Credible governance or opaque government?

In the wake of the alleged corporate spying , it is pertinent to recall the all-embracive
provisions of the Official Secrets Act and the way it has been applied in the recent past
N SUNDARESHA SUBRAMANIAN, SAHIL MAKKAR
& SUDIPTO DEY
New Delhi, 20 February

Last September, a senior journalist

had wandered into the venue of a
states' power ministers conference
at Vigyan Bhavan here. The Union
power ministry went into a tizzy
when this person was found to have
used passes of one of the event managers to gain entry. While the journalist was let off with a warning, the
ministry put up CCTV cameras and
restricted media access, Business
Standard had reported.
In October, the government's
national security advisor, Ajit Doval,
wrote to the cabinet secretary, Ajit
Seth, raising concerns about an
instance of classified information
relating to warship INS Arihant finding its way into a television report.
Obtaining such information was an
offence under the Official Secrets Act
(OSA), 1923.
It has been observed that in the
last few years, it has become a regular
practice, particularly in the media, to
violate secrecy laws with impunity.
Firm action needs to be taken in such
cases that undermine national security," Doval had written in his letter,
widely reported in the media. He had
also advised Seth to reiterate the
instructions to the ministries and government departments dealing with
such classified information.

The crackdown announced on

Thursday regarding the alleged case
of corporate espionage at the
petroelum ministry incidentally,
a day after the government faced
uncomfortable questions about a
boat that blew up in international
waters is the strongest measure
taken by the government after the
Doval letter to Seth.
Far-reaching
The OSA is applicable to government
organisations and employees and
could extend to public sector bodies that handle strategic resources.
Legal experts say it can also be
extended to private organisations
that are handling strategic matters in
association with the government.
The penalty for violating the Act can
range from three years to 14 years,
depending on the nature and subject matter of violation.
"The application has to be limited
to instances set out in the Act. The
restriction of confidentiality has to
be balanced with the larger interest of
transparency and accountability in a
constitutional democracy," says M S
Ananth, a corporate lawyer here.
Lawyers add journalists and private persons are not specifically covered under OSA but are liable to be
prosecuted for any violation.
A senior official from a regulatory organisation said transparency is
good only when it is equal for all.

Selective transparency for a select

group of people is not good. So,
there is a fine line between leakage
and transparency. All decisions
must be transparent and must be
disseminated to all. However, the
decision making process itself
should be confidential.
Delhi's Police chief, B S Bassi, who
briefed the media on Thursday, said
his department was still probing
whether the key documents recovered fell under the ambit of OSA or
not. The police have sought inputs
from the ministries concerned.
There is apprehension among
journalists that the OSA provisions
are liable to be misused. Iftikhar
Gilani, bureau chief of Mumbai-based
DNA, said: OSA is against the spirit of
transparency. In the past, the Law
Commission and Administrative
Reforms Commission have recommended repealing the Act. The
biggest problem is that people at the
clerical level decide what document
comes under this Act. This arbitrary
power should be withdrawn and if
there is anything which undermines
the security of the country, it should
be properly codified."
Past misuse
Gilani was falsely implicated under
the OSA in 2002. "A mistake of a military clerk would have put me behind
bars for 14 years, had the media not
supported me and highlighted the

drawbacks in the case," he said.

He'documented his ordeal in a book,
My days in prison.
Television journalist and consulting editor Bhupendra Chaubey tweeted, Accessing info is the job of serious
journos. Don't know how many times
I myself have revealed so-called topsecret stuff.
Saikia's case
Among those picked up on
Thursday was a journalist named
Santanu Saikia, who runs a portal
called Indianpetro.com. This is not
the first time Saikia is being probed.
Under the previous National
Democratic Alliance (NDA) government, Saikia was charged by the
Central Bureau of Investigation
(CBI) for allegedly violating OSA, by
writing a story based on a cabinet
note on divestment policy.
The case went on for years before,
in 2009, a sessions court in Delhi discharged Saikia of the charge. The
main ground on which the court discharged Saikia was that the publication of the disinvestment document
was unlikely to affect the sovereignty
and integrity of India or the security
of the state or friendly relations with
foreign states, according to The
Times of India report dated February
26, 2009.
Adding: The court also recalled
the bizarre circumstances in which
CBI booked Saikia under OSA in 1999

