Hawala: Political Dilemma and the Legal Dimension - The Times of India

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Political Dilemma and the Legal Dimension

A Talk by

S. Gurumurthy,Chartered Accountant
In Madras on 20 th March 1996

Published by VIGIL

"Eternal vigilance is the price of democracy"

(Public Opinion Forum)
28, Viswanathapuram Main Road
Kodambakkam, Madras - 600 024

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Table of Contents
1. Introduction
* The Corrupt Deals
* The Quatorrochhi angle
* The Jain Diaries and the CBI
2. Sins of omission and Commission
3. Newspapers failed us
4. Analysis of the Diaries
* Discredited Politics
5. The Diary is the backbone of the case
* Prosecution or Persecution
6. Campaign of Disinformation
7. Aborted Investigation
Failed Institutions

8. Questions and Answers
9. Points on facts and Law
10. About VIGIL
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Introduction

We are all gathered here to discuss the issue of hawala. It is unfortunate
that this word has been misused and inaccurately understood from the very
beginning in the context of the entire case as has been presented before
the people. I will give you a brief run up to the expose that shook this
country. When the CBI was tracking down the source of funds for the
terrorists in Kashmir, they were on the trail of one Shambudayal Sharma.
He was the conduit or the carrier of money for the terrorists. Quite
unaware of the CBI on his trail, he was caught in the act of passing on
the money to them. Thereafter he spilled the beans. He gave the CBI a list
of names of people to whom he had been delivering the money. One of the
recipient was S.K. Jain. As per the confession of Shambu Sharma, he had
been acting as the conduit for such transactions on behalf of one Amir
Bhai. This Amir Bhai is the kingpin of this whole issue or rather he is
the tip of the iceberg . It is now known that Amir Bhai has been paying
fifty five persons in this country, out of which Jain is only one. But
what is not known is who are the rest?? And this will never be known
because it will be this information which will really rock this country.

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The Corrupt Deals

It is not as though only terrorists have been receiving funds through the
hawala or through Amir Bhai. As an investigator I can vouch for the fact
that the money that was paid to Jain or received by Jain has nothing to do
with the funds for terrorists. He received his own money which was his by
way of commission for the deals that he had struck with Quatorrochhi of
Italy. These deals concerned three specific projects involving rupees 4000
crores. One was the Uri project, the second was the Dulhash Hydel project
and the third was the Durgapur Steel Expansion Contract- all totaling 4000
crores. Jain says a commission of 10% was agreed upon out of which 3% was
to go to Jain and the remaining 7% was to go to Quatorrochhi in Italy.
This is Jain's statement before the CBI. The arrangement between Jain and
Quatorrochhi was to the effect that Jain was to be paid the amount due to
him in Indian rupees in India. Jain stated before the CBI that
Quatorrochhi arranged to effect these payments through Amir Bhai and that
he did not know Amir Bhai previously and that it was Quatorrochhi who
introduced Jain to Amir Bhai. Therefore, the first thing we have to bear
in mind is that the money that Jain received had nothing to do with funds
for the terrorists in Kashmir. And it is here that the press has failed in
its duty to the people. It failed to highlight that what Jain received was
his share in the corrupt deals and that he was not a hawala dealer but a
hawala client himself.

The 59 crores that is being talked about - it is 59 crores and not 65
crores as is being made out, which Jain undoubtedly received through
non-banking channels, through a hawala transaction. A hawala transaction
involves surrender of foreign exchange for rupees paid in cash, or vice
versa, not through the legal banking channels. Thus Jain chose to
surrender the money due to him in foreign exchange and arranged with
Quatorrochhi to pay him in cash in rupees; which Quatorrochhi arranged to
do through Amir Bhai. The most significant fact in all this is that this
59 crores paid to Jain is the product of corrupt deals. But unfortunately,
what is being investigated today is merely the application of the corrupt
money and not these corrupt deals themselves. This is a very crucial
omission, a calculated omission in the investigation.

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The Quatorrochhi angle

Fortunately for the people, India Today did an excellent job in this
regard. As a follow up to the revelation made by Atal Behari Vajpayee and
of the Jain statement, India Today brought out the fact that the source of
the money received by Jain was the corrupt deals struck between him and
Quatorrochhi between 1987 and 1989. It is evident from Jain's statement
that between them they made 10% by way of commission of which Jain
received 3% and the balance of 7% went to Quatorrochhi. In his testimony
before the CBI Jain has given the names of banks in which Quatorrochhi is
supposedly maintaining accounts. HE has given other corroborating facts
too. He has also said that a particular Russian government company, had
been awarded a contract for a sectional work to be undertaken in Durgapur
Steel Plant. He has alleged that Rajiv Gandhi demanded 15 crores from this
Russian company for giving the contract. Jain says, being a government
Organization the Russian company refused to pay the amount as demanded but
agreed to pay the amount to Jain's company as an advance which will not be
recovered later. Jain has testified that he did receive this amount from
the Russian company and that this amount stands credited in his account
even today. Jain has also said that it was from this money that he paid
10.5 crores to Lalit Suri, 2 crores directly to Rajiv Gandhi and 2 crores
to Sita Ram Kesari for onward transmission to Jayalalitha. 14.5 crores out
of a total of 19.5 crores which Jain had earmarked as political payment,
is thus accounted for by a single person out of 19.5. But this is not
corruption in its totality. This is only application of corrupt money made
from corrupt deals. And this is what Jain has accounted in his diaries.

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The Jain Diaries and the CBI

I must say as a chartered accountant, I admire the meticulous way in which
Jain has maintained these diaries: daily sheets, monthly diaries
summarizing the daily transactions into monthly receipts and payments, and
then periodical receipts and payments which have been recorded as
quarterly, half yearly, three quarterly and annual statements - each one
of these records meticulously tallying with one another. It is therefore
that I say, if a person's name does appear in that diary, then there is a
prima facie case against that person. I concede it straight-away. But that
person's name must appear in that diary, positively in that diary. If it
does not appear in the diary, clearly there is no case. I will soon tell
you why. The daily statements, monthly statements and the periodical
statements for the entire period between February 1988 and March 1991 are
meticulously interwoven. They tally with each other and they are mutually
corroborative. From the records that Jain maintained in two slip pads, two
diaries and two files, I have come to know that daily statements are
available for three months in 1990, monthly statements are available for
the entire period between February, '88 and March '91, that is for 38
months and periodical statements are available for 36 months. Jain says he
received the 59 crores as a part of his commission which constituted 3% of
the deal and the remaining 7% was a payoff.

Incidentally, I spoke to Amod Kant who investigated the case on behalf of
the CBI. Mr. Kant has said publicly that the CBI got hold of these
documents on the 3rd of March 1991 and that the CBI rested on them till
1994. They did nothing. In 1994, Amod Kant took up the matter. Amod Kant
is a good friend of mine and when I spoke to him he made a shocking
revelation. He told me that it was he who caused' Jain's statement to be
recorded.

Amod Kant also confirmed that Jain in his statement before the CBI also
declared that he had paid 3.5 crores to Narasimha Rao, having met him nine
times altogether. Jain said that he was summoned to meet the Prime Minster
in 1992 on the day before the festival of Holi. Jain further told the CBI
that on that occasion the Prime Minister had asked Jain for that money and
that Jain told Narasimha Rao he did not have that kind of money with him.
Jain had also said that he had been drunk for over seven hours on that day
and had to take an equalizer to keep his appointment with the Prime
Minister. A meticulously detailed statement recorded by an honest officer
of the CBI. Jain has revealed that he went to Satish Sharma's farm house
from where Satish Sharma and Chandraswamy, drove him to meet the Prime
Minister. He has recorded in his statement that on that occasion since he
was accompanying Chandraswamy, he was not subjected to any security check
but that on the several previous occasions when he had to meet the Prime
Minister, he had to go through the normal and regular security cheeks.
Incidentally I also met S.K.Jain the, central figure in this drama and
Jain told me, as he must have told the CBI and as he must have told
several others that there must be official records of his visits to the
Prime Minister in the PMO (Prime Minister's Office).

