, August 7, 2010
THE Rs 98,000-CRORE LAND SCAM BY PRAFUL PATEL?
ON the surface, these appear innocuous, unrelated figures: Cost of land at Mumbai and Delhi airports at market value – Rs 98,000 crore; cost of construction of new airports at Mumbai and Delhi – Rs 14,300 crore. But, placed under the microscopic scrutiny of investigative reporting, these numbers bespeak a horror story of how the Ministry of Civil Aviation under Mr Praful Patel brazenly gifted India’s most expensive public real estate to private consortiums under the government’s so-called “airport modernization” programme.
The beneficiaries of these sweetheart deals, which would have been denounced under accountability and anti-corruption laws in most responsible democracies, are laughing all the way to the bank with a Rs 83,000 crore booty. The beneficiaries: GVK Power & Infrastructure and GMR Industries, cleverly disguised in public-private partnerships. The benefactor: Minister Praful Patel.
AAI conducted no price survey or evaluation of the land before entering into identical agreements with GVK and GMR.
In January 2006, consortiums led by GVK and GMR and comprising Airport Company South Africa and Bidvest and other allied companies were awarded the work to operate, develop, design, construct, upgrade, modernize and manage Chhatrapati Shivaji International Airport (CSIA) and Indira Gandhi International Airport (IGIA) on land owned by the Airports Authority of India.
The details, as pieced together by gfiles, add up to a sordid tale of nepotism and a fraud on the public treasury perpetrated bald-facedly by Mr Patel and conniving senior officials in the teeth of serious reservations voiced on the record by dissenting officials who believed that the public interest was being sacrificed at the altar of vested interests out to make a free killing.
Consider the following facts:
•Shockingly, the owner of this invaluable land (the per unit value of which is possibly the highest in the world) – Airports Authority of India (AAI) – conducted no price survey or evaluation of the land before entering into identical agreements with GVK and GMR. At the time, the land was being used on lease by the National Aviation Company Ltd (NACIL), formed after the merger of Air India and Indian Airlines in 2007. Even more shocking is the fact that when the new airport comes up at Navi Mumbai in 2014 and the existing CSIA becomes redundant, GVK will become the owners of this land automatically as per the Companies Act. Surprisingly, there is no mention in the agreement with Mumbai International Airport Pvt Ltd (MIAL) of whether the company will be dissolved and the land will be repatriated to AAI.
•Had the land evaluation been carried out by experts and the land sold or even given on lease to GVK and GMR, the revenues generated could have easily wiped out the entire debt of the merged IA and AI, instead of burdening the national exchequer with a Rs 50 billion bailout plan.
•MIAL and DIAL (Delhi International Airport Pvt Ltd) are joint-venture companies owned by the GVK- and GMR-led consortiums, respectively, each with 74% share while Airports Authority of India has 26% share. Formed in March 2006, MIAL and DIAL were to operate, manage and develop CSIA and IGIA, respectively. By this simple incorporation of MIAL and DIAL with AAI as a minority shareholder, GVK and GMR de facto became the instant owners of India’s prime landed property at Mumbai and Delhi. All that GVK and GMR had to do was shell out a trifling $1.2 billion (Rs 5,500 crore) and $2.6 billion (Rs 8,080 crore), respectively, for construction, development and management of these airports.
•Under this land transfer arrangement to MIAL and DIAL, GVK and GMR earned instant assets of Rs 83,000 crore. Land value: Rs 98,000 crore. GVK and GMR investment: $1.26 billion and $2.6 billion, respectively, totalling Rs 14,300 crore. Not only were GVK and GMR able to pump in the $1.26 billion and $2.6 billion of their commitment from this asset that fell like manna, they also began amortizing its outlay through lease fees and operational costs charged to different airlines.
The alacrity and rapidity with which the deals were allegedly consummated by Mr Patel probably set a record.
•The alacrity and rapidity with which the deals were allegedly consummated by Mr Patel probably set a record in the annals of ministerial and bureaucratic decision-making in India where papers do not move for months. The Rs 83,000- crore bonanza scheme for GVK and GMR was rammed through in record time. Those present at the first meeting on October 4, 2007 to implement the whole idea were the Joint Secretary, KN Srivastava, Chairman, Airports Authority of India, K Ramalingam, CMD, NACIL, V Thulasidas, the Secretary, Civil Aviation, and representatives of MIAL and DIAL. The proceedings of the meeting (of which gfiles has a copy) were pre-orchestrated. With minor suggestions/objections, all discussions went as per the Minister’s wishes. The GOI’s safeguard tools (read bureaucrats) were in mute mode.
GVK Group, builders of Mumbai International Airport
“Acentury ago, Jamshedji Tata was like me. But, I cannot say I will become like the Tatas tomorrow. It takes time to grow. If we have ambition, the sky is the limit,” said GVK group chairman GVK Reddy. He started his career at the age of 22 as a small-time contractor building the Nagarjuna Sagar-Srisailam canal works. Today, at 76, he owns an empire of over $5.24 billion (Rs 25,000 crore). GVK reckons that the Mumbai International Airport is the most difficult airport to build as it has only 2,000 acres of land, unlike the newer airports which are much bigger in area. His company’s board of directors consists of Abid Hussain, former Indian Ambassador to the US, G Krishna Murthy, Sanjay Narayan (Joint Secretary, Ministry of Civil Aviation, when the airport planning and sanction meetings were on), KN Shenoy, P Abraham and Pradip Baijal.
•Among the few conscientious objectors was the General Manager, Legal, Air India, TN Kumar (now deceased). He had initially penned adverse comments on the file. In addition, a year after the deal was inked, he emailed Executive Director R Harihar (06.06.2008) to point out that the language of the Memorandum of Understanding (MoU) was cleverly weighted against the interests of NACIL. The draft MoU stated, “Parties have agreed that a Master Plan is to be developed to accommodate all Existing NACIL facilities at Old Airport, New Engineering Complex and other locations at Chhatrapati Shivaji International Airport (CSIA), for this purpose areas of the various existing facilities shall be mutually finalized between the parties and the Architect to be appointed and paid by MIAL. Areas shall be rationalized without affecting requirements of NACIL as per Master Plan of NACIL.”
•Kumar pointed out that there should have been mention of specific areas and, as decided by the CMD, future requirements for the next 10 years should have been configured. He added: “Airport development needs to be defined. This term is so vague that it could include the best facilities for our competitor airlines at favorable locations to those airlines and again to the detriment of NACIL. Airport development can be the taxi ways or essential operational requirement.” Nobody listened.
•But Kumar was no quitter. He further pointed out that NACIL had never agreed to the relocation of the existing simulators, yet this had been conceded and presented as a fait accompli. Who authorized this extra-legal benefit that went against the interests of India’s national carrier?
GMR Group, builders of Delhi International Airport
GMR Industries was set up in 1978 and was the brainchild of its present Chairman, Grandhi Mallikarjuna Rao. GMR Industries is among the fastest growing companies in the Indian economy. Rao was ranked 198th in the “world’s richest” list of Forbes, and his wealth was valued at $2.6 billion. He is 14th on the “India’s richest” list. Rao, who started with jute mills, expanded the GMR group into the energy and infrastructure sectors. In 2007, the GMR group won a bid to privatize India’s third busiest airport, the Indira Gandhi International Airport. He spent $1 million on his bid and made a deal with Fraport AG to support his bid. The GMR group has also completed a $200-million Hyderabad Airport project. In April 2009, he was linked with a £500-million takeover of Liverpool FC. He owns the Indian Premier League cricket team, Delhi Daredevils.
•Even more shocking was that land valued at Rs 3,000 crore and belonging to NACIL within the airport complex was also surrendered to the consortium. Kumar noted in dissent: “Regarding Para D (2) (C)…we have already agreed that the land belongs to NACIL and we have already got an opinion from M/s Bhasin & Company that NACIL becomes the owner of this land by way of adverse possession. In spite of this, it is surprising that you have conceded indirectly to surrender this nearly six acres of Land which as intimated would have an approx. market value of Rs 3000/- crores.”
•Paragraph F of the MoU states that MIAL shall bear the cost of facilities/buildings as per details given to NACIL, including cost of air conditioning (wherever existing facilities of NACIL being relocated have similar facilities), electrical installations, data cabling, and so on. Cost of interiors, soft furnishing and furniture shall be borne by NACIL. Kumar questioned why NACIL should spend for interiors when it already had interiors. This spending would benefit only MIAL.
•Paragraphs G & H, Kumar pointed out, were at total variance with what had been agreed to earlier. He wrote sharply: “I am totally disagreeing with what has been drafted by you in Para G & H. We had already agreed that the license fees/lease amounts would continue to be the same and will not be enhanced by MIAL. This is in view of the fact that the AAI had fixed some rate and NACIL should not be subject to increases as MIAL has earlier done in respect of vehicles where they have increased amounts in multiples of 20 and 25. This is minimum protection that NACIL can expect for the tremendous inconvenience that NACIL is going to suffer in future in the relocations etc. Further what has been stated by you is not in line and spirit of what has been agreed by the committee and so recorded.” The question that begs an answer from Mr Patel: How much did NACIL lose to MIAL by increase of lease rates?
•Kumar summed up the systematic financial rape of the national carrier, guaranteed to deepen its fiscal ruin and place additional burdens on the national treasury. He could not have been more blunt: “As land is a crucial factor, we need to look at the issue that we as a national carrier can face in the event of the land being taken away from us by MIAL towards development of the airport and in the process offering the same to us on lease at astronomical rentals detrimental to our interests, especially in these difficult times when we are incurring heavy losses due to global recessionary trends.
“While we are supportive of MIAL’s expansion plan for a modern airport, as a private player MIAL has a monopoly over airlines and therefore a right to demand a higher price to optimize its commercial deals. As a national carrier we need to fulfill the social obligations of the Government of India and also face the stiff competition from other airlines. “Being one of the important parties to whom the Airports Authority of India has been leasing their vast lands for over several decades for our use and to take it away without adequate compensation should not be a cause for criticism at a later date which needs to be examined in toto. Especially so, if land is being used for building of malls, hotels etc other than for airport development, in which case a share of the proceeds needs to be negotiated to be paid to us as our rightful share.”
•MIAL has indicated that should the GOI’s stake in NACIL fall below 50 per cent in case of disinvestment, it would charge NACIL prevailing market rates for use of the airport’s facilities. Likewise, NACIL should, by right, have been given a share in revenues from MIAL’s development of malls, hotels, and other commercial ventures at the airport. But Mr Patel did not take this into consideration.
PRAYER FOR JUSTICE
•Praful Patel should be prosecuted and asked to publicly answer the questions posed in this petition.
•Praful Patel’s personal properties and Rs 1,500-crore empire should be held in escrow by the government until the nation is satisfied with his reply so received.
•If found guilty, Praful Patel should be imprisoned without bail to set an example for other Ministers not to treat the national wealth and national assets as their personal milch cows.
•All the concerned officials from the Ministry, NACIL and AAI should be punished with imprisonment and all their assets should be confiscated and handed over to the nation.
The beneficiaries of these sweetheart deals, which would have been denounced under accountability and anti-corruption laws in most responsible democracies, are laughing all the way to the bank with a Rs 83,000 crore booty. The beneficiaries: GVK Power & Infrastructure and GMR Industries, cleverly disguised in public-private partnerships. The benefactor: Minister Praful Patel.
AAI conducted no price survey or evaluation of the land before entering into identical agreements with GVK and GMR.
In January 2006, consortiums led by GVK and GMR and comprising Airport Company South Africa and Bidvest and other allied companies were awarded the work to operate, develop, design, construct, upgrade, modernize and manage Chhatrapati Shivaji International Airport (CSIA) and Indira Gandhi International Airport (IGIA) on land owned by the Airports Authority of India.
The details, as pieced together by gfiles, add up to a sordid tale of nepotism and a fraud on the public treasury perpetrated bald-facedly by Mr Patel and conniving senior officials in the teeth of serious reservations voiced on the record by dissenting officials who believed that the public interest was being sacrificed at the altar of vested interests out to make a free killing.
Consider the following facts:
•Shockingly, the owner of this invaluable land (the per unit value of which is possibly the highest in the world) – Airports Authority of India (AAI) – conducted no price survey or evaluation of the land before entering into identical agreements with GVK and GMR. At the time, the land was being used on lease by the National Aviation Company Ltd (NACIL), formed after the merger of Air India and Indian Airlines in 2007. Even more shocking is the fact that when the new airport comes up at Navi Mumbai in 2014 and the existing CSIA becomes redundant, GVK will become the owners of this land automatically as per the Companies Act. Surprisingly, there is no mention in the agreement with Mumbai International Airport Pvt Ltd (MIAL) of whether the company will be dissolved and the land will be repatriated to AAI.
•Had the land evaluation been carried out by experts and the land sold or even given on lease to GVK and GMR, the revenues generated could have easily wiped out the entire debt of the merged IA and AI, instead of burdening the national exchequer with a Rs 50 billion bailout plan.
•MIAL and DIAL (Delhi International Airport Pvt Ltd) are joint-venture companies owned by the GVK- and GMR-led consortiums, respectively, each with 74% share while Airports Authority of India has 26% share. Formed in March 2006, MIAL and DIAL were to operate, manage and develop CSIA and IGIA, respectively. By this simple incorporation of MIAL and DIAL with AAI as a minority shareholder, GVK and GMR de facto became the instant owners of India’s prime landed property at Mumbai and Delhi. All that GVK and GMR had to do was shell out a trifling $1.2 billion (Rs 5,500 crore) and $2.6 billion (Rs 8,080 crore), respectively, for construction, development and management of these airports.
