ARE YOU READY TO CATCH TAX THIEVES ?
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NAGARAJ.M.R..........VOL.2....Issue.27...............16/09/2006
EDITORIAL : ARE YOU SINCERELY READY TO CATCH TAX THEIVES ?
- AN APPEL TO UNION FINANCE MINISTER & KARNATAKA STATE FINANCE MINISTER
In india , tax compliance is worse. In our criminal
justice system, there is rigorous imprisonment for a pick-pocketer
stealing Rs.10. even the authorities spend thousands of rupees in
legally prosecuting him & the thief spends a year or more as punishment
behind bars. Where as there is no commensurate investigation nor legal
prosecution nor punishment for corporate thieves , evading tax to the
tune of crores of rupees. In contrast, those tax thieves pay a part of
that booty to the ministers & political parties and get crores of
rupees tax exemptions , incentives from the government. Government is
rewarding corporate criminals.
The tax officials of central & state governments
are hand in glove with these corporate criminals & traders. For a
price, they are helping corporates & traders in evading tax. Most of
the tax officials are wealthy & leading luxurious lifestyles , much
beyond the scope of their legal income. The black money thus generated
every year by tax evasion , is many times more than our total annual
budget allocation. As a result, all our fiscal reforms fail & inflation
is soaring. This black money is the source of illegal funding of
political parties , terrorist outfits & underworld. It is a greater
threat to national unity & integrity.
Both the central government & karnataka state
government have failed to collect the full , actual tax dues from
corporates & traders. As a result , the governments don't have enough
money in their coffers even to provide basic needs like health care ,
education , safe drinking water , etc to the poor & needy. For every
Rs.100 tax evaded , one poor patient is dying without medical care , 10
poor persons lack education , 100 persons don't get safe drinking water
, 100 persons barely survive on a single piece meal per day , 20
persons starve. Most of The government officials , ministers & people's
representatives who have deliberately failed in their duties of tax
collection & welfare of poor citizens , SHAMELESSLY indulge in
luxurious lifestyle at the expense of poor tax payer . they live in
paltial bungalows , chauffer driven AC cars , all living food expenses
paid by exchequer , dine at 5-star hotels , only drink bottled mineral
water , eat non-vegetarian dishes , drink alcohol sitting before
mahatma gandhi's photograph & preaching mahatma's ideals. Mahatma
preached & practiced simple living , vegetarianism & he was teto teller
, he paid for his expenses from his earnings . these public servants
are parasites , who are making merry at the expense of tax payer.
Some non government organisations ( NGO) have
formed trusts and under the aegis of those trusts are running
educational institutions , hospitals , community halls , etc , in the
name of providing free / subsidised services like education , health
care , etc to the poor. It is only in record books , they conduct fake
medical camps , self employment training camps . in practice they are
running these educational institutions , hospitals & community halls
as commercial enterprises & collecting huge fees. they are not even
remitting full fees collected to the trust account & swindling the
money. no outsider is allowed to become a member of these NGOs , only
their cronies & their family members are in these trusts.
Numerous NGOs promoted by religious bodies , mutts
are swindling public & government money to the tune of crores of
rupees. Nobody dares to question the heads , pontiffs of these mutts ,
as at his feet VVIPs , ministers fall down. These religious bodies are
hot beds of fundamentalism , terrorism & mafia. Hwere is the
accountability of religious bodies & political parties in in india ?
Inspite of bringing specific cases to the notice of
authorities , they are mum ? hereby , HUMAN RIGHTS WATCH offers it's
services ( subject to conditions ) to the governments of india &
karnataka , in apprehending the criminals - tax evaders. Are you
ready mr.Chidambaram sir & mr.Yediyurappa sir ? If you are ready to do
your duty look into the following cases , take appropriate action &
kindly inform me about the outcome.
Jai hind.vande mataram.
Your's
sincerely,
Nagaraj.M.R.
REQUEST FOR INFORMATION AS PER PROVISIONS OF RTI ACT
- An appeal to tax authorities ABOUT MOBILE PHONE SCANDALS
Case no.1 : in the year 2004 , dealer for tata indicom mobile phone
service M/S INTOTO COMMUNICATIONS , kalidasa road , vv mohalla , mysore
sold a nokia 2280 mobile hand set to a customer for Rs.4000 along with
mobile phone connection ( bill no.41 dt 25/09/2004 ). On the box of the
mobile hand set , MRP is mentioned as Rs.5799 , so either the dealer is
selling the handset at discount or there is over invoicing the cost of
product during import. However there is no mention of discount in the
sales bill. There was no mention of 15 digit IMEI number nor there was
warranty card . all these proved that , the dealer is dealing in
illegal handsets either smuggled , stolen or seconds and selling them
to customers as brand new genuine ones.
The matter went before the honourable consumer disputes
redressal forum , mysore and the honourable forum acknowledged the
illegality of the handset & ordered the dealer to refund the money
with costs to the customer. The dealer has complied with the order ie
accepted his wrongdoing. ( Case no : CD 49/2005 ). The issue was
brought up before the CBDT , CBEC & CCT , till date no action why ?