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Sins of omission and Commission

Strangely enough, although Jain made this statement before the CBI in
March 1995, he PMO was not asked to produce these records until September
1995, by which time PMO told the CBI that since these records are not to
be preserved, they have been destroyed. In my opinion the very fact that
these records have been destroyed is' the most damning corroboration that
Jain was speaking the truth about his visits to the prime minister. But
this statement made by Jain which revealed the nature of real corruption,
corruption in very high places, the real issues whose implications were
beginning to emerge and the real people involved in the scandal was cast
aside. And most damning of all and yet another corroboration of Narasimha
Rao's involvement in the hawala, is that soon after Amod Kant records this
incriminating statement by Jain, he is removed his post. He is asked to
go. Amod Kant is told unceremoniously that his deputation to the CBI from
his own organization is ended; and this despite the fact that he has the
right to be in the same post for another three years. Every police
official who is on deputation to the CBI is given an initial assignment of
four years. Thereafter he is given two extensions- the first for three
years and then again for two years, altogether serving with the CBI for
nine years. Amod Kant was in charge of very important investigators. He
was investigating several corruption cases involving politicians and
therefore the hawala case too was entrusted to him. At that point in time
investigations into several of these cases had been completed, in some
cases evidence was being recorded while in others charge sheets were being
prepared. In some cases as the hawala case, investigations were just
beginning to take off. It is at such a juncture that he is relieved of his
post and asked to hand over charge. Significantly at the time of his being
asked to go, Amod Kant's next assignment has not been specified and what
is more, he does not get his next assignment until three months later. And
during this period, he is not paid his salary, his telephone connection is
cut off and he does not know if there is going to be any future
appointment at all. He was cat aside without explanations.

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Newspapers failed us

I see a need to mention all this in my talk today because for some strange
reason, our newspapers have not thought it fit to inform our people about
all this; and a situation prevails today whereby we believe anything the
newspapers choose tell us and what they choose not to tell us never
happened. As one who belongs, in a sense, to the newspaper community, I
must say that more than half a dozen newspapers which reach among them,
the largest number of our English speaking people, are virtually in the
hands of the present government. They can therefore, not be expected to
print anything which will even remotely implicate the Prime Minister in
the hawala scandal or any other scandal for that matter. Which is why
there is a dire need to hold such large scale meetings throughout the
country so that the people are told the facts of the case. Of course such
meetings are not the best of mediums for this purpose but we are left with
no choice. So a person like Ram Jethmalani who appeared, who advised and
who promoted the litigation to ensure that the CBI investigated the case,
has today reached the conclusion that this case is no longer about
corruption in high places but only a weapon to gain electoral advantage. I
will tell you how.

>From March 1991 when the CBI got hold of these diaries, until 1994,
nothing was done about investigating the contents of the diaries. This
case would never have seen the light of day and all of a sudden, in
January monstrous of this year it assumes monstrous proportions and hits
news headlines. The pressure from the Supreme Court was of course there
but it is not as though Supreme Court judgments and directives have not
been resisted before by central or state governments. The Supreme Court
came into the picture already in 194 but it is not until the beginning of
1996 that the government was s(en to be doing anything at all with regard
to the contends of the Jain diaries or responding to Supreme Court
directives. I am putting it before this audience that on the 3rd of
January this year when I was in Singapore, a very important minister in
the Central Government sent information to me - to me Gurumurthy -that Mr.
Advani is being framed in this case. I relayed this information
immediately to the BJP because that Advani was being framed emerged very
soon thereafter. This was later confirmed by Jain himself. After the
chargesheet was filed on the 16th of January, 1996, after considerable
effort one of my friends managed to arrange a meeting'-for me with Jain.
Initially he was not as forthcoming as I would have liked him to be but in
stages he revealed almost everything so that I was able to get the
complete picture on the hawala and the contents of those diaries. Jain
told me that on the 3rd of January, the CBI took away with them 14 persons
of his household for interrogation. The only question asked of them was if
there had been any kind of meeting between Jain and Advani. This was on
the 3rd of January. On the 2nd of January, the Prime Minister reportedly
met Vijaya Rama Rao, the Director of the CBI. Which is probably when the
idea must have germinated. The Prime Minister must have decided that the
only way to subvert the entire political process and have the issue of
corruption thrown out of the electoral agenda is to implicate and thereby
fix the person who was making the issue of corruption a very large part of
his party's electoral campaign. Minister Kamal Nath tells us that if
Advani's name were not implicated in the case, the hawala issue would
never have seen the light of day. What I say is, if Advani's name does
indeed figure in the diary, repeat, in the diary, then prosecute him by
all means and convict him. But his name is not in the diary. His name is
not in the daily statements, his name does not figure in the systematic
monthly records of receipts send payments available An the entire period
between February 1988 and March 1991, and his name does not appear in any
of the periodical statements available for 36 months - not in the
quarterly, half yearly, three quarterly or the annual statements. And I
reiterate again, all these records of receipts and payments tally
perfectly with each other.

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Analysis of the Diaries

In fact we made another kind of calculation. Jain says he distributed 59
crores as political payments. There is one point I wish all of you to
note. The CBI says that Advani received money twice from Jain - a sum of
35 lakhs between the period February '88 and March '90 w en Advani as a
member of the Parliament, was a public servant, and the second payment in
April 1991, when Parliament had been dissolved and he was no longer a
public servant. The CBI in its chargesheet says it is not concerned with
the second payment. Therefore as per the chargesheet, Advani is accused of
having accepted a bribe when he was a public servant. We therefore
examined the records of receipts and payments for that period - the period
between February 1988 and March 1991, which is two months before he became
a public servant and twelve months after he ceased to be one, and the
closing balance in cash with Jain as of 31st March, 1991. The total
receipts less total payments tallies perfectly with the closing balance in
cash as of 31st March, 1991, without accounting for the payment supposedly
made to Advani. I am now revealing the facts as contained in the records
which the CBI is claiming as its sole basis for filing the chargesheet
against Advani and the others. And if the reading of these facts go in
favor of Advaniji, well then, it only corroborates what Kamal Nath said,
that Advani is being framed in this case. I am sorry that these facts seem
to disturb this particular gentleman in the audience. He has accused me of
defending Advani and I am glad that all of you reject his claim. I can
only request all of you to listen. These are not my views. Facts cannot be
seen in two different ways. Facts, especially figures never lie. I
therefore beseech all of you to listen because this issue is all about
corruption, and more than corruption, it is about politics of a very
disturbing kind.

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Discredited Politics

And as Biju Patnaik said and as Nani Palkhivala felt distressed enough to
warn us, if as a discerning people we fail to see this subtle and vital
distinction between the political motives of this case and corruption, and
if, as a consequence, we discredit the entire political system, we may be
inviting dictatorship. Of any kind. Every country which has suffered
dictatorship has gone through a process-, of discrediting Us politicians
and its prevailing political system as corrupt. Are chartered accountants
not corrupt, are lawyers not corrupt? And how many judges in this country
will vouchsafe that the entire judiciary is not corrupt? Please
understand, corruption is a issue that needs to be tackled by all of us
and I can say this with a degree of conviction because I have done it and
at some cost myself. There is a widespread belief that the CBI is this
country's premier investigating agency. But that is no reason why
intelligent people have to accept all that it says to be the truth. it was
the very same CBI which was not above forging a letter and having me
arrested on trumped up' charges. I am not talking here to mere receivers
of information. It is my hope I am talking to transmitters of information.
Therefore please listen to facts.

There is a page in one of the files which the CBI is claiming as a part of
the evidence, which carries Advani's name in the list of names under the
heading Political expenses (POE). Besides the fact that the amount against
Advani's name does not tally with any of the daily, monthly or periodical
records of receipts and payments, I will make bold to say that if it were
not for the fact that Advani's name is on the list, no chargesheet would
have been filed. Against Advani or anyone else. Can what lam saying today
in this meeting be construed merely :as a defense for Advani? This is one
politician who writes a letter promptly to the investigating agency
listing his only assets. He lists his assets which include just one flat
and he says if the CBI can prove otherwise, he will withdraw from public
life. These things need to be said now because if this audience and other
thinking people fail to see the horrendous conspiracy behind this
formulation of the hawala case, we will fail to target the author of this
infamous frame up - the corrupt prime minister of India. And this is the
man who could not give a categorical answer in the parliament when he was
asked if he was being investigated by the CBI. He could have said 'no'. He
did not have the courage to say 'yes'. We are today faced with corruption
and we are faced with a system that failed. This systemic fault however
exposed which is why The Free Press newspaper wrote an editorial in which
it has been observed that there are two streams of politicians in India.
One stream is represented by people like Arif Mohammad Khan who purchases
16 cars with the money he received from Jain and the other stream is
represented by a person like Advani. The newspaper said that it was
nobody's case that Advani had had even a cup of tea with the amount
allegedly paid to him by Jain. And the newspaper writes this on the
assumption that Advani's name is in the diary. Advani represents the
embarrassment caused to honesty by a corrupt and hypocritical system.