•Under this land transfer arrangement to MIAL and DIAL, GVK and GMR earned instant assets of Rs 83,000 crore. Land value: Rs 98,000 crore. GVK and GMR investment: $1.26 billion and $2.6 billion, respectively, totalling Rs 14,300 crore. Not only were GVK and GMR able to pump in the $1.26 billion and $2.6 billion of their commitment from this asset that fell like manna, they also began amortizing its outlay through lease fees and operational costs charged to different airlines.
The alacrity and rapidity with which the deals were allegedly consummated by Mr Patel probably set a record.
•The alacrity and rapidity with which the deals were allegedly consummated by Mr Patel probably set a record in the annals of ministerial and bureaucratic decision-making in India where papers do not move for months. The Rs 83,000- crore bonanza scheme for GVK and GMR was rammed through in record time. Those present at the first meeting on October 4, 2007 to implement the whole idea were the Joint Secretary, KN Srivastava, Chairman, Airports Authority of India, K Ramalingam, CMD, NACIL, V Thulasidas, the Secretary, Civil Aviation, and representatives of MIAL and DIAL. The proceedings of the meeting (of which gfiles has a copy) were pre-orchestrated. With minor suggestions/objections, all discussions went as per the Minister’s wishes. The GOI’s safeguard tools (read bureaucrats) were in mute mode.
GVK Group, builders of Mumbai International Airport
“Acentury ago, Jamshedji Tata was like me. But, I cannot say I will become like the Tatas tomorrow. It takes time to grow. If we have ambition, the sky is the limit,” said GVK group chairman GVK Reddy. He started his career at the age of 22 as a small-time contractor building the Nagarjuna Sagar-Srisailam canal works. Today, at 76, he owns an empire of over $5.24 billion (Rs 25,000 crore). GVK reckons that the Mumbai International Airport is the most difficult airport to build as it has only 2,000 acres of land, unlike the newer airports which are much bigger in area. His company’s board of directors consists of Abid Hussain, former Indian Ambassador to the US, G Krishna Murthy, Sanjay Narayan (Joint Secretary, Ministry of Civil Aviation, when the airport planning and sanction meetings were on), KN Shenoy, P Abraham and Pradip Baijal.
•Among the few conscientious objectors was the General Manager, Legal, Air India, TN Kumar (now deceased). He had initially penned adverse comments on the file. In addition, a year after the deal was inked, he emailed Executive Director R Harihar (06.06.2008) to point out that the language of the Memorandum of Understanding (MoU) was cleverly weighted against the interests of NACIL. The draft MoU stated, “Parties have agreed that a Master Plan is to be developed to accommodate all Existing NACIL facilities at Old Airport, New Engineering Complex and other locations at Chhatrapati Shivaji International Airport (CSIA), for this purpose areas of the various existing facilities shall be mutually finalized between the parties and the Architect to be appointed and paid by MIAL. Areas shall be rationalized without affecting requirements of NACIL as per Master Plan of NACIL.”
•Kumar pointed out that there should have been mention of specific areas and, as decided by the CMD, future requirements for the next 10 years should have been configured. He added: “Airport development needs to be defined. This term is so vague that it could include the best facilities for our competitor airlines at favorable locations to those airlines and again to the detriment of NACIL. Airport development can be the taxi ways or essential operational requirement.” Nobody listened.
•But Kumar was no quitter. He further pointed out that NACIL had never agreed to the relocation of the existing simulators, yet this had been conceded and presented as a fait accompli. Who authorized this extra-legal benefit that went against the interests of India’s national carrier?
GMR Group, builders of Delhi International Airport
GMR Industries was set up in 1978 and was the brainchild of its present Chairman, Grandhi Mallikarjuna Rao. GMR Industries is among the fastest growing companies in the Indian economy. Rao was ranked 198th in the “world’s richest” list of Forbes, and his wealth was valued at $2.6 billion. He is 14th on the “India’s richest” list. Rao, who started with jute mills, expanded the GMR group into the energy and infrastructure sectors. In 2007, the GMR group won a bid to privatize India’s third busiest airport, the Indira Gandhi International Airport. He spent $1 million on his bid and made a deal with Fraport AG to support his bid. The GMR group has also completed a $200-million Hyderabad Airport project. In April 2009, he was linked with a £500-million takeover of Liverpool FC. He owns the Indian Premier League cricket team, Delhi Daredevils.
•Even more shocking was that land valued at Rs 3,000 crore and belonging to NACIL within the airport complex was also surrendered to the consortium. Kumar noted in dissent: “Regarding Para D (2) (C)…we have already agreed that the land belongs to NACIL and we have already got an opinion from M/s Bhasin & Company that NACIL becomes the owner of this land by way of adverse possession. In spite of this, it is surprising that you have conceded indirectly to surrender this nearly six acres of Land which as intimated would have an approx. market value of Rs 3000/- crores.”
•Paragraph F of the MoU states that MIAL shall bear the cost of facilities/buildings as per details given to NACIL, including cost of air conditioning (wherever existing facilities of NACIL being relocated have similar facilities), electrical installations, data cabling, and so on. Cost of interiors, soft furnishing and furniture shall be borne by NACIL. Kumar questioned why NACIL should spend for interiors when it already had interiors. This spending would benefit only MIAL.
•Paragraphs G & H, Kumar pointed out, were at total variance with what had been agreed to earlier. He wrote sharply: “I am totally disagreeing with what has been drafted by you in Para G & H. We had already agreed that the license fees/lease amounts would continue to be the same and will not be enhanced by MIAL. This is in view of the fact that the AAI had fixed some rate and NACIL should not be subject to increases as MIAL has earlier done in respect of vehicles where they have increased amounts in multiples of 20 and 25. This is minimum protection that NACIL can expect for the tremendous inconvenience that NACIL is going to suffer in future in the relocations etc. Further what has been stated by you is not in line and spirit of what has been agreed by the committee and so recorded.” The question that begs an answer from Mr Patel: How much did NACIL lose to MIAL by increase of lease rates?
•Kumar summed up the systematic financial rape of the national carrier, guaranteed to deepen its fiscal ruin and place additional burdens on the national treasury. He could not have been more blunt: “As land is a crucial factor, we need to look at the issue that we as a national carrier can face in the event of the land being taken away from us by MIAL towards development of the airport and in the process offering the same to us on lease at astronomical rentals detrimental to our interests, especially in these difficult times when we are incurring heavy losses due to global recessionary trends.
“While we are supportive of MIAL’s expansion plan for a modern airport, as a private player MIAL has a monopoly over airlines and therefore a right to demand a higher price to optimize its commercial deals. As a national carrier we need to fulfill the social obligations of the Government of India and also face the stiff competition from other airlines. “Being one of the important parties to whom the Airports Authority of India has been leasing their vast lands for over several decades for our use and to take it away without adequate compensation should not be a cause for criticism at a later date which needs to be examined in toto. Especially so, if land is being used for building of malls, hotels etc other than for airport development, in which case a share of the proceeds needs to be negotiated to be paid to us as our rightful share.”
•MIAL has indicated that should the GOI’s stake in NACIL fall below 50 per cent in case of disinvestment, it would charge NACIL prevailing market rates for use of the airport’s facilities. Likewise, NACIL should, by right, have been given a share in revenues from MIAL’s development of malls, hotels, and other commercial ventures at the airport. But Mr Patel did not take this into consideration.
PRAYER FOR JUSTICE
•Praful Patel should be prosecuted and asked to publicly answer the questions posed in this petition.
•Praful Patel’s personal properties and Rs 1,500-crore empire should be held in escrow by the government until the nation is satisfied with his reply so received.
•If found guilty, Praful Patel should be imprisoned without bail to set an example for other Ministers not to treat the national wealth and national assets as their personal milch cows.
•All the concerned officials from the Ministry, NACIL and AAI should be punished with imprisonment and all their assets should be confiscated and handed over to the nation.
The daylight rape of the public interest by Praful Patel
COVER STORY
Aviation
petition versus praful patel
The daylight rape of the public interest
gfiles prayerfully brings to the Supreme Court’s attention, in two parts, the inside story of how a national resource – as well as a powerful symbol of modern Indian ingenuity and enterprise in the public sector – has been systematically emasculated in order to pave the way for vested interests to dominate a vital segment of the Indian economy. In addition, we also document how, as part of a larger conspiracy, prime land worth Rs 98,000 crore belonging to the Government of India was gifted for profit to a consortium of vested interests in the name of “airport development”.
For suo moto cognizance
THE HON’BLE SUPREME COURT OF INDIA AT NEW DELHI
(Extraordinary Civil Writ Jurisdiction)
In the Matter of
Citizens of India through gfiles
(A magazine on governance)
(Registered with Registrar of Newspapers for India)
Regn. No. DL Eng/2007/19719
VERSUS
Praful Patel
Minister for Civil Aviation
Govt of India
Rajiv Gandhi Bhavan Safdarjung Airport, New Delhi
V Thulasidas, former Chairman & Managing Director,
and his team, NACIL (Indian Airlines & Air India)
K Ramalingam, former Chairman, Airports Authority of India
KN Srivastava, Joint Secretary, Ministry of Civil Aviation
Sanjay Narayan, former Joint Secretary, Ministry of Civil Aviation,
and now Director in MIAL
RK Singh, former Joint Secretary, Ministry of Civil Aviation
PS Nair, former ED, Airports Authority of India
Ajay Prasad, former Secretary, Civil Aviation
Your Lordships,
This is not a polemic or ideological argument for or against free enterprise or competition or modernization. In India’s growth story, these precepts carry intrinsic value. It is, rather, the shameful tale of how a Union Minister, Constitutionally sworn to protect the interests of the Indian state, has instead been a prime mover in what we can only describe as its plunder.
What is sad is that this ransacking has taken place in full public view, complaints and protest notes based on public documents and actions have been filed, and yet the Minister has escaped from being held accountable. Your Lordships, we believe that because the Constitutional instruments have failed to implement basic checks and balances that are designed to safeguard the national interest of our Republic and to protect its Treasury against profligate mismanagement, we have no choice other than to ask for judicial intervention and activism in order to restore the sanctity of balance in governance.
Without delving into circumstantial conjecture or suppositions –but based on documented verification – we have compiled, for the first time ever, a comprehensive record of how Civil Aviation Minister Praful Patel – a former director of Jet Airways, with whose owner he still has cherished relations – first systematically bankrupted India’s national flagship carrier, Indian Airlines, and paved the way for Jet Airways to acquire primacy, and later approached the Government of India for a Rs 50 billion bailout from taxpayers’ money to keep afloat the very airline he had so tactfully destroyed.
PART-I
DELIBERATE DESTRUCTION OF A NATIONAL RESOURCE
THE destruction of Indian Airlines, as we will demonstrate, was craftily calibrated with the connivance of bureaucrats who are supposed to be the steel frame of protective governance. In the name of privatization”, “modernization”, “open skies” and other such buzzwords and mantras, Indian Airlines, in a series of moves, was deprived of its revenue sources through unreasonable and unviable fleet expansion, budgeting, cutting off commercially viable international routes in the garb of “route rationalization”, unjustifiable leasing arrangements, quietly opening passages for foreign airlines on profitable sectors, siphoning off baggage handling activities to other conglomerates, and destroying the Indian Airlines brand by first obliterating its 50-year-old logo after renaming it “Indian” and then by merging it with the unviable Air India.
In short, Mr Patel ensured the annihilation of the Indian Airlines brand by a virtual obliteration of a level playing field for Indian Airlines.
We back this conclusion with the following facts:
•Mr Patel, the former Jet Airways director-turned-politician, took oath as Civil Aviation Minister in May 2004. (His personal fortune as a businessman is valued at Rs 1,500 crore.) At that time Indian Airlines was earning a profit of Rs 65.61 crore (source: Government of India Press Release dated December 26, 2005). Four years later, on November 11, 2009, NACIL (the company formed after the merger of IA & AI) declared a post-tax loss of Rs 5,548.26 crore! Mr Patel informed reporters on November 12, 2009 that the airline would have to generate Rs 20 billion through cost cuts and revenue gains.
•When Mr Patel asked the Government of India to pump in an equity of Rs 5000 crore, every frontal union of workers of the newly formed NACIL wrote strong letters of protest regarding the decisions that led to the seeking of the bailout and merger of Indian Airlines with Air India. They included Air Corporations Employees Union (wrote on 23.06.09); All India Cabin Crew Association (wrote on July 21, 2009); Indian Commercial Pilots Association; All India Aircraft Engineers Association; Indian Airlines Officers’ Association; Airlines Ground Instructors Association and Airlines Radio Officers & Flight Operations Officers Association.
•Their letters, addressed privately to the Prime Minister of India and top politicians and rulers of our country, fell on deaf ears.
HOW THE DAMAGE WAS DONE
1. Ramping up the premerger AI fleet acquisition plan from 24 to 68 aircraft to bankrupt the airline
•This one act shows how Mr Patel systematically began his agenda to ground the national carrier.
•Air India’s original fleet plan was for 24 aircraft to be inducted over a five-year period. This was suddenly enhanced to 68 aircraft within a period of 24 weeks, with a change of aircraft from Airbus to Boeing, including induction of an aircraft that was still on the drawing board (the B787). The Ministry of Civil Aviation as well as Air India’s Board ignored the fact that they were burdening an airline that has a turnover of only Rs 7,000 crore per year with an aircraft order worth Rs 35,000 crore. Air India was expected to service a debt and interest repayment of Rs 6,000 crore annually for the purchase, an outgo of 86% of its annual turnover.
•Where then would the resources for essential expenditure come from? Why was the decision regarding such huge purchases taken even without a full business plan and informing the Cabinet? Who initiated this move? Why was there no inquiry into how Air India would bear the burden of these new aircraft?
To support international plans of Jet and Kingfisher, entitlements far in excess of the actual traffic demand on many routes to and from India were exchanged with many countries.