Case no.2 : on 18/06/2006 , M/S Rajhans Novelties , surya bakery circle
, hebbal , mysore - dealer for reliance mobile phones has sold a
mobile connection together with handset for Rs.2060 . on the outer box
of the handset cost is mentioned as MRP Rs.4000 , however he has sold
it for Rs.1265 . also, the dealer has not stated the cost of lifetime
voucher ie Rs.795 in the sales bill ( bill no : 1017 dt 18/06/2006 )
, there is no mention of discount in the sales bill . it is a clear
case of either over invoicing of the product during import or sale of
illegal handsets. The reliance infocom is not even responding to my
queries & requests for written confirmation of 10 year validity. Why ?
there is something amiss here .
Hereby , i do seek following information under the
provisions of RTI ACT from ,the chairman of central board of excise &
customs , chairman of central board of direct taxes , government of
india & the commissioner , commercial taxes , government of karnataka
:
1. is the handset sold through bill no:41 dt 25/09/2004 by m/s INTOTO
communications , kalidasa road , vv mohalla mysore genuine one ? how
much excise , customs duty & commercial taxes has been paid towards
it's import & sales ?
2. is the handset sold through bill no:1017 dt 18/06/2006 , by m/s
Rajhans novelties , surya bakery circle , hebbal mysore , genuine one ?
how much excise , customs duty & commercial taxes has been paid towards
it's import & sales ? specific figures needed.
3. Why the amount of life time voucher is not shown in sales bill ? why
neither the company reliance infocom or it's dealer is not giving
written confirmation of 10 year incoming phone service validity inspite
of collecting Rs. 795 ?
4. every business transaction needs a bill. Then why don't the sellers
of mobile phone currencies , life time cards , activation cards are not
giving bills ?
5. also in these currencies , a part of currency ie money is deducted
as tax by the mobile companies. Are they passing on those deducted tax
amounts to the government ? when there is no track back on the sales of
mobile currencies , how the government collects it's rightful tax dues
?
6. how you are monitoring the growing riches of tax officials year
after year ?
there is a huge scandal under the belly of mobile
phone market , but the tax officials are mum . why ? HRW offers it's
services in apprehending tax thieves , are you ready ?
RELIANCE INDUSTRIES LIMITED
-WHERE IS ACCOUNTABILITY?
Dear mukesh & anil ambani,
The reliance industries has always got a favourable treatment from the
state & central governments.there are allegations that ,
1.years ago, the central government gave import concessions for import
of certain raw materials of textile sector ,which hugely benefitted the
P.F.Y & TEXTILE projects of your's ie reliance industries.
2.the O.N.G.C which has painstakingly surveyed the oil & gas reserves &
prepared a list of lists,gave that list & you got godavari basin oil &
gas project from the government .O.N.G.C could have developed it &
earned millions.
3.few months back you were charged both by the government & cellular
operators (GSM) that you are giving S.T.D & ROAMING FACILITIES to your
reliance phone subscribers.your's was only a W.L.L. they even claimed
that you are misusing a legal loophole & causing crores of losses to
the government & other GSM operators. however while the issue was
before the T.R.A.I, the trai legalized your actions by announcing
unified licence for telecom operators.
4.now you are charged by the government of re-routing ISD CALLS as
local calls,thereby causing crores of losses to the government &
BSNL.this time also you may get the reprieve from the government. the
government ,if a commonman does not pay his electric bills in time
slaps interest & cuts down the electric supply immediately.
however the same government ,even if your company has been alleged of
causing crores of rupees losses to the government & other players,
always enacts favourable laws for you like
a SANTA CLAUS.
WILL YOU PLEASE CLARIFY mr.mukesh ambani & mr.anil ambani?
the TRAI announced unified licence regime in haste that too with
retrospective effects.so all the charges against reliance were dropped.
in the same vein as unified licence got retrospective effect , why not
the government re-imburse the differece amount out of hefty fees
collected from other cellular operators ? take the reliance fees as
bench mark.anyway , finally commonman is the looser.
CASES OF RELIANCE INDUSTRIES LIMITED
RIL transported tonnes of steel on these!
Income Tax dept serves assessment notice exposing bogus
transactions;vReliance says claims genuine, goes in appeal to tribunal
C Unnikrishnan
The income tax department has issued a showcause notice to Mukesh
Ambani's Reliance Industries' Limited and then passed an assessment
order pointing out that the company has made some bogus transactions to
evade income tax for the assessment year 2003-2004.
These transactions relate to the purchase of tonnes of steel from
various parties for their projects in Jamnagar. However I-T
investigations reveal that these parties don't exist, except on paper,
or in some cases if the do, they don't deal in steel. Further, the
department's investigation wing also found out that the registration
numbers of the vehicles that were allegedly used to transport tones of
steel actually belonged to sundry motorcycles, scooters, one car and
even an autorickshaw!
Of the 76 transport vehicles mentioned by the RIL suppliers three
vehicles were not allotted the numbers by the transport officers and
owners of most vehicles denied any delivery while others did not have
the permit to enter Gujarat.
These details were then passed on to the assessment wing of the
department which carried the probe further and issued the company a
showcause notice. In response to that RIL denied any wrongdoing and
said they had receipts of the steel delivered and claimed depreciation
worth Rs 32 lakhs. (See box) However, the I-T department refused to
accept this claim and gave a detailed account of the way the case was
cracked. The modus operandi is mentioned in the assessment order sent
to RIL, a copy of which is with this newspaper.