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The Diary is the backbone of the case

The whole thrust of the CBI case against all those chargesheeted, is the
diary; which is the single most important evidence in this case. Not the
file containing the Political Expenses list, but the diary which contains
records of the month to month statements of receipts and payments and the
opening and closing balance between February '88 and March '91. It is this
diary which has recorded the amount that Jain received through Amir Bhai,
the amount that Jain paid to Arif Mohammad Khan and Madhav Rao Scindia.
This diary is the very backbone of the CBI case. The CBI told the Supreme
Court that though the evidence is recorded in a diary, the records have
been so meticulously maintained that the daily, monthly and periodical
statements harmonize, tally and corroborate with each other, that it
should be accepted as a book on accounts under section 34 of the Evidence
Act. And yet the CBI records the evidence of its own technical adviser who
was asked the question if with his technical knowledge and as an
accounting expert, he would accept the diary as being equivalent to a
regular book of accounts. The CBI technical adviser says 'no', he would
not accept the diary as a regular book of accounts. The amazing thing is
that this negative reply by the CBI's own technical adviser is adduced as
prosecution evidence. This evidence alone is enough to destroy the
prosecution case. It is obvious to those with even a rudimentary knowledge
of law that this prosecution has been launched to see that no conviction
takes place. I challenge the CBI to tell me if any court will now convict
anybody on the basis of the diary which has been discredited by the CBI's
own witness. The CBI has hinged its entire prosecution around the diary
and its own technical adviser refuses to grant it any respectability. The
core of the case has been blown to smithereens.

As I said earlier, people with a little knowledge of law and those
familiar with criminal law proceedings will tell you that the prosecution
will never ask a question and record an answer which could adversely
affect the prosecution case. It is never done and it never happens. But
the CBI has done so in this very important case involving some of India's
leading politicians. The farce does not end here. Yet another witness is
asked if he had delivered any money to a politicians. The answer is 'no'.
A third witness is asked if he had given seven and a half lakh rupees to
Buta Singh and another 10 lakhs to X. The witness replies that he
remembers giving Buta Singh seven and a half lakhs but has no recollection
of the 10 lakhs. All these statements undermining the prosecution case are
meticulously recorded to ensure that eventually no conviction will take
place. The idea of filing these chargesheets is merely to appropriate for
the Congress and particularly for Narasimha Rao a halo for having
initiated action to cleanse politics of corruption. More importantly, it
has been done to defame Advani who is held in high esteem in political
circles for his untarnished image, thereby hoping to finish off the BJP's
campaign against the highly corrupt Congress regime. The idea is to keep
the cases pending until the elections so that a cloud of suspicion hangs
around his head; and I tell you, once the elections are over neither the
CBI nor Narasimha Rao is going to evince any interest in pursuing the
case.

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Prosecution or Persecution?

When I told Ram Jethmalani about the statements of the witnesses and the
technical adviser as recorded by the CBI, he was stunned. He told me that
such a thing had never happened in all these long years of experience as a
criminal lawyer. As a nation we have this uncanny ability to get hold of
the wrong end of any issue. We are not investigating Amir Bhai,
Quatorrochhi or Narasimha Rao. We have instead, got hold of Jain. And all
that poor Jain wanted, according to a friend, of his, was a Rajya Sabha
seat. He spent over 90% of his ill gotten money on Congressmen in pursuit
of that ambition. I would now like to share with this audience some
details about the different payments recorded by Jain in his diary and how
the CBI has acted upon that. Having analyzed the contents of the diary, I
observed three streams of payments. One stream of recipients of the Jain
largesse was the bureaucrats. Jain paid 2.63 crores altogether to some. of
the bureaucrats in the county. The second stream of recipients was that of
the politicians. Jain has paid several politicians money to the tune of
18.5 crores or there abouts, all listed under Political expenses or POE.
This record of POE tells us that Bhajan Lal received 1.1 crore and that
Arvind Netam received just 50,000 rupees. Arvind Netam is chargesheeted
but Bhajan Lal is still untouched. It is well known that Narasimha Rao
dare not proceed against Bhajan Lal. So, is it prosecution or Persecution?
Jain told me that he had specifically warned V.C.Shukla and Balram Jhakar
that the Prime Minister was arranging to have chargesheets filed against
them; but they did not take his warning seriously because according to
Jain, these ministers believed that their ministerial positions were
protection enough. According to Jain, V.C.Shukla told him that, he had met
the Prime minister four times between the 10th and 15th of January and
that Narasimha Rao, besides discussing the strategies to be employed for
the forthcoming Parliament session, had also assured V.C.Shukla that he
need have no fears of being chargesheeted by the CBI. This conversation
between Jain and Shukla took place on the 15th of January. On the 16th,
the very next day, V.C.Shukla is woken up at 4.30 in, the early hours of
the morning, in the train in which he was traveling, to be told that the
CBI was filing a chargesheet against him the very same day. As far as the
role of the CBI and the Prime Minister is concerned in this whole sordid
episode of the hawala, there is very little of law and even less of
ethics. There is only politics and, politicking.

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Campaign of Disinformation

In these circumstances, when people see the degeneration of these
institutions, with whom does the responsibility lie? The responsibility
lies with the intelligentsia and the press to get at the truth
tenaciously. But the press, along with the CBI and the Prime Minister's
office seem bent on letting loose upon the people a substantial campaign
of disinformation. The people are now being beguiled into believing that
this political case, inspired by nothing more than the ignoble motive of
doing away with political opponents and challengers for power, is a
movement against corruption. I am all for action. against corruption
involving politicians and bureaucrats, if there is a clear case of quid
pro quo. As in the case of Arif Mohammad Khan. But also present in the
diary are those who received money from Jain, not on a quid pro quo basis,
but as political donation. As in the case of Arjun Singh and Arvind Netam.
We have to separate the two. In the case of Advani, the CBI examined
nearly twenty witnesses just to find out if any of them had seen Advani's
car in Jain's house or Jain's car in Advani's house. Nobody was willing to
make even a false statement implicating Advani. I am forced to say all
this because if we begin to discredit people without evidence, without
qualms, there will be no end to it. I was myself a victim of this kind of
unscrupulous persecution involving once again the CBI and inevitably the
office of the Prime Minister. But at that time, the Indian Express was
solidly behind me and exposed the nefarious plot in a matter of days.
Unfortunately today, no newspaper seems willing to get at the whole truth,
setting aside its personal predilections. People like you who are
assembled here today to listen to us who have something to say, are the
last hope of this country. I appeal to all of you to exercise your
responsibility in demanding the truth from all concerned and thereafter in
transmitting the truth.

Corruption has touched every institution of this country. It is not just
the politicians. What about people in highly respected professions?
Chartered Accountants who write false accounts and sign false certificates
- they are worse than politicians because this tribe passes itself off as
intellectuals. There are lawyers who are without scruples and those who
proclaim openly they can 'fix' judges. The common man sees no reason to
vent his ire on them because he thinks he is not affected directly by
them. But the politician is abused because he comes asking for votes. We
think he alone is accountable to the people. But there is a danger in this
abuse. If we abuse all politicians without discrimination . will be guilty
of driving away even the exceedingly few good and decent politicians away
from politics. Blanket discrediting of people is no way to look at issues.

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Aborted Investigation

Sensing the danger of this kind of indiscriminate dicredition of
politicians, Nani Palkhiwala felt compelled to observe that this case was
not a movement against corruption. There is no attempt to get at the truth
and the investigation into corruption in this case was aborted
successfully midway during the process. As the case is being tried today,
there is no way that this prosecution is going to end in conviction. Not
with the kind of negative statements recorded by the CBI. The only
possible way to get at the real perpetrators of corruption would be for at
least one Jain to turn approver, in the case. And the only way they are
going to turn approvers is when they are assured of total immunity. You
let off a small crook to catch a bigger crook. If this government was
indeed serious about nailing corruption, then it ought to have come
forward to grant the Jains full immunity in return for the whole truth.
The law leans heavily in favor of the bribe giver to enable the
authorities to go after the bribe taker. The reason for the present
government dragging its feet on the issue is not far to seek. If Jain were
to testify in court regarding all that he told the CBI earlier, where
would it place the CBI, and more to the point where would it place the
Prime Minister?