•Why was the decision shifted from Airbus to Boeing (B787, which was at drawing board stage)? This has never happened with any airlines in the world – placing an order for an untested aircraft.
•Will Mr Patel inform the nation of any revenue plan for the induction of 68 Boeings? Can he deny that this is one of the main reasons that the airline is now reeling under a working capital deficit of Rs 15,000 crore?
2. Giving disproportionate access to/from India to foreign airlines
•Between 2004 and 2009, the Ministry was very liberal in the exchange of bilateral entitlements with many countries. It is alleged that in order to support the international operation plans of Jet Airways and Kingfisher Airlines, entitlements far in excess of the actual traffic demand on many routes to/from India were exchanged with many countries. The increase in traffic entitlements benefited mainly foreign airlines, and they were quick to capitalize on the Indian air travel market, increasing their seats from around 35,000 to 90,000 per day over the past four years or so. Airlines of many countries were fully utilizing their entitlements prior to the economic downturn. Comparatively, on the Indian side, Air India and Indian Airlines could only marginally enhance capacity while Jet Airways deploys only 12,000 seats per day on international routes.
•The revenue earning opportunity was thus skewed heavily in favour of foreign airlines, allowing privileged private Indian operators to fly international routes.
•Air India and Indian Airlines’ international market has also been opened up to competition from certain favoured Indian private airlines. A propaganda campaign was started during Mr Patel’s tenure that Al and IA were not fully utilizing the bilateral entitlements available to the Indian side, and hence private airlines such as Jet Airways should be allowed to operate international services.
•What was conveniently glossed over was the fact that Al and IA were operating services to places where demand existed, such as Dubai, Sharjah, Singapore, London, US, Canada, and so on. The only real constraint that AI and IA faced was lack of aircraft capacity to be able to ramp up services to important markets. However, instead of clearing Al and IA’s long-pending aircraft purchase plans, the ground was allegedly laid to allow Jet Airways to commence international operations. On its part, Jet Airways commenced operations on commercially viable routes – to only those established destinations which were already linked by AI and IA!
Permission to private airlines to operate internationally was structured to favour Jet Airways.
•The permission to Indian private airlines to operate international operations was also structured in such a manner that it favoured Jet Airways. Criteria were decided such that, apart from Jet Airways, only Air Sahara (which Jet Airways eventually acquired) qualified to operate international services, keeping the other domestic airlines at bay for a period of 3-4 years. Also, the move to allow Jet Airways to operate international services was further supported by the Ministry of Civil Aviation, by granting capacity entitlements to operate flights to London. The processes were put in place in a great hurry to enable Jet Airways to commence operations to London just a few days prior to their IPO which made Jet Airways owner Naresh Goyal a richer man than he already was.
•The complicity was so blatant that Jet Airways applied for slots in Singapore and London within the first month of Mr Patel’s tenure at Rajiv Gandhi Bhavan (a fact reported in newspapers in June 2004) – a full six months prior to the Government of India announcing the change in policy, permitting private airlines to fly on international routes, in December 2004.
•This policy change ostensibly emanated from the Naresh Chandra Committee report. Strangely, this is probably the single instance when the Ministry of Civil Aviation tabled and the GOI adopted just one single recommendation out of an entire policy document. Interestingly, the draft Civil Aviation Policy which was framed in 2004 is yet to see the light of day.
•It is also alleged by the All India Airlines Retired Personnel Association (AIARPA) that start-up airlines such as Air Arabia of Sharjah have in fact gained significant market access with Mr Patel’s support, simply because they appointed his long-time friend and hatchet man, Deepak Talwar, as their GSA in India.
3. Establishing more private operators in the domestic market
•Mr Patel actively encouraged private players to set up shop in India, ostensibly to unleash the potential of the Indian market. Starting with Air Deccan, we have had a number of socalled low-cost carriers operating in the Indian domestic market at yields that are unsound, leading to a sick Indian airlines industry. As a result, the domestic market share and revenues of Indian Airlines and Air India from domestic operations have shrunk, adding to the woes of the airline.
•Simultaneously, demands were placed on Air India and Indian Airlines that necessitated their curtailing operations on many routes – favouring the private carriers. For instance, Air India was made to withdraw its flights to Los Angeles as well as the Mumbai-Doha, Delhi-Dhaka via Kolkata, Hyderabad-Singapore and Delhi-Hong Kong services. Its domestic operations from Kolkata to Jaipur and Ahmedabad, Chennai and Kolkata to Bhubaneswar, and Kolkata- Hyderabad also had to be withdrawn. The withdrawal and delay of operations by Air India was subtly enforced just before Jet Airways commenced operations to some of the international destinations. For instance, Air India suddenly postponed operations from Amritsar to Toronto in August 2006 to facilitate the launch of the Jet Airways flight on the same sector. Can Mr Patel inform the nation why it was done? What was the necessity?
4. Fallacious premise of the merger
The selection of Accenture was cloaked in secrecy in the Ministry. Stakeholders from Air India and Indian Airlines were neither involved in the selection process nor in the deliberations of Accenture during the build-up to the merger.
Accenture is guilty of simply pushing the Minister’s agenda for merger as he needed to show the world that he was doing something for the national carriers also, after having craftily robbed them to benefit other airlines, especially Jet Airways. The merger enabled him to make the spurious claim that he had strengthened Air India by merging it with Indian Airlines to enable them to take on the competition. As per the allegation of AIARPA, Accenture had identified a number of “imperatives of merger”. The details show how Mr Patel systematically destroyed the national carrier.
The Justification: An integrated international/domestic footprint, significantly enhancing attractiveness to customers and allowing easy entry into one of the three global airline alliances.
Increase in traffic entitlements benefited foreign airlines, and they were quick to capitalize on the Indian market.
The Facts: It is not understood as to how a merger of two airlines that were already making losses could be based on specious arguments such as these. Attractiveness to passengers comes not just from an airlines’ reach or size, operational issues such as image/perception, track record, service levels, etc. form a major part. The fact that Air India has been suffering from an extremely poor image and is virtually passengers’ last choice, especially on international routes, was conveniently overlooked. Also, entry into global airline alliance cannot be an objective for any airline, as has been claimed by Accenture to justify the merger.
The Justification: Parking bays and landing slots in an “infrastructure constrained” environment.
The Facts: It is again not understood as to how the merger would increase availability of parking bays and landing slots for the merged airline, unless it was envisaged that there would be shrinkage of operations in the merged entity, thus releasing bays and slots which would naturally then be available to Air India’s competitors.
The Justification: Potentially enable merged airline to command better valuation.
The Facts: Valuation of an airline is defined primarily by its route rights, its future revenue earning potential, its current ownership, labour policies & IR/HR status. In Air India’s case, the international route rights are no longer the preserve of Air India, having been opened up to other private airlines.
Given the fact that the minister had systematically pawned AI and IA’s silver and thrown Air India and Indian Airlines together in a cauldron of chaos, it is hard to understand how the merged entity would manage a better valuation.
5. Destroying the Indian Airlines brand to allow private airlines to dominate the domestic market
Indian Airlines was always a strong brand with many positive attributes. Year after year, Indian Airlines was the only airline brand to be included in the top 25 brands in the Economic Times’ annual Brand Equity Most Trusted Brand survey, regarded as one of the most reliable indicators of a brand’s standing and equity in India. In 2003, 2004, 2005, Indian Airlines was first the unexpected dark horse to win and then the expected trusted brand. Strangely, in 2007, when the Indian Airlines brand ceased to officially exist, it still found mention in the survey.
Yet the Minister chose to re-brand Indian Airlines as Indian with a nameless logo, despite the fact that the merger was already around the corner. Indian Airlines was forced to spend a fortune on the re-branding, a cost which was reincurred when the airline merged with Air India. Can Mr Patel tell the nation how much public money was spent on redesigning his fantasy?
Indian Airlines’ identity was systematically obliterated to give Jet Airways a clear run in the domestic market. The merger forced Indian Airlines to market itself as Air India in the domestic and Gulf markets where the Indian Airlines name commanded a premium. Instead, a new entity – Air India Express – was forced in. It had neither Air India’s international reputation nor Indian Airlines’ trustworthiness but was a characterless, unreliable airline with no back-up support, headed by a retired General Manager.
The decision to merge Air India and Indian Airlines was taken knowing full well that mergers take at least three-four years to settle and that the entities become vulnerable in the marketplace during this time. The timing was significant since Jet Airways was taking off in a big way on the international routes and Kingfisher Airline needed to establish itself first in the domestic and then the international arena. This act of the Minister shows that he systematically opened up Indian Airlines and Air India markets to unfair competition. At the same time, Mr Patel ensured that the two airlines placed orders for aircraft that they could not service. In order to cover up the fact that he had stripped the national carriers of their markets and had saddled them with massive losses, Mr Patel conjured up the merger of Air India and Indian Airlines. The merger of the two airlines, each with a distinct ethos and work culture, became the Minister’s panacea for all ills that plagued them and was undertaken ostensibly to strengthen them despite knowing well that the merger would be chaotic for the initial couple of years at least.
6. The ingenious sale and lease back of fully depreciated aircraft of Air India and Indian Airlines
Air India has entered into sale and lease back of eight A320, three B747 and four A310 aircraft during 2007-2008. The sale and lease back transaction essentially involves sale of an aircraft to a lessor or foreign financial institution in consideration for an upfront amount to shore up revenues with an attendant agreement to lease back on dry lease basis for a specific period, at a fixed monthly lease rental (or EMI in simpler terms). At the end of the lease term (about 70 months in Air India’s case), the aircraft is returned to the lessor in a condition agreed upon. During the lease period, the airline continues to operate the aircraft and incurs all operating expenses. In addition, even after the aircraft purchase order was placed, a case was made out for Air India to lease capacity to meet its requirements till the new aircraft were delivered. Accordingly, AI leased eight B777s at very high rates without even having pilots to fly them. As a result, five leased B777s stayed grounded for months together. The number of non operational B777s would have been higher but for the fact that A310 pilots were pulled out for training to fly the B777. However, as a result of this move, three leased A310 aircraft also had to be grounded. Why was this decision taken? Can Mr Patel reveal how much of taxpayers’ money was paid to lease these aircraft?
Including insurance and mandatory modifications as if the aircraft is on dry lease, the lease rental effectively covers the repayment of capital (upfront amount paid to the airline) and the cost of capital. The resale value is realized by the lessor. The sale and lease back effectively means asset stripping to finance revenue expenditure – a back-door sale. The airline commits to pay lease rental and maintain the aircraft in an agreed manner, without any claim to the residual value of the aircraft. There is usually an unspecified – no capping, openended liability to return the aircraft to the lessor in the agreed condition on expiry of the lease term. Airlines usually need to incur significant expenses on this account so that return conditions are met. If operating margins to meet the lease rental and residual values are not realized from operations of such aircraft, the transaction is financially unattractive to the airline.
Air India’s original fleet plan for 24 aircraft was suddenly enhanced to 68 aircraft within a period of 24 weeks.
Can the Minister answer the following questions?
•Why was this methodology adopted when, clearly, these options were never exercised earlier due to the reasons explained above?
•Why was AI’s sale and lease back transacted when the airline was experiencing low fleet utilization, low load factors, cash losses on 70% of services and especially when brand new aircraft were arriving at the rate of one or two every month?
•Why did AI sell and lease back 20-year-old fully depreciated aircraft, with an out-of-production engine, instead of removing these high operating-cost aircraft from its fleet?
•Was any study conducted to see whether these aircraft were at all needed?
•Why was the entire process hurried through to meet a March 31, 2007 deadline?
•Is it a mere coincidence that the “investee” who was in regular contact with Air India bagged the deal, through a competitive e-auction at a rate known/discussed with Air India‘s finance department?
•Can the then CMD be asked to explain why there was no mention of the sale and lease back proposal in the briefing to the Board of Directors on the need and process to raise additional funding?
7. Creation of Air India Express – the biggest hoax in Indian aviation history
Mr Patel ensured that Air India set up a low-cost carrier to operate on the lucrative India-Gulf and India-Southeast Asia routes – routes that were well served by both Indian Airlines and Air India and were reportedly the most profitable ones for at least IA. Both Air India and Indian Airlines became losers: Air India because of ceding routes to Air India Express, with lesser revenues being earned as Air India Express operates on the low fare principle; while Indian Airlines lost overall revenues as it had to reduce fares to match Air India Express fares and other LCCs (Low Cost Carriers) such as Air Arabia that entered these markets. Air India Express was launched amid consternation in both camps – erstwhile AI managers in the Gulf feared a dip in their yields and a lowering of overall revenue, while erstwhile IA managers in the Gulf feared competition from another narrow-body fleet running on similar principles, owned by a common owner.
The Minister has to answer and also get the then Chairman to reveal the true story of Air India Express, which was touted as the success story of the new Air India – lowest fares, highest load factors, high seat factors, reliable operations and profits every year.
The Minister must answer serious questions for the public:
•What was the logic in launching Air India Express?
•Air India Express was launched as a Low Cost Carrier on the standard LCC premises – only internet bookings, no meals, no agents and therefore no commissions. Yet it offers meals and even in-flight dutyfree, and sells through agents as well as consolidators very openly. It has a tie-up with the Minister’s friend, Mr Deepak Talwar. Who gave him the contract without tenders and proper bidding?
•How did Air India Express decide to lease the B737-800 without competitive bidding?
•Is it again a mere coincidence that Air India Express later decided to purchase 18 B737-800 aircraft? How was this figure arrived at?
•Why is it that Air India Express operates – in most cases –flights at around the same timings as Air India on the same routes, at significantly lower fares? Isn’t Air India Express competing with its parent company?
•Even two years after merger, why are the schedules of Air India Express and Air India not aligned?
•Is there a transparent transfer pricing mechanism between Air India and Air India Express that has been followed consistently?