This is how it goes: RIL claims to have made steel purchases from
several companies belonging to the Mumbai-based P K Agarwal group.
This group had in turn reportedly purchased steel from three other
concerns of Laxmi Exports, the proprietor of which is a certain
Vinayak Kokate. Kokate in his statement to the department then
admitted that there were no genuine transactions carried out. Kokate
even said his role was to deposit cheque/demand draft issued by RIL in
the bank account, withdraw the same in cash and hand it over to one man
addressed as 'Masa'. His identity is still secret. After some time,
this account was closed and another one opened in a different name.
Kokata was paid a remuneration of Rs 20,000 for this.
"Beacuse of these irregularities we are being extra-cautious this year
and probing all suppliers," said a senior I-T official on condition of
anonymity. RIL has now gone in appeal to the tribunal against this
assessment order. Their spokesperson refused to comment saying they
would await the verdict of the tribunal.
WHY RIL DID IT
This has been done basically to claim depreciation on a non-existent
asset. As the claim of depreciation increases, the incidence of tax
proportionately goes down. According to I-T sources, use of bogus
purchases also helps the corporate entity to generate cash. The person
who introduces the bogus purchases charges a small percentage usually
2% to 4% of the invoice/bill value and after routing the cheque through
the bank account arranges for withdrawal of the cash after retaining
his service charge of 2% to 4% as the case may be. This cash
then gets introduced into the system wherever unaccounted payments are
to be made.Govt bails out Ambani
PRESS TRUST OF INDIA
Posted online: Thursday, March 09, 2006 at 1545 hours IST
Updated: Thursday, March 09, 2006 at 1609 hours IST
NEW DELHI, MARCH 9: In a major relief to Reliance group firm IPCL, the
government has ruled that state-run gas firm GAIL (India) Ltd cannot
charge marketing margin on supply of natural gas.
"In terms of the gas pricing order dated June 20, 2005, GAIL is not
entitled to levy any marketing margin on any category of consumers for
supply of APM (government regulated) or JV gas," a Ministry of
Petroleum and Natural Gas order said.
The order comes after Mukesh Ambani-controlled Indian Petrochemicals
Corp Ltd (IPCL) approached the ministry against GAIL's notice to
terminate gas supplies unless marketing margins were paid.
The ministry's order states that "in the gas pricing order dated June
20, 2005 effective from July 1, 2005, the government has enunciated a
dual pricing regime for different categories of consumers, which is Rs
3,200 per thousand cubic meters to power, fertiliser and court
mandated/small consumers and the market regulated price for all other
consumers."
"The said pricing order does not envisage marketing margin on supplies
to any particular category of consumers. Furthermore, there are no new
marketing efforts made by GAIL post-June 30, 2005 vis-a-vis any of
these consumers," it said.
GAIL had demanded from IPCL a marketing margin of Rs 222 per thousand
cubic meters on the government-administered or APM gas, which it was
supplying to IPCL's plants at Baroda, Gandhar (Gujarat) and Nagathone
(Maharashtra).
GAIL had last month stated that "IPCL has not signed the revised gas
supply agreement with GAIL after the government pricing order which
came into effect from July 1, 2005," a ground enough to terminate gas
supplies.
------------------------------------
Another example of Reliance profiting at the cost of a PSU (read as
people of India).
This has been happening so often that it is now evident to every
educated person that Reliance Group is out to subjugate our beloved
nation.
It is for the people to unite and defeat their evil intentions
RIL's unfair trade practices with government connivance
Bade Telgi Ka Kamal Friends, You can see how Bada Telgi continues to
Con Government And Public Of India. RIL had slight surplus LPG after
using most of it for internal consumption and sales to PSUs. This
1,48,000 T is just 0.5% of over 30 Million Ton Jamnagar throughput.
Instead of selling it to PSUs at already contracted rates, it seeks GOI
permission to export it but in actual practice wants to sell it PSUs at
the import price these PSUs pay for exports, not the
contracted sale price for direct purchase. So many Bada and Chhota
Telgis rob India in addition to tax concessions Rs. 1,56,000 crores
which Business Standards termed as "Tax Dodges". We should raise such
vital issues at our meetings and groups and pass resolutions against
such "Daylight Robbery". Ravinder Singh Reliance seeks permission for
LPG export New Delhi, May 5
http://www.tribuneindia.com/2006/20060506/biz.htm#6
Reliance Industries Ltd, which operates India's largest refinery at
Jamnagarin Gujarat, has sought government permission to export 148,000
tonnes of surplus LPG in May-July. Indian Oil Corp, on behalf of the
industry, had last fiscal tied-up several tonnes of LPG imports from
suppliers, including Saudi Aramco of Saudi Arabia and Abu Dhabi
National Oil Corp. Industry sources said Reliance wants the IOC, which
had tied-up the imports for itself and on behalf of sister public
sector oil firms Hindustan Petroleum and Bharat Petroleum, to import
the contracted cargoes and the surplus LPG in the system could be
exported by RIL from its Jamnagar refinery. "As RIL suffers losses in
disposal of LPG import cargoes in the international market, it would be
prudent for RIL to plan export of its own produced LPG," the company
wrote to the Petroleum Ministry. Currently, LPG cannot be exported
without government nod.