There are only two ways to nail a bribe taker - you either lay a trap for
him and catch him in the act or you 'get the bribe giver to confess with
promise of total immunity from prosecution. And because both the CBI and
the Prime Minister are vulnerable in this case, the possibility of
immunity for the Jains seems remote. In fact Jain told me, as he told the
CBI and as he. probably told others that he met the Prime Minister several
times only to ensure that his business with, the government continued and
that he was never arrested. In fact, he says he gave Narasimha Rao 3.5
crores only to see that he was never arrested. And, said Jain, since the
Prime Minister backtracked on our agreement, I spilled everything to the
CBI. Today I am routinely asked the question, how is it that Narasimha Rao
is also accused of accepting money from Jain when his name does not appear
in the diary at all? This is a poor fig leaf. I tell them Rao confiscated
the diaries in 1991, and then took the money from Jain. This is a very
complicated issue with very wide and dangerous ramifications.

----------------------------------------------------------------------------
Failed Institutions

Conveniently sweeping the larger issues under a mound of lies and
disinformation, the Congress has trivialized the entire thing into an
electoral campaign against corruption. They would like us all to see them
as crusading against the corrupt impartially even within their own party.
But the point is, corruption within the congress is no big deal, people
have accepted it to be natural to their culture. But what is news, what
shocks people is the charge that Advani is guilty of corruption. That is
the image people have of him. Which is why under the guise of
chargesheeting his own men, Narasimha Rao hinged the entire case around
Advani and the press seems only too happy to be led by the nose.

Knowing well the cloud under which his name could hang, Advani asks the
court for a speedy trial on a day to day basis. It is no wonder the CBI
opposes this demand but it is strange that Advani's discharge application
is likely to be deferred until after the elections. Not to say disturbing
raising several questions in our minds. I will make bold to say that this
case in its truncated version of the truth will be seen to be relevant
only until the elections. Once elections are over, we will hear no more of
it and yet another aborted investigation will become a part of our
collective amnesia. I thank you for listening to me. I am now ready to
answer any question which this audience may have.

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Questions and Answers

Shri Gurumurthy's talk was followed by a very serious and unrelenting
session of questions and answers. The audience posed some very thought
provoking and penetrative questions which motivated Shri Gurumurthy into
giving detailed answers thus bringing to light more and more facts which
did not find place in his talk.

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Ql. Mr. Gurumurthy, what is the role of Vineet Narain in this case? An
interview appearing in the Indian Express says that it was he who brought
the issue into the limelight

Ans. The events preceding the filing of the writ on this issue by Vineet
Narain deserve our attention by themselves. The run up to the writ
involves one O.P.Sharma, an allegedly corrupt CBI official. This O.P
Sharma superseded Shri. Madhavan an honest officer who later investigated
the Bofors scandal and the infamous security scam and Madhavan was forced
to approach the Supreme Court to get his seniority restored. It is an
accepted tradition in any Congress regime that a corrupt man will
supersede an honest person. O.P.Sharma was in charge of this case and had
taken a bribe of thirty lakhs from one Kaul who was a well known 'fixer'
and who was engaged by Jain. Kaul was not only a 'fixer' of politicians
but was also a 'fixer' of the CBI. Sharma had received his bribe in three
installments of 10 lakh each. Kaul was due to pay him the fourth
installment of 10 lakhs but before that he informed people in the CBI who
were opposed to Sharma. The CBI laid a trap for Sharma and caught him in
the act of accepting - money which Jain was supposed to have paid him. The
most disgraceful aspect of this episode is that Sharma attended office for
four days after being caught in the act of accepting the bribe from Jain.
He continued to have access to the papers relating to the cases under his
charge. Sharma was removed from his job only four days after the event an
during this period he made photocopies of all the case papers. To get back
at Jain whom he held responsible for exposing him, Sharma began to
distribute the case papers which included the diary, to several people. A
those who saw the papers were unwilling to act upon it. They were afraid
because those involved were very big names. When Vineet Narain got hold of
these papers took them straight to Ram Jethmalani's who advised hi to file
a writ in the Supreme Court. Three other public spirited people joined in
and with Jethmalani's support an advise the case was brought to the notice
of the Supreme Court.

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Q2: Several bureaucrats are now discovered to be implicated in the hawala
case. Please comment upon this.

Ans. Obviously there is bureaucratic corruption. And if the expenditure
patterns and investments of the bureaucrats are unexplained and patently
disproportionate to their known sources of income, then they have to be
proceeded against And when the law does catch up with these corrupt
bureaucrats, we should welcome it even if in most cases the action is
politically motivated. As far as I am concerned this applies equally to
bureaucrats and politicians. I will repeat what I said before. If it is
proved that Advani has accumulated wealth beyond his means, I will support
and welcome any action taken against him. But there is no concrete
evidence against him. They have merely filed the chargesheet and are in no
hurry to convict him. The idea is not to convict him, because there is no
evidence against him, but merely to keep him accused in the eyes of the
public until the elections. But in the case of several others in the
hawala case there is concrete evidence to convict them and as in the case
of some of the bureaucrats implicated, they have been found to have
accumulated disproportionate wealth. I therefore welcome the action being
taken against them. But at the same time I must warn this audience that
all action taken so far is a charade - not intended to convict even the
really guilty. I tell you, this prosecution is not going to result in
anybody getting convicted - not even the guilty.

----------------------------------------------------------------------------

Q3. You asked us not to paint all politicians black. Similarly I do not
think we should paint all newspapers black. They have played their roles.
You know the role that Irani played during the Emergency. And even today
many of us regard The Hindu as a very fair and straight paper (howls of
derisive laughter and the questioner is shouted down by members of the
audience) There are newspapers and newspapers. There are well respected
editors and I think people can even today rely upon some of them. Another
thing. In your talk you have not touched upon the role of the Supreme
Court in this issue. We should accept that the Supreme Court has
contributed significantly in this case. Those that have been chargesheeted
in the issue, I think their cases are in the hands of very respectable
judges and they are not going to take any crap (sic) from the CBI, the
prosecution or the defence. I believe they will take a very fair view.
Please do not remove this confidence in our topmost judiciary by talking
about corrupt judges.

Ans. I understand your emotions and will answer your questions. I
mentioned in my talk that I am associated with newspapers and in a certain
sense I even belong to the tribe. 'Therefore any comment I make upon
newspapers is a comment on myself too; it is an introspection. Similarly
when I was speaking about chartered accountants, I was introspecting
again. It was not an allegation against someone else. I was speaking about
my profession. And when I spoke about lawyers and judges. I was not
speaking irresponsibly. This is the first point that I would like to make.
As for the role of the Supreme Court in this case, and I am being very
responsible when I say it, only after Justice Verma started to preside
over the Bench did the case make any progress. Not until then. Once
Justice Verma took charge of the issue, he made two pronouncements - in my
view, both very significant pronouncements. When the diary was presented
before him and the statements of S.K.Jain, Justice Verma instructed the
CBI to proceed against any person implicated in the case no matter how
high a post he may hold. For as long as the (CBI had been acting at the
behest of the Prime Minister, they were given a carte blanche with respect
to this case. And then Justice Verma made the second pronouncements
logically following the first. He pronounced that as far this case went
the CBI would no longer take any instructions or orders from the Prime
Minister, but would be answerable only to the Supreme Court. Within
minutes of the Supreme Court judgment, the CBI Director, Vijaya Rama Rao,
the Prime Minister and the law secretary were huddled together in a
conclave. If they were to be asked what it was that they were discussing
in view of the Supreme Court judgment, I have no doubt that they will say
they were discussing terrorism in Kashmir. (Laughter from the audience).
And so if the Prime Minister were to be exonerated by the CBI tomorrow,
Rao can always claim that he was exonerated honorably because the CBI has
now been constituted into an independent body at the orders of the Supreme
Court. There is constitutional independence granted to the courts in
India. But are all judges independent? This question arose when I was
having a long discussion with Anil Diwan, amicus curiae in the Supreme
Court.