•Have the books been manipulated to show profits for Air India Express?
•Has Air India Express ever achieved its projected aircraft utilization?
•Does Air India Express have a system of compiling figures for on-time performance, passenger carriage, revenues, etc?
•How has Air India Express been allowed to take passengers booked as passengers travelled? Or is it booking fictitious revenues? If so, why? Just to keep the leased aircraft going?
•How is it that there is only one person who is capable of being the COO of Air India Express and he gets an extension beyond retirement age when there is no dearth of able officers in Air India to take on the job? Is it a reward for past favours?
•Air India Express has, however, served one key purpose – it enabled the lease of a number of B737-800 aircraft and also the expansion of Air India’s aircraft purchase plan to include 18 B737-800 aircraft for Air India Express. Air India Express also chose to induct B737-800 aircraft from Day 1 without following the normal aircraft selection process.
8. Robbing AI and IA of their existing revenue streams from ground handling of other airlines and also from their then existing commercial agreements
The Ministry forced AI to spin off ground handling activities into a joint venture with SATS, further forcing the airline to transfer all ground handling (for other airlines as well as own flights) to the JV. Pre-merger, and prior to the creation of HIAL and BIAL, AI was earning Rs 600 crore and IA was earning Rs 380 crore annually from ground handling. Not only have AI and IA lost this amount, AI is now expected to pay the JV company for handling of its own flights. The future of employees transferred to the joint venture is uncertain. Apart from robbing AI and IA of their ground handling revenue, the Minister has also ensured that the merged airline loses the revenues it earned from commercial agreements with foreign airlines. These agreements were instituted by earlier governments to ensure that AI and IA derived some benefits from one-sided grant of entitlements and operations by foreign airlines. The institution of such agreements in bilateral agreements with other countries also recognized that AI has not been able to add new aircraft for many years owing to delay in obtaining requisite approvals from the government. Along with the opening up of the Indian international market to private Indian airlines, the Ministry took a decision to phase out all such commercial agreements within 3-4 years.
9. What has been outlined above can be documented in detail
There is ample reason to deduce that Mr Patel has spearheaded nothing short of a carefully calibrated conspiracy to deprive the nation of a national asset in order to siphon off a portion of the national wealth to co-conspirators through strong-arm tactics, deceit, diktat and devious legerdemain for which the taxpayers have had to pay a heavy price.
Aviation
petition versus praful patel
The daylight rape of the public interest
gfiles prayerfully brings to the Supreme Court’s attention, in two parts, the inside story of how a national resource – as well as a powerful symbol of modern Indian ingenuity and enterprise in the public sector – has been systematically emasculated in order to pave the way for vested interests to dominate a vital segment of the Indian economy. In addition, we also document how, as part of a larger conspiracy, prime land worth Rs 98,000 crore belonging to the Government of India was gifted for profit to a consortium of vested interests in the name of “airport development”.
For suo moto cognizance
THE HON’BLE SUPREME COURT OF INDIA AT NEW DELHI
(Extraordinary Civil Writ Jurisdiction)
In the Matter of
Citizens of India through gfiles
(A magazine on governance)
(Registered with Registrar of Newspapers for India)
Regn. No. DL Eng/2007/19719
VERSUS
Praful Patel
Minister for Civil Aviation
Govt of India
Rajiv Gandhi Bhavan Safdarjung Airport, New Delhi
V Thulasidas, former Chairman & Managing Director,
and his team, NACIL (Indian Airlines & Air India)
K Ramalingam, former Chairman, Airports Authority of India
KN Srivastava, Joint Secretary, Ministry of Civil Aviation
Sanjay Narayan, former Joint Secretary, Ministry of Civil Aviation,
and now Director in MIAL
RK Singh, former Joint Secretary, Ministry of Civil Aviation
PS Nair, former ED, Airports Authority of India
Ajay Prasad, former Secretary, Civil Aviation
Your Lordships,
This is not a polemic or ideological argument for or against free enterprise or competition or modernization. In India’s growth story, these precepts carry intrinsic value. It is, rather, the shameful tale of how a Union Minister, Constitutionally sworn to protect the interests of the Indian state, has instead been a prime mover in what we can only describe as its plunder.
What is sad is that this ransacking has taken place in full public view, complaints and protest notes based on public documents and actions have been filed, and yet the Minister has escaped from being held accountable. Your Lordships, we believe that because the Constitutional instruments have failed to implement basic checks and balances that are designed to safeguard the national interest of our Republic and to protect its Treasury against profligate mismanagement, we have no choice other than to ask for judicial intervention and activism in order to restore the sanctity of balance in governance.
Without delving into circumstantial conjecture or suppositions –but based on documented verification – we have compiled, for the first time ever, a comprehensive record of how Civil Aviation Minister Praful Patel – a former director of Jet Airways, with whose owner he still has cherished relations – first systematically bankrupted India’s national flagship carrier, Indian Airlines, and paved the way for Jet Airways to acquire primacy, and later approached the Government of India for a Rs 50 billion bailout from taxpayers’ money to keep afloat the very airline he had so tactfully destroyed.
PART-I
DELIBERATE DESTRUCTION OF A NATIONAL RESOURCE
THE destruction of Indian Airlines, as we will demonstrate, was craftily calibrated with the connivance of bureaucrats who are supposed to be the steel frame of protective governance. In the name of privatization”, “modernization”, “open skies” and other such buzzwords and mantras, Indian Airlines, in a series of moves, was deprived of its revenue sources through unreasonable and unviable fleet expansion, budgeting, cutting off commercially viable international routes in the garb of “route rationalization”, unjustifiable leasing arrangements, quietly opening passages for foreign airlines on profitable sectors, siphoning off baggage handling activities to other conglomerates, and destroying the Indian Airlines brand by first obliterating its 50-year-old logo after renaming it “Indian” and then by merging it with the unviable Air India.
In short, Mr Patel ensured the annihilation of the Indian Airlines brand by a virtual obliteration of a level playing field for Indian Airlines.
We back this conclusion with the following facts:
•Mr Patel, the former Jet Airways director-turned-politician, took oath as Civil Aviation Minister in May 2004. (His personal fortune as a businessman is valued at Rs 1,500 crore.) At that time Indian Airlines was earning a profit of Rs 65.61 crore (source: Government of India Press Release dated December 26, 2005). Four years later, on November 11, 2009, NACIL (the company formed after the merger of IA & AI) declared a post-tax loss of Rs 5,548.26 crore! Mr Patel informed reporters on November 12, 2009 that the airline would have to generate Rs 20 billion through cost cuts and revenue gains.
•When Mr Patel asked the Government of India to pump in an equity of Rs 5000 crore, every frontal union of workers of the newly formed NACIL wrote strong letters of protest regarding the decisions that led to the seeking of the bailout and merger of Indian Airlines with Air India. They included Air Corporations Employees Union (wrote on 23.06.09); All India Cabin Crew Association (wrote on July 21, 2009); Indian Commercial Pilots Association; All India Aircraft Engineers Association; Indian Airlines Officers’ Association; Airlines Ground Instructors Association and Airlines Radio Officers & Flight Operations Officers Association.
•Their letters, addressed privately to the Prime Minister of India and top politicians and rulers of our country, fell on deaf ears.
HOW THE DAMAGE WAS DONE
1. Ramping up the premerger AI fleet acquisition plan from 24 to 68 aircraft to bankrupt the airline
•This one act shows how Mr Patel systematically began his agenda to ground the national carrier.
•Air India’s original fleet plan was for 24 aircraft to be inducted over a five-year period. This was suddenly enhanced to 68 aircraft within a period of 24 weeks, with a change of aircraft from Airbus to Boeing, including induction of an aircraft that was still on the drawing board (the B787). The Ministry of Civil Aviation as well as Air India’s Board ignored the fact that they were burdening an airline that has a turnover of only Rs 7,000 crore per year with an aircraft order worth Rs 35,000 crore. Air India was expected to service a debt and interest repayment of Rs 6,000 crore annually for the purchase, an outgo of 86% of its annual turnover.
•Where then would the resources for essential expenditure come from? Why was the decision regarding such huge purchases taken even without a full business plan and informing the Cabinet? Who initiated this move? Why was there no inquiry into how Air India would bear the burden of these new aircraft?
To support international plans of Jet and Kingfisher, entitlements far in excess of the actual traffic demand on many routes to and from India were exchanged with many countries.
•Why was the decision shifted from Airbus to Boeing (B787, which was at drawing board stage)? This has never happened with any airlines in the world – placing an order for an untested aircraft.
•Will Mr Patel inform the nation of any revenue plan for the induction of 68 Boeings? Can he deny that this is one of the main reasons that the airline is now reeling under a working capital deficit of Rs 15,000 crore?
2. Giving disproportionate access to/from India to foreign airlines
•Between 2004 and 2009, the Ministry was very liberal in the exchange of bilateral entitlements with many countries. It is alleged that in order to support the international operation plans of Jet Airways and Kingfisher Airlines, entitlements far in excess of the actual traffic demand on many routes to/from India were exchanged with many countries. The increase in traffic entitlements benefited mainly foreign airlines, and they were quick to capitalize on the Indian air travel market, increasing their seats from around 35,000 to 90,000 per day over the past four years or so. Airlines of many countries were fully utilizing their entitlements prior to the economic downturn. Comparatively, on the Indian side, Air India and Indian Airlines could only marginally enhance capacity while Jet Airways deploys only 12,000 seats per day on international routes.
•The revenue earning opportunity was thus skewed heavily in favour of foreign airlines, allowing privileged private Indian operators to fly international routes.
•Air India and Indian Airlines’ international market has also been opened up to competition from certain favoured Indian private airlines. A propaganda campaign was started during Mr Patel’s tenure that Al and IA were not fully utilizing the bilateral entitlements available to the Indian side, and hence private airlines such as Jet Airways should be allowed to operate international services.
•What was conveniently glossed over was the fact that Al and IA were operating services to places where demand existed, such as Dubai, Sharjah, Singapore, London, US, Canada, and so on. The only real constraint that AI and IA faced was lack of aircraft capacity to be able to ramp up services to important markets. However, instead of clearing Al and IA’s long-pending aircraft purchase plans, the ground was allegedly laid to allow Jet Airways to commence international operations. On its part, Jet Airways commenced operations on commercially viable routes – to only those established destinations which were already linked by AI and IA!
Permission to private airlines to operate internationally was structured to favour Jet Airways.
•The permission to Indian private airlines to operate international operations was also structured in such a manner that it favoured Jet Airways. Criteria were decided such that, apart from Jet Airways, only Air Sahara (which Jet Airways eventually acquired) qualified to operate international services, keeping the other domestic airlines at bay for a period of 3-4 years. Also, the move to allow Jet Airways to operate international services was further supported by the Ministry of Civil Aviation, by granting capacity entitlements to operate flights to London. The processes were put in place in a great hurry to enable Jet Airways to commence operations to London just a few days prior to their IPO which made Jet Airways owner Naresh Goyal a richer man than he already was.
•The complicity was so blatant that Jet Airways applied for slots in Singapore and London within the first month of Mr Patel’s tenure at Rajiv Gandhi Bhavan (a fact reported in newspapers in June 2004) – a full six months prior to the Government of India announcing the change in policy, permitting private airlines to fly on international routes, in December 2004.
•This policy change ostensibly emanated from the Naresh Chandra Committee report. Strangely, this is probably the single instance when the Ministry of Civil Aviation tabled and the GOI adopted just one single recommendation out of an entire policy document. Interestingly, the draft Civil Aviation Policy which was framed in 2004 is yet to see the light of day.
•It is also alleged by the All India Airlines Retired Personnel Association (AIARPA) that start-up airlines such as Air Arabia of Sharjah have in fact gained significant market access with Mr Patel’s support, simply because they appointed his long-time friend and hatchet man, Deepak Talwar, as their GSA in India.
3. Establishing more private operators in the domestic market
•Mr Patel actively encouraged private players to set up shop in India, ostensibly to unleash the potential of the Indian market. Starting with Air Deccan, we have had a number of socalled low-cost carriers operating in the Indian domestic market at yields that are unsound, leading to a sick Indian airlines industry. As a result, the domestic market share and revenues of Indian Airlines and Air India from domestic operations have shrunk, adding to the woes of the airline.
•Simultaneously, demands were placed on Air India and Indian Airlines that necessitated their curtailing operations on many routes – favouring the private carriers. For instance, Air India was made to withdraw its flights to Los Angeles as well as the Mumbai-Doha, Delhi-Dhaka via Kolkata, Hyderabad-Singapore and Delhi-Hong Kong services. Its domestic operations from Kolkata to Jaipur and Ahmedabad, Chennai and Kolkata to Bhubaneswar, and Kolkata- Hyderabad also had to be withdrawn. The withdrawal and delay of operations by Air India was subtly enforced just before Jet Airways commenced operations to some of the international destinations. For instance, Air India suddenly postponed operations from Amritsar to Toronto in August 2006 to facilitate the launch of the Jet Airways flight on the same sector. Can Mr Patel inform the nation why it was done? What was the necessity?
4. Fallacious premise of the merger
The selection of Accenture was cloaked in secrecy in the Ministry. Stakeholders from Air India and Indian Airlines were neither involved in the selection process nor in the deliberations of Accenture during the build-up to the merger.
Accenture is guilty of simply pushing the Minister’s agenda for merger as he needed to show the world that he was doing something for the national carriers also, after having craftily robbed them to benefit other airlines, especially Jet Airways. The merger enabled him to make the spurious claim that he had strengthened Air India by merging it with Indian Airlines to enable them to take on the competition. As per the allegation of AIARPA, Accenture had identified a number of “imperatives of merger”. The details show how Mr Patel systematically destroyed the national carrier.
