Watch: Prashant Bhushan Explains the Sahara-Birla Diaries

Prominent lawyer Prashant Bhushan discusses the recent Sahara-Birla diaries, over-invoicing of coal imports by Reliance and Adani groups, and the Essar tapes.

You recently brought to public notice the Sahara diaries and the Birla papers, which the income tax department also has. Could you tell us about what these documents actually say?

In 2013, there was a CBI raid on the Aditya Birla Group of companies, in particular Hindalco, in connection with the coalgate scam. In that raid, apart from recovering Rs 25 crores in cash, the CBI also recovered some information stored in the computer of the CEO of the Birla group – Amitabh. Several documents were recovered – some of them showed bribes being paid to some Environment Project J, which is obviously to the ministry or to the minister of environment. We know that around the same time the Birla group of companies was trying to secure environmental clearances from the ministry of environment for a large number of their projects. So those clearly represented bribes paid for getting the environmental clearances. There was another set of documents which was recovered from the computer of Shubhendu Amitabh, which said, “Gujarat CM – Rs 25 crores. 12 paid. 13?”

Unfortunately, though these documents showed payment of bribes and therefore, offences under Prevention of Corruption Act, the CBI did not register any FIR on this matter but just passed the papers on to the income tax (IT) department.

Income tax department did a somewhat detailed investigation into the matter. They questioned Amitabh many times in which he admitted that he had written, “Gujarat CM – Rs 25 crores. 12 paid. 13?” But he said that “Gujarat CM” meant Gujarat Alkalis and Chemicals. When asked what the C and M stood for he was unable to answer and the IT department concluded that he was lying.

They also found that there was a large amount of cash which was being received through Hawala by the Birla group and was apparently being paid to various people. But despite this the IT department did not refer the matter back to the CBI for investigation of these ostensible offences under the Prevention of Corruption Act and the matter was sought to be buried at that level. After that we understand that the Birla group has approached the IT settlement commission for settling the matter and the hearings have been concluded; the matter is likely to be settled after which there is this apprehension that the papers seized in the raids will be returned back to the Birla group.

The Sahara raid took place on November 22, 2014. In this raid Rs 137 crores of cash was seized from their offices in Noida, from the corporate office of the chairman, and a large number of documents, some loose sheets, computer data from his personal staff were seized, which showed details of proposed as well as actual payments made to various senior political figures. One of the documents which was seized – a printout of a detailed spreadsheet – in which the first three columns represent the cash the Sahara group received on different dates from different sources and the total comes to Rs 115 crores. Thereafter, this document also represents cash payments to different people on different dates and the places where the payment has been made, and the persons who have taken the payment are also mentioned. It is signed by the IT officer, two witnesses and one of the Sahara officials. Several such documents were recovered in this raid. There was another one which was partly overlapping with minute differences. For example, in the previous one the payments which were referred to as, “cash given at Ahmedabad, Modiji”, in other documents they are referred to as, “cash given to CM Gujarat”. There are Rs 40 crores given at Ahmedabad to Modiji, Rs 10 crores given to CM of Madhya Pradesh, Rs 4 crores to CM of Chhattisgarh, Rs 1 crore to CM of Delhi which at that time was Ms Sheila Dikshit. These are all payments made between 2013 and March 2014.