We were discussing the possibility of constituting an independent central
investigating agency. Independent of the executive. We knew that such a
method of administration is unknown to the constitution in its present
form. There is no way that the CBI can be brought out of the control of
the Prime Minister. To even think it -is possible is only a theoretical
formulation. So the Supreme Court is struggling to give an ethical
direction to the case and it can see no way out. At one point it was
thought, just before the last hearing on Advani's case, that the Supreme
Court may be asked to direct three former judges of the Supreme Court to
examine all papers of the CBI related to the case and form an opinion
about the merits or demerits of the investigation conducted so far. Such a
step would have meant delaying the hearing by at least six months. And
what kind of constitutional or legal status be given to these judges
except Commissioners of Court. And should the highest court constitute
commissioners to go into the question of whether prosecution should be
launched or not? If it did so then what were the implications of such an
act with regard to the discretion of the lowest judiciary. They would no
longer be able to even grant bail. These are very vital issues before the
country today. It therefore means that if the target of the investigation
by the CBI is the Prime Minister himself, there can be no impartial or
honest investigation to get at the; truth as long as Rao remains the Prime
Minister. (Thunderous applause).

To make good my point I will now relate instances of the Prime Minister's
complicity in the case. When Jain made his statement to the CBI
implicating Narasimha Rao in the hawala case, the CBI chief was unwilling
to place this statement before the Supreme Court. However, India Today has
recorded the fact that the CBI chief came under tremendous pressure from
his own officers who threatened not to associate themselves in the case if
Jain's statement were not made known to the Supreme Court. Secondly, in
March 1995, Jain stated to the CBI that he was introduced to the Prime
Minister by Satish Sharma, Chandraswamy and R.K.Dhawan. He also stated
that all the three were involved in the payoff and that he had paid 50
lakhs to Satish Sharma and 2.5 crores to Chandraswamy. Though this
statement was made by Jain to the CBI in March 1995, clearly implicating
those closest to the Prime Minister, no effort was made to investigate any
of them until September 1995 when all incriminating documents were
conveniently disposed of. Immediately after examining Jain, Amod Kant
wrote to the CBI chief saying that these three persons ought to be
investigated. Not surprisingly, there was no reply. The CBI did not
interrogate the security staff of Satish Sharma, R.K.Dhawan ,or
Chandraswamy. No effort was made to procure the office records from the
PMO, or the records from the security staff or the records maintained by
the police in the offices and residences of these three persons. Thirdly,
Jain told the CBI that he had asked the Prime Minister to give him the
contract for the Durgapur Steel Plant. The CBI did not undertake to find
out from the Durgapur Steel Plant. if the contract was indeed offered to
Jain. Because if the, contract had indeed been given to Jain it would
firmly establish the Jain - Narasimha Rao nexus. This investigation by the
CBI is therefore not to nail corruption. How can the present regime claim
to be carrying on a movement against corruption with a corrupt prime
minister as its leader?

----------------------------------------------------------------------------
Q4. The hawala case came to light during the tenure of Chandrashekhar as
prime minister. Don't you think he is accountable too? As per some
newspaper reports, it seems when this was brought to his notice by the
CBI, he instructed the CBI to take action against the Jains but to leave
the politicians alone. IS, this true?

Ans. When the hawala racket was brought to the notice of Chandrashekhar,
he could not have known that the CBI conducted a raid on Jain. That Jain
was raided was only incidental to the CBI's total action plan to nail the
source of funds for the terrorists in Kashmir and the means employed to
disburse them. Chandrashekhar was probably told of Jain's involvement in
the hawala racket when the CBI got hold of the Jain diaries. According to
the diary, Harmohan Dhawan, a very close friend of Chandrashekhar was paid
one crore. Harmohan Dhawan was the Works and Housing minister in the
Chandrashekhar cabinet and I have no doubt that the money which Dhawan
received must have been for the party. Chandrashekhar was asked why his
name did not occur in the diary to which he replied it must be because he
did not receive any money personally from Jain. Further he -was asked if
he would have accepted the money if it had been offered to him and
Chandrashekhar said 'yes'. This only goes to drive home the point that
just as black money finances several admirable charitable causes, it also
finances politics. Unfortunate but true. We cannot reform the system by
shutting our eyes to uncomfortable truths. We know that elections are
fought with black money. Knowing this, the BJP has been the only party
which has been consistently demanding state funding of elections.

----------------------------------------------------------------------------
Q5. You told us that Advani's name does not figure in the Jain diary. Then
what was the material evidence with them that they riled a chargesheet
against him and more Importantly why did the y court issue a non bailable
warrant against Advani?

Ans. You see there are these daily statements which are a record of the
daily receipts and payments and these daily records are available for the
months of July, August and December, 1990. These are not available for
other months. Then there are the monthly records of receipts and payments
available for 38 months, from February 1988 to March 1991. And these daily
records, available for three months, tally perfectly with the
corresponding monthly records. And then we have these periodical summaries
of the monthly payments and receipts into quarterly, half yearly, three
quarterly and annual summaries. These monthly summaries harmonize with
these periodical summaries. And then we have this unprecedented slip of
paper with regard to Advani. This document is headed Political Expenses
(POE), and spans he period between April 1988 and March 1990. This
statement unlike all other statements, uncharacteristically does not show
the opening balance, list of receipts and list of payments. It also does
not show the closing balance. There are several names on this list, which
is an incomplete summary of some payments. Not, all payments. It is in
this document that the name Advani appears. While all other names, and
amounts against these names tally with the monthly, and periodical
statements which are comprehensively available, Advani's name sticks out
like a sore thumb because his name does not appear in the. comprehensive
monthly and periodical statements therefore the amount mentioned against
his name also does not tally with the accounts in these statements. Advani
has been chargesheeted on the basis of this unusual paper.

----------------------------------------------------------------------------
Q6. You just made the statement that all records which do not have
Advani's name on them, tally with each other. Now there is this other
document detailing political expenses, in which Advani's name also - rinds
mention. Do these political expenses amounts tally with the other records?

Ans. No. Not in respect of Advani. In respect of most others, yes.

----------------------------------------------------------------------------
Q7. How did Jain derive the money for these political expenses and how
exactly did he utilize them?

Ans. As I told you before, Jain received 59 crores out of which he received
51.5 crores by 31st March 1991. And if you total all the payments made by
Jain, he utilizes all the 51.5 crores as political expenses given to
politicians, as per his own records, without taking into account the amount
supposedly paid to Advani. The opening balance and closing balance are
available in the monthly and periodical statements. When these balances are
examined they show that Jain DID NOT HAVE ANY MONEY TO PAY ADVANI out of the
51.5 crores. So that is why there is a very big question mark over this
document and over the authenticity of the entry in the name of Advani.

----------------------------------------------------------------------------
Q8. How far are Tamil Nadu politicians involved in the hawala case? We have
been given to understand that. some of Jayalalitha's close associates 'are
involved in it. Please throw some light on it.

Ans. Hawala transactions other than the one involving Jain is an issue in
itself. Now it is estimated that the total hawala transactions are of the
order of 8 to 10 billion dollars a year. This is around thirty to
thirty-five thousand crores of rupees. So we cannot go into the entire
ramifications of it in this meeting. Every businessman is using the hawala
machinery.

----------------------------------------------------------------------------
Q9. You have mentioned that Sita Ram Kesari has passed on some amount to
Jayalalitha. Can you say anything more on this issue?

Ans. I did not say this. Jain said it.(Laughter).

----------------------------------------------------------------------------
Q10. Jain told you and you are telling us.

Ans. No. Jain told the CBI. I cannot throw any more light on this issue. The
CBI was told by Jain that out of the 15 crores paid to his company by a
Russian government company, he paid 10.5 crores to Lalit Suri meant for
Rajiv Gandhi, two crores directly to Rajiv Gandhi and two crores to Sita Ram
Kesari meant for Jayalalitha.

----------------------------------------------------------------------------
Q11. (In Tamil). Instead of bemoaning the fact that several people have
received money from the Jain brothers or that they are involved in the
hawala scandal, why don't you tell us how to bring home to roost those who
have used the hawala machinery to stash away money at home and abroad?