The Justification: An integrated international/domestic footprint, significantly enhancing attractiveness to customers and allowing easy entry into one of the three global airline alliances.
Increase in traffic entitlements benefited foreign airlines, and they were quick to capitalize on the Indian market.
The Facts: It is not understood as to how a merger of two airlines that were already making losses could be based on specious arguments such as these. Attractiveness to passengers comes not just from an airlines’ reach or size, operational issues such as image/perception, track record, service levels, etc. form a major part. The fact that Air India has been suffering from an extremely poor image and is virtually passengers’ last choice, especially on international routes, was conveniently overlooked. Also, entry into global airline alliance cannot be an objective for any airline, as has been claimed by Accenture to justify the merger.
The Justification: Parking bays and landing slots in an “infrastructure constrained” environment.
The Facts: It is again not understood as to how the merger would increase availability of parking bays and landing slots for the merged airline, unless it was envisaged that there would be shrinkage of operations in the merged entity, thus releasing bays and slots which would naturally then be available to Air India’s competitors.
The Justification: Potentially enable merged airline to command better valuation.
The Facts: Valuation of an airline is defined primarily by its route rights, its future revenue earning potential, its current ownership, labour policies & IR/HR status. In Air India’s case, the international route rights are no longer the preserve of Air India, having been opened up to other private airlines.
Given the fact that the minister had systematically pawned AI and IA’s silver and thrown Air India and Indian Airlines together in a cauldron of chaos, it is hard to understand how the merged entity would manage a better valuation.
5. Destroying the Indian Airlines brand to allow private airlines to dominate the domestic market
Indian Airlines was always a strong brand with many positive attributes. Year after year, Indian Airlines was the only airline brand to be included in the top 25 brands in the Economic Times’ annual Brand Equity Most Trusted Brand survey, regarded as one of the most reliable indicators of a brand’s standing and equity in India. In 2003, 2004, 2005, Indian Airlines was first the unexpected dark horse to win and then the expected trusted brand. Strangely, in 2007, when the Indian Airlines brand ceased to officially exist, it still found mention in the survey.
Yet the Minister chose to re-brand Indian Airlines as Indian with a nameless logo, despite the fact that the merger was already around the corner. Indian Airlines was forced to spend a fortune on the re-branding, a cost which was reincurred when the airline merged with Air India. Can Mr Patel tell the nation how much public money was spent on redesigning his fantasy?
Indian Airlines’ identity was systematically obliterated to give Jet Airways a clear run in the domestic market. The merger forced Indian Airlines to market itself as Air India in the domestic and Gulf markets where the Indian Airlines name commanded a premium. Instead, a new entity – Air India Express – was forced in. It had neither Air India’s international reputation nor Indian Airlines’ trustworthiness but was a characterless, unreliable airline with no back-up support, headed by a retired General Manager.
The decision to merge Air India and Indian Airlines was taken knowing full well that mergers take at least three-four years to settle and that the entities become vulnerable in the marketplace during this time. The timing was significant since Jet Airways was taking off in a big way on the international routes and Kingfisher Airline needed to establish itself first in the domestic and then the international arena. This act of the Minister shows that he systematically opened up Indian Airlines and Air India markets to unfair competition. At the same time, Mr Patel ensured that the two airlines placed orders for aircraft that they could not service. In order to cover up the fact that he had stripped the national carriers of their markets and had saddled them with massive losses, Mr Patel conjured up the merger of Air India and Indian Airlines. The merger of the two airlines, each with a distinct ethos and work culture, became the Minister’s panacea for all ills that plagued them and was undertaken ostensibly to strengthen them despite knowing well that the merger would be chaotic for the initial couple of years at least.
6. The ingenious sale and lease back of fully depreciated aircraft of Air India and Indian Airlines
Air India has entered into sale and lease back of eight A320, three B747 and four A310 aircraft during 2007-2008. The sale and lease back transaction essentially involves sale of an aircraft to a lessor or foreign financial institution in consideration for an upfront amount to shore up revenues with an attendant agreement to lease back on dry lease basis for a specific period, at a fixed monthly lease rental (or EMI in simpler terms). At the end of the lease term (about 70 months in Air India’s case), the aircraft is returned to the lessor in a condition agreed upon. During the lease period, the airline continues to operate the aircraft and incurs all operating expenses. In addition, even after the aircraft purchase order was placed, a case was made out for Air India to lease capacity to meet its requirements till the new aircraft were delivered. Accordingly, AI leased eight B777s at very high rates without even having pilots to fly them. As a result, five leased B777s stayed grounded for months together. The number of non operational B777s would have been higher but for the fact that A310 pilots were pulled out for training to fly the B777. However, as a result of this move, three leased A310 aircraft also had to be grounded. Why was this decision taken? Can Mr Patel reveal how much of taxpayers’ money was paid to lease these aircraft?
Including insurance and mandatory modifications as if the aircraft is on dry lease, the lease rental effectively covers the repayment of capital (upfront amount paid to the airline) and the cost of capital. The resale value is realized by the lessor. The sale and lease back effectively means asset stripping to finance revenue expenditure – a back-door sale. The airline commits to pay lease rental and maintain the aircraft in an agreed manner, without any claim to the residual value of the aircraft. There is usually an unspecified – no capping, openended liability to return the aircraft to the lessor in the agreed condition on expiry of the lease term. Airlines usually need to incur significant expenses on this account so that return conditions are met. If operating margins to meet the lease rental and residual values are not realized from operations of such aircraft, the transaction is financially unattractive to the airline.
Air India’s original fleet plan for 24 aircraft was suddenly enhanced to 68 aircraft within a period of 24 weeks.
Can the Minister answer the following questions?
•Why was this methodology adopted when, clearly, these options were never exercised earlier due to the reasons explained above?
•Why was AI’s sale and lease back transacted when the airline was experiencing low fleet utilization, low load factors, cash losses on 70% of services and especially when brand new aircraft were arriving at the rate of one or two every month?
•Why did AI sell and lease back 20-year-old fully depreciated aircraft, with an out-of-production engine, instead of removing these high operating-cost aircraft from its fleet?
•Was any study conducted to see whether these aircraft were at all needed?
•Why was the entire process hurried through to meet a March 31, 2007 deadline?
•Is it a mere coincidence that the “investee” who was in regular contact with Air India bagged the deal, through a competitive e-auction at a rate known/discussed with Air India‘s finance department?
•Can the then CMD be asked to explain why there was no mention of the sale and lease back proposal in the briefing to the Board of Directors on the need and process to raise additional funding?
7. Creation of Air India Express – the biggest hoax in Indian aviation history
Mr Patel ensured that Air India set up a low-cost carrier to operate on the lucrative India-Gulf and India-Southeast Asia routes – routes that were well served by both Indian Airlines and Air India and were reportedly the most profitable ones for at least IA. Both Air India and Indian Airlines became losers: Air India because of ceding routes to Air India Express, with lesser revenues being earned as Air India Express operates on the low fare principle; while Indian Airlines lost overall revenues as it had to reduce fares to match Air India Express fares and other LCCs (Low Cost Carriers) such as Air Arabia that entered these markets. Air India Express was launched amid consternation in both camps – erstwhile AI managers in the Gulf feared a dip in their yields and a lowering of overall revenue, while erstwhile IA managers in the Gulf feared competition from another narrow-body fleet running on similar principles, owned by a common owner.
The Minister has to answer and also get the then Chairman to reveal the true story of Air India Express, which was touted as the success story of the new Air India – lowest fares, highest load factors, high seat factors, reliable operations and profits every year.
The Minister must answer serious questions for the public:
•What was the logic in launching Air India Express?
•Air India Express was launched as a Low Cost Carrier on the standard LCC premises – only internet bookings, no meals, no agents and therefore no commissions. Yet it offers meals and even in-flight dutyfree, and sells through agents as well as consolidators very openly. It has a tie-up with the Minister’s friend, Mr Deepak Talwar. Who gave him the contract without tenders and proper bidding?
•How did Air India Express decide to lease the B737-800 without competitive bidding?
•Is it again a mere coincidence that Air India Express later decided to purchase 18 B737-800 aircraft? How was this figure arrived at?
•Why is it that Air India Express operates – in most cases –flights at around the same timings as Air India on the same routes, at significantly lower fares? Isn’t Air India Express competing with its parent company?
•Even two years after merger, why are the schedules of Air India Express and Air India not aligned?
•Is there a transparent transfer pricing mechanism between Air India and Air India Express that has been followed consistently?
•Have the books been manipulated to show profits for Air India Express?
•Has Air India Express ever achieved its projected aircraft utilization?
•Does Air India Express have a system of compiling figures for on-time performance, passenger carriage, revenues, etc?
•How has Air India Express been allowed to take passengers booked as passengers travelled? Or is it booking fictitious revenues? If so, why? Just to keep the leased aircraft going?
•How is it that there is only one person who is capable of being the COO of Air India Express and he gets an extension beyond retirement age when there is no dearth of able officers in Air India to take on the job? Is it a reward for past favours?
•Air India Express has, however, served one key purpose – it enabled the lease of a number of B737-800 aircraft and also the expansion of Air India’s aircraft purchase plan to include 18 B737-800 aircraft for Air India Express. Air India Express also chose to induct B737-800 aircraft from Day 1 without following the normal aircraft selection process.
8. Robbing AI and IA of their existing revenue streams from ground handling of other airlines and also from their then existing commercial agreements
The Ministry forced AI to spin off ground handling activities into a joint venture with SATS, further forcing the airline to transfer all ground handling (for other airlines as well as own flights) to the JV. Pre-merger, and prior to the creation of HIAL and BIAL, AI was earning Rs 600 crore and IA was earning Rs 380 crore annually from ground handling. Not only have AI and IA lost this amount, AI is now expected to pay the JV company for handling of its own flights. The future of employees transferred to the joint venture is uncertain. Apart from robbing AI and IA of their ground handling revenue, the Minister has also ensured that the merged airline loses the revenues it earned from commercial agreements with foreign airlines. These agreements were instituted by earlier governments to ensure that AI and IA derived some benefits from one-sided grant of entitlements and operations by foreign airlines. The institution of such agreements in bilateral agreements with other countries also recognized that AI has not been able to add new aircraft for many years owing to delay in obtaining requisite approvals from the government. Along with the opening up of the Indian international market to private Indian airlines, the Ministry took a decision to phase out all such commercial agreements within 3-4 years.
9. What has been outlined above can be documented in detail
There is ample reason to deduce that Mr Patel has spearheaded nothing short of a carefully calibrated conspiracy to deprive the nation of a national asset in order to siphon off a portion of the national wealth to co-conspirators through strong-arm tactics, deceit, diktat and devious legerdemain for which the taxpayers have had to pay a heavy price.
Saturday, July 31, 2010
Tuesday, June 8, 2010
THE DAY OF THE FIXER...IT’S THE SHELF LIFE, STUPID!
THE fixer has become a fixture in the shadowy world of Indian governance. Even though this unique position finds no mention in the official lexicography of India’s polity, it has come to occupy an institutionalized status in the affairs of state. The individual occupants, however, have a shelf life. While they are needed, they are larger than life, more powerful than politicians, more omniscient than bureaucrats. Through channels unknown to Ministers, by the gift of the gab, through the knowledge of murky financial and personal secrets, through pretensions to guru-dom, through cajolery, blackmail and charm, they move mountains that Prime Ministers, Finance Ministers, Chief Ministers once thought unfeasible to budge.
Ultimately, however, these conjurers of the art of the impossible live out their life cycles. Some fade away without a whimper. Others, unaware of the ephemeral nature of their proxy-power, try to play for keeps by securing party positions or nominations to Parliament or starting successful businesses. Yet, no matter what garb they don later, they cannot metamorphose. They are like Cain, marked. They are never accepted into the true brotherhood – or oligarchy, if you will – of the very politicians, bureaucrats, and industrialists for whom they performed miracles. Despite his dynamism, brilliance in wile, network of friends, ability to throw upmarket soirées, bevy of glamorous women, when the time of the fixer is up, it is up. Ultimately, he is no more than a facilitator with neither dynastic nor grassroots mooring. He is a dealmaker. And when there are no more deals, or when he sees himself as kingmaker – or (heaven forbid!) king himself – he is dispensable. Like a wad of sullied tissue paper.
With the story of erstwhile Samajwadi Party supremo Amar Singh still fresh in the mind, Inderjit Badhwar and Anil Tyagi look at the phenomenon of facilitators and their impact on Indian governance.
Amar Singh... the historical cog
IN the saga of facilitators, the career of Rajya Sabha MP and industrialist Amar Singh is not as unique as it is made out to be. Despite the fact that he played a massively powerful role – using all the political, persuasive, PR skills at his command – in helping push through the Indo-US nuclear deal for the ruling party, his rise and eclipse as a fixer have followed predictable patterns. Had he had the sense of humour to view himself as no more than one more historical cog in the endlessly turning wheel of India’s murky politics, he would probably have been able to avoid the hubris from which emanates, now, so much sorrow over betrayals by Uttar Pradesh Chief Minister Mulayam Singh Yadav, Jaya Bachchan and, not least, Sonia Gandhi and Prime Minister Manmohan Singh whose government he saved from collapse after the Left pulled the plug.
Amar Singh’s speciality lay in combining politics with a glamour quotient. He picked this up from Subrata Roy. He learned about the importance of the facilitator while working unofficially as a liaison man for KK Birla and Shobhana Bhartiya.
