The Hindu Business Line : Inquiries into Volcker report — Let it not stray into a blind alley

It is entirely right that the Government has decided to leave no scope for idle speculation on the Volcker report and to clear the air once and for all. Only, it should ensure that the two-pronged inquiry does not turn out a damp squib.

STUNG to the quick by the inclusion of the names of the Congress party and Mr Natwar Singh in the list of supposed recipients of allotments of oil by the Saddam Hussein regime in Iraq under the Oil-for-Food Programme, the Government has taken timely action to appoint a former UN Under-Secretary-General, Mr Virendra Dayal, to collect and compile all relevant and authentic information.

The former Chief Justice of India and Judge of the International Court of Justice, Mr R. S. Pathak, will undertake a formal judicial inquiry into the imputations on the basis of the material obtained in the form of documents and oral testimony.

Measured and judicious

Apart from containing the political fallout of the Volcker committee disclosures, this will also serve to counteract the growing tendency of implicated public figures brazening it out with subterfuge, coming out with the familiar outraged denials and protestations of innocence, and bad-mouthing the accuser, without answering his specific charge, as if two wrongs make one right.

Such persons also resort to imputing political motivations and clouding the issues, ruling out any inquiry citing certificates of good conduct given to oneself, or by dignitaries roped in for the purpose, and hauling the accuser himself over the coals by making him the victim of a vengeful inquiry for foisted misdeeds.

It would not have escaped the notice of discerning observers reading between the lines that the Prime Minister had, in the beginning, commented, not directly but through his Press Adviser, and that too in a measured and judicious manner, about the Government being "deeply concerned" over the unverified references, the evidence being "insufficient to arrive at any adverse or definitive conclusion," but all the same, the Government "being determined to go into the root of the matter and establish the truth or otherwise of the references".

This is the position consistently taken by the Prime Minister's Office (PMO) from the day following the publication of the story in The Hindu on October 29. This shows that there had been no hesitation in the Prime Minister's mind in confronting the situation head on.

It is worth noting that although he has been saying that a mention in the annexures to the report does not by itself constitute proof, it is clear that this is only for the record because he has not so far come out with any categorical assertion, unlike Mr Natwar Singh or the spokespersons of the Congress Party, that the report is baseless.

In short, he has been giving the impression of one who is willing to keep an open mind until the inquiries are completed.

Disturbing development

This has to do not just with his upbringing as a civil servant who does not want to jump the gun and say things he will regret later but also with the fact that the reach and range of a Prime Minister's eyes and ears are not confined to media reports and sound bytes.

He has many other sources, active behind the scenes, from whom he receives a variety of inputs in the form of pointers and clues.

For instance, a story ricocheting in media circles is that the Finance Minister, Mr P. Chidambaram, had advised Dr Singh that from what had been turning up during a quick cross-check in his Ministry of the leads provided by the Vocker committee report with reference to India, there was enough reason for the Government not to be dismissive of its contents. That was why the Prime Minister has stopped with what essentially are proforma reservations.

Meanwhile, there has been a disturbing development which, in fact, lends a semblance of credence to the information put together by the Volcker committeee and is gradually weakening the force of denials by the Congress Party and Mr Natwar Singh. Of the four from India named as non-contractual beneficiaries (meaning they had no obligation to supply food or humanitarian goods to Iraq), Reliance Petroleum and Prof Bhim Singh have corroborated the entries in the report about them. While the former maintained that the allocations were handled as a regular commercial transaction, the latter conceded that an offer of allocation of the specified number of barrels was indeed made but not accepted as a matter of principle.

Among the Indian companies shown as contractual beneficiaries that supplied various items falling within the definition of humanitarian goods in return for oil, Cipla and Tata have been candid in admitting the transactions along with backhand payments going by the euphemism of `charges for transportation and fabrication' which, they say, they considered legitimate.

Likewise, it is seen from what can be gathered from the ambiguous reactions of the Australian Wheat Board, DaimlerChrysler, Volvo, Siemens and Weir that comments by the Committee on their roles have not been off the mark. In the US, the investigation of the oil-for-food programme has resulted in indictments on corruption charges against two Russian citizens, a Texan oilman, a Bulgarian living in the US and a London oil trader.