after a three-year in-house probe to

find how the secret document on disinvestment had been leaked just a
day before a Cabinet meeting.
Although the prolonged probe yielded no result and the CBI made no
recovery from Saikia, a case was registered against him.
It noted Saikia, who argued the
case himself in court, pointed to how
an archaic Act, framed to nab spies,
was being used to harass a journalist
in the 21st century. He also argued
that in the age of the Right to
Information Act, where courts and
commissions are broadening the
ambit of official documents accessible to citizens, a news report on
divestment could in no way be seen as
an offence inviting penalties as strict
as those prescribed under OSA.
Now
The #Corporateespionage hashtag
was one of the top trends on social
media on Thursday, with a multitude
of views pouring in. Concerns about
corporations using journalists and
vice versa to fish out sensitive information were aired by people who
were supportive of the government
action.
Former BPL chief Rajeev
Chandrasekhar, member of parliament tweeted, #CorporateEspionage
in Delhi reveals the dark underbelly of
Govt - Business - media nexus! informatn not innovation drives many
'corporates. Former cop and Delhi
BJP member Kiran Bedi tweeted
This detection will strengthen
Credible Governance.

CORPORATE ESPIONAGE SCANDAL N

Two pence for Cabinet notes but

information worth a million
JYOTI MUKUL
New Delhi, 20 February

Ali Baba and the Forty Thieves is

what the indomitable Mani
Shankar Aiyar said at a formal
function in a plush Delhi hotel,
when asked by a reporter in 2006
to respond to a question on an
increase in liquid petroleum gas
price. The function was being
hosted to mark the signing of an
agreement between Shell and Oil
and Natural Gas Corporation
(ONGC).
Aiyar had arrived a bit late at
the event and stories of his being
shown the door at the Ministry of
Petroleum and Natural Gas were
already doing rounds in political
circles. It seems you and your
friends have formed some sort of a
network. This reminds me of the
classic story of Ali Baba and the
Forty Thieves. I am Ali Baba and
you are the opposite side. You are
talking about a note to the Cabinet.
I do not understand from where
you are collecting these Cabinet
notes, Aiyar told the reporter who
had flaunted a secret note in his
possession.
Subir Raha, then ONGC chairman, and Vikram Singh Mehta,
then Shell India chairman, were
sharing the dais with him. Both
Raha and Aiyar were media-friendly, but their bitter disputes were
being fought openly in media, putting the minister under immense
pressure.
The classic Arabian Nights story was not something that journalists were pleased to write about,
but the Delhi Police crackdown on
a network in operation in the petroleum ministry leaking information
to corporates and reporters, well

known to everyone in the business itself. An additional private secreof information gathering, is proba- tary who had worked both with
bly as easy to uncover as saying Aiyar and Ram Naik, the petroleum
khul ja sim sim (open sesame). It minister in the Atal Behari
was, therefore, probably the easiest Vajpayee government, was moved
thing
for
Delhi
Police out. His son was an employee of
Commissioner B S Bassi to talk Reliance Industries even while the
about since such networks have father was serving the minister.
The crackdown began during
been in operation for decades.
Paid websites such as indian- Jaipal Reddys tenure when a fresh
petro.com and petrowatch.com band of peons and secretarial staff
upload government documents. was placed, but information always
Corporates subscribe to their has a premium, more so before the
services and sometimes even gov- age of transparency in government
ernment officials themselves functioning and the Right to
access the sites to get hold of a Information Act. There is money to
document to which they do not be made by ill-paid lower staff in
have access. But access can be dif- the government hired largely on
contract basis now.
ficult, yet easy. If you
Outside the governneed anything, let me
ment setup, companies,
know, a peon outside
too, have become more
a joint secretarys
transparent because
office told a young
regulatory
norms
reporter a few months
require them to inform
ago. The joint secreinvestors. Within the
tary himself was in a Companies use
government, not all
bit of soup for being journalists as
documents are classiunder informal probe conduits and
fied as secret though
of M Veerappa Moily, journalists use
getting information out
the third petroleum companies as
of the officials is diffiminister
in
the conduits to get
cult for anyone includdecade-long United information out
ing
companies.
Progressive Alliance of the govt
Documents go through
(UPA) rule at the
Centre, for having allegedly layers of bureaucracy and from
leaked documents to the Left par- one room to another, and can be
accessed through an online filing
ties.
Although the joint secretary system, too.
A seemingly inconsequential
could have lost his job and had an
inquiry instituted against him, paper written in some archaic lanmany believed the leak was proba- guage can make an impact if the
bly out of the time-tested network importance of it can be read by a
in operation, in not just the petro- trained journalist. Companies use
leum ministry, but all government journalists as conduits and journalists use companies as conduits
departments.
The sifting of secretarial staff in to get information out of the govthe petroleum ministry had begun ernment. Journalists get a good
during late Murli Deoras tenure story which could even rake up