RELIANCE LOOT OF Rs.95OO CRORE ?
Showcause notice for non-payment of additional duty.
The Central Excise and Customs Department today issued a showcause
notice to Reliance Industries Ltd, asking the company to explain why
action should not be taken against it for unpaid duty amounting to Rs
9,500 crore.
The notice has been issued for non-payment of duty on export of petrol,
high-speed diesel and aviation turbine fuel from the company's Jamnagar
refinery during the five-year period from August 31, 2000 to August 31,
2005. The basis of the notice is an observation made by the
Comptroller- and Auditor-General's office in Gujarat.
The CAG has contended that though RIL was exempt from the payment of
basic excise duty on export of petroleum products, it has to pay an
additional duty on the same.
According to sources, RIL was to pay an additional excise duty at a
rate of Re 1 per litre on the exports, which was later raised to Rs
1.50 per litre.
Central excise and Customs sources in Rajkot confirmed that the notice
was issued by the department this morning.
"We have issued a notice to the company for the Rs 9,500-crore
additional duty on exports made by the company from its Jamnagar
refinery," the sources said.
When contacted by Business Standard, an RIL spokesperson said he would
not like to comment on the issue.
With good profit margins, RIL has been exporting a sizeable output of
petroleum products from its Jamnagar refinery.
According to RIL's annual report for the last financial year, the
refining business had a net turnover of Rs 48,183 crore against Rs
39,258 crore in 2003-04. RIL exported 10.2 million tonnes of refining
products to 30 countries in 2004-05. Iran in West Asia and Brazil in
South America are some of RIL's major markets for diesel and petrol.
The company's exports of petroleum products are expected to jump
significantly once the planned expansion of the Jamnagar refinery, to
60 million tonnes, is completed.
RPG CABLES LTD thy name FRAUD ? BEWARE BANKERS & SMALL INVESTORS
M/S RPG CABLES LTD , an industry located at mysore is promoted by the
most influential congress M.P mr. R.P.Goenka. the senior executives of
the company are looting the resources of the company in turn bringing
bad name to the company & causing immense losses to all
stakeholders.
Without due permission of the customers & in violation of customer
contracts, these executives are effecting deviations in the process
like using recycled products, processing at higher speeds & using the
approved materials at the ends of the cable ie testing lengths only ,
in between the cable length non-conforming raw materials are used.
Thereby, these executives are cheating the customers like BSNL, PGCIL,
GAIL, MTNL, etc since years. Many cables are failing at fields , if
thorough inspection is done many more will come to light. The company
is made to pay huge penalties , even sufferred blacklisting all due to
the greedy actions of senior executives.
There is no proper tendering procedure while purchasing raw materials
or disposal of machinaries. The money is siphoned-off to sister
companies by offering low interest loans, selling the shares at
undervalue or by purchasing shares at inflated price, etc.
There is no proper documentation or tax payments for the flow of goods
between M/S RPG CABLES LTD, MYSORE & M/S CONCEPTA CABLES LTD, MYSORE.
There is no word called TRANSPARENCY OR CORPORATE GOVERNANCE in their
books.
These type of ill-gotten wealth of various industrialists & traders in
india is fuelling the black economy, destabilising the economy,
cheating the government of it's tax dues, cheating the lending banks,
funding the political parties, underworld & terrorist outfits. The
senior executives of the company are leading the luxurious lifestyles
much above their known sources of income. When mr. R.P.Goenka has
failed to properly govern a small company, how can he
govern our vast country india being a member of parliament ?
RPG CABLES FIT TO BE BLACK LISTED FOR UNFAIR TRADE PRACTICES
this is a company promoted by longtime supporter & congress M.P (member
of parliament), mr.R.P.GOENKA. the company was blacklisted by the
supreme court of india in 1996.the
company was subjected to inspection by department of telecommunications
& tax authorities,for various violations of contract,tax laws,etc,time
& again,however eachtime it was MANAGED WELL.
due to various wrong decisions of the management like purchase of wrong
raw materials(not upto customer requirements),changing process
parameters and using reworked/recycled materials, all in violation of
CONTRACTS WITH THE CUSTOMERS(like BSNL, MTNL , PGCIL , GAIL).thereby
the customers were supplied with inferior quality products than those
mentioned in the contract. as a result the company was forced to
frequently pay-up penalties to
the customers & to provide replacements to the customers,all to the
tune of crores of rupees.after opening up of CONCEPTA CABLES LTD in
mysore beside the RPG CABLES LTD in mysore the materials used to be
moved from one company to another without any documents or excise
documents.
the company has totally disregarded the safety & environmental norms.
HOWEVER WHENEVER GOVERNMENT OFFICIALS CAME FOR INSPECTION THEY MANAGED
IT SO WELL WITH THE AID OF FAKE DOCUMENTS. the management frequently
made large purchases from the market
without calling for public bidding/tender. the management frequently
gave loans/money advances to the sister concerns at low lending rates
than the prevailing market rates. finally as a result the public -the
shareholders,government,lending banks are cheated by the management.
ILLEGAL ACTS BY M/S RPG CABLES LIMITED
An industry belonging to member of parliament mr.R.P.GOENKA.
Respected sir/madam,
subject : 1) illegal retrenchment by M/S RPG CABLES LIMITED.MYSORE.
