Modi's Minimum Raj: Jaitley Forwarded Anonymous Note to Flag Key Matter to PMO

Finance minister sought prime minister's intervention on the question of the poor handling of international arbitration cases running into hundreds of crores of rupees.

New Delhi: Union finance minister Arun Jaitley, who often advises the prime minister on a host of issues, feels that India’s interests are not “being adequately addressed in 23 international arbitrations”, the ministries of mines and heavy industry are not doing their job and that the law officers engaged by the government “do not have the adequate stature to create an impact on these arbitrations.”

These arbitrations – including the controversial Rs 22,100 crore Vodafone case – involve revenues worth thousands of crores of rupees for the exchequer.

Worse, in a letter he wrote to Modi’s principal secretary, Nripendra Misra, in May last year,  Jaitley took unusual recourse to enclosing an anonymous note from someone whom he describes “as a former colleague from the legal fraternity” to drive home these points.

When Modi took office in the halcyon days of 2014 he did not tire of promising “minimum government, maximum governance”. That a powerful minister holding multiple portfolios had to take recourse to an anonymous letter to point out instances of misgovernance to the prime minister casts a shadow over Modi’s claims of running an efficient, decisive government.

The Wire is placing Jaitley’s letter in the public domain for the first time.

Arun Jaitley’s Letter to PMO on Vodafone Arbitration dated May 26, 2017 by The Wire on Scribd

In a damning indictment of the way the Modi government works – which is contrary to the public perception it has sought to create – Jaitley also writes that “there is no coordinating ministry which is following up these arbitrations on a day to day basis and this needs to be addressed adequately”.

The fact that arbitrations involving billions of dollars of tax payer money are being handled in such a cavalier fashion as described by the finance minister himself speaks volumes for the claim made repeatedly by Modi that he will act as a “chowkidar“, or watchman, of public funds. Worse, Jaitley’s damaging indictment came three years after the Modi government took office –  enough time for him to rectify the errors of his predecessors.

Apart from the Vodafone matter, four other “illustrative” cases the note mentions are RAKIA, involving the ministry of mines, the Cairn and Vedanta cases involving ITAT (whose nodal ministry is law and justice), and Nissan, involving the government of Tamil Nadu.

In the Cairn case, the note Jaitley forwards says it would be prudent for the government to engage a tax and damages expert like the claimant [has] done”.

The anonymous note which Jaitley forwards says that “it is necessary that these cases are effectively handled so to avoid adverse awards being passed against the Republic of India which have huge financial implications.”

The note, which appears to have Jaitley’s endorsement since he forwarded it to Mishra, suggests that the lawyers hired by the Union of India are not good enough and that the government “should hire a leading Queens counsel (QC) to represent the government from Essex Court chambers”.

The note also suggests that “one of the leading QC’s who is not conflicted and is also representing GOI in other cases, Salim Moollan, could be considered for engagement for the Vodafone case.”

Jaitley’s “former colleague”, whose identity he did not reveal to the PMO, stresses the value of hiring a leading QC, even if this means paying higher fees: “It is important that a QC of repute is engaged rather than on the basis of a low cost quote”. He also suggests the name of three other QC’s for engagement in the vexed multi billion Vodafone case” The names suggested in his letter are Joe Smouha, Peter Goldsmith and Maurice Mendelson, all QCs.

While Jaitley’s note draw attention to  the huge implications for the exchequer on account of the shoddy handling he points out, it is not clear what action Modi took to rectify the instances of incompetence his finance minister identified.

Jaitley is one of India’s leading Supreme Court lawyers and virtually the entire team of law officers who represent the Union of India has been vetted and in some cases selected by him.
His close friend, Mukul Rohatgi, was, till recently, the attorney General of India. Legal observers say Jaitley’s letter to the PMO is clearly a vote of no-confidence in the law officers representing the government.

Interestingly, Jaitley was Vodafone’s counsel in the tax matter till he became the leader of the Rajya Sabha and publicly said that he was “recusing” himself from any handling of Vodafone matters as a minister in the highest standards of probity in public life. Though his letter to the PMO makes the case for more effective representation against Vodafone, it does still represent a U-turn on the public pledge he took on keeping away from the case.

The note forwarded by Jaitley asks for the setting up of an inter ministerial committee comprising representatives of finance, external affairs, law and the concerned ministry to “effectively represent the state and act as lead state agency”

It reiterates that the committee must be empowered to engage counsel having expertise from both within the country and outside and this should not be on the basis of a low fee quote.

Jaitley’s letter is a pointer to the the complete inertia and lack of urgency of the concerned ministries, despite the huge sums of money involved in these arbitrations.

The fact that no one seems to care that India even has representation in such big ticket arbitrations is telling. Says a lawyer who is familiar with the shocking state of affairs: “Is it stupidity or cupidity? Are these people deliberately helping transnationals who have taken the GOI to court? The implications are huge. And are all claims of guarding public money mere window dressing?”

Lawyers say a huge question mark is placed on the functioning of the government when one of its most powerful cabinet ministers points to repeated failure and draws a line in the sand.