Amar Singh’s persona, however, was special – a cut high above the wheelers and dealers who have preceded him on the stage of power. He was, and is, a great listener, feisty, never servile or pusillanimous. He learned about the importance of the facilitator while working unofficially as a liaison man for KK Birla, Shobhana Bhartiya, and her husband, Shyam: He learned that even KK, whose family had virtually bankrolled the Congress party from its inception, and his media-savvy and socially active daughter, Shobhana, could do very little themselves to move the bureaucracy or Ministries, whether in matters of newsprint purchase, industrial licensing changes, or achieving price decontrol for molasses in Gajraula (Uttar Pradesh) factories run by KK’s son-in-law, the dashing, Errol Flynn-moustachioed Shyam, or helping Shobhana get rid of white elephant Home TV (ultimately purchased by Amar Singh confidant Subrata Roy of Sahara). They all needed middle men with extraordinary powers of persuasion at every level of government.
It was from late hotelier Lalit Suri, a friend of Sanjay and Rajiv Gandhi, and a recipient of land for Bharat Hotels as a real estate boondoggle from the Congress party, and a monopoly outlet for Maruti cars, that Amar Singh picked up the finer part of durbar politics, and the art of raising and distributing party finances fairly without annoying the top. As he became “dispensable” to the Birla clan with liberalization picking up, he veered closer to the Thakur brigade that ran Mandal politics, including Amethi Raja Sanjay Singh and Mulayam Singh who picked up the reins of UP’s Yadav politics after Congressman Vir Bahadur Singh’s untimely demise.
Amar Singh’s speciality lay in combining politics with a glamour quotient. Some say he picked this up from Subrata Roy, the one-time flamboyant and now somewhat reclusive “Sahara Shree” of the Sahara group whose entire business USP was a combination of low-to-mid-income non-banking financial “bhaiyya” depositors from eastern UP and Bihar along with the glamour of the Bachhans, Sushmita Sen, Raj Babbar, Kavita Krishnamurthy, Kapil Dev, Ajay Jadeja, Subhash Ghai, Aishwarya Rai and Swapna Bannerjee. Others claim that Amar Singh was a fanatical Bollywood buff and star autograph-hunter from childhood. He could rattle off film dialogue after having seen the movie just once. It was Amar Singh, his friends say, who came to Amitabh Bachchan’s aid, with no strings attached, when the Big B’s ABCL Ltd was in trouble and the superstar was in debt. They claim that Amar Singh was Subrata Roy’s Bollywood connection, and not the other way around.
Similarly, there’s debate about who brought the Ambanis into the Mulayam Singh camp. Subrata Roy’s friends say that “Sahara Shree” was greatly admired by the late Dhirubhai Ambani who often sought his advice on how to maintain company discipline as well as on investment matters. Anyway, the story is that UP needed investment and a good image, Mulayam loved Amar Singh, Amar Singh loved Amitabh, Dhirubhai (and later Anil Ambani who set up a power project in Dadri on the Delhi-UP border), Subrata Roy, and Aishwarya Rai like a daughter and Abhishek Bachchan like a son. And they all came together as one big happy family.
Until, one day, Amar Singh found himself dispensed with. Political analysts like Vir Sanghvi are guessing that Amar Singh will be back in the Samajwadi Party, larger than life. Gourmet Sanghvi forgets that once you suck the pulp off the mango seed, you don’t put the seed back in your mouth. You spit it out. To change the metaphor, it’s the shelf life, stupid!
Kapoor and Dhawan... the dancing needles
THE facilitator emerges, struts about the stage and then, poof! He vanishes like Cinderella’s fairy godmother’s pumpkin carriage. In post-Independence Indian politics the culture of the top wheeler-dealer took root in Prime Minister Indira Gandhi’s time. She needed personally loyal fixers to ward off and survive the onslaughts of the Congress Old Guard led by stalwarts like Morarji Desai and Jagjivan Ram. Enter Yashpal Kapoor. This PA-like character understood the symbolic emanation of power. He kept Chief Ministers as also senior bureaucrats waiting outside his house for hours for a five-minute audience. For 16 uninterrupted years Kapoor managed the affairs of the PMO, along with RK Dhawan. Dhawan, with his boyish Punjabi looks and Karol Bagh accent, a determined moustache, and a shock of black hair that fell over his forehead, was the political secretary and chief of staff. They enjoyed the untrammelled confidence of Mrs Gandhi because they never exceeded their brief and knew how to kowtow to Sanjay Gandhi’s extra-constitutional authority.
Dhawan had a boyish Punjabi look and Karol Bagh accent,a shock of black hair fell over his forehead. He enjoyed the untrammelled confidence of Mrs Gandhi because he never exceeded his brief and knew how to kow-tow to Sanjay.
Dhawan’s influence, however, never carried into the Rajiv Gandhi years. He was like a beached whale and later faced opprobrium when the Thakkar Commission of Inquiry into Indira Gandhi’s assassination pointed the “needle of suspicion” at Dhawan for allegedly changing the guard’s duties on the day she was shot. The last image of Dhawan that people remember was that of a bald aging man – tonsured in a religious ceremony – walking out of Tirupati.
While the Kapoor-Dhawan duo managed Mrs Gandhi’s appointments and guarded her political manoeuvres from sabotage, a facilitator from Bihar, Lalit Narain Mishra, emerged. Few people know that Mishra discovered the talent of Dr Manmohan Singh. The latter was first appointed by Mishra as an adviser to the Ministry of Foreign Trade. Mishra became so powerful that, with Yashpal Kapoor’s help, he dethroned Haryana Chief Minister Bhagwat Dayal Sharma and managed to get Bansi Lal appointed.
Lal never looked back. He did not need to, backed as he was by one of Mrs Gandhi’s most powerful secret fund raisers with influence in industrial houses and dominant bureaucratic circles. According to Mitrokhin Archive, money was paid by the KGB to the Congress party through conduits like Railway Minister Lalit Narain Mishra, who was also said to have accepted large bribes from the KGB. He died mysteriously in a bomb blast at Samastipur, Bihar, in 1975.
Brahmachari... the yogi as commissar
POLITICIANS and babus were not the only ones who qualified during this great era of fixers. Yogis also had their say. The most formidable among them was Dhirendra Brahmachari who was born in a village, Dhanushi Chanpura, in Madhubani, Bihar. Brahmachari left home at the age of 13 to study at Varanasi before parachuting into Delhi’s power corridors and becoming a top acolyte of Mrs Gandhi.
A row of imported cars was regularly parked at Brahmachari’s ashram in Friends Colony. His lust for power, pelf and women was unparalleled. He seduced his contacts with his resounding voice, persona and the mystique of his brand of yoga.
He died in 1994 when his private plane crashed, an event still shrouded in mystery. Those who have witnessed that era can recall how a long row of imported cars was regularly parked at his ashram in Delhi’s Friends Colony. His lust for power, pelf and women was unparalleled. He seduced most of his contacts with his resounding voice, persona and the mystique surrounding his brand of yoga. He enjoyed privileged entry at Mrs Gandhi’s residence. He amassed unaccounted wealth and set up a gun manufacturing factory and five-star yoga centres in Mantalai (J&K). But he never aspired to be a politician.
Capt Sharma... piloting more than one ship
DURING the Rajiv Gandhi years the long arm of liaison reached all the way to New York. This was way before NRIs became politically “in” and PIO and OCI cards were given out in recognition of the Indian diaspora’s collective political clout on behalf of the mother country. Certain trusted loyalists were assigned fund-raising tasks for the Congress party as well as looking after its leaders’ interests in foreign deals. One such operator was Kamal Dandona. This New York-based entrepreneur was known for his generosity, his ready raucous laughter, strings of gold chains around his neck, gaudy Hawaiian shirts unbuttoned to display a hairy chest, and solid gold rings on both hands. Dandona was considered the Man Friday of the Hinduja brothers who were trying to make inroads into Rajiv Gandhi’s coterie.
Operators like Dandona were obsessively secretive about their meetings with Rajiv Gandhi, admitting at most to having had his “blessing” to start a wing of the Congress party in the US. Until the Bofors scandal surfaced, Dandona visited Delhi almost evey other month.Perfunctorily, at least, he was constantly in touch with Rajiv’s long-standing PAs, Vincent George and Madhavan. Actually, he reported directly to Capt Satish Sharma, Rajiv’s former airline pilot buddy (now MP) who managed Rajiv’s constituency and acted as personal secretary and confidant. Sharma was also trusted by Rajiv to disburse party funds to favoured candidates and his Dutch wife, Sterre, was an artist who was a personal friend of Sonia Gandhi. Actually, Dandona had a dual reporting assignment – the other one to Lalit Suri (with whom Sharma had a love-hate relationship), the charming, generous-to-a-fault, genial hotelier who managed and financed the entire transportation logistics for the Congress party during elections. Even though the mostly affable Suri had a bad temper after drinking, he was best known for not having made political enemies and his largesse often stretched to other parties, including the BJP. Indeed, he was a great source of political intelligence for Rajiv. He was easy to talk to, and people from all parties talked to him. Just before VP Singh broke with Rajiv and the Congress party over the HDW submarine and Bofors issues to form the Jan Morcha, Suri was the main person involved in trying to manage a last-minute patch-up. Until his sudden death in a London casino, Suri continued to be courted by Congress bigwigs like Oscar Fernandes, Ghulam Nabi Azad and Ahmed Patel.
Dandona (right) had a dual reporting assignment– one to Lalit Suri (left), the charming, generous-to-a-fault, genial hotelier who managed and financed the entire transportation logistics for the Congress party during elections
Dandona was a big party-giver. His New York bashes included Bollywood superstars, US Senators and Congressmen, visiting Indian politicians and dignitaries, and Hollywood biggies like Sharon Stone and Richard Gere. Whenever Dandona visited Delhi, he came armed with photo albums bearing tesimony to his ascent of New York’s party ladder. These albums impressed Delhi’s politicians and bureaucrats to no small extent.
Another compulsive album-displayer (Lord this ... and Lady that … and Sir this … and His Excellency that …) who made a bid to influence Delhi’s power circles because of his proximity to Capt Sharma and, to an extent, Lalit Suri, was the burly, overweight Panjab University-educated London based Rajpal Choudhury (“Chow”). Whenever he travelled in Manhattan, he used a black stretched Cadillac or Lincoln limousine equipped with a stereo and bar. He once published a magazine called Delhi Recorder. Though this was never confirmed, sources in the government say many of Choudhury’s overseas activities were financed by funds from India’s Cabinet Secretariat and that his information was passed on directly or indirectly to Rajiv Gandhi’s coterie.
Pinaki and the Swami... Rasputin and the law
ANY twist or change in India’s domestic political equations usually brings to the fore a bevy of fixers. Always one to be counted on is the ubiquitous lawyer, Pinaki Misra. His high point in palace politics was when PV Narasimha Rao became PM. But, with the ease of a chameleon, he switched loyalties between individuals, parties and leaders. He is a low-profile facilitator who knows how to move to the right place at the right time. He was elected to the 11th Lok Sabha during Narasimha Rao’s tenure on a Congress ticket from Orissa with the help of JB Patnaik. Now a Member of the 15th Lok Sabha, he is a confidant of Orissa CM Navin Patnaik. He is reportedly Patnaik’s Man Friday in Delhi. Misra learnt the art of hobnobbing with politicians and bureaucrats from his one-time ring master, the infamous Nemi Chand Jain alias Chandra Swami. The latter, who has been in and out of jail, is considered one of the shrewdest and most malign influences in modern India’s hall of influence peddling infamy. Born in Rajasthan, this veritable Rasputin rose to power during Janata Party rule. He travelled in private planes with Biju Patnaik, Devi Lal and Karpoori Thakur, and hobnobbed with Prime Minister Chandra Shekhar. He has holidayed and partied with international arms dealer Adnan Khashoggi, the Sultan of Brunei, former Foreign Secretary Romesh Bhandari and Washington socialite Steve Martindale, swinging international deals back and forth.
Misra (left) represented Chandra Swami (right), who has been in and out of jail and is considered one of the shrewdest and most malign influences in modern India’s hall of influence-peddling infamy.
He hit it big when Narasimha Rao became PM, having uninterrupted access to the PM’s house. Cabinet Ministers and top bureaucrats lined up at his Safdarjung Development Area residence to curry favour. He, too, had a shelf life.
The Q... catch as catch can
FACILITATORS share one quality: the insight – or foresight – to spot the political geniuses of the country. Jayant Malhotra and his wife, Badola, a business couple from Mumbai, set their sights on Dalit leader Kanshi Ram and his protégé, Mayawati. Initially, this shrewd couple had backed Ramakrishna Hegde, former Karnataka CM, and former Prime Minister Chandra Shekhar as separate horses. They later shifted their sights to UP where they not only, to begin with, funded the BSP, but later also gifted a sea-facing flat in Mumbai to the party chief. So it was natural that, during Mayawati’s first stint as CM, Jayant Malhotra enjoyed tremendous power and the fruits that went with it.
The Rajiv Gandhi era saw another prodigious international power-player descend on Delhi: an Italian named Ottavio Quattrocchi. As word of mouth had it, shivers would run down the spines of Ministers when Quattrocchi was on the line. They danced to his tunes. Quattrocchi wielded such influence with the PMO that most bureaucrats would stand up behind their desks when he visited them. It is also alleged that he could get Ministers and bureaucrats sacked if they ever dared challenge his authority.
This Italian businessman, representing Snamprogetti, eventually became one of the causes of the beginning of the sudden downfall of the Rajiv Gandhi government. He is rumoured to have won as many as 60 projects worth Rs 300 billion across Asian countries for Snamprogetti. It was also alleged in a case that he was the main conduit for the payment of bribes to secure the contract for the sale of Bofors field guns to India. With the twists and turns, Quattrocchi is either vindicated or damned to nobody’s real satisfaction.
