t48
17.04 hrs
DISCUSSION UNDER RULE 193
ACTION TAKEN REPORT ON THE REPORT OF JOINT PARLIAMENTARY COMMITTEE ON STOCK MARKET SCAM AND MATTERS RELATING THERETO
Title : Discussion regarding Action Taken Report on the Report of Joint Parliamentary Committee on Stock Market Scam and matters relating thereto. (Not concluded).
(MAYILADUTURAI): Mr. Speaker, Sir, the JPC Report, read with the ATR… (Interruptions)
कुंवर अखिलेश सिंह (महाराजगंज, उ.प्र.) : महोदय, वित्त मंत्री जी बैठे नहीं हैं।…( व्यवधान)
श्री मणि शंकर अय्यर:प्रधानमंत्री जी बैठे हैं।
Mr. Speaker, Sir, the JPC Report, read with the ATR raises issues of constitutional jurisprudence, parliamentary propriety and political morality. Sir, I am particularly pleased that the hon. Prime Minister is present with us today because all these three issues of constitutional jurisprudence, parliamentary propriety and public morality were admirably summed up by him, as the Leader of the Opposition, when he spoke in this House on the previous JPC Report on the 29th of December, 1993.
I would like to remind the hon. Prime Minister and other Members of the House of what Shri Atal Bihari Vajpayee, the then Leader of the Opposition, said in 1993 in respect of the previous JPC. Hon. Shri Atal Bihari Vajpayee said:
“देश में एक नई संस्कृति का विकास हो रहा है, उत्तरदायित्वहीनता का, क्या इसमें कोई सुधार चल सकता है, क्या इसमें राज्य अपने कर्तव्य का पालन कर सकता है? इस संस्कृति का विकास कैसे हुआ? वित्त मंत्री जिम्मेदारी लेने को तैयार नहीं हैं, यह कहने को तैयार नहीं हैं कि मेरा अनुमान गलत था, मैंने भूल की, यह कहने के लिए तैयार नहीं हैं कि मैं प्रायश्चित करने के लिए तैयार हूं।”आगे श्री अटल बिहारी वाजपेयी जी ने कहा: “मैं कोई आरोप नहीं लगा रहा हूं कि वित्त मंत्री ने इसमें कोई लाभ उठाया, धन का कोई लाभ उठाया है, उनकी प्रामाणिकता के बारे में कोई संदेह नहीं है। लेकिन”श्री वाजपेयी जी ने कहा: “वे वित्त मंत्री हैं और वित्त मंत्रालय की विफलता के लिए, आर.बी.आई. की विफलता के लिए पूरी व्यवस्था को, जो सड़ी हुई निकली है, उसकी सड़ांध के लिए वित्त मंत्री को नैतिक जिम्मेदारी लेनी होगी। ”
My only request is that the JPC Report presented last year be looked at by the Government and of course, by the Opposition on exactly the same principles of constitutional jurisprudence, parliamentary propriety, and political morality that none other than the then Leader of the Opposition, who is today the hon. Prime Minister of India placed before this House and placed before this country. At the same time, I take the liberty of reminding the House of how the Finance Minister of that age, Dr. Manmohan Singh responded to the statement made by the present hon. Prime Minister, that is, the then Leader of the Opposition, Shri Atal Bihari Vajpayee. The following day, that is, the 30th of December, 1993, Dr. Manmohan Singh responding to Shri Vajpayee said:
“I accept full constitutional responsibility for the actions or events which pertain to the areas of responsibility entrusted to the care of the Ministry of Finance. There are various interpretations of ministerial responsibility. But I am not going to take shelter under constitutional niceties. I do accept that as Finance Minister I have a responsibility to this House, to the Prime Minister, and to the people of this country and whatever punishment this Houses chooses for me, I will gladly accept that.”
