The Lalit Modi-Sushma-Raje Saga - Lessons for the BJP

For two weeks now,  prime time TV debates have revolved around Lalit Modi (LM) and his  politician friends. A Sunday Times London report  referred to Sushma Swaraj’s assistance to LM. The ball then moved  at rocket speed to Chief Minister Vasundhara Raje in Jaipur. Every  day, news channels came up with startling facts: first, an unsigned  affidavit by Raje, receiving funds of Rs 11.6 Crores by LM in her son  Dushyant Singh’s company, investment in shares at a premium of  about Rs 96,000/, a signed affidavit, and Rajasthan Government’s  MOU with a Portuguese Cancer Hospital.

This story kept  unfolding with many twists and turns just like a mindless Ekta Kapoor  soap opera. The Media went back to Raje’s first tenure as Chief  Minister to tell us how LM was super chief minister, how files were  allegedly sent to him, then the sale of two havelis at a throwaway  price to a company in which LM and his wife were directors, passing  of the Rajasthan Sports Ordinance that allowed LM to unseat the  mighty Rungtas and become President of Rajasthan Cricket Association.  Lastly, how LM became the youngest vice-president of BCCI in 2005  with the support of Sharad Pawar.

Documents were shown  on TV to prove Raje’s guilt. In short, a perfect media trial. The  ordinary viewer might thus believe that LM was Raje’s creation,  that the BJP was responsible for nurturing LM and ignoring his  alleged misdeeds. News channels have brought perceptions to a stage  where LM is now an untouchable. A meeting or a picture with him is  the equivalent of being seen with the absconding don Dawood Ibrahim.

By the weekend of 27  June, some English news channels demanded Raje’s resignation. Old  stories were rehashed and new ones added to convince the viewer why  she should resign. The call kept getting shriller and shriller. One  channel kept on showing pictures of LM’s holidays in exotic locales  whilst reporting on him!

However, few can now  recall a similar media frenzy that took place in 1995. Then, a  leading pink paper went after former ITC Chairman KL Chugh. For over  a month about 50 per cent of column inches was devoted to the alleged  misdeeds and FERA violations by ITC and its Chairman. Every day we  were treated to juicy stories.

The perception in  that case as in LM’s case was built such that any reader would want  the Chairman to be sacked. However, in the end, it actually turned  out to be a corporate battle between Chairman Chugh and its British  shareholder, British American Tobacco.

After this, for  years, one did not hear about those charges against Chugh. And then,  in 2002, a report was published stating that charge sheets were filed  against six but not Mr. Chugh. So whatever happened to the published allegations against  Mr. Chugh? The media had moved on. (Disclosure: the author was an  employee of the ITC Classic Finance Group in 1995.)

Like Nestle in the  Maggi episode, the BJP merely denied the allegations, did not  communicate clearly and swiftly creating a perception it had  something to hide. Again, like Nestle, it generously allowed the  media to build up the story by which time a great degree of damage  had already been done.

How could the BJP have responded?

One, when the story  broke out, Smt Sushma Swaraj should have upfront stated the reasons  why she helped LM, her family’s long association with the Modis and  how her action, on humanitarian grounds, had not weakened the  Enforcement Directorate’s case against LM or caused any financial  loss to the exchequer. The Party should have proactively studied the  judgment of the Delhi Court, which restored LM’s passport, and  prepared an FAQ.

Judging by the way  LM has shared documents with the media it is clear that he is an  outstanding data miner.

Two, did Smt  Vasundhara Raje not know her friend of many years when she gave a  neither here nor there reply on the veracity of the affidavit  supporting LM’s immigration application to British authorities?  Subsequently the BJP questioned  the authenticity of the  affidavit on TV—only to be highly embarrassed when a signed copy of  the affidavit was released. This was a major victory by LM’s team  and consequently the media. Did Ms Raje keep the party in the dark or  were they plain naive?

If Raje had  confirmed the existence of the affidavit earlier on and stated it was  given in her personal capacity to help a friend, who is yet to be  convicted by Indian Courts, she would’ve reduced LM’s ability to  embarrass her with selective leaks and strike an emotional chord with  those Indians who value friendship. Most importantly, the friendship  did not cause any financial loss to the Indian Government or reduce  its ability to pursue LM’s prosecution for alleged misdeeds.

Three, while making  full disclosures on the quantum and timing of investment by LM in the  company floated by Dushyant Singh, the BJP should have given  instances of similar investments involving the Congress where the  sums involved were much larger.

According to Business Standard report a 2012 , “India Cements had  invested about Rs 140 crore in the companies of Jagan Reddy. This  includes an investment of Rs 40 crore in Jagathi Publications, which  runs the Telugu newspaper Sakshi, and Rs 100.3 crore in other firms,  including Bharathi Cements.” It is well-known that N.Srinivasan of  BCCI fame is the  Managing Director of India Cements.

According to a 2013 Mint report, After the block was allocated, Jindal’s  companies invested in Saubhagya Media,” a Hyderabad-based  firm. “They bought shares worth Rs.2.25 crore at a price of  Rs.100 each, when the listed price of Saubhagya Media was Rs.28  only.”