a national controversy or simply

become breaking news. For
companies, which may already
know the decision in making
because of the consultative
process carried out by the government, could in return have their
opinion placed in media through
a reporter by giving a slant to it. In
media parlance, it is called a
plant, which might not be factually incorrect but gives an
impact analysis crucial for any
healthy debate.
For politicians, too, the leaks are
dried powder for training guns on
the ruling party. It is not too long
ago that anti-corruption activist
turned Delhi chief minister Arvind
Kejriwal, who has himself been a
government employee, distributed
documents to media straight out
of government files.
Kejriwals Aam Aadmi Party colleague Prashant Bhushan, a lawyer
by training, made use of a guest list
at Ranjit Sinha, former director,
Central Bureau of Investigation, to
turn the tables on the investigating agency termed earlier as caged
parrot by the Supreme Court in a
corruption case. Sinha, in turn,
petitioned Bhushans source of
information be revealed.
The ruling Bharatiya Janata
Partys own member of Parliament,
Hansraj Gangaram Ahir, credited
with unearthing coal scam had
independently collected evidence
on the coal allocation and
approached the Central Vigilance
Commissioner to investigate the
matter much before the scandal
blew up on UPAs face. Unlike
politicians, however, companies
and officials end up cases being
registered against them for violation of Official Secrets Act.

Coal auction to yield

~1 lakh-cr to states
PRESS TRUST OF INDIA
New Delhi, 20 February

States will get about ~l lakhcrore, including royalty, over

the next 30 years from the 16
coal blocks sold so far in the
ongoing auction, a senior
government official said on
Friday.
Besides, reverse auction for
the power sector will result in
benefits of ~37,050 crore to
end-users by way of a cut in
rates, Coal Secretary Anil
Swarup said.
The government has put on
block 19 mines in the first
tranche of auction. Companies
such as Jindal Power, Hindalco
and UltraTech and others have
bagged 16 of them so far.
The e-auction amount is
~83,662 crore. But these blocks
will also entail an income to
the states by why of royalty
which comes to ~12,801 crore,
Swarup told reporters.
Madhya Pradesh will get
~39,900 crore, Chhattisgarh
~26,425 crore, Jharkhand
~14,498 crore, West Bengal
~13,210 crore, Maharashtra
~1,819 crore and Odisha ~607
crore, he said.
On benefits to power consumers, he said: This is also a
huge amount (~37,050 crore).
Because this is getting lost ...
most of the auctions have begun
at zero.... But what we are forgetting is that it comes from a
ceiling price of a particular level and comes down to zero and
this is the value that will get
transferred to the tariffs.
In the reverse auction, government sets a ceiling price that
is representative of production
cost of Coal India. The private
sector companies, which are

Allow Birla Corp in second phase

of coal auction: HC tells govt
The Delhi High Court on Friday asked the government to allow
Birla Corporation to participate in the bidding in the second
phase of allocation of a coal block in Madhya Pradesh, for
which it was disqualified in the first phase due to its failure to
attach relevant documents. The relief was given to the
company after it gave the assurance that the relevant
documents would be attached in the bidding for the second
phase of auction for the coal block in Birchapur. A Bench said
the government should not take any coercive steps against the
company till May 15. It also restrained the coal ministry from
forfeiting the ~2 crore deposited during the first phase of
bidding, till the next date of hearing. Birla Corporation Ltd has
moved the high court, saying that if it is held to be technically
disqualified then it will have to forfeit its ~2-crore deposit and
be barred from participating in the auction for one year. It has
PTI
challenged its disqualification.
considered more efficient, are
expected to bid at lower price.
For example, if the ceiling price
is ~1,000 and the bidder bids
~800, then the benefit of ~200 is
directly passed on to consumers. This would mean if the
power is sold at ~3.50, out of
which is ~1 is cost coal and the
same will become 80 paise
because of pass through benefit
of ~200. Thus the new price of

power will be ~3.30 per unit. In

case the bids touch zero, meaning that the private producer is
ready to pass on the benefit of
coal extraction to power consumers, there would be a forward bidding.
Under the forward bidding,
the companies will be required
to mention the price which
they are willing to give to
states.