So in addition to the principles adumbrated by Shri Atal Bihari Vajpayee, if we could add the response given then by Dr. Manmohan Singh, I think we have the basis on which, by consensus, this House can agree on what should be done with regard to the question of “नैतिक जिम्मेदारी”? What should be done with regard to the “वित्त मंत्रालय”? What should be done with regard to the Finance Minister जिसका अनुमान गलत था ? What should be done by the Prime Minister’s own Office since he is in charge of the CBI and the Department of Company Affairs, both of which have been indicted in the JPC Report? प्रायश्चित करने के लिए क्या आप तैयार हैं, बताइये। मैं श्री यशवन्त सिन्हा जी पर कोई आरोप नहीं लगा रहा हूं, मैं मानता हूं कि उन्होंने कोई लाभ नहीं उठाया, धन का कोई लाभ नहीं उठाया, उनकी प्रामाणिकता के बारे में कोई संदेह नहीं है, लेकिन मैं यशवन्त सिन्हा जी से कहना चाहता हूं और खास तौर पर प्रधानमंत्री जी से कहना चाहता हूं, लेकिन वे, मतलब यशवन्त सिन्हा जी वित्त मंत्री थे ।
वित्त मंत्रालय की विफलता के लिए, आरबीआई की विफलता के लिए पूरी व्यवस्था को जो सड़ी हुई निकली है, उसके सिद्धांत के लिए मैं प्रधान मंत्री महोदय से जानना चाहता हूं कि क्या उनके वित्त मंत्री नैतिक जिम्मेवारी लेने को तैयार हैं या नहीं ?
Sir, I have just given to you the reaction of the Finance Minister then. What did this Finance Minister, Shri Yashwant Sinha say as soon as that report came out 368 days ago? He was asked, `what is your reaction to the demand of the Opposition that you resign?’ He said, `why should I resign? It is the job of the Opposition to demand my resignation. I am not going to accept it’. So, we know that Shri Yashwant Sinha did not live up to the traditions set by his predecessor. All I want to know is the hon. Prime Minister ready to live up to the traditions set up by the hon. Leader of the Opposition of 1993? The two persons are exactly the same. But the stand Shri Vajpayee took here is one thing and the stand that he has taken over the last 368 days is another thing. All I want the hon. Prime Minister to do is to say that what is sauce for the goose is sauce for the gander and what he wanted the Finance Minister of 1993 to do, is he ready that the Finance Minister, who is responsible for the stock market and the UTI scams, should also suffer exactly the same punishment which Dr. Manmohan Singh said, `I will gladly accept.’
Sir, the JPC defined both the scam and the period of the scam. It defined the scams at para 2.7 by saying, “there has to be persistent and pervasive misappropriation of public funds and this must involve issues of governance’. Having so defined the scam, it sets out the periodicity of the scam in para 3.1 where it says, ” the events that culminated in the exposure of the scam in March 2001 started approximately 18 months earlier”. What is 18 months before March, 2001? It was October, 1999. What great events took place in October, 1999? Shri Atal Bihari Vajpayee became the Prime Minister again. He once again appointed Shri Yashwant Sinha as his Finance Minister. The period of the scam, as defined by the JPC is exactly co-terminus with the first 18 months in office of the 1999 Government that assumed charge under the Prime Ministership of Shri Atal Bihari Vajpayee.
Sir, what was the nature of the scam? The nature of the scam, as reported by the JPC involves the following elements: the involvement of a bewildering number of banks, brokers and corporates in exploiting every available loophole left gaping open by Government regulators; next, rampant irregularities in all major stock exchanges. Then, persistent irregularities in several banks, notwithstanding RBI inspection report and the failure of the RBI to take follow up action on its own reports. I remind the hon. Prime Minister of what he said: आरबीआई की विफलता के लिए वित्त मंत्री जी को नैतिक जिम्मेवारी लेनी होगी।Then comes the nexus between the banks, brokers and corporates. Sure, there was the Ketan Parikh malfeasance. For 14 years that man has been banned from the Stock Exchange now. But when everyone in this country knew the name of Ketan Parikh, when every financial newspaper was building him up as the next Big Bull, this Government did nothing except allow him to continue without examination, without investigation of what he was doing. Today you have done `prayaschitta’ but in the meanwhile when you should have taken action, did you or did you not take that action?
