From ‘Scam 1992’ to Electoral Bonds

I watched two outstanding mini-TV series recently. Both were biopics on those putative wicked villains of the past who end up appearing as star-crossed tragic heroes. A Very Private English Scandal is about Jeremy Thorpe, former chief of Britain’s Liberal Party who was accused of murdering his homosexual lover. The other was Scam 1992: The Harshad Mehta Story, about India’s first celebrity ‘Big Bull’ who upended Dalal Street. By the time Harshad Mehta dies of a heart attack on December 31, 2001, director Hansal Mehta makes you root for the beleaguered 47-year-old who saw both dizzying heights and bottomless lows. Journalist Sucheta Dalal exposed not just Mehta but India’s breezy affair with easy institutional money. It was more than a one-night stand.

Madhuli in Worli was once a residential address people doffed their hat to. The frisson at seeing Mehta’s Toyota Lexus at traffic junctions was noticeable. The world of high finance, though, is shark-infested and requires ruthless ambition and a pathological lust for profits. The destruction of an adversary elicits schadenfreude. Mehta had the audacity to defang the bear cartel. He was the Shakespeare of relationship-management and deal-making.

I have the dubious distinction of having worked with two foreign banks, ANZ Grindlays and Bank of America, which were neck-deep in the securities scam. Both pretended otherwise. I remember BankAm’s dapper Indian-American CEO at the time holding office meeting to say that the bank was pure as running water. It was laughable. In layman’s language, Mehta was simply playing around with idle cash balances (bankers call it “float”) awaiting physical settlement of stock certificates. It was easy to create a bull run as everyone wanted a share of the burgeoning pie. Especially, bored avaricious bankers.

Recently, SEBI fined Reliance Industries over Rs 40 crore for share price manipulations but trust me, insider trading is a market practice in India, like the infamous Bank Receipts. Is hamam me sab nange hain. Sexy equity research is a clever camouflage for boardroom leaks.

It was when I joined New York-based Alliance Capital that I saw how India’s biggest brokers openly insinuated “big names” they hobnobbed with who wanted their share prices massaged. The real battle was between the natural business savvy of the traditional Gujarati stockbrokers and the repressed ambitions of foreign banks and foreign portfolio investors seeking freedom from India’s labyrinthine laws. They smartly decided to hold hands. Ironically, Mehta’s credo was like that of his nemesis, Citibank: If you see a systemic fault-line, exploit it until caught.

Mehta took the unprecedented step of holding a press meet in June 1993, where he accused former PM PV Narasimha Rao of taking a bribe of Rs 1 crore for political guardianship. Nearly 28 years later, the truth remains buried. Both Rao and Mehta are dead. And election funding remains opaque. New India, anyone? The Indian Renaissance is not even visible on the horizon. Big Bulls have a friendly equation with ruling political masters. A self-confessed Modi bhakt and one of the most powerful stockbrokers is the current “market-maker,” who once said that democracy hinders India’s economic growth.

Greed is good, is how conservative economists cleverly twisted Adam Smith’s free-market philosophy. Mehta was Big Bull, but the wolves of Dalal Street operate from far away Lutyens corridors. Ultimately, in a non-transparent world of election bankrolling, there are many stakeholders. The political class is the most powerful of them. Quid pro quo transactions are based on verbal assurances. It is like a parallel underworld operation. Crony capitalism reigns.

I have been in politics long enough to know that the system is a stink bomb. Electoral Bonds is daylight heist, but the BJP cares two hoots (it gets 95% of corporate donations). Since the Congress gets a beggarly 5%, it should ideally aggressively seek a public investigation of anonymous donors. But it appears contented with paltry crumbs today, perhaps in the hope that the questionable instrument will serve it well when it returns to power. BJP and Congress are not sworn enemies; sometimes they are joined at the hip. A corporate friend sarcastically joked on the shady bond scheme: “One national party is like a petty pocket-maar. The other has elevated it to an efficient legalised operation with bulletproof SOPs.” The Supreme Court is yet to pass a verdict on a PIL on Electoral Bonds. It’s been over three years.

State-funding of elections is a poor option; we need less government. If a political party can successfully monopolise individual donors and corporate contributors it is kosher, but full disclosure must be mandatory. Concealment of even one rupee should be a criminal offence. India needs an independent empowered Election Commission, not a toothless paper lion. Corruption is institutionalised, and at its core is political financing. Right now in India, anything can be rigged.

Is there hope yet? Yes, but it is civil society that will have to do the heavy-lifting.

Narasimha Rao said he would survive Mehta’s bribery allegation just as Sita had in a trial by fire. He did. But until India sorts out its political funding train wreck, Ram Rajya is far away.

(The writer, a former Congress spokesperson, is author of The Great Unravelling: India After 2014)