Anatomy of CBI Cover-up!

There has been much talk about the way in which CBI probes are subverted because the agency is not independent. One popular solution is to make the CBI accountable to a newly created Lokpal. Do most people who glibly offer solutions have a realistic idea of the problem? They should first acquaint themselves with how corruption is really covered up. They would know then that the challenge is much bigger than they realize. They would know then that the crisis is not just about corruption but about culture. They would know then that the problem is not just about the CBI but about the system. They would get some idea of this after recalling what happened in the Mother of all Cover-ups – the Jain Hawala Case. This briefly is what happened in that case. 

In 1991 a terrorist funding case was being investigated by the CBI. On May 3, 1991 a special investigating unit conducted searches in several places. One belonged to SK Jain from where Rs 58 lakhs and a huge amount of foreign exchange were recovered. Along with these, proper books of accounts, as described by the Supreme Court, later popularly described as diaries, were also seized. The accounts revealed Rs 64 crores from abroad and their disbursement in India. It transpired that top politicians and bureaucrats were recipients of these foreign funds. 

Among the top politicians were: Rajiv Gandhi, LK Advani, Devi Lal, Pranab Mukherjee, Yashwant Sinha, RK Dhawan, Arif Mohammed Khan, Kalpnath Rai, Balram Jhakkar, Shiv Shankar, Moti Lal Vohra, Har Mohan Dhawan, Rajesh Pilot, Natwar Singh, MJ Akbar, Jaffar Shariff, Lalit Suri, Rajesh Pilot, VC Shukla, Madhav Rao Scindia, Chiman Bhai Patel, ND Tewari, Arun Nehru, Kamal Nath, Arjun Singh, Ashok Sen, Kalyan Singh Kalvi, Ajit Panja, AK Antuley, Dinesh Singh, Madan Lal Khurana, Buta Singh, Sharad Yadav, Tajdar Babar, Purshottam Kaushik, Krishan Kumar and many others.

There were three categories of recipients. A few received big amounts which were in fact their own monies stashed abroad brought into India by availing of the Hawala route. Secondly were a few who received big amounts that were kickbacks paid by the Jains. But the vast majority was recipients of sometimes small amounts who accepted donations for the impending elections. In fairness, they were most likely unaware of the foreign source of the money. By accepting cash for elections they were merely acting by the prevailing political practice – legally wrong but morally accepted. Indeed Mr. Devi Lal and Mr. Sharad Yadav in the beginning were not at all secretive about having received the donations. However, after knowing the foreign source of the donations would not the recipients have felt vulnerable to blackmail? These VIP names remained outside public knowledge because the CBI did not leak them. The agency was vigorously pursuing the terrorist funding angle.

Mr. OP Sharma, DIG, was in charge of the investigation. There was quick progress and seven people were arrested among them Mool Chand Shah known as the Hawala King of Bombay. London and Interpol were contacted and foreign sources such as Mohini Jain in London and Tariq Bhai in Dubai were identified. But 20 accounts in the diary remain unidentified even till today. They could belong to anyone, including terrorists. Then something happened to derail the whole process. On the last working day of Prime Minister Chandrashekhar, June 16, 1991, one LK Kaul complained that OP Sharma had demanded a bribe from SK Jain for not arresting him. On behalf of SK Jain Kaul claimed to deliver Rs 10 lakhs to Sharma. LK Kaul was neither an accused nor a witness. It transpired that SK Jain later said he never knew Kaul, nor OP Sharma and he was never asked for a bribe nor did he pay one. Without contacting SK Jain the CBI quickly registered a case against DIG OP Sharma. It was the news of a top CBI officer being accused by the CBI which first attracted national media attention. Only after that gradually the details about the so-called Jain Diaries also surfaced in the media. After that operation cover up proceeded rapidly. 

With Sharma out of the probe five out of the seven arrested were released on bail. Only two Kashmiris were kept in jail. Subsequently not a single accused person was arrested and for all practical purpose they were all given amnesty. These included Mool Chand Shah who many years later was arrested by the Mumbai police for his role in funding the city’s bomb blasts in 1991! The entire investigation was buried and the public was kept in the dark. But a leak from the CBI found its way in the media. The Jansatta Hindi daily gave the whole story of the Jain Diaries written by Mr. Ram Bahadur Rai. This was followed by exposure in Blitz weekly by Mr. Sanjay Kapur. This was followed by public interest litigation by Mr. Vineet Narain and others in the Supreme Court (SC) demanding a proper probe. The petition was drafted under the direct supervision of noted lawyer Mr. Ram Jethmalani. But before the court hearing he left on an urgent foreign visit. Later against established convention he appeared for one of the accused, Mr. LK Advani. Did personal friendship prove too strong for observing professional norms? In Mr. Jethmalani’s absence his named substitute Mr. Shanti Bhushan wanted to withdraw the case from the Supreme Court and introduce it in the High Court. The petitioners disallowed this and eventually Mr. Anil Dewan represented them. The SC admitted the petition and criticized the CBI for inaction stating: “This revealed a grave situation posing a serious threat even to the unity and integrity of the nation. The serious threat posed to the Indian policy could not be under-scored.”