Sir, finally, this I stress, the JPC report says, that at ”the heart of the scam are swindles that took place in two urban co-operative banks’.
One of these is the Madhavpura Mercantile Co-operative Bank which is located in the hon. Deputy Prime Minister’s home State of Gujarat which is next to his own constituency of Gandhinagar with a lot of depositors in Madhavpura being residents of Gandhinagar. The second epicentre of the scam was the City Co-operative Bank located in the hon. Prime Minister’s constituency of Lucknow. The epicentres of this scam were in the constituencies of the hon. Prime Minister of India and the hon. Deputy Prime Minister of India. And the Prime Minister has said nothing about the nethic zimmewari of an MP. It is his constituency, Sir.
Then, there was a payment crisis on the Kolkata Stock Exchange and the misuse of the Mauritius route. The Report has also pointed out that there were unregulated flows from abroad running to thousands and thousands of crores of rupees. An amount of Rs. 15,000 crores was there from the Mauritius route alone and the Government did nothing about even checking on what is happening, leave alone formally regulating the route. There was absolutely no follow-up on RBI’s inspection reports. There was very careless regulation by SEBI and the DCA. There was very poor performance on the part of the CBI which falls directly under the Prime Minster, and a huge mismatch between stagnation in the primary market and the boom in the secondary market which we are seeing once again just now. The hon. Finance Minister, or shall I say the absent hon. Finance Minister – actually, it is better that he sleeps outside than when he sits here when I speak – has circulated a mid-year Review this year. It says that between April and September, 2003, the total turnover in the primary market is only Rs. 1300 crores whereas he says, in the same sentence, that the mutual funds alone have poured Rs. 33,300 crores into the stock market. The FIIs are booming. I do not know how many tens of thousands of crores of rupees have come into India from Foreign Institutional Investors.
But what is happening in Foreign Direct Investment? There is a mismatch between the primary and the secondary market. That was a major cause identified by the hon. General Prakash Mani Tripathi, the Chairman of the JPC, who was unanimous with all of us. And the same thing is happening once again because no Minister was punished and no Minister cares. After all this, I would quote what the JPC has said.
“Nor was adequate attention paid in Government circles particularly the Ministry of Finance as the custodian of the financial health of the economy.
Not having ensured concerted mutual interaction between Government and Regulators which could have signally contributed to effective pre-emptive and corrective action to forestall or moderate the scam by the early detection of wrong-doing”
It is the JPC and it is General Prakash Mani Tripathi and his colleagues among whom I have the honour to belong who said:
“Dissonance in the approach to issues of regulation and good governance.”
It has manifested itself in this way.
“When stock markets were rising, there was general lack of concern because all concerned were stoking the ‘feel good’ factor but when the markets went into a steep fall, there was a sudden concern all over.”
They were not interested in the integrity of the market. They wanted congratulations because the sensex was crossing 6000 and then suddenly when the Finance Minister presented what he thought was a good Budget, the market reacted adversely, then everybody got into the act of trying to discover what went wrong. Is this good governance? Is this good regulation? Or is this chrony capitalism?
Sir, it is utterly shocking to see what the then hon. Finance Minister, Shri Yashwant Sinha, said on the 13th March, 2001, after the question of a scam had been raised in this House and the other House, in reply to a Calling Attention Motion.