2)THE NEGLIGENCE OF DUTY BY ASISSTANT LABOUR COMMISSIONER MYSORE.
3)refer : IDA-3/CR-152/2002-03 dated 25/05/04
I have brought the issue of illegal retrenchment of me by the above
said management and other injustices , to the notice of honourable
labour commissioner on 15/05/04.in turn he directed the A.L.C MYSORE to
take action & to send a report to him.on 02/07/04 the A.L.C Mysore
informed me that as the same dispute of retrenchment has been filed by
RPG CABLES EMPLOYEES UNION & as she has sent the failure report to the
government , the matter is closed.
The A.L.C mysore has not taken into consideration the total number of
employees (workman) working in RPG CABLES unit 1 &unit 2 mysore ,RPG
CABLES branches at silvassa, raebarelli U.P.,thane,maharashtra and the
marketing offices spread throuht india, in the preceding 12
months.all these units are merged , a single entity with common
registered office at mysore.
In my application dated 15/05/04 , i have raised other issues of
injustices like,damage to my health ,occupational safety,unfair labour
practices,etc.the A.L.C mysore has not treated those each issues as
separate disputes and has clubbed everything with the issue of
retrenchment & swept it away. why this negligence of duty ?
1. there are workman much junior to me in my category working in the
company.
2. after effecting the retrenchment on 29/04/04 the management through
oral orders has made internal transfers to my category.these new
transferees are also much junior to me.
3. i was not paid equal wages for the work of equal value & quality.
4. i was made to lift, push weights more than 60kg all alone.
5.i was not provided safety gears against the fumes of methyl ethyl
ketone, petroleum jelly,H.D.P.E,L.D.P.E compounds.
6. i was not provided safety gears to handle optic fibre cable
materials.
7. some times even handgloves were not provided.
8. since 2 years i was not provided even safety shoes & clothings.the
first-aid room is not properly equipped,the accidents go unreported
intentionally.
9. in night shifts i was not even provided the 1/2 hour rest interval.
during overtime shift continuation also the 1/2 hour rest interval were
not provided to me.
10. various machines are without proper safety guards.the D.G sets are
operated by the personnel without D.G OPERATOR LICENCE.
11.no yearly employee health check-up nor the safety audit is
conducted.
12. the scrap disposal is not proper,the cables are burnt in the
open,the optic fibre cable scrap is thrown in the yard.
13. due to all these unhealthy work practices & sorroundings , i have
sufferred health damages
14. the management has closed the canteen while conciliation was going
on.
15.the management was paying rupees 8.00 as the canteen allowance plus
subsidy for each day instead of rupees 9.50 which it was paying early
to the canteen contractor.
16. the management effected the retrenchment while the conciliation
proceedings were going on.
17. the management threatened me of dismissal if i don't resign from
the union leadership.
18. the management didn't take into account the balance of working days
of the previous year nor it was carried forward while giving EARNED
LEAVE for the current year.
19. the management was not paying the monthly salary on the stipulated
date.
20. the management didn't pay the full & final financial settlement on
the last working day together with retrenchment notice .
HEREBY, I DO REQUEST YOUR KINDSELF TO TREAT THE EACH ISSUES AS SEPARATE
DISPUTES , TO GIVE ME JUSTICE , TO ORDER MY RE-INSTATEMENT INTO SERVICE
WITH FULL BACKWAGES, TO SECURE ME THE MEDICAL COMPENSATION TOWARDS
HEALTH DAMAGES.
THREAT TO INDIA'S SECURITY BY CORPORATE CRIMINALS
- An appeal to honourable prime minister of india & honourable chief
minister of karnataka
In india , since ages certain section of people - dalits , tribals
are being oppressed in the name of caste by forward caste people. The
name sake independence has not changed the lives of dalits & tribals.
The
upper caste people were in control of government & economic sector
before independence as well as after independence too. The upper caste
people are now MPs , MLAs & are running businesses . they have framed
rules , laws to suit their ends. They are getting bank loans ,
subsidies , tax cuts , etc , by greasing the palms of those in power
- their own caste men. The reservation policy is just a vote winning
gimmick of forward caste politicians , it is neo divide & rule policy.
Only few dalits with money & contacts have benefitted , by the
reservation policy of government. Majority of them are still
sufferring from utter poverty & social oppression.
Now, due to rapid industrialisation & globalisation a new economic
divide has taken place - rich & poor , haves & have nots. Now,
economically poor are also being oppressed along with dalits. The
forward caste people in government have framed laws to suit their ends
, they have provided concessional priority loans , tax cuts , subsidies
, etc from the government to corporate sector . The corporate sector
has demanded & got monetary benefits , infrastructure facilities from
the government . however the same corporates , MNCs are violating
statuotary laws & are averse to social welfare measures of the
government . they are averse to provide jobs to dalits , tribals & poor
, why ? these corporates are bribing the labour , tax department &
other government officials . as a result the government is loosing tax
revenues to the tune of thousands of crores every year , the government
doesn't have money to provide social welfare measures to common people.
The lives of common people are under threat. Now,
the number of common people dying due to starvation , lack of health
care is more than in a war field. The threat to unity & integrity of
india is more from the corporate sector than pakistan or china.
