The Nation: Enforcement Directorate; Price of a Push

The ED chief's removal has invited queries from the Supreme Court and triggered speculation on who pulled it off .

If dogged pursuit of criminal charges against well-known people held the passport to fame, M.K. Bezbaruah would by now have vied for a place in the sun with Kenneth Starr. But the similarity ends there. The Enforcement Directorate (ED) chief, who was recently removed from his post, dealt with offences under the FERA, a musty law against holding assets in foreign currency, which is now being sent to the archives. Unlike the US independent prosecutor, Bezbaruah's script had no sex, and no prime-time trial. Yet, the 1968-batch IAS officer had ruffled enough VIP feathers in his three-year tenure -- AIADMK supremo J. Jayalalitha, publishing tycoon Ashok Jain, political tantrik Chandraswami, to name a few. Even his ouster from the directorate was far from quiet, with Jayalalitha, who might as well have thrown a party to rejoice at his exit, instead launching a war of statements alleging that people close to Prime Minister A.B. Vajpayee had been "bribed" to secure Bezbaruah's removal.

While Jayalalitha's charges soon erupted into a fresh crisis for the five-month-old coalition Government at the Centre, the transfer of the enforcement director to the Delhi Government as its transport commissioner attracted frowns even from the judiciary. A three-judge bench of the Supreme Court described Bezbaruah's transfer as an "extremely distressing matter" in view of the "sensitive" cases he was handling. The bench has ordered the Government to file an affidavit by August 26 on the circumstances of Bezbaruah's transfer. The bench, hearing the Indian Bank scam case, in which the directorate is one among the investigating agencies, put a question mark on the transfer by saying that it would be "subject to further orders of the apex court" on the next hearing date, September 8. An official in the Law Ministry said: "The Government seemed to be in a tearing hurry to shift Bezbaruah. If it had consulted us, we'd have advised caution because the Supreme Court had clearly debarred the executive from making any changes at the CBI or the ED without a reasonable cause."

The haste in removing Bezbaruah is intriguing because there is indeed a "reasonable cause" for it. An earlier Supreme Court judgement, which had outlined procedure for appointment to the top seats of the investigating agencies, had also ordered that the enforcement director must hold at least the rank of an additional secretary. Being of the joint-secretary rank, Bezbaruah is clearly disqualified for the post. But instead of submitting it before the court as the ground for his transfer, Solicitor General of India Santosh Hegde took a rather messy plea before the bench that the shifting took place because the Delhi Government needed an officer of Bezbaruah's competence to head its Transport Department. At this, Justice B.N. Kirpal, one of the judges on the bench, wanted to know when the Delhi Government had made the request and when it was complied with. The dates: August 11 and 13. Justice S.P. Bharucha, seniormost of the trio, remarked with a smile: "It shows the Transport Department of Delhi would have come to a halt without him (Bezbaruah)."

The procedure of appointment of the directors of CBI and ED, as formulated by the Supreme Court in December last year, is now being fine-tuned by the Law Commission. Until this exercise is over, there is little chance of the directorate finding a new chief. The question is: who stands to gain most from a headless ED? Considering the array of powerful people on the ED's list of suspects in several FERA cases, it is quite likely that one of them had pulled strings to get him out. Was it Jayalalitha?

Though the amma of Poes Garden has denied it -- she has twisted the needle of suspicion in the direction of Ashok Jain -- her cupboard is brimming with FERA skeletons. These are:

These cases being at the trial stage, with notices being served by the ED on the accused persons at frequent intervals, it was but natural that the BJP's weightiest alliance partner was losing sleep. Besides, with all these monies allegedly flowing through her company without quite showing on the asset side of its balance sheet, it lent substance to the charge that the cash was the harvest of graft. Jayalalitha and her friends and associates undoubtedly had the largest stake in the removal of Bezbaruah. "I have not made a single move in this (Jayalalitha) matter, nor on any other major case, without the knowledge of the Revenue Department," Bezbaruah said. But directorate sources say that the investigation against amma and her people would have been hushed up from above but for Bezbaruah.

Jayalalitha's accusation that Jain, chairman of the Bennett Coleman and Company Ltd, could be behind the ouster drama is suspect on one ground. In the FERA investigation against Jain, the Supreme Court gave ED a clear order to complete all investigation by a specific date -- which is over. The directorate has appealed for an extension of the date, but there is little possibility of fresh ammunition being added to the prosecution case. The continuance of Bezbaruah in the directorate is therefore not of much consequence for Jain.