The Jain Diaries were deposited with the Registrar of the SC. The CBI probe was subject to “continuous mandamus”, meaning that the agency had to periodically report to SC all progress in the probe. SC for all practical purpose was monitoring the investigation. Similar “continuous mandamus” is being followed by SC in the current 2G Spectrum probe. I opposed this move in the light of the experience gained in the Jain Hawala Case. Fortunately I was proved wrong. The SC in the present case is giving a better account of itself than it did in the Hawala case.

What went wrong with the SC in the Jain Hawala Case?

The vested interests that had targeted Mr. OP Sharma succeeded in neutralizing the SC Judges. One of the accused hosted a party which the SC Judges attended. Later Mr. Vineet Narain in a journal he owned and edited alleged that the SC Judges were guilty of moral turpitude and of receiving bribes from the accused in order to subvert the case. These allegations were ignored until the Supreme Court Bar Council took up the matter and accused Mr. Narain of defamation and contempt of court. In the hearings during the case Justice Sen admitted that he had indeed attended the party hosted by the accused, but he did not know his identity till later. The question why he did not recuse himself from the Bench hearing the case was never addressed by him. Inexplicably, despite the grave allegations made by Mr. Narain he was not hauled up by SC. Instead the case was dismissed after warning issued to Mr. Narain! It would be fair surmise that the SC Judges were unwittingly lured into a compromising situation and were too embarrassed to punish Mr. Narain. But what does that incident do to the credibility of the court’s handling of the case?

What kind of vested interests could have masterminded the subversion of the SC itself? It should be recalled that the total money received and disbursed by SK Jain was Rs 64 crores.

This was the precise amount that was the kickback in the Bofors case. Was there a link?
Well, subsequently the CBI in a case against Mr. Ottavio Quattrochchi informed the court that Quattrochchi was the source of the Hawala money disbursed by Jain. What might have been the reaction of Rajiv Gandhi on learning that the Bofors kickback was not only paid to him but also to many opposition leaders? We will never know because 19 days after the diaries were seized and the names of the recipients became known to the government, Rajiv Gandhi was assassinated in a crime that has to this day not been satisfactorily explained.

What happened to the case against Mr. OP Sharma? After 19 years since he was charged the case is still proceeding in the court! During the trial of OP Sharma’s case the Investigating Officer of the Jain Hawala Case, Mr. CM Sharma, Joint Director and IG Police, admitted he had earlier met SK Jain with a mutual friend and he had no knowledge of any links he may have had with terrorists. In the written deposition regarding this case by the Joint Director Mr. CM Sharma, which is posted on the Internet, the following quotations occur: 

“I was not interested in the arrest of SK Jain and others… OP Sharma wanted to arrest Jains to ascertain their role in funding of money to terrorists…It is correct that I had opposed the arrest of Jains by OP Sharma…I was not in favour of arrest of those persons who were purely and simply hawala dealers…It is correct that terrorists were funded through hawala transactions…OP Sharma had made a note that “It is felt that those recoveries are very important in establishing the offence under TADA, if approved we may keep them with us and continue to investigate the terrorist link”… It is correct that despite the above note of OP Sharma, I suggested to refer the matter to Income-Tax department and Directorate of Enforcement be consulted…As per the note by OP Sharma he had submitted a chart along with his note relating to hawala dealers. I cannot comment as to where the chart mentioned above at present is. It is not on the file brought by the CBI official... It is correct that OP Sharma did record a note in the file suggesting arrest of bankers/financiers straight away to know more about the hawala racket and to continue to interrogate the receivers in order to eliminate any terrorist links and arrest those who are not able to explain the soured of origin and subsequent disbursement.”

Readers may draw their own conclusions from this deposition. 

The Jain Hawala case was dismissed for insufficient evidence by the Delhi High Court. Surprisingly the SC which had monitored the case till the charge sheets were filed silently concurred with the lower court’s dismissal. Many years later former Chief Justice Mr. JS Verma who presided over the Bench hearing the Jain Hawala case publicly said that the case should be heard all over again!       

This then was how a case that had the potential of bringing revolutionary change in the nation’s political culture was subverted and buried without a single politician or bureaucrat facing any kind of punishment.

What might one conclude from the entire episode?

First, the enemy is not this party or that party but an international mafia that has the power and reach to subvert the nation’s polity, the media and the judiciary. Secondly, corruption thrives not only because of corrupt individuals but mainly because the rest refuse to confront them. In the prevailing context people think it futile to invite trouble because nothing will happen any way. The rot therefore transcends corruption. It has polluted culture. Finally, it is naïve to state that the poor are suffering from corruption which is why Class C and Class D officials should be tackled by the proposed Lokpal. Poor people suffer indirectly from corruption because money for their welfare is diverted to kickbacks. But in direct fashion the poor suffer from bad governance and exploitation. They are hardly in a position to pay bribes or receive bribes. Should the petty offerings of a street vendor to a policeman be called corruption or the prevailing systemic culture?