It can, therefore, be plausibly argued that the very fact that the inclusion of some among those named have been found to be justified, although their culpability with regard to utilising the oil allocations or making illicit payments may be a moot question, points to the necessity for a further probe into the deals insofar as they concern individuals and business concerns in India.

Fabricated?

A view being propagated is that the documents on which the Committee relied for making its observations may have been fabricated by the CIA or the US Administration or at their behest by Iraq's Ministry of Oil or its State Organisation for Marketing Oil (SOMO) to put into trouble those who were sympathetic to Iraq or Saddam Hussein, or opposed the sanctions or the invasion by the US. This is to assume either that the three eminent members of the committee with such distinguished credentials were themselves privy to such forgery and fabrication or that they were so naïve as to be taken for a ride. Actually, the records and notes of officials in Iraq's Oil Ministry and SOMO were in the public domain from the end of 2003, and they were the sources for my article "Oil as a weapon of mass corruption" (Business Line, October 15, 2004) 13 months before the submission of the Volcker report.

That apart, why should these documents of the period include corporate icons, or stray individuals and political parties unless it be for recording dealings in the course of normal transactions? In the context of India, what motive could the alleged fabricators or the Iraqi officials — who were most likely ignorant of India's internal politics — have for choosing the four entities named as non-contractual beneficiaries and the 130 companies as contractual beneficiaries?

It is entirely right, in view of these considerations, that the Government has decided to leave no scope for idle speculation and to clear the air once and for all. Only, the route of the double-barrelled inquiry it has chosen should not be allowed to lead everyone into a blind alley. The possibility of this is inherent in some of the loose ends. For instance, only the Congress party and Mr Natwar Singh are proposed to be brought within the purview of the inquiry, keeping the business concerns out for the present.

There is no indication in the terms of appointment of Mr Virendra Dayal, working on the diplomatic front, requiring him to assist the inquiry by Justice Pathak on the judicial front. Sans such a requirement, there is every chance of overlap or, worse, crossing of lines, with considerable drain on resources and loss of time, blurring the nature of the final outcome. It is also doubtful whether Mr Dayal's status as a plenipotentiary will give him sufficient clout to prevail upon the various actors in the drama to comply with his demands for information and evidence. Already, Mr Volcker has politely declined to act on any request other than from a judicial body.

Hobbled

The inquiry by Justice Pathak also is likely to face a number of legal and functional impediments. For starters, it has not been set up under the Commission of the Inquiry Act, which would have automatically vested Justice Pathak with extensive powers of summoning of witnesses, production of documents and enforcement of his directions on pain of penalties in the form of fine or imprisonment.

If he is merely viewed as a standalone individual embarking on an inquiry, even were the Government to confer some of the powers under the Act, his authority would be nothing more than that derived from an executive fiat and not of a statutory Commission. Thus, he is bound to feel hobbled in discharging his duties.

The other factor hamstringing the efforts of Mr Dayal and Justice Pathak arises from want of extra-territorial jurisdiction. Governments, state agencies, companies, intermediaries and banks will be no any compulsion or obligation to make available to them on demand all they have or know pertinent to the inquiry, and may not cooperate, especially if they have something to hide or want to protect their clients. This does not take into account the enormous strain that sifting and scrutinising documents, examination of witnesses and travelling to distant places will impose on Justice Pathak, who is 82.

If for these the inquiry turns out to be a damp squib, the damage to the Government's credibility will be incalculable. There is still time for the Government to guard against facing accusations of eye-wash or white-wash by devising suitable ways to make the inquiry purposeful in consultation with the Opposition so that the outcome finds acceptance across the political spectrum.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Of limited appeal

New draft EIA Notification — Unaddressed issues cloud positives

Inquiries into Volcker report — Let it not stray into a blind alley

Why France is burning

Portfolio for models and ministers

Whither regulatory autonomy?