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regular-article-logo Saturday, 13 July 2024

PM Modi’s two faces on economic offence

Hard abroad, soft on cronies: Congress

Sanjay K. Jha New Delhi Published 10.02.23, 03:28 AM
Narendra Modi in the Rajya Sabha during the budget session of Parliament on Thursday.

Narendra Modi in the Rajya Sabha during the budget session of Parliament on Thursday. PTI

The Congress on Thursday pointed to the dichotomy between Prime Minister Narendra Modi’s lofty rhetoric on fighting economic offenders at international platforms and the reluctance to act despite investment by shell companies operating from tax havens in Indian firms, wondering whether the happenings in India were unknown to the world.

Congress communications chief Jairam Ramesh said: “Mr Prime Minister, you have used strong words in the past, calling on world leaders at G20 meets ‘to eliminate safe havens for economic offenders’, to ‘track down and unconditionally extradite money launderers’ and to ‘break down the web of complex international regulations and excessive banking secrecy that hide the corrupt and their deeds’. Yet these same world leaders cannot have missed the high degree of tolerance you have shown for such activities by your own cronies.”

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Modi has not only sought global cooperation for tracking down economic offenders, but had also suggested a ninepoint agenda to tackle the menace of fugitive economic offenders at the G20 meet in Buenos Aires in December 2018. This included setting up a Financial Action Task Force.

The Congress contrasted this outlook with real action on the domestic front, pointing out that Modi had refused to even order an inquiry.

Ramesh said: “Furthermore, the failure of market regulators like the Securities and Exchange Board of India (Sebi) to protect Indian capital markets has tarnished their image and put a question mark on the integrity of India’s financial markets.”

Congress leaders said in off-the-record conversations that the conduct of the Parliament presiding officers in removing even mild criticism or normal questions asked by Rahul Gandhi and Mallikarjun Kharge had created a wrong image of Indian democracy in the country and abroad.

One Congress leader pointed out that Modi appeared rattled by Rahul’s blunt attack as he for the first time in nine years referred to the “joy” in the anti-BJP ecosystem in his speech and even argued that people won’t trust the allegations because of his welfare measures.

There are some manifestations of the changing climate on social media because Rahul’s speech has clearly generated greater interest than Modi’s reply.

While Modi’s reply in the Lok Sabha on Wednesday had been watched on his YouTube channel by 4.88 lakh people by 8pm on Thursday, Rahul’s speech had been watched on his YouTube channel by over 12 lakh people.

Modi’s reply in the Rajya Sabha on Thursday was watched live by barely 4,000 people while Rahul’s small clip on Wednesday where he talked about the Prime Minister not mentioning Adani’s name drew 4.82 lakh views.

The Congress insisted that the Adani issue, along with the “unimpressive” budget, is finding resonance among the people and the feedback from the ground is encouraging.

The Youth Congress on Thursday again held demonstrations in Delhi, reviving the “Chowkidar chor hai” slogan even as a police crackdown restricted their protests. Youth Congress chief B.V. Srinivas said: “Does the Prime Minister come to Parliament to tell tales? Or is he not expected to answer questions? Why didn’t he answer Rahulji’s questions?”

The Congress asked three more questions in the HAHK (Hum Adani Ke Hain Kaun) series: 1) There are serious charges of “brazen stock manipulation” against the Adani group.

The collapse in publicly listed stock prices following the publication of these allegations has financially damaged the lakhs of retail investors who invested in Adani group stocks after being duped by artificially inflated prices. The value of Adani group stocks crashed by Rs 9,50,000 crore between January 24 and February 6, 2023.

On July 19, 2021, the ministry of finance had admitted in Parliament that the Adani group was under investigation for violating Sebi regulations. Yet Adani group stock prices were allowed to spiral after that. When will Sebi be held accountable for this serious lapse and for allowing the destruction of huge retail savings? Did the Modi government put pressure on Sebi to go slow in its investigation?

2) For all your (Modi’s) talk of cracking down on illicit flows of black money, your favourite business group is alleged to have manipulated stock prices using offshore shell companies and related parties posing as investment funds to bypass Sebi regulations.

One of the egregious cases is that of the Monterosa group that has owned as much as $4.5 billion (Rs 37,000 crores) of Adani group stocks. The CEO of this supposedly independent firm is allegedly linked to a fugitive diamond merchant whose son is married to Gautam Adani’s brother Vinod Adani’s daughter.

Other large funds are known to invest almost exclusively in Adani group companies, which is unusual for an investment fund. Take Elara Capital, in which former Conservative minister Jo Johnson, brother of former Prime Minister Boris Johnson, was until recently a director. Elara held some $3 billion (Rs 24,300 crores) worth of stocks almost exclusively in the Adani group.

The ministry of finance told Parliament that Sebi had frozen the accounts of certain funds operated by the Monterosa group in 2016, but no further action is evident. What has Sebi done to properly investigate these dubious benami companies? If not, what is the leverage that the Adani group exercises that has prevented the full force of India’s regulators and investigative agencies from unravelling the truth? What did Gautam Adani discuss in person with Sebi chairperson Madhabi Puri Buch in October 2022?

3) The inclusion of Adani Enterprises in the widely used National Stock Exchange (NSE) Nifty 50 index in September 2022 proved controversial. It had questionable fundamentals, an excessive priceto-earning ratio and a tiny free float. Adding Adani Enterprises compelled seemingly conservative Nifty index funds to make significant purchases of this risky stock, including the Employees Provident Fund Organisation, India’s largest pension fund.

In recent days, global stock indices have suspended Adani group companies while the matter is investigated, but the NSE has failed to take any similar action to protect investors. Is it not Sebi’s responsibility to protect investors by taking strict action? Is there pressure from the Prime Minister’s Office on the NSE and Sebi to go easy on Adani in an effort to bail it out?

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