Now, the government of india & other state governments are literally
under corporate control. HRW has brought to the notice of government
cases of statuotary law violations by various corporate entities ,
till date no action has been taken. Why ? hereby , HRW once again
offers it's conditional services to the government of india & karnataka
in apprehending corporate criminals , corrupt tax , labour , pollution
control board offricials. Are you ready sir ????
COVERING-UP CORPORATE FRAUDS IN INDIA
- CORPORATE ACCOUNTABILITY & CORPORATE GOVERNANCE NEED OF THE HOUR
In India , most of the commercial ventures cheat
the government of it's rightful tax dues. As a result the governments
doesn't have enough money to carryout it's social welfare duties -
Providing health care , food , potable water to all. In turn common
people are dying due to lack of health care , hunger , mal nutrition ,
etc. the murderers of these commoners are TAX EVADING CORPORATES , the
politicians & officials keep mum by taking bribe.
Nowadays , even the underworld activities of
mafia , terrorist outfits , political parties are being financed by
the illegal corporate deals. Who says threat to India is from Pakistan
only , it is most likely from our own entrepreneur. Till date the GOI
has not put any corporate bigwigs behind bars for their crimes. The
corporate lobby always clamours for flexible labour laws , credit
policies as in U.S.A , but are mum about SOCIAL SECURITY NET ,
ENVIRONMENT POLICY & CORPORATE GOVERNANCE as in the same U.S.A. Why ?
Recently , it has been published that , in India
out of vast sales of counterfeit MOVIE CDs & software CDs , underworld
is funding narcotics trade , terrorist movements. It is high time the
small investors , public became aware about the activities of their
neighbouring businessmen / Entrepreneurs.
CORPORATE FRAUDS IN INDIA
`Forget terrorism, I want to be an accountant' Osama Bin Laden,
`quoted' in Private Eye.
CORPORATE frauds have becomes a global phenomenon. There is a crisis of
confidence arising from the failure of the pillars of the capitalist
system such as the stock market, financial analyst and accountants and
the investment banks.
>From Harshad Mehta to Ketan Parekh and further down to Madhavapura
Co-operatives in 2002, it is a familiar story of a few corporate heads
indulging in creative accounting with the sole object of enriching
themselves at the cost of the lower middle-class investors.
Almost every corporate giant in India has been accused of violating
business ethics and indulging in corporate mis-governance. "For every
fall from virtue," confessed Mr Mukesh Ambani, "there is a seducer.
Millions can be offered only when billions can be made".
India, however, shares the distinction of being in the company of
Corporate America. Enron (fraud of $591 million), WorldCom (fraud of
$3.8 billion), Adelphia (off-balance sheet loans of $3.1 billion),
Xerox ($6 billion) and a host of other corporates have been caught
red-handed. The investment advisor, Merrill Lynch, confessed to giving
false advice to the public about investments and compounded the offence
by paying $100 million.
Fortune magazine displayed a table of CEOs as felons and suggested that
there should be a list of 500 worst-managed corporates in the World.
India will take a number of ranks in such a list if prepared.
The American scene
Despite the powerful Securities And Exchange Commission (SEC) and the
Internal Revenue Service not found wanting in handing out deterrent
punishments, audit firms such as Arthur Andersen and KPMG, went hand in
glove with corporate houses to fudge accounts to the detriment of the
public at large, which forced the US President, Mr George W. Bush, to
inaugurate the new Corporate Fraud Task Force and declare: "This
Government will investigate, will arrest and will prosecute corporate
executives who break the law.''
"Infectious greed,'' said Mr Alan Greenspan. Ralph Nader was more
accurate. "It is impossible to exaggerate the super market of crimes.
It is greed on steroids.'' The American Congress passed a Corporate
Accountability Act in July 2002. Ralph Nader suggested the setting up
of a Federal Bureau of Audits to monitor the top thousand companies. As
India grapples with the crises of confidence posed by the failure of
so-called pillars of the capitalist system such as investment banks,
analysts, accountants, and Dalal Street, it is time to rework the
regulatory mechanism and ensure a fool-proof system under which
conflict of interest will not arise for audit firms and there will be
transparency about financial crashes. There is much in the present
American scene that India can look for guidance.
In August 2002, the US Government promulgated an unprecedented order
forcing top managements of hundreds of giant companies to swear by past
financial results. The order covered 945 companies, including giant
corporations such as AOL Time Warner and Bristol-Myers Squibb.
The SFC of UK
The British Government set up the Serious Frauds Office in 1987 to be
responsible for investigating and prosecuting serious or complex
frauds. The Attorney-General appoints and superintends its directors.
Serious and complex fraud cases can go straight to the Crown Court
without committal for trial. That Court can hold preparatory hearings
to clarify issues for the jury and settle points of law. Time is of the
essence of investigation and the success rate of the UK Serious Fraud
Office is 71 per cent in obtaining conviction.
Even in the US, convictions are secured against CEOs within two years
of the launching of prosecution. Contrast this scenario with the
situation in India. Despite the constitution of Special Courts to
investigate the securities fraud, no conviction has been secured.
The Indian scene
It is unbelievable that the hundreds and thousands of
"whistle-blowers'' from board directors to corporate insiders and the
accounting firms and the credit-rating agencies were kept in the dark
about the goings-on in the Indian financial world.