Ans: It was in this connection that I approached the Fairfax Investigating
Agency in 1986. They told me that we will have to pay them 25% of the
total money which we will recover with their help. The chief of Fairfax,
Michael Hershman told me that this 25% constituted their fee. I passed on
this information to two officials of the government of India. I told them
that we ought to hire these people and entrust them with the task of
flushing out these funds as we are not equipped to conduct such an
investigation which would cost us much more than the 25% we would have to
pay Fairfax. Bhure Lal and Vinod Pande asked me what would be the amount
that we would be able to recover with the help of Fairfax. Fairfax replied
that the amount would be close to 3 billion dollars. In those days, 3
billion dollars meant 4500 crore rupees. -In today's context the same
amount is valued at 13,500 crores. We gave them a letter of appointment
and tried very hard to bring this money back into India.. It was then that
the government forged a letter purported to have been written by Fairfax
to me asking me to send important and secret government documents to them.
And then I was arrested by the CBI on trumped up charges of espionage, and
the effort to nail the people using the hawala and to bring the money back
to India was successfully aborted.

----------------------------------------------------------------------------
Q12. Sir, Jain Is a very big businessman. He might have received crores of
rupees for several reasons. Then why should he maintain a separate diary
just for the hawala transactions? Is the diary genuine or is it cooked up
just to bring the issue out into the open? I also think that the
constitution should be suitably amended to ensure punishment for crime.

Ans. You see Jain maintained his business accounts through proper systems.
But he probably asked his clerk J.K.Jain to maintain his black money
transactions and that is in the diary. I do not think the diary is cooked
up. I am convinced, based on my experience of records, that this diary is
genuine. As regards amending the constitution for ensuring punishment for
the corrupt, I would rather suggest total amnesty for the bribe giver so
that we may nail the bribe taker. Nothing else needs to be done. If you
give the person immunity under the anti-corruption law alone he could be
nabbed under FERA or the income tax act. No! The only thing to do is give
him total immunity so that once he reveals the whole truth, he is ensured
protection from harassment. This way nobody would dare accept money as
bribe.

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Q13 We have not come hare to wash the dirty linen of any politician. What
a person like me wants to know is, what is this hawala, why is it corrupt
and how does it affect the common man. The political or the judicial angle
may not be very relevant to the common man.

Ans. Hawala is an illegal transfer of money from outside to inside India
and vice versa. Whenever money passes, something other than money also
passes in consideration of it. Let us assume, you export goods outside
India - it may be jewelry, cotton or steel. When businessmen export goods
many of them usually under value it. That is, if the consignment of
exported goods is worth 100 crores, the businessman will say it is worth
only 75 crores. He will accept money openly to the tune of 75 crores and
the remaining 25 crores he will stash it away in a Swiss account or some
other account. This amount will not be known to the Reserve Bank or the
Income Tax department. Similarly when he imports goods, he will over
invoice it. But this depends on the customs duty. If the customs duty is
high, then he may not over invoice the goods because he will end up paying
a very high customs duty. But if the customs duty is less then a
businessman will over invoice. Which means if you have to pay the foreign
supplier only one crore, you ask him to give you a bill for 1.5 crores.
You pay him one crore and stash away the 50 lakhs already accounted for as
payment, into a secret account. Smuggling also leads to illegal transfer
of money. This has been going on since the 1950s and the- total amount
transferred illegally, known as hawala, is of the order, of 40 billion
dollars from India. This is a conservative estimate. In fact when I was in
Switzerland, some bankers told me that the largest amount of deposits into
their secret accounts was from India. This is one way that the hawala is
being used. Another stream which uses the hawala are those who smuggle
goods into India. They have to pay the money outside India for the goods
they are going, to smuggle into this country. Then, there are those who
want to; remit money into India' When they remit it through the banks,
they will only get the official rate of exchange. -People who go abroad on
employment, remit money outside the banking channels. because the person
who receives the money here will receive more than what the banks can give
him. In the same way if A remits money here in rupees, his associate
outside India will receive the specified dollars. When I went to
Singapore, I saw a very big shop that belonged to a madrasi trader. He is
a money changer; he openly accepts dollars and gives you rupees and vice
versa. When A gives the hawala dealer dollars to remit money into India
outside banking channels, he will telephone somebody in India. Yes, A has
remitted dollars here, so hand over cash to A's brother. Now how do these
transactions affect the common man? If Jain had brought in the 59 crores
in terms of dollars, the foreign exchange reserves would have gone up by
22 million dollars. Because he took this by way of rupees in cash, the
country lost foreign exchange to a similar tune. Through such transactions
there is a rupee glut and consequently inadequate foreign exchange
reserve. This in turn pushes up the value -of the dollar and the value of
the rupee depreciates. These are the economic implications of the hawala,
But toddy the discussion in the context of the Jain diaries is not
economic but crime, corruption, politics and the legal dimension.
----------------------------------------------------------------------------
Q14. Gurumurthy, what about Jain's statement to the Directorate of
Enforcement under section 40 of FERA? And what about Mr. B.R. Jain's trip
with the prime minister when he went to Korea? The only corroboration of
Devi Lal's involvement In the hawala, according to the CBI, is that he
took Jain with him on a foreign trip. But Mr. Narasimha Rao also took Jain
with him when he went to Korea and that too when Jain was not recommended
by FICCI or CII. Is this not a greater crime?

Ans. I must pay a tribute to the person who came and asked this question.
(applause). He is Shri. K.G.Ramakrishnan, a former member of the Planning
Commission. He phones me everyday, he comes to my office and will climb up
to the 4th floor on days when there is no lift. You know why? There is
fire in the man (Thunderous applause). In 1975, when we fought the
horrendous Emergency, he was one of our most inspiring people. He was
never in party politics but he has never been out of politics lie sends
his observations, the material he has procured from the press. And today,
the two points that Shri. Ramakrishnan has made are very relevant. Jain
became a leper a political leper only from the 3rd of May, 1991. Till that
date he was hobnobbing with most politicians, big and small. The PM's
entourage to Korea contains a list of names recommended by CII and FIICI.
Some names are recommended by the Industry ministry. But there was one
name on that list not recommended by any of these institutions. The name
of Jain.

(interruptions: It has been denied. It has been denied by the Prime
Minister himself).

Gurumurthy: The Prime Minister hag been denying every- thing. (Howls of
derisive laughter). More to the point, the Industry ministry, the CII and
FIICI have not owned up Jain. Then who recommended his name?

(Interruptions: He did not go with the PM).

Gurumurthy: He did go. B.R.Jain did go to Korea with Rao. if has not been
denied. In fact Shenoy has meticulously explained through the columns of
the Economic Times, that Jain went to Korea as a part of the PM's
entourage. It may be denied but the list of names of those who went to
Korea with the Prime Minister is available. The second point made by Shri
Ramakrishnan is that S.K Jain has testified to all this to FERA. He
refused to sign his statement to the CBI and so it is not admissible in
court. So the PMO took a comfortable position. In the normal course of
events such a statement would be the starting point of any investigation.
It may not be proof but it is still the starting point to get at the
truth. Shri. Ramakrishnan's point is, when Jain testified to FERA he also
said that he had made the same statement to the CBI. This testimony of
Jain to FERA that the CBI already knew through him what he was telling
them now, is evidence that can be admitted in court. This is an important
point missed by most newspapers because this indicts the CBI for not
starting. investigation inspite of Jain's statement to them. I am saddened
by the fact that the newspapers have missed informing the people about the
gravity of this issue. It only goes to show that the ability of newspapers
to reach out to people is limited but their ability to misinform is great.

----------------------------------------------------------------------------
Q15. What Is the role of FERA in this scandal?

Ans. You see, Jain's diary shows that he received rupees I place of
dollars as commission due to him. So there is no doubt that he has
violated FERA regulations. There are also ministers who have accepted
money from Jain in rupees instead of dollars. These ministers, according
to the diary, are Arif Mohammad Khan, Balram Jhakar, V.C.Shukla, Yashwant
Sinha, N.D.Tiwari and others. Even if these ministers had received it as
dollars, it is still violation of FERA because Jain is not a bank. So some
ministers and some bureaucrats are guilty of FERA violation. The term
hawala therefore should be limited only to these offenses. We cannot say
that all those names present in the Jain diary are guilty of having used
the hawala machinery. In the case of Madhav Rao Scindia, Advani or even
Arjun Singh for instance, there is no hawala there. And yet even
newspapers report in total ignorance: Madhav Rao Scindia, Advani and Arjun
Singh implicaled in hawala scandal But is this not a great injustice to
these men? Which is why I said, newspapers instead of being educators are
today peddling disinformation and lies.