Further, according  to a 2012 Economic Times report, “Shah Rukh Khan and his wife Gauri are investors in Rajeev  Shukla’s companies. Gauri Khan invested Rs 10 crore in E24  Broadcast (formerly BAG Glamour) in early 2007. Shah Rukh is an  investor in ARVR Communications, a company promoted by Anurradha  Prasad that is the largest shareholder in BAG Films and Media Ltd,  the publicly traded flagship company of the BAG Group.”

Also read a 2013  article titled, ‘The  unholy nexus between business and politics has taken a whole new  form’ .

Fourth, is the  allegation that Raje/Sushma helped, and are shielding LM.

According to this  2015 Business Standard article of the 16 Enforcement Directorate notices issued to LM, 15 were  issued during the UPA regime. Details provided on LM’s website and  reproduced in this article are as follows-

BCCI and Cricket  South Africa inked an agreement on March 30, 2009 and floated an  entity called IPL (SA) Pty Ltd. It was acting as an offshore account  of BCCI by receiving all payments and settling dues. The ED has found  that this entity and its various actions including opening bank  accounts and transactions therein to be violative of FEMA as none of  these had the approval of the Reserve Bank of India (RBI).  All  these 11 notices are addressed to eight respondents. Apart from Modi  and BCCI, Shashank Manohar, then President, BCCI; N Srinivasan, then  Secretary BCCI; MP Pandove, treasurer, BCCI; Ratnakar Shetty, CEO,  BCCI; Prasanna Kannan, manager, IPL; Sunder Raman, COO, IPL, are also  addressed.

One show cause  was on hiring the international sports management agency IMG. ED has  found irregularities in payments made to IMG between May 24, 2008 and  November 12, 2010. BCCI, Modi, Srinivasan, Pandove, State Bank of  Travancore and its Chief manager are respondents.

IPL gave  guarantees to foreign players taking part in the tournament of a  certain base fee, retainer fee and player’s fee. ED has that such  guarantees were allegedly given without any general or specific  permission from RBI. Niranjan Shah, then Secretary of BCCI is the  third respondent in this case beside Modi and BCCI.

Two notices  issued in August 2012 relate to deposits received by BCCI from firms  based in UK and Singapore. BCCI allegedly received performance  deposits of Rs 20 crore and Rs 40 crore for grant of ‘media rights’  from Emerging Media (IPL) UK and MSM Satellite Singapore,  respectively. ED says these were illegal as RBI permission was not  acquired. BCCI, Shah and Srinivasan are co-respondents.

The third one,  which came in January 2015, was BCCI’s dealing with the broadcaster  Sony and World Services Group (WSG). ED alleged that the deal between  BCCI, MSM Satellite and WSG which provided for a ‘facilitation fee’  of Rs 425 crore was in nature of “entering into a financial  transaction in India as consideration for creation of assets outside  India” and violated FEMA. The complaint was against BCCI, Modi,  Srinivasan, Sundar Raman and several executives of WSG and MSM.”

Based on the above,  the BCCI is a respondent in every notice, Modi and N Srinivasan in  most, whilst a host of others are respondents too?

Why then, is only  Lalit Modi the epitome of media attention or is this hullaballoo  because of media’s dislike for the surname ‘Modi’? The  government could have avoided speculation by sharing information on  each ED notice.

IPL’s alleged  wrongdoings referred to in ED notices took place under the UPA reign.  Does the media really want us to believe that the UPA Government was  unaware of the IPL murkiness? Indeed, there were enough warnings  about the IPL. The India Today 4 June 2012 issue  did an excellent cover story titled IPL The Dirty Picture.

Given all this, why  didn’t the UPA speed up the judicial process to ensure LM’s  conviction for alleged violations? Post the issue of notices in 2011,  why did the UPA not get a red corner notice issued to enable LM’s  extradition?

Fifth is the MOU  with the Portuguese hospital where LM’s wife was treated. Mumbai’s  Tata Cancer Hospital attracts patients from all over India. The fact  that demand far exceeds supply means there is a need for more cancer  hospitals.

The Rajasthan  Government should have, in week one, come out with all details of the  MOU, and how it would benefit thousands of poor patients. The state  BJP woke up too late by which time the damage was done. Indeed, there  is a huge gap in the fact that the BJP is missing someone with the  intellectual bandwidth and depth of Arun Shourie and powerful legal  spokeswomen.

And now a line on  the media: just as we expect Ministers to make appropriate  disclosures in case of conflict of interest,  Editors/Anchors/Journalists must do the same whilst reporting. The  root cause of the problem is the BCCI. And it is also an excellent  opportunity for Modi Sarkar to clean up the BCCI mess.

In the interim, the  BCCI could be managed by a five person team consisting of a corporate  lawyer, chartered accountant, a management professional and two   former cricketers. I am pretty sure the Government can find five  Indians with impeccable integrity in a country of 1.25 billion  people. Cricket is India’s biggest religion. The government must  ensure BCCI operations are above board.

First  published Click here to view

The  author is an independent columnist, founder and a Chartered Accountant by education.

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