The Roulette... hit some, miss some
WITHIN this universe of come-and-go fixers is an enduring class of facilitators – like a permanent civil service available across the board. They manoeuvre in all political seasons though they may not have any particular constituency or any particular political party leader as their target. They are the likes of KC Tyagi, Sompal Singh, Virendra Dixit, Santosh Bharatiya and DP Tripathi. They surfaced suddenly during the Janata Party days. All became MPs at one time or another. Of them, Sompal was lucky to hit the jackpot and was inducted as a Minister in the Vajpayee government, besides being made a member of the Planning Commission. These facilitators have also been close to Mulayam Singh Yadav, VP Singh, LK Advani and Sharad Pawar. All of them can be seen flocking to the Constitution Club to attend some meeting or another.
Shivers would run down the spines of Ministers when Quattrocchi was on the line. It was rumoured he wielded such influence that he could get Ministers and bureaucrats sacked if they ever dared challenge his authority.
When Atal Behari Vajpayee, the cleanest of all the Mr Cleans, became PM, the people heaved a sigh of relief. At last, a PMO sans fixers. They could not have been more wrong. A new tribe, just as powerful, emerged: Pramod Mahajan, Ranjan Bhattacharya, Dinanath Misra, and Balbir Punj were already on the podium to welcome the palm greasers. Mahajan, Misra and Punj all reportedly operated through Bhattacharya or Brajesh Mishra.
Misra and Punj were even able to acquire Rajya Sabha seats. The clout they enjoyed with the PMO and Advani from 1996 to 2004 was without parallel. A veteran like Dattopant Thengadi, a renowned labour leader and an RSS protégé, was compelled to complain to Vajpayee about the growing clout and baneful influence of these facilitators.
Another curious character, Sudheendra Kulkarni, came out of the blue and quickly took root in the Vajpayee and Advani camps. Kulkarni’s rise was nothing short of meteoric. It was unusual for a BTech graduate from IIT Bombay in 1980 to become a journalist. Even more unusual was his association with two publications owned by Russy Karanjia – the Daily and Blitz – that were radically chic in outlook. In the early 1990s, Advani visited Mumbai. At a press conference, he said he had no problems with intellectual disagreement, it was only misrepresentation of his views by the media that upset him. “I have, for instance, read Sudheendraji’s article today. It is not favourable to us, but I liked what he wrote. It was provocative,” Advani said. For Kulkarni, his journalistic odyssey had just commenced. He moved on, joining the Reliance-owned Observer of Business and Politics as an executive. He also worked with the Hindujas before being picked up by the powers-that-be in Delhi.
The diminutive pudgy-faced MP, Rajiv Shukla, known better for his sycophancy before Congress operatives, and being an informant for ML Fotedar, than for any story he ever wrote, is back from the wilderness as a player in the Rahul Gandhi camp.
HE was made Director (Communications and Research) in the PMO. Because Vajpayee was strict about not allowing bureaucrats to attend party meetings, Kulkarni found himself uniquely placed to represent the party’s views in the PMO and take the PMO’s views to the party. When a fixer becomes a political guide, only disaster can follow. His lack of managerial capabilities was prominently on display during the elections in which the BJP suffered ignominy. His steadfast loyalty to the BJP’s Lohu Purush – his mentor, Advani – turned quickly to disenchantment after the electoral debacle. Eventually, his career came full circle to square one. He is currently with Reliance Industries.
Another star-spotter, in the mould of the Malhotras, is Prem Chand Gupta, a former Minister for Corporate Governance at the Centre, the conscience-keeper and, reportedly, the purse-keeper of Lalu Prasad Yadav. This well-known figure among the colourful ranks of facilitators reached his fixing heights by brokering a de-merger settlement between the feuding Ambani brothers. A small-time watch manufacturer at Singapore, his eagle eye spotted Lalu, the rising star on the political horizon, and he lost little time in establishing himself in the good books of the Bihari politician. Though Gupta belongs to Jind district in Haryana, he is a Rajya Sabha member, thanks to his boss, from Bihar for the last three terms. Even if better fortune may have shunned Lalu for the moment, Gupta’s loyalty to him remains impervious.
An interesting story doing the rounds in RSS circles concerns the amazing rise of Nishikant Dubey, a confidant of Rajnath Singh, ex-chief of the BJP, and of RSS acolyte Gurumurthy. Dubey was elected to the Lok Sabha from Godda constituency of Jharkhand on a BJP ticket. The man who arrived in Delhi wearing tattered slippers and lived in a barsati in South Avenue Apartments, climbed the ladder quickly to become a successful facilitator. He took little time in gaining the confidence and backing of one of India’s biggest business houses. His declared worth is to the tune of Rs 11 crore. He is reportedly not only a part-time Director in ESSAR but also wields enormous power in Jharkhand to protect the interest of his mentors.
Under Nehru, none dared even breathe the tainted terms “dealmakers”, “facilitators” and “fixers”. The leadership was simple, honest and hardworking. Bureaucrats were a conscientious species. Nehru trusted his Chief Ministers and always remained in direct touch with them.
Most facilitators nurture no real commitment to any individual, party, ideology or even to the interests of the nation. Money is their be-all and end-all. They are survivors, come what may. Former Cabinet Secretary BG Deshmukh once told gfiles that Delhi was a town of “200 influential people”, visibly pained while recounting the menacing influence of these facilitators on the bureaucracy of India.
Amar Singh once told a woman buddy from Bollywood: “When a leader is at the peak of power, exploit him to the hilt.” More of his ilk will wax and wane, but the genes and character of the facilitator seem destined to live on in time, in one shape or another.
PS: One such mutation is erstwhile wheeler-dealer and former Ravivar journalist, the diminutive pudgy-faced MP, Rajiv Shukla, known better for his sycophancy before Congress operatives, and being an informant for ML Fotedar, and Gen Next leaders like the late Madhavrao Scindia, than for any story he ever wrote. An outsider for a while, he is back from the wilderness, not only as BCCI Vice--President despite the fact that he does not know a googly from a chinaman but, more important, as a player in the Rahul Gandhi camp.
Ultimately, however, these conjurers of the art of the impossible live out their life cycles. Some fade away without a whimper. Others, unaware of the ephemeral nature of their proxy-power, try to play for keeps by securing party positions or nominations to Parliament or starting successful businesses. Yet, no matter what garb they don later, they cannot metamorphose. They are like Cain, marked. They are never accepted into the true brotherhood – or oligarchy, if you will – of the very politicians, bureaucrats, and industrialists for whom they performed miracles. Despite his dynamism, brilliance in wile, network of friends, ability to throw upmarket soirées, bevy of glamorous women, when the time of the fixer is up, it is up. Ultimately, he is no more than a facilitator with neither dynastic nor grassroots mooring. He is a dealmaker. And when there are no more deals, or when he sees himself as kingmaker – or (heaven forbid!) king himself – he is dispensable. Like a wad of sullied tissue paper.
With the story of erstwhile Samajwadi Party supremo Amar Singh still fresh in the mind, Inderjit Badhwar and Anil Tyagi look at the phenomenon of facilitators and their impact on Indian governance.
Amar Singh... the historical cog
IN the saga of facilitators, the career of Rajya Sabha MP and industrialist Amar Singh is not as unique as it is made out to be. Despite the fact that he played a massively powerful role – using all the political, persuasive, PR skills at his command – in helping push through the Indo-US nuclear deal for the ruling party, his rise and eclipse as a fixer have followed predictable patterns. Had he had the sense of humour to view himself as no more than one more historical cog in the endlessly turning wheel of India’s murky politics, he would probably have been able to avoid the hubris from which emanates, now, so much sorrow over betrayals by Uttar Pradesh Chief Minister Mulayam Singh Yadav, Jaya Bachchan and, not least, Sonia Gandhi and Prime Minister Manmohan Singh whose government he saved from collapse after the Left pulled the plug.
Amar Singh’s speciality lay in combining politics with a glamour quotient. He picked this up from Subrata Roy. He learned about the importance of the facilitator while working unofficially as a liaison man for KK Birla and Shobhana Bhartiya.
Amar Singh’s persona, however, was special – a cut high above the wheelers and dealers who have preceded him on the stage of power. He was, and is, a great listener, feisty, never servile or pusillanimous. He learned about the importance of the facilitator while working unofficially as a liaison man for KK Birla, Shobhana Bhartiya, and her husband, Shyam: He learned that even KK, whose family had virtually bankrolled the Congress party from its inception, and his media-savvy and socially active daughter, Shobhana, could do very little themselves to move the bureaucracy or Ministries, whether in matters of newsprint purchase, industrial licensing changes, or achieving price decontrol for molasses in Gajraula (Uttar Pradesh) factories run by KK’s son-in-law, the dashing, Errol Flynn-moustachioed Shyam, or helping Shobhana get rid of white elephant Home TV (ultimately purchased by Amar Singh confidant Subrata Roy of Sahara). They all needed middle men with extraordinary powers of persuasion at every level of government.
It was from late hotelier Lalit Suri, a friend of Sanjay and Rajiv Gandhi, and a recipient of land for Bharat Hotels as a real estate boondoggle from the Congress party, and a monopoly outlet for Maruti cars, that Amar Singh picked up the finer part of durbar politics, and the art of raising and distributing party finances fairly without annoying the top. As he became “dispensable” to the Birla clan with liberalization picking up, he veered closer to the Thakur brigade that ran Mandal politics, including Amethi Raja Sanjay Singh and Mulayam Singh who picked up the reins of UP’s Yadav politics after Congressman Vir Bahadur Singh’s untimely demise.
Amar Singh’s speciality lay in combining politics with a glamour quotient. Some say he picked this up from Subrata Roy, the one-time flamboyant and now somewhat reclusive “Sahara Shree” of the Sahara group whose entire business USP was a combination of low-to-mid-income non-banking financial “bhaiyya” depositors from eastern UP and Bihar along with the glamour of the Bachhans, Sushmita Sen, Raj Babbar, Kavita Krishnamurthy, Kapil Dev, Ajay Jadeja, Subhash Ghai, Aishwarya Rai and Swapna Bannerjee. Others claim that Amar Singh was a fanatical Bollywood buff and star autograph-hunter from childhood. He could rattle off film dialogue after having seen the movie just once. It was Amar Singh, his friends say, who came to Amitabh Bachchan’s aid, with no strings attached, when the Big B’s ABCL Ltd was in trouble and the superstar was in debt. They claim that Amar Singh was Subrata Roy’s Bollywood connection, and not the other way around.
Similarly, there’s debate about who brought the Ambanis into the Mulayam Singh camp. Subrata Roy’s friends say that “Sahara Shree” was greatly admired by the late Dhirubhai Ambani who often sought his advice on how to maintain company discipline as well as on investment matters. Anyway, the story is that UP needed investment and a good image, Mulayam loved Amar Singh, Amar Singh loved Amitabh, Dhirubhai (and later Anil Ambani who set up a power project in Dadri on the Delhi-UP border), Subrata Roy, and Aishwarya Rai like a daughter and Abhishek Bachchan like a son. And they all came together as one big happy family.
Until, one day, Amar Singh found himself dispensed with. Political analysts like Vir Sanghvi are guessing that Amar Singh will be back in the Samajwadi Party, larger than life. Gourmet Sanghvi forgets that once you suck the pulp off the mango seed, you don’t put the seed back in your mouth. You spit it out. To change the metaphor, it’s the shelf life, stupid!
Kapoor and Dhawan... the dancing needles
THE facilitator emerges, struts about the stage and then, poof! He vanishes like Cinderella’s fairy godmother’s pumpkin carriage. In post-Independence Indian politics the culture of the top wheeler-dealer took root in Prime Minister Indira Gandhi’s time. She needed personally loyal fixers to ward off and survive the onslaughts of the Congress Old Guard led by stalwarts like Morarji Desai and Jagjivan Ram. Enter Yashpal Kapoor. This PA-like character understood the symbolic emanation of power. He kept Chief Ministers as also senior bureaucrats waiting outside his house for hours for a five-minute audience. For 16 uninterrupted years Kapoor managed the affairs of the PMO, along with RK Dhawan. Dhawan, with his boyish Punjabi looks and Karol Bagh accent, a determined moustache, and a shock of black hair that fell over his forehead, was the political secretary and chief of staff. They enjoyed the untrammelled confidence of Mrs Gandhi because they never exceeded their brief and knew how to kowtow to Sanjay Gandhi’s extra-constitutional authority.
Dhawan had a boyish Punjabi look and Karol Bagh accent,a shock of black hair fell over his forehead. He enjoyed the untrammelled confidence of Mrs Gandhi because he never exceeded his brief and knew how to kow-tow to Sanjay.
Dhawan’s influence, however, never carried into the Rajiv Gandhi years. He was like a beached whale and later faced opprobrium when the Thakkar Commission of Inquiry into Indira Gandhi’s assassination pointed the “needle of suspicion” at Dhawan for allegedly changing the guard’s duties on the day she was shot. The last image of Dhawan that people remember was that of a bald aging man – tonsured in a religious ceremony – walking out of Tirupati.
While the Kapoor-Dhawan duo managed Mrs Gandhi’s appointments and guarded her political manoeuvres from sabotage, a facilitator from Bihar, Lalit Narain Mishra, emerged. Few people know that Mishra discovered the talent of Dr Manmohan Singh. The latter was first appointed by Mishra as an adviser to the Ministry of Foreign Trade. Mishra became so powerful that, with Yashpal Kapoor’s help, he dethroned Haryana Chief Minister Bhagwat Dayal Sharma and managed to get Bansi Lal appointed.
Lal never looked back. He did not need to, backed as he was by one of Mrs Gandhi’s most powerful secret fund raisers with influence in industrial houses and dominant bureaucratic circles. According to Mitrokhin Archive, money was paid by the KGB to the Congress party through conduits like Railway Minister Lalit Narain Mishra, who was also said to have accepted large bribes from the KGB. He died mysteriously in a bomb blast at Samastipur, Bihar, in 1975.