----------------------------------------------------------------------------
Q16. Sir, my only question is: Is there no way the public can play a role
with the help of the judiciary in making the contents of the diary public?

Ans. The Jain diary is there for the asking in the streets of
Delhi.(Laughter). But the diary is written in the mystic language of the
Rishis.(Laughter again). For instance, it says 'BL'. Bhajan Lal says it is
Bansi Lal. (Uproarious laughter). Until Jain turns approver we may never
know if it is Bhajan Lal or Bansi Lal. By making this diary public you can
do nothing.

----------------------------------------------------------------------------
Q17. You say J.K.Jain wrote the diary. Is Advani's name written by Jain
himself or somebody else?

Ans. The diary is written by J.K.Jain, an employee of S.K.Jain. Advani's
name does not figure in the diary that J.K.Jain wrote.

----------------------------------------------------------------------------
Q18. Sir, I was at a meeting in Trivandrum listening to a talk by Mr.
T.N.Seshan. He was talking about the necessity to cleanse politics and how
this can be done by the Intelligentsia entering the political fray. I will
ask you the 'same question that I ask him. Every sinner has a future, every
saint has a past: Which one are you?

Ans. I am neither a saint nor a sinner. As for the intelligentsia entering
political feel the intelligentsia has to first scrutinize politics,
political parties and politicians and form some opinion. They have this
duty towards the nation. Politics does not mean party politics. Even when
Rajaji's days of party politics were over, he would address a small group
of people, say 150 of them belonging to the Lakshmipuram Young Men's
association. What he had to say would be avidly listened to by this small
group of people. The next day, the newspapers would carry a faithful
reproduction of his talk and thousands would be guided by it. We require
such people today. Not that India cannot produce them but as long as we
utilize all the 24 hours at our disposal to make money and more money, the
possibility of such people emerging from our midst seems remote if not
impossible today.

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POINTS ON FACTS AND LAW

I. Alleged payment of Rs. 35 lakhs - the core of the charge - and in fact
the only charge.

* The Charge sheet rests on the allegation that Advani, was paid Rs. 35
Lakhs during April 1988 to March 1990 when he was public servant.

* It expressly admits that the other alleged payment, Rs. 25 lakhs, Was
made in April 1991 when he was not a public servant. Therefore, the
allegation of payment of Rs. 25 lakhs is not relevant for the charge
against Advani in view of the above admission in the charge. Therefore the
alleged payment of Rs. 35 lakhs constitutes the core of the charge - and,
infact, the only Charge.

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II. The prosecution ought to establish that the amount was actually received
by Advani

While framing the charge, the prosecution ought to establish that if the
evidence cited is proved and accepted, that would prove that Advani in
fact, received the amount alleged to have been paid. This is the proof
Section 20 of the Prevention of Corruption Act 1988 stipulates to shift
the onus to the accused to establish his innocence. The prosecution must
ultimately prove by evidence not only that the alleged amount was paid to
and received by Advani, it must also prove that he accepted it with a
consenting mind.

If the prosecution does not cite evidence, which, if accepted in the trial
will prove that the said amount of Rs. 35 lakhs Was in fact paid to Advani
and that he has accepted the same, the prosecution will fail.

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III. Documentary Evidence relied upon by the prosecution and their contents:

(a) The documentary evidence adduced by the prosecution in support of the
charge are as under:

* Two small now books MR 69/91 and MR 7091
* Two diaries MR 71/91 and MR 68/91
* Two files MR 72/91 and MR 73/91.

While the small note books and files contain broken details or summarized
payments, the diaries (particularly diary MR 71/91) contain continuous
month to month receipts and payments.

(b) The slip pads - small note Books MR 70/91 and MR 69/91

Of the two small note books referred to as - slip pads, MR 70/91 principally
contains date wise details of some payments made to certain persons in July
and August (1990) and MR 69/91 mainly contains date wise details of payments
made in December (1990).

(c) The Diaries MR 71/91 and MR 68/91

(i) The first of the two Diaries (namely MR 71/91) contains the complete,
summarized and month wise receipts and payments from February 1988 to
March 1991 and also contains details of the receipts for April 1991, but,
only partial details of payments - with the summary of the receipts and
payments for April 91 being entered in unfinished form.

(ii) The second Diary (Mr 68/91) contains partial details of receipts and
payments for January and February 91, and full details of the receipts and
payments for March 91 (which, incidentally completely tallies with the
details of the receipts and payments for March 91 contained in the other
diary MR 71/91).

This diary also contains details of the weekly receipts and payments for
the period 1 st to 14th April 91. Thus, the first Diary (MR 71/91)
contains the complete details of month wise receipts and payments up to
31.3.91 and the second one (MR 68/91) has the full details of receipts and
payments from 1.4.91 to 14.4.91 and both overlap to some extent for the
period January to March 91.

The Files Mr 72/91 and MR 73/91

The files contain the periodical summary of the receipts and payments for
the period from April 1988 to March 1991 and the periodical summaries
found in the file are as under: These are quarterly, half-yearly,
three-quarterly and annual summaries of receipts and payments.

Period of the summary Months Page and File
1. Apr. 1988 to March 1989 12 P 33 of Mr 72/91
2. Apr. 1989 to Dec. 1989 9 P 29/30 of Mr 72/91
3. Jan. 1990 to March A990 3 P 23 of Mr 73/91
4. Apr. 1990 to Sept. 1990 6 P 21 of Mr 73/91
5. Oct. 1990 to Dec. 1990 3 P 22 of MR 73/91
6. Apr. 1990 to De, 1990 9 P 2415 of of MR 7191
7. Apr. 1990 to March 1991 12 P 16/17 of Mr 73/91

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IV. The first diary (MR 71/91) which is the most vital documen, does not
show any payment to Advani during the entire 38 months from February 88
to March 91. This completely destroys the allegation of the prosecution and
proves that in law and in fact no payment was made to Advani

An analysis of the first diary MR 71/91 shockingly reveals that from
February 88 to March 91 there was -NO ENTRY OF PAYMENT IN THE NAME ADVANI"
at all, much less any payment of Rs. 35 lakhs as alleged. And, in fact the
name Advani does not all figure in the first diary throughout the entire
period of February 88 to March 91.

----------------------------------------------------------------------------
V. The name Advani Is also not found In any of the Seven periodical
summaries for the period from 1.4.88 to 31.3.91

All analysis of the seven periodical summaries of receipts and payments,
covering the entire period of April 88 to March 91 again shockingly reveals
that the name Advani or the alleged amount of Rs. 35 lakhs does not figure
in any of the summaries during the entire period.

1 The alleged payment of Rs. 35 lakhs is clearly unsupported,
unsubstantiated, uncorroborated - and even contradicted by evidence:

* it does not figure in the month to month receipts and payments entered in
the Diary from February 1988 to March 1990 and even up to March 91 (MR 71/91
Sheets 2 to 7)

* it does not figure in the twelve-month receipts and payments summary for
April 1988 to March 1989 (file MR 72/91 Page 33)

* it does not figure in the 9-month receipts and payments summary for the
period April 1989 to December 1989. (File MR 72/91 Pages 29 & 30).

* it does not figure in the 3-month receipts and payments summary for
January to March 1990. (File MR 73/91 Page 23).

* it does not figure in the 6-month receipts and payments summary for April
90 to September 90. (File MR 73/91 Page 21).

* it does not figure in the 3-month receipts and payments summary for
October 90 to December 90. (File MR 73/91 Page 23).

* it does not figure in the 9-month summary receipts and payments for April.
90 to December 90. (File MR 73/91 Pages 24/35).

* it does not figure in the 12-month receipts and payments summary for April
90 to March 91. (File MR 73/91 Pages 16/17)

* it does not figure in the two slip pads (MR 69/91 and 70/91) in which also
as already said certain date-wise payments are recorded for July, August and
December 1990.

----------------------------------------------------------------------------
(2). It is therefore evident that:

* the first two documents (slip Pads I and II) contain date wise entries of
receipts and payments for July and August 90 (Slip pad 1) and for December
90 (Slip Pad II).

* the third document (Diary 1) contains month wise summary of receipts and
payments for 38 months from February 1988 to Match 1991.