Despite recovery of such incriminating documents and in such detail which showed pay-offs made to various senior political figures, the IT department did not refer this matter to the CBI for investigation under the Prevention of Corruption Act. They apparently prepared some appraisal report which according to my understanding does not deal with these papers and the pay-offs, and these documents were buried. The person who was responsible for burying the documents of both Birla and Sahara was K. V. Chowdary, who was heading the IT investigations at the time and thereafter was appointed, apparently as a reward, as the chief of central vigilance commissioner of the Central Vigilance Commission (CVC). It was the first time a revenue officer was appointed although there were a number of complaints against him; his name appeared several times in the entry register of the infamous former CBI director, Ranjit Sinha, who was involved in interfering with the income tax assessment of Ponty Chadha. He was also involved in the stock guru scam which is apparently still under investigation. Despite that, Chowdary was still appointed. We challenged his as well as the appointment of another person in the CVC. Because of our information that he played a major role in suppressing the information, we have filed an application. When I got these documents in October, I sent a complaint to CVC, CBDT, the Enforcement Directorate, CBI and to the SIT on black money, saying that these are highly incriminating documents and according to the principles laid by the Supreme Court in the Jain Hawala case these should have been investigated – whether these payments were made, why were they were made, if these were bribes or some other kind of payments – but none of that was done. The matter was sought to be buried.

Therefore, we have eventually moved the Supreme Court, filed an application in the petition that we had filed challenging the appointment of the CVC and that application will be heard on Friday.

Sahara diaries mention a lot of names but they don’t specifically name the politicians, for example, like you said the Delhi CM and so on. Are there more? Who are the other prominent politicians mentioned in the list?

There’s Madhya Pradesh CM Shivraj Singh Chouhan, Delhi CM at the time, Sheila Dikshit, Chhattisgarh CM Raman Singh and the Gujarat CM at the time, Mr Modi. Mr Modi is also personally mentioned as Modiji. Largest payments are made to him in the Sahara diaries, more than Rs 40 crores. One other politician which is mentioned prominently is Shaina NC of the BJP and one of the documents says that she was being asked to intercede with the advocate general of Maharashtra for withdrawal of some case which was pending against Sahara. Perhaps the Sebi case (which was mentioned as the Bombay case in the papers).

The Modi government is already in the know of these papers because you have already written to various agencies. What are the kind of replies you got from the government?

Well, I only received one response from the CVC after ten days saying, “Will you please confirm whether you have sent this complaint?” I immediately confirmed that I sent this complaint and I am not aware as to what they have done, or whether they have done anything in this matter because unfortunately, it seems that the CVC himself, as the head of investigation of income tax was responsible for suppressing this.

The income tax department has already filed an appraisal report back in 2015. What could the Modi government do right now to investigate the matter?

Of course, no investigation by an agency controlled by the government would carry any credibility in this matter because the names of top people in the government are mentioned as major recipients of these pay-offs. This would have to be investigated by SIT or some court monitored investigation by the Supreme Court. That is what we had asked for. Investigation in this case was easily possible because the people who are the carriers of the money are mentioned. The IT department had found out that they were employees in the personal staff of the chairman. Uday Sawant, Jaiswal and so on who were mentioned, they were all identified. The telephone and mobile numbers they were using had also been identified. It was easy to find out whether these people who are mentioned as being the carriers of the payment were indeed at those places where the payments are shown to have been made. That could have been easily investigated and then these people ought to have been questioned. They would have to explain what they did with the cash which has been shown as received.

All that should have been done. Of course, they would deny it but the investigation still needed to go into all these aspects. They could have checked if the persons who have received and delivered the money were present at the place and their phone records would have shown.

The Birla papers make it apparent that the minister of environment was made some payments by the group in exchange of certain favours like the environmental clearance Hindalco was seeking at the time. Do the Sahara papers also mention what were the favours done to these companies in exchange of the alleged payments?

The Sahara papers don’t mention that. In fact, some of the Sahara papers seem to suggest that these were general kind of payments being made to influential people in order to keep them happy. Perhaps close to the elections, as political donations. But in any case, many of these people were senior public servants. Sahara certainly had operations in all these states – Gujarat, Madhya Pradesh, Chhattisgarh, Delhi – one would have to investigate if there was any sort of quid pro quo or they were just political or black money donations which have not been shown by politicians or in their party returns. The Sahara papers also mention payment of Rs 15 crores to the BJP office, and all this happens at the time when Mr Modi had taken over as the [prime ministerial candidate] of the BJP.