How did the system ensure such effective silence on the part of so many
involved in the deals? How come a few corporate houses were able to
rush to the UTI in time to retrieve their investments - a privilege
denied to the low-level pensioners eking out their livelihood from the
Monthly Income Plans? What is the JPC's answer?
Every time a scam erupts, we seem to be satisfied with the ordering of
a probe by the Joint Parliamentary Committee whose report, delivered
long after the event, is consigned to the parliamentary libraries
without any worthwhile action being taken
Rule of Law
We have a queer sense of the rule of law. A murder accused does not
have as many chances of filing appeals in higher fora of law as
financial fraudsters.
Our jurisprudence is yet to march in step and act as per the urgent
needs of a society plagued by white-collar crimes. Macaulay's Penal
Code is incapable of meeting the requirements of this century.
We need a new radical jurisprudence. Financial crimes are no less
heinous than the crimes dealt with by the Code of Criminal Procedure.
We need a new law to tackle such financial crimes. It is a sad fact of
life that the Economic Offences Courts, set up with much fanfare two
decades back, have proved a damp squib.
The Government of India has set up the Corporate Governance Committee
under the chairmanship of Mr Naresh Chandra, former Cabinet Secretary.
The panel will no doubt examine and suggest changes in accounting
practices, regulation of auditors and the supervisory mechanism for
over seeing corporate Governance.
The Institute of Chartered Accountants of India cannot shirk its
responsibility when so many accounting frauds are being exposed. Why is
not the Indian accounting standard harmonised with the international
accounting practices?
The ICAI has been dormant for several decades as can be seen from the
fact that in the first two decades of the formation of the accounting
standards board, the ICAI issued only 15 accounting standards; it woke
up in the past two years and rushed with 12 more standards and more are
in the offing.
Whereas these standards were not mandatory in the initial years SEBI
has made it compulsory for the entire corporate sector to fall in line
and comply with these accounting standards.
It is in this context that the need for internalising our accounting
standards arises. We can also emulate the US example and establish a
permanent Public Accountability Board. It is also necessary that SEBI
is vested with powers similar to those enjoyed by the SEC in the US.
The Proposed Serious Frauds Office should act as a coordinator along
with SEBI, the RBI, the CLB and the Union Revenue Intelligence Wing.
And,finally, can we ever visualise any leading corporate fraudster in
India being handcuffed for being led to jail?
Yet, that Bastion of Democracy and Rule of Law - the US - was able
to haul up the founder of Adelphia Communications and his sons in
handcuffs in front of a bank of television cameras.
ITC Scam - Corporate Crimes and the Indian Big Bourgeoisie
The revelation of the multicrore fraud by the Indian corporate giant,
ITC by way of excise evasion and FERA violation, has put in sharp
relief the hollowness of the recent rhetorics by the big bourgeoisie,
viz. Swadeshi, economic nationalism etc. The company's $100 million
foreign exchange and Rs.799 crore excise-evasion fraud and the other
recent findings from the raids at Shaw Wallace & Company (Rs.150 crores
siphoned off by its NRI owner) and leading export house, Ganapati
Exports (over Rs.85 crores of over-invoicing) focus light on the
ingenuous and multifarious tricks of corporate fraud, many of which
have been standardised as `prudent' business practices.
Less than a year back, when the multinational BAT Industries, the
principal non-institutional shareholder in ITC (with about 32% stakes),
had first forced the then chairman KL Chugh to resign and then opposed
Chugh's man, YC Deveshwar for the post, in an attempt to gain total
control over the company, the former chairman draped the tricolour and
the whole bourgeoisie and the media lauded it as the heroic defiance of
a `nationalist' corporate against a `neo-colonial' British
multinational's threats to takeover ITC. However, those who harboured
these illusions have received their worst shock with the unfolding of
India's biggest EXIM fraud. Probably, greater and many more such frauds
still lie unexposed. Now BAT is back in its takeover game with the
takeover war getting dirtier and dirtier bringing all the corporate
muck before the public glare. While the government seems to be readily
obliging the multinational in its covert game, sending signals to
foreign capital regarding `the level playingfield' of a different
order, the ITC top brass who tumbled down like nine pins, and their
fraternity across the corporate world, have come to realise that
Swadeshi can hardly come to their rescue when they have so many
skeletons up their corporate boards.
But the ITC affair serves to highlight certain general characteristics
of the big bourgeoisie. For one thing, it has established that
corporate boards are dens of thieves. Unwilling to fight what now they
describe as archaic FERA rules and regulations unsuited to the modern
world of business, these corporate houses preferred to park funds
outside the country illegally to carry on what they claim `normal'
business practices. Despite their clamour for liberalisation, in
reality, they have one-sided preference for only certain liberalisation
measures and start squealing, invoking Swadeshi invariably, the moment
MNCs mount an assault for takeover, but they are little amenable to any
strict framework of corporate accountability to the shareholders.
