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

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.

Dawood IbrahimDocuments 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 a 2012 Business Standard report, “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.”

Rajeev ShuklaFurther, 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.

modiThe 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.

Sanjeev Nayyar

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