Brahmachari... the yogi as commissar
POLITICIANS and babus were not the only ones who qualified during this great era of fixers. Yogis also had their say. The most formidable among them was Dhirendra Brahmachari who was born in a village, Dhanushi Chanpura, in Madhubani, Bihar. Brahmachari left home at the age of 13 to study at Varanasi before parachuting into Delhi’s power corridors and becoming a top acolyte of Mrs Gandhi.
A row of imported cars was regularly parked at Brahmachari’s ashram in Friends Colony. His lust for power, pelf and women was unparalleled. He seduced his contacts with his resounding voice, persona and the mystique of his brand of yoga.
He died in 1994 when his private plane crashed, an event still shrouded in mystery. Those who have witnessed that era can recall how a long row of imported cars was regularly parked at his ashram in Delhi’s Friends Colony. His lust for power, pelf and women was unparalleled. He seduced most of his contacts with his resounding voice, persona and the mystique surrounding his brand of yoga. He enjoyed privileged entry at Mrs Gandhi’s residence. He amassed unaccounted wealth and set up a gun manufacturing factory and five-star yoga centres in Mantalai (J&K). But he never aspired to be a politician.
Capt Sharma... piloting more than one ship
DURING the Rajiv Gandhi years the long arm of liaison reached all the way to New York. This was way before NRIs became politically “in” and PIO and OCI cards were given out in recognition of the Indian diaspora’s collective political clout on behalf of the mother country. Certain trusted loyalists were assigned fund-raising tasks for the Congress party as well as looking after its leaders’ interests in foreign deals. One such operator was Kamal Dandona. This New York-based entrepreneur was known for his generosity, his ready raucous laughter, strings of gold chains around his neck, gaudy Hawaiian shirts unbuttoned to display a hairy chest, and solid gold rings on both hands. Dandona was considered the Man Friday of the Hinduja brothers who were trying to make inroads into Rajiv Gandhi’s coterie.
Operators like Dandona were obsessively secretive about their meetings with Rajiv Gandhi, admitting at most to having had his “blessing” to start a wing of the Congress party in the US. Until the Bofors scandal surfaced, Dandona visited Delhi almost evey other month.Perfunctorily, at least, he was constantly in touch with Rajiv’s long-standing PAs, Vincent George and Madhavan. Actually, he reported directly to Capt Satish Sharma, Rajiv’s former airline pilot buddy (now MP) who managed Rajiv’s constituency and acted as personal secretary and confidant. Sharma was also trusted by Rajiv to disburse party funds to favoured candidates and his Dutch wife, Sterre, was an artist who was a personal friend of Sonia Gandhi. Actually, Dandona had a dual reporting assignment – the other one to Lalit Suri (with whom Sharma had a love-hate relationship), the charming, generous-to-a-fault, genial hotelier who managed and financed the entire transportation logistics for the Congress party during elections. Even though the mostly affable Suri had a bad temper after drinking, he was best known for not having made political enemies and his largesse often stretched to other parties, including the BJP. Indeed, he was a great source of political intelligence for Rajiv. He was easy to talk to, and people from all parties talked to him. Just before VP Singh broke with Rajiv and the Congress party over the HDW submarine and Bofors issues to form the Jan Morcha, Suri was the main person involved in trying to manage a last-minute patch-up. Until his sudden death in a London casino, Suri continued to be courted by Congress bigwigs like Oscar Fernandes, Ghulam Nabi Azad and Ahmed Patel.
Dandona (right) had a dual reporting assignment– one to Lalit Suri (left), the charming, generous-to-a-fault, genial hotelier who managed and financed the entire transportation logistics for the Congress party during elections
Dandona was a big party-giver. His New York bashes included Bollywood superstars, US Senators and Congressmen, visiting Indian politicians and dignitaries, and Hollywood biggies like Sharon Stone and Richard Gere. Whenever Dandona visited Delhi, he came armed with photo albums bearing tesimony to his ascent of New York’s party ladder. These albums impressed Delhi’s politicians and bureaucrats to no small extent.
Another compulsive album-displayer (Lord this ... and Lady that … and Sir this … and His Excellency that …) who made a bid to influence Delhi’s power circles because of his proximity to Capt Sharma and, to an extent, Lalit Suri, was the burly, overweight Panjab University-educated London based Rajpal Choudhury (“Chow”). Whenever he travelled in Manhattan, he used a black stretched Cadillac or Lincoln limousine equipped with a stereo and bar. He once published a magazine called Delhi Recorder. Though this was never confirmed, sources in the government say many of Choudhury’s overseas activities were financed by funds from India’s Cabinet Secretariat and that his information was passed on directly or indirectly to Rajiv Gandhi’s coterie.
Pinaki and the Swami... Rasputin and the law
ANY twist or change in India’s domestic political equations usually brings to the fore a bevy of fixers. Always one to be counted on is the ubiquitous lawyer, Pinaki Misra. His high point in palace politics was when PV Narasimha Rao became PM. But, with the ease of a chameleon, he switched loyalties between individuals, parties and leaders. He is a low-profile facilitator who knows how to move to the right place at the right time. He was elected to the 11th Lok Sabha during Narasimha Rao’s tenure on a Congress ticket from Orissa with the help of JB Patnaik. Now a Member of the 15th Lok Sabha, he is a confidant of Orissa CM Navin Patnaik. He is reportedly Patnaik’s Man Friday in Delhi. Misra learnt the art of hobnobbing with politicians and bureaucrats from his one-time ring master, the infamous Nemi Chand Jain alias Chandra Swami. The latter, who has been in and out of jail, is considered one of the shrewdest and most malign influences in modern India’s hall of influence peddling infamy. Born in Rajasthan, this veritable Rasputin rose to power during Janata Party rule. He travelled in private planes with Biju Patnaik, Devi Lal and Karpoori Thakur, and hobnobbed with Prime Minister Chandra Shekhar. He has holidayed and partied with international arms dealer Adnan Khashoggi, the Sultan of Brunei, former Foreign Secretary Romesh Bhandari and Washington socialite Steve Martindale, swinging international deals back and forth.
Misra (left) represented Chandra Swami (right), who has been in and out of jail and is considered one of the shrewdest and most malign influences in modern India’s hall of influence-peddling infamy.
He hit it big when Narasimha Rao became PM, having uninterrupted access to the PM’s house. Cabinet Ministers and top bureaucrats lined up at his Safdarjung Development Area residence to curry favour. He, too, had a shelf life.
The Q... catch as catch can
FACILITATORS share one quality: the insight – or foresight – to spot the political geniuses of the country. Jayant Malhotra and his wife, Badola, a business couple from Mumbai, set their sights on Dalit leader Kanshi Ram and his protégé, Mayawati. Initially, this shrewd couple had backed Ramakrishna Hegde, former Karnataka CM, and former Prime Minister Chandra Shekhar as separate horses. They later shifted their sights to UP where they not only, to begin with, funded the BSP, but later also gifted a sea-facing flat in Mumbai to the party chief. So it was natural that, during Mayawati’s first stint as CM, Jayant Malhotra enjoyed tremendous power and the fruits that went with it.
The Rajiv Gandhi era saw another prodigious international power-player descend on Delhi: an Italian named Ottavio Quattrocchi. As word of mouth had it, shivers would run down the spines of Ministers when Quattrocchi was on the line. They danced to his tunes. Quattrocchi wielded such influence with the PMO that most bureaucrats would stand up behind their desks when he visited them. It is also alleged that he could get Ministers and bureaucrats sacked if they ever dared challenge his authority.
This Italian businessman, representing Snamprogetti, eventually became one of the causes of the beginning of the sudden downfall of the Rajiv Gandhi government. He is rumoured to have won as many as 60 projects worth Rs 300 billion across Asian countries for Snamprogetti. It was also alleged in a case that he was the main conduit for the payment of bribes to secure the contract for the sale of Bofors field guns to India. With the twists and turns, Quattrocchi is either vindicated or damned to nobody’s real satisfaction.
The Roulette... hit some, miss some
WITHIN this universe of come-and-go fixers is an enduring class of facilitators – like a permanent civil service available across the board. They manoeuvre in all political seasons though they may not have any particular constituency or any particular political party leader as their target. They are the likes of KC Tyagi, Sompal Singh, Virendra Dixit, Santosh Bharatiya and DP Tripathi. They surfaced suddenly during the Janata Party days. All became MPs at one time or another. Of them, Sompal was lucky to hit the jackpot and was inducted as a Minister in the Vajpayee government, besides being made a member of the Planning Commission. These facilitators have also been close to Mulayam Singh Yadav, VP Singh, LK Advani and Sharad Pawar. All of them can be seen flocking to the Constitution Club to attend some meeting or another.
Shivers would run down the spines of Ministers when Quattrocchi was on the line. It was rumoured he wielded such influence that he could get Ministers and bureaucrats sacked if they ever dared challenge his authority.
When Atal Behari Vajpayee, the cleanest of all the Mr Cleans, became PM, the people heaved a sigh of relief. At last, a PMO sans fixers. They could not have been more wrong. A new tribe, just as powerful, emerged: Pramod Mahajan, Ranjan Bhattacharya, Dinanath Misra, and Balbir Punj were already on the podium to welcome the palm greasers. Mahajan, Misra and Punj all reportedly operated through Bhattacharya or Brajesh Mishra.
Misra and Punj were even able to acquire Rajya Sabha seats. The clout they enjoyed with the PMO and Advani from 1996 to 2004 was without parallel. A veteran like Dattopant Thengadi, a renowned labour leader and an RSS protégé, was compelled to complain to Vajpayee about the growing clout and baneful influence of these facilitators.
Another curious character, Sudheendra Kulkarni, came out of the blue and quickly took root in the Vajpayee and Advani camps. Kulkarni’s rise was nothing short of meteoric. It was unusual for a BTech graduate from IIT Bombay in 1980 to become a journalist. Even more unusual was his association with two publications owned by Russy Karanjia – the Daily and Blitz – that were radically chic in outlook. In the early 1990s, Advani visited Mumbai. At a press conference, he said he had no problems with intellectual disagreement, it was only misrepresentation of his views by the media that upset him. “I have, for instance, read Sudheendraji’s article today. It is not favourable to us, but I liked what he wrote. It was provocative,” Advani said. For Kulkarni, his journalistic odyssey had just commenced. He moved on, joining the Reliance-owned Observer of Business and Politics as an executive. He also worked with the Hindujas before being picked up by the powers-that-be in Delhi.
The diminutive pudgy-faced MP, Rajiv Shukla, known better for his sycophancy before Congress operatives, and being an informant for ML Fotedar, than for any story he ever wrote, is back from the wilderness as a player in the Rahul Gandhi camp.
HE was made Director (Communications and Research) in the PMO. Because Vajpayee was strict about not allowing bureaucrats to attend party meetings, Kulkarni found himself uniquely placed to represent the party’s views in the PMO and take the PMO’s views to the party. When a fixer becomes a political guide, only disaster can follow. His lack of managerial capabilities was prominently on display during the elections in which the BJP suffered ignominy. His steadfast loyalty to the BJP’s Lohu Purush – his mentor, Advani – turned quickly to disenchantment after the electoral debacle. Eventually, his career came full circle to square one. He is currently with Reliance Industries.
Another star-spotter, in the mould of the Malhotras, is Prem Chand Gupta, a former Minister for Corporate Governance at the Centre, the conscience-keeper and, reportedly, the purse-keeper of Lalu Prasad Yadav. This well-known figure among the colourful ranks of facilitators reached his fixing heights by brokering a de-merger settlement between the feuding Ambani brothers. A small-time watch manufacturer at Singapore, his eagle eye spotted Lalu, the rising star on the political horizon, and he lost little time in establishing himself in the good books of the Bihari politician. Though Gupta belongs to Jind district in Haryana, he is a Rajya Sabha member, thanks to his boss, from Bihar for the last three terms. Even if better fortune may have shunned Lalu for the moment, Gupta’s loyalty to him remains impervious.
An interesting story doing the rounds in RSS circles concerns the amazing rise of Nishikant Dubey, a confidant of Rajnath Singh, ex-chief of the BJP, and of RSS acolyte Gurumurthy. Dubey was elected to the Lok Sabha from Godda constituency of Jharkhand on a BJP ticket. The man who arrived in Delhi wearing tattered slippers and lived in a barsati in South Avenue Apartments, climbed the ladder quickly to become a successful facilitator. He took little time in gaining the confidence and backing of one of India’s biggest business houses. His declared worth is to the tune of Rs 11 crore. He is reportedly not only a part-time Director in ESSAR but also wields enormous power in Jharkhand to protect the interest of his mentors.
Under Nehru, none dared even breathe the tainted terms “dealmakers”, “facilitators” and “fixers”. The leadership was simple, honest and hardworking. Bureaucrats were a conscientious species. Nehru trusted his Chief Ministers and always remained in direct touch with them.
Most facilitators nurture no real commitment to any individual, party, ideology or even to the interests of the nation. Money is their be-all and end-all. They are survivors, come what may. Former Cabinet Secretary BG Deshmukh once told gfiles that Delhi was a town of “200 influential people”, visibly pained while recounting the menacing influence of these facilitators on the bureaucracy of India.
Amar Singh once told a woman buddy from Bollywood: “When a leader is at the peak of power, exploit him to the hilt.” More of his ilk will wax and wane, but the genes and character of the facilitator seem destined to live on in time, in one shape or another.
PS: One such mutation is erstwhile wheeler-dealer and former Ravivar journalist, the diminutive pudgy-faced MP, Rajiv Shukla, known better for his sycophancy before Congress operatives, and being an informant for ML Fotedar, and Gen Next leaders like the late Madhavrao Scindia, than for any story he ever wrote. An outsider for a while, he is back from the wilderness, not only as BCCI Vice--President despite the fact that he does not know a googly from a chinaman but, more important, as a player in the Rahul Gandhi camp.
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