He said: “There is no big scam”. In March, 2001 when everybody who was a player, everybody who was a commentator, everyone who is involved in the governance of this country knows that there is a huge scam unfolding, the hon. Finance Minister tells the country through Parliament, the Upper House, that there is no big scam. All right, the Finance Minister of India of that time may have been an incompetent man and I hope the Prime Minister will see to it that he is dropped from the Council of Ministers at least now. The new Finance Minister has presented an ATR in this House in which he has said – this is in response to paragraph 2.7, I would request the hon. Chairman of my Committee who is happily with us now to note that the ATR says in respect of our basic finding that there is a huge scam – that irregularities do not reveal any systemic weakness. This is what they have said. After we presented a 700-page Report, they cannot find any systemic weakness. It further says: “this whole problem is basically a violation of RBI norms and involve transactions of a fradulent nature by a few private cooperative banks”.
I ask the hon. Chairman of the JPC to confirm to this House when he speaks and I hope he speaks, that this was exactly the bogus excuse trotted out before the Committee by the Governor of RBI who is now an hon. Member of Parliament. The JPC rejected this argument. We said that there are huge numbers of systemic weaknesses that should have been addressed, that need now to be addressed.
With this casualness, with this contempt for a Committee of Parliament, for a Parliamentary miniature, these people say: “No problem, we will sort it out. There is just a little bit of fraud in a few banks”. I want to remind the hon. Deputy-Prime Minister of India of today, who was then the Deputy-Leader of the Opposition – unfortunately he is not with us just now – Shri L.K. Advani of what he said with regard to the previous JPC Report on 27th July,1994 in this House. Shri L.K. Advani said: “A Parliamentary Committee, after all, is Parliament in miniature”. He then quoted Kaul and Shakder and said the recommendations of a Parliamentary Committee are normally accepted and implemented by the Government and went on to add, “I would think it is contrary to all the established conventions of the House that the Government rejects it. They cannot, in the name of giving a Report, reject the Parliamentary Committee’s Report. The Parliament has been insulted”. This, said Shri L.K. Advani, is an insult to Parliament.
Is this Report that Shri Atal Bihari Vajpayee’s Government has presented, through the Kar Kamalon of Shri Jaswant Singh, not an insult to Parliament? How can the country possibly accept that the most fundamental finding of the JPC, which is that there were hugh systemic weaknesses, be rejected in this cavalier fashion by a mere Minister of Finance, parroting the old RBI Governor, whose mistakes have caused so much of this trouble, …*……..*
I do not think that Shri Atal Bihari Vajpayee, the then Leader of the Opposition, or Shri L.K. Advani, the then Deputy-Leader of the Opposition has been given any mann samman by the Prime Minister called Shri Atal Bihari Vajpayee and by the Deputy-Prime Minister called Shri L.K. Advani or by their Finance Minister, the hon. the Jaswant Singh, who was a Member of the previous JPC, and imposed a lot of not only his thoughts but also his rather heavy language upon that JPC.
The most important institutional innovation put in place by Dr. Manmohan Singh, after the last scam, which was reported in both the ATRs through this House in 1994, was the establishment of a High Level Coordination Committee for Capital Markets, normally called HLCC. It is normally called the HLCC. It was set up under the Chairmanship of the Governor of the Reserve Bank of India. In the ATR that was given to us in 1994, it was stated by Dr. Manmohan Singh that the mandate of the HLCC included “to regularly review the position regarding financial and capital markets”. This was the main job given to this HLCC. Our Committee, General Prakash Mani Tripathi’s Committee, found unanimously at paragraph 13.50 of the Report that the HLCC “has not carried out its mandate to regularly review the position regarding financial/capital markets”. We have all written it together. They have not done it. Moreover, in the same paragraph, we have said:
“The Ministry of Finance, on its part, has not referred such crucial issues to the HLCC. ”
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* …….* Expunged as ordered by the Chair
Neither has the HLCC taken up a review of the financial market nor has the Minister of Finance asked them to do so. So, what is the point of having a High Level Coordination Committee – with no one other than the Governor of the Reserve Bank of India, the highest financial and monetary authority of this country as Chairman – without doing it? Every single Chairman of every single Regulatory Authority is represented on that Committee with all the senior officers of the Ministry represented on that. The Committee is mandated to review the financial and capital markets. The Minister is authoritised to refer any issue of concern to him, to the HLCC. The HLCC did not once, through the entire period of the scam from October 1999 to March 2001, hold a single meeting where it reviews the financial and capital markets. What were these people put together for? Is it to eat pakoras, to munch sandwiches and to drink tea? Or, is it to review the financial and capital markets?