The ED case involving Chandraswami has been hanging fire for quite some time. One of the main prosecution witnesses in the FERA case against the controversial godman is dead. However, the investigation against Chandraswami began hotting up since 1995, when the Supreme Court goaded the investigating agencies into action. An apex court bench led by former Chief Justice of India J.S. Verma directed the ED to report back on the investigation against Chandraswami. Justice A.S. Anand, who is due to become the Chief Justice of India in October, was a member of that bench. This fact alone could have struck a note of urgency among those who would have liked to drive a nail in the case's coffin.

Jayalalitha, Jain, Chandraswami ... who was behind the plot to put a gadfly away from the ED? While the answer will probably remain a riddle swaddled up in mystery, the directorate has proved once again its reputation of being an undying source of political irritation. In the high noon of Rajiv Gandhi's rule, V.P. Singh, his finance minister, broke away from him and eventually brought the government down because of a combative enforcement director Bhure Lal, and his "raid raj" on big business. History often threatens to repeat itself.

Reform-atory
With Kelkar replacing Ahluwalia as finance secretary, the chariot of liberalisation rolls on.

Both Vijay Laxman Kelkar and Montek Singh Ahluwalia -- the new man in the finance secretary's room in North Block and the one to step out -- are committed to reform. The difference is that Ahluwalia started off in the world of public policy as a reformer whereas Kelkar is a "born again" reformist. He began his career in the Government in the '70s in the charmed circle of leftist bureaucrats like D.P. Dhar, Lovraj Kumar and Gopi Arora -- men who wished the state to capture the commanding heights of the economy, with Indira Gandhi at the commanding heights of politics. But this difference has narrowed down over time. Just as much of yesterday's socialism has become "wasm", with both sides of the ideological picket fence clamouring for economic policies to be left alone by politicians.

In the Finance Ministry, Kelkar's entry is with the tide, whereas Ahluwalia had to swim against it. When the spry and dapper former World Bank economist became the Economic Affairs Secretary in 1991, the air in Raisina Hills was heavy with anti-globalisation rhetoric. Its practitioners had just vacated their lofty chairs, but not before leaving the economy in a shambles. Whether the five years of "Manmohanomics" that followed had infused some life-blood into it is still a point of debate. But it clearly put to an end a dirigisme economic philosophy and reduced the time lag in public policy environment between India and the rest of the world. It also turned India, from a nation tottering on the brink of bankruptcy, to an interesting transition economy which the world began to watch. At least a part of its credit should go to Ahluwalia, who had headed the Income Distribution Division of the World Bank at 25, authored a seminal work on rural poverty when he was 32, and was on first-name terms with some of the most powerful economists of the '90s -- Lawrence Summers, Michael Camdessus and Stanley Fisher.

Kelkar, on the other hand, flowered as a public policy planner during his stint as chairman of the Bureau of Industrial Costs and Prices (BICP) from 1987 to 1991. An engineer from Pune, and armed with a PhD in economics from Berkley, Kelkar brought into the stale corridors of a government office a rare understanding of the "real sectors" of economy, such as technology, research and development, markets and pricing. As BICP chairman, he drafted a report on pricing electricity and another on telecom services, which greatly influenced official thinking on these subjects in the later era of liberalisation. At the BICP, he also devised pricing mechanisms for drugs and for the aromatic products derived from petrochemical plants. These pricing exercises were the forerunner of future thinking that the states should stay away from setting prices of products and services as much as possible. As petroleum secretary between 1994 and 1997, he helped dismantle the administered pricing mechanism in the oil sector and headed a select group of executives in preparing the blueprint for the entire sequence of reforms in the oil sector. Before taking over as finance secretary, Kelkar was chairman of the Tariff Commission with the task of simplifying and revising the excise taxes and customs duties.

So Kelkar moves into his new office, leaving a blazing trail. But Ahluwalia was losing his sparkle over the years, due largely to the failure of the P.V. Narasimha Rao government to control the politician-banker-stockbroker-bureaucrat mafia -- best evident in the 1992 securities scam and the Indian Bank scandal. The economic slowdown since 1995 finally weighed down heavily on the North Block's shiniest star. Kelkar has, therefore, moved into an office where, as a newly appointed adviser to the ministry quips, "things cannot get much worse."

In another wing of the building, the Revenue Department, the change of guard from N.K. Singh to Javed Choudhary signals the transition from a colourful leader to a low-profile bureaucrat. For Choudhary too, the entry is well-timed with the tax receipts picking up in the first quarter. Also lucky is S.D. Mohila, the new chairman of the Central Board of Excise and Customs. The new team in North Block should thank their masters if an economic recovery is round the cornner.

-- Sumit Mitra