The claim on ITC due to excise fraud, along with a Rs.74 crore penalty,
for just a four-year period, is the biggest excise claim ever served on
a company. Excise evasion is not new to the corporate world and various
corporate laws have been given the go by time and again. According to
the Directorate-General of Anti-Evasion, the amount of excise evasion
detected rose from Rs.562 crore to Rs.1,236 crore in the liberalisation
period 1991-92 to 1995-96. This in spite of the fact that during this
period excise and custom barriers have been reduced and the hold of the
`suffocative' rules loosened. But our bourgeoisie which loses no chance
to adorn the `nationalist' cloak whenever it comes to foreign takeover
bid or opening up of new sectors for FDI, has been consistently
devising new methods for evasions. As in the case of ITC, where the
company, deliberately for years, maintained a pricing strategy that
kept higher effective prices than the maximum retail prices marked on
their cigarette packets. Even in the case of exporters who were allowed
to import without having to apply for foreign exchange under the
liberalised regime, willful violations took place like over-invoicing
export bills to pick up the tax concessions on exports. About 605 such
cases have been detected by the authorities in the last four years, a
period when under the new tax set-offs, EXIM violations should have
come down.
The ITC episode also puts a question mark on the role of financial
institutions (FIs). In this particular case FIs had put their weight
behind Chugh when it came to oppose BAT's move to raise their holdings
to 51% - a seemingly patriotic gesture of supporting domestic crooks
for the cause of warding off `imperialism'. As a rule most of the
nominees of these FIs and the supposedly watchdog bodies like SEBI and
CLB sitting in the boards of these companies have remained passive and
have hardly taken interest in checking the massive bungling going on in
corporate houses, even though collectively they command majority
stakes, 35.5% as in the case of ITC. While many FIs complain being
under-staffed organisations and having lack of resources for research
and investigation, the government too has deliberately pruned their
powers - they cannot impose penalties on erring companies which can
only be done by courts.
With majority stakes, FIs can effectively prevail over the management
to impose strict business discipline. Instead, as was revealed in the
case of MS Shoes, another irregularity taking place with alarming
regularity has been to make FIs give loans against insufficient
collaterals. It is estimated that such unsecured loans in the excess of
Rs.4,000 crore lie unrecovered. With forex-starved coffers and also
pressures from MNCs and specially after India's surrender at the WTO
ministerial meet, it cannot be ruled out that in the future political
pressures will be exerted to bring around the FIs to ease the way for
raising the stakes of foreign shareholding companies even over 51% or
pave way for FIIs for full takeover. The recent SEBI norms on takeovers
which describe them as a perfectly healthy business practice in a
competitive economy, has already set things in that direction.
Why the crackdown now? The excise evasions which came to light way back
in 1992 had been in the cognisance of the enforcement agencies since
then but it took them four years to crackdown on the company now on
FERA violations after going soft on massive excise frauds. The Chitalia
brothers, partners in crime but subsequently fallen apart with ITC, had
spilled the beans and their subsequent filing a law-suit against the
latter for damages and defamation had already piled up pressure on the
enforcement agencies to make the much delayed crackdown on the company.
With the country witnessing activism from the judiciary and the
enforcement agencies the raids at ITC offices throughout India and the
arrests of 2 former chairmen and 8 executive directors, made
sensational headlines and gave the impression that a generalised
crackdown on corporate crimes may be in the offing.
However, to radicalise it as an Armageddon of the bourgeois state
against the erring individual members of the class is wishful thinking.
One, these revelations are but the tip of the iceberg of thousands of
crores that the corporate crooks have swindled for years. Two,
corporate crime does not take place without the sanction of politicians
and bureaucrats, with whom the bourgeoisie share a reciprocal
symbiosis. Deve Gowda was quick to go all out to allay fears of the
industry that a spate of raids were to follow or this was a new
`raid-raj'. Even a shaky Bal Thackrey was seen assuaging the fears of
his corporate friends. Even at the time of VP Singh as FM, all talk of
cleaning up the corporate world fizzled out after few initial raids on
business houses like Kirloskars etc. Sometimes, the bourgeois state
does crackdown on some individual members of the ruling class,
politicians, businessmen, bureaucrats etc., and usually those who would
go a bit too far, in the overall interests of the class and class rule.
And the media laps this up as the widening dragnet of a neutral state
though the holes are so big that the majority escape and only a few are
netted. One of the biggest crooks, Reliance Industries was let off the
hook recently when the CLB granted permission for compounding of all
offences (28 cases out of 29) in the duplicate share certificates and
share-switching scandal.
Even the press at large, though with a mild condemnation of ITC's
corrupt practices, was sympathising with ITC calling it a victim of
imperialist conspiracy and wishing Deveshwar to bring back a
`respectable' and `India's very own' multinational back on the tracks.
Most of the parties, including the left partners of UF, were rather
reserved in their reactions. Instead of demanding of the government to
continue with the crackdown on other corporate defaulters, some of the
left MPs from CPI-CPI(M) who spoke up individually, only spoke of this
as a BAT-Chitalias inspired crackdown on ITC. After all, these are the
parties which theorised that Indian big bourgeoisie is opposed to
liberalisation in the context of Bombay Club and it is the CPI(M)
veteran EMS who characterised the UF as an alliance of communists and
progressive and forward-looking bourgeoisie. The ITC experience should
serve as an eye-opener for these opportunist leftists to cast away
their illusions about the Swadeshi bourgeoisie and the government of
the`forward-looking' bourgeoisie. Can a bunch of crooks be the leaders
of economic nationalism in India?
-Siddartha
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