Before I come to the ATR, I would like to say that the JPC has then said what that these people did not look into . General Prakash Mani Tripathi and Shri Kirit Somaiya are as committed to this sentence as I am. I quote:
“Had these issues”, that is the issues relating to capital and financial markets, “been taken up by the HLCC periodically, it would definitely have helped in minimising , if not averting altogether, the irregularities which have surfaced in the present scam. ”
Dr. Manmohan Singh put the HLCC in place. What does the ATR say in response to this? It is most shocking and amazing. The NDA’s ATR says:
“As per the present terms of reference, the HLCC is expected to consider only divergences in policies. ”
It is amazing! Dr. Manmohan Singh set up the HLCC. He then brought the mandate of the HLCC before the Parliament. They said that did not want the ATR of July 1994 and walked out of the House for 13 days. They forced Dr. Manmohan Singh to bring another ATR in December 1994. The poor man obliged. His chief innovative mechanism is the HLCC. It has everybody of significance in it. Then, it never met to discuss the most important part of its mandate. Instead of accepting that we made a huge mistake, instead of saying neithic zimmedari, instead of saying – Pradhan Manthri ji – prayaschit, what did they say? I quote:
“As per the present terms of reference, the HLCC is expected to consider only the divergences in policies. ”
Why did they do that? Do they really feel that the HLCC is not required to keep financial and capital market under review? Then, there is no wonder that Ketan Parekh came and made money. How can they amend it? I ask this question. How can they amend the Parliament’s approved terms of reference of the HLCC without either informing or consulting Parliament?
Sir, I want to know as to how they reconcile this with the statement made by the Deputy Prime Minister as the then Deputy Leader of the Opposition that the JPC is Parliament in miniature, its report cannot be rejected and that to reject amounts to insulting Parliament.
Sir, the ATR insults Parliament. The ATR saying that they had unilaterally amended the terms of reference of the HLCC to take the review of capital markets out of the purview of the HLCC. This is an insult to Parliament, apart from being the prime collaborator with Shri Ketan Parekh and all the others who have been indicted for their malfeasance. So, we have no alternative but to hold the then Finance Minister, Shri Yashwant Sinha, both accountable and responsible to Parliament.
Sir, in the JPC Report, – I hope the mathematics of Gen. Tripathi will confirm my counting abilities – according to my count, the Finance Ministry has been indicted in, at least, 52 places, one indictment per week of the year. Every week, on an average, the Finance Ministry was falling flat on its face, but our friends on the Treasury Benches say that it is the Ministry that is indicted, not the Minister. Sir, have you ever heard of a Ministry without a Minister?
SHRIMATI RENUKA CHOWDHURY (KHAMMAM): There is a Minister without a Ministry.
SHRI MANI SHANKAR AIYAR : Yes; we have heard of Ministers being there without a Ministry, like Kumari Mamata Banerjee. But have you ever heard of a Ministry without a Minister?
There is no Minister who is accountable for these mistakes. I want to remind – unfortunately he is not here now – Shri Jaswant Singh, who was then Deputy to the then Deputy Leader of the Opposition sitting on the front benches here and I was sitting where Shri Bikram Keshari Deo is sitting now, as to what he said at that time. On 27 July, 1994, he said:
SHRI ANADI SAHU (BERHAMPUR, ORISSA): Mr. Speaker, Sir, this type of mimicry should be stopped. This is not proper at all. … ()