(3) The Daily entries (in MR 70/91 and MR 69/91) tally with the monthly
entries in Diary I (MR 71/91) and the seven periodical summaries of receipts
and payments tally with the entries In Diary 1. There is complete harmony
between Diary I and the periodical summary of receipts and payments for the
period April 88 to March 91.

(4) The Diary 71/01 is the Source of all periodical summary or receipts and
payments - the periodical summaries have been prepared only from the Diary

----------------------------------------------------------------------------
It is obvious that the seven . periodical summaries for the period from
April 1988 to March 1991 have been prepared only from the diary 71/91. The
periodical summaries tally with the diary in every respect as shown here
under.

1. opening balance and closing balances of cash in hand in- the Diary and
in the periodical statements tally.

2. The payments to outside parties mentioned in diary when aggregated
tally with the figure in the periodical statements.

3. The code names in the Diary and in the periodical statements are
identical.

4. The receipts from outside parties mentioned in the, diary when
aggregated tallies with the figures mentioned in the periodical statement.

5. The intra Jain group payment and receipts in the diary when netted
tally with the figures mentioned in the periodical statement.

Thus, there is complete harmony and agreement between the Diary 71/91 and
the periodical statement in - respect of all receipts and payments for the
entire period 1.4.88 to 31.3.91 - within which period only the alleged
payment during April 88 to March 90 falls - but. neither the Diary not the
seven periodical: statements show any payment to Advani during that period
namely, April 88 to March 90 or at any time during February 88 to March 91.

----------------------------------------------------------------------------
VII. The document (at Page 8 of File MR 77/9l( which the prosecution cites
at Page 16 of the charge sheet to allege payment of Rs. 35 lakhs to -Advani
is neither a summary of receipt and payments, nor does it harmonies with the
Diary MR 71/91 or with the periodical summary of receipts and payments for
April 1988 to March 1990.

The prosecution relies not on the daily cash receipts and payments in the
two slip pads I (MR 70/91 and MR 69/91) nor on the monthly summary of cash
receipts and payments for April 88 to March 90, in Diary I (MR 71/91), or on
the periodical summary of receipts and payments for April 88 to March 89
(Page 33 of File, MR 72/91) or for January 90 to March 90 (Page 23 of File
MR 73/91) which harmonies, tally and corroborate with one another.

The prosecution relies precisely on an isolated document which does not
tally with any other document, Diary or any one of the seven summaries of
receipts and payments. This document is at page B of File MR 72/91- which
contains a statement of -POE" from April 88 to March 90 in which the name
-Advani figures and against which 35.00 is written.

----------------------------------------------------------------------------
The unusual features of the document at page 8 of MR 72/91 are:

First, it is not a summary of receipts and payments for the period April 88
to March 90 unlike the seven summaries of receipts and payments during April
88. to, March 91.

Second, it is a statement of certain payments, and that too not the entire
payment during the 24 months.

Third, excepting for April 88 to March 90, such statement does not exist for
any other period.

Fourth, when the details of all payments including the alleged political
payments exists in the receipts and payments summaries for April 88 to March
89, April 89 to December 89 and January 90 to March '90 the sudden
appearance of the alleged statement of POE from April 89 to march 90,
especially as it contains the name Advani, which is not found in the Diary
or in the periodical receipts and payments, appears to be exceptional,
irregular and unusual.

Fifth, whereas every other statement of receipt and payment tallies with the
critical document namely the Diary, the impugned document at Page 8 of MR
72/91 does not tally with the Diary MR 71/91 or with the three periodical
statements.

Sixth, there is not explanation as to why the name Advani appears in the
impugned statement when it does not appear in any receipts and payments
summary relating to the same period.

----------------------------------------------------------------------------
VIII. The virtues of the different records claimed by the prosecution in the
charge sheet as mutually corroborating and being mutually continuous and
consistent is limited to the Diary MR 71/91 and the seven periodical
summaries during April 88 to March 91 - and does not apply to the isolated
Page 8 of MR 72/91.

Therefore what evidentiary value the prosecutions claims in favor of the
Diary and the summary of receipts and payments cannot - and indeed does not
apply to the listed payments in page 8 of MR 72/91.

----------------------------------------------------------------------------
X. If all receipts as given in the charge sheet for the period from February
88 to March 91 and payments for the same period February 88 to March 91 as
per the diary (MR 71/91) are accounted - Jains could not have paid a single
rupee to -Advani - as all receipts during the said period are exhausted by
the payments during the said period listed In the diary.

The receipts and payments as summarized from
the month to month diary are as under:
(a) Receipts from February 88 to April 91: As
per charge Sheet 59.12 Crores
Opening balance as on 1.4.88 wrongly
accounted in the charge sheet as cash -0.02 crores
received.
As per Diary 59.10 Crores

----------------------------------------------------------------------------
Therefore the disposable funds available with the Jain's as per the diary MR
71/91 and as per the charge sheet tallies.

(b) Receipts and payments up to 31.3.91 (the transaction of receipt aid
payment for the month of April 91 are excluded because the details of
payment for that month are not fully recorded):

As per As per Diary
Charge Sheet 71/91 (Rs.
(Rs. Crores) Crores)
Receipts from Feb. 88 to April
91 59.12 59.10
Cash Received - 0.02
Opening balance in April 98 of
0.02 taken as cash received in 59.10 59.10
charge sheet. 0.02
Receipts for April 91 -5.92 -5.922
Balance 53.18 53.18
Payments as per diary 71/91
(Sheets 1 to 11) up to 31.3.91.
(The payments in he diary do -51.51 -51.51
not include the alleged payment
of Rs. 35 lakhs to Advani)
Balance as on 31.3.91 1.67 1.67
Totaling error in July 89 at
Page 6 of Diary 71/91 resulting
in lower closing balance in 0.00.50
diary
Closing balance as on 31.3.91
as per diary at Page 11 & back 1.66.50
of Mr 71/91
Correct closing Balance 1.67 1.67

Thus, the disposable receipts mentioned in the charge sheet at page 5 for
the period February 88 to April 91 (Rs. 59.12 Crores) as reduced by the
calculation error (of Rs. 2 lakhs and the receipts -for April (of Rs. 5.92
Crores) yields a disposable receipt of Rs. 53.18 Crores up to 31.3.91.
This is exactly tallies with the receipt of Rs. 53.18 Crores consolidated
from the monthly receipts in the diary MR 71/91 from February 88 to March
91. If the payments as per diary up to 31. 3.91 (which do not show any
payment to Advani) and the closing balance as on 31.3.91 are added, the
aggregate equals the receipts up to 31.3.91 - leaving not a single rupee
available for any other payment during February 1988 to March 1.991 other
then the payments mentioned in the Diary. Since all receipts as per the
charge sheet is exhausted by payments (and the alleged payment of Rs. 35
lakhs to -Advani, being non-existent in they Diary) and the closing
balance as on 31.3.91 there is clear evidence that there was - and could
be no such payment to -Advani" or any one else

----------------------------------------------------------------------------
XV. the charge sheet suppresses vital facts and contains incorrect
allegations and representations on the state of the record

The charge sheet suppresses important and vital facts which will make the
prosecution groundless if disclosed and the charge sheet also makes
generalized allegations in respect of all accused which do not apply to
Advani and in fact, in Advani's case, such allegations amount to false and
incorrect statements as shown below:

(a) The prosecution has supposed and withheld the fact - the vital fact -
that the name Advani or any payment of Rs. 35 lakhs does not figure in the
Diary MR 71/91 during the period April 88 to March 90 when it was allegedly
paid.

(b) The prosecution has also suppressed and withheld the vital fact that in
the three annual summaries at page 33, 29 and 30 of MR 72/91 and at Page 23
of MR 73/91 for the period April 88 to March 90 also the name Advani does
not find a place.

(c) The prosecution has claimed at page 8 and 12 of the charge sheet that
all the payments mentioned in the files tally and corroborate with the
payments in the Diary. It is clearly a false statement as the entry Advani
in the file MR 72/91 at page 8 is not corroborated by and does not tally
with the entries in the Diary Mr 71/91 and the summaries of receipts and
payments in files MR 72/91 and MR 73/91.

The suppression and false statements in the charge sheet shows the
determination to fix Advani - and is consistent with the case of the accused
that the prosecution filed against him was a politically motivated exercise.

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