All the protagonists of the Lokpal and others against corruption should reassess the dimensions of the challenge facing India. To end corruption there is need for a strong executive accountable to the people. Corruption will end through a trickle-down effect. If the top boss has zero tolerance for corruption its impact will travel down to the lowest levels of bureaucracy. The present system needs to be changed. Fortunately that can be done without changing the Constitution. It can be done by faithfully observing our written Constitution which is Presidential. That alone will improve the system, the culture and the future of India.


More by :  Dr. Rajinder Puri

Top | Analysis

Views: 3364      Comments: 5

Comment what a common man can do? any suggestions

PP Dixit
16-Jul-2015 12:58 PM

Comment "Finally, it is naïve to state that the poor are suffering from corruption which is why Class C and Class D officials should be tackled by the proposed Lokpal"

There are some merits and genuine reasons behind demanding class C and D officials under the ambit of [dead] Lokpal, below are some arguments in favour:

PCMC (Pune-Chinchwad Municipal Corporation) has a lot of industries - locals, domestic and multinationals, all are there. therefore, the revenue received by PCMC is very high as compared to other an average municipality. It has been to the status of 'The richest municipality of Asia' once (Tokyo, Seoul and Kualalumpur also come in Asia !!).

But, if you visit this city of Pune-Chinchwad, it does not show any sign of a rich municipality. While its revenue may be exceeding GDPs of few nations, the basic needs of a common man there remain unfulfilled, as it happens elsewhere in India. To name some, water, road, education, public health support, and even vegetables - all are difficult to be obtained by lower class and some part of middle class in this PCMC.
You can see a small bridge getting constructed for years together on a main road occupied in traffic day and night, the construction work seemingly in progress but on a halt for all practical purpose, block the traffic on a typical road already congested.
You can see the same road getting repaired thrice a year !! And the road turning into potholes in a few months after getting repaired or newly constructed.
There is no place for public amenities - all land sold to private construction !!
No wonder that the corporation does not have enough money to support public welfare.
And hardly any minister is directly involved in managing this mess, the local employees handle everything. for example, a road contractor needs to pay back 60% of the contract value to xx ??

Class C and D employees are hands and legs to receive money out of the mass corruption. To totdal amount of black money generated within a municipality must be mind boggling.

And Lokpal should not have power to directly investigate on class C & D employees ? !!!!!!!!!!!
It will be indeed a safe heaven to Class A, B and their political masters, first class C and D can not be probed easily and directly by [dead] Lokpal and second, if they are caught then only they will be punished, not their masters.


One of my friend's relative is Mines Manager in a privately owned mining company (as I understand). The mines manager is an employee, and thus either he needs to serve company in illegal matters or leave the job.

So, he serves the company without doing anything illegal on personal front - the company is involved in illegal mining.

What next ?

A class C employee needs to be 'paid' monthly fixed amount, and along with him, a few local media persons also need to be fed monthly.

Occasionally, when there is a delay in payment, a telephone call comes to this mines manager from a 'Class A' employee, once can understand the hurry the mines manager needs to show in that scene.

We surely didn't want class C to be under [dead] Lokpal !!

Dinesh Kumar Bohre
10-Jan-2012 13:56 PM

Comment "the enemy is not this party or that party but an international mafia that has the power and reach to subvert the nation’s polity, the media and the judiciary"

Is the article suggesting that a foreign (or domestic) mafia did all to bury the hawala case 1000km under the ground ? Does it suggest that Mr. O. P .Sharma was removed by his superiors under threat and direction by mafia and subsequently judiciary was influenced by it too ?

I suppose such a conclusion need to be revisited.

Or, rather than mafia doing it alone, the self centered politicians joined hands only to avoid taint on their image and bureaucrats and judiciary bowed to them - that should otherwise not occur in a balanced democracy ?

And if 'selected' permanent employees of the government, who are called IAS & IPS officers and selected Judicial officers can come under influence of politicians, why 'elected' supreme of all govt deparments - The President will not come under similar influence ? After all, his/her job will be limited to 5 years !!

So, I suppose the root cause of the problem is yet to be identified.

The second reason suggested carries much more weight - "Secondly, corruption thrives not only because of corrupt individuals but mainly because the rest refuse to confront them" - and this is a serius issue.

Dinesh Kumar Bohre
10-Jan-2012 13:00 PM

Comment Dear Sir,

This is indeed full of information - that is not talked about in media and other public domains the way it should be.

Dinesh Kumar Bohre
10-Jan-2012 12:32 PM

Comment Informative

05-Jan-2012 00:03 AM

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