This brings us to the larger question about the politics-government-corporate nexus. A few months ago you were also highlighting the Essar Tapes, which showed Essar tapping into phones of various prominent persons in the government and elsewhere. A few months ago we also came to know of a scam where both Adani and Ambani and various other private companies over-invoiced the coal that they imported and the burden of which directly passed onto the consumers. So we have three scams and what do you want to say about the Essar Tapes and the over-invoicing of coal imports?

Of course, those are major scams. It’s not just the Essar tapes but also the Essar emails. There was a whistle blower in the corporate office of Essar Corporation who uncovered a very large number of internal emails of Essar which showed a very systematic attempt to bribe a large spectrum of senior public servants, somewhat similar to the Sahara case. Those emails have been with the government; they are subject matter of a petition which I have filed in the Supreme Court. The government has been asked to respond to that but there has been no response so far. They have just been sitting on this matter because a large number of these pay-offs implicate senior members from the BJP, the ruling party. They implicate Congress people also, just as the Sahara and Birla papers do, but because they also implicate the BJP people this government has just been sitting on them.

Similarly, with the over-invoicing of coal by the Adani group as well as some others like Reliance where the department of revenue intelligence itself has uncovered the entire evidence showing over-invoicing through bogus companies registered in tax havens through whom this over-invoicing was done. All this evidence was available with the government but again nothing was done. I had myself sent two fully documented complaints, one against Mukesh Ambani, which showed that Rs 6500 crores was brought in to four 100% owned Mukesh Ambani companies through a fictitious Singapore company which had no assets, no income, no business. But the largest FDI from Singapore came in through that fictitious company. The Indian high commission in Singapore had at that time, in 2011, written to the ministry of finance saying that this is a very suspicious FDI and needs to be investigated. But the UPA government didn’t do anything about this. When I came to know, Mr Modi had just become the prime minister and I sent a complaint to him that this is the evidence which the Indian high commission has itself written, which means that Reliance has siphoned out money from their company through over-invoicing, which is also reported by the CAG in their KG D6 basin, that they had over-invoiced a lot of their purchases and that siphoned out money has been thereafter laundered through this fictitious Singapore company and brought into Mukesh Ambani’s companies. Nothing was done.

I wrote the same thing against Anil Ambani. Some investigations were carried out by the IT department. About $750 million were again brought in through the Singapore route through a bogus, fictitious company to 100% Anil Ambani owned companies. These are classic ways of money laundering. Nothing has been done about this.

It was well known that participatory notes is one very large anonymous investment device through which black money is laundered and invested in the stock market. Because participatory notes are anonymous you can’t come to know the holder of the notes, they are purchased from outside and through that investments are made in the stock market in India. I had written to Mr Modi immediately after he became prime minister that you are talking about curbing black money, you need to at least stop these anonymous investment devices like participatory notes and FDIs from tax haven companies. When a tax haven company makes an investment in India, you can’t come to know as to who are the beneficial owners and shareholders of that company. Therefore, ways like the Singapore route, are easy to launder illicit money. If the prime minister wanted to carry out a surgical strike against black money he should have gone against all these – Essar, Ambanis, Adanis, holders of participatory notes, investments coming from tax havens, or against holders of Swiss bank accounts or people with their names in the Panama Papers. He would have got lakhs of crores of black money and that would have been a surgical strike on the people who are known to be holding black money in large amounts.

Instead of that, this demonetisation is touted as a surgical strike when you know that you are taking out 86% of the currency in circulation. Half of the poor people in this country have no bank accounts, ATM cards and therefore, they are holding all their savings in cash. They can’t use that. They are in very serious trouble. Farmers are in trouble, people are dying in queues and due to malnutrition, people are losing their jobs. The whole economy has taken a huge hit, especially the poor people, in the name of carrying out a surgical strike on black money when in fact it is just a ham-handed attempt. As Arun Shourie pointed out, it’s a strike against currency. It’s a strike against the legal tender.