The unmaking of India

A thrusting Make in India campaign holds the danger of cutting India off from the world

WHERE MONEY TALKS

SUNANDA K DATTA-RAY

hen we moved from Honolulu to

Singapore, my son, then aged 13,
told me the little island republic
was self-sufficient only in eggs. Not long
afterwards, he announced that even eggs
were imported. Before I left Singapore,
booming without making anything, my elderly Chinese neighbour had acquired a
large red rooster that crowed raucously
every dawn just under my bedroom window. When I mentioned it, he apologised in
Singlish, You so lucky! India have cow,
hen, pig, fresh milk, eggs, meat. My grandchildren think all made in supermarket, so
I get rooster, lah, to show!
Thats the human dilemma of econom-

ic success. But sound management means

being able to buy the best worldwide, even
in defence, and not being content with
shoddy goods just because its desi. A
thrusting Make in India campaign holds
the danger of cutting India off from the
world. The psychological fall-out of import
substitution is even more crippling. I dont
know how the Latin American structuralism advocated by Ral Prebisch, Hans
Singer and others affected people, but the
craze for phoren, Vidya Naipaul rightly
mocked, was part of the price India paid for
trying to save foreign exchange through
enforced self-sufficiency.
It produced all manner of psychological quirks. When my son was even
younger and we hadnt gone to Honolulu,
I happened to tell a school friend of his
that he was looking nice. The chubby
nine-year-old son of a rich Kolkata trader
thought I meant his clothes. This is only
Indian, he piped. I have many foreign
shirts! The roaring black market throve
on such complexes. Even export rejects
were desperately demanded.
All this came back to me listening to
Y C Deveshwar, ITC chairman, talking
about the Make in India campaign. ITC
faced a major challenge in 1982 when the
Forest (Conservation) Act prompted
Andhra Pradesh to renege on a contract to

supply wood. The company could have

imported pulp from Brazil or Indonesia or
set up pulping plants there, but both would
have meant exporting jobs. So, it went in for
tree farming instead.
Other companies might find that solution too expensive or lengthy. But I am not
sure one should worry about jobs instead of
productivity. That could lead to a situation
like Gujarat where at one time job creation
meant engaging peasants to build earthen
dams that the next rains washed away. If
Brazilian or Indonesian pulp reduced costs
and increased profits, it might foster supplementary manufacturing and create
more jobs. Theres a patriotic ring about
import substitution, but we all know of
imports being banned not to facilitate the
swadeshi industry but to enrich monopolists whose clout depends on handsome
payments to the ruling party. The system
was abused from the other end, too. I knew
Lancashire mill owners who were trained in
their youth to make coarse dhotis and saris
that looked like khadi.
Even assuming everything works perfectly without cheating which is impossible to imagine Make in India would be
a wasteful exercise in bombastic nationalism. Governments can forbid foreign retail
sellers; they cant prevent foreign goods
flooding markets. Many stalls in Kolkatas

Hogg Market have replaced books, magazines, tobacco and dried fruit with tawdry
artifacts from Bangkok and Singapore. One
reason why Chinas special economic zones
boomed while ours languished was the
hungry domestic market on the doorstep.
Indian consumers werent fussy about
quality or packaging; they also saved
manufacturers transport costs.
Globalisation means making optimum
use of the factors of production. My mothers Wilkinson (hallowed English swordmakers) scissors were made in Finland;
my Olivetti typewriter came from Spain.
My breakfast eggs in Singapore were probably Indonesian. Peter Drucker, the
American management guru of AustrianJewish lineage, touched on the human
aspect when he wrote Globalisation is not
an economic event; its a psychological
phenomenon.
He cited a West African wood carver
who made masks just like his ancestors but
using Western technologys latest tools. He
lived in a mud hut in his tribal village in a
country that was officially underdeveloped but had TV and a motorbike. He sold
his carvings through art dealers in Paris
and New York. His aesthetics owe as much
to the German Expressionists and to
Picasso as they owe to his own West African
ancestors, Drucker added.
Thats the face of the future. In a country as large and diverse as India, it can be
managed with adroitness so that children neednt imagine that milk, eggs and
meat originate in supermarkets. A coercive Make in India campaign could
unmake India.

ILLUSTRATION BY BINAY SINHA

The rule of law,

for 800 years

The influence of the Magna Carta continues to be felt, even

in the 21st century

his year marks the 800th anniversary of the

Magna Carta, on which the constitutional liberties and the Rule of Law of England were founded. It was signed by a beleaguered King John on 15 June
1215 with his disgruntled noblemen. Dan Jones Magna
Carta shows why it was granted, repudiated by the king,
and subsequently reinstated, and became the founding
document in the history of liberty of the English-speaking peoples, in particular the United States.
The Magna Carta is also the basis for the Rule of
Law that was established in India by the British Raj
and is the foundation of independent Indias
Constitution. But it also seems to have resonance in
authoritarian states as President Xi claims to be
establishing the Rule of Law in China, whilst the
illiberal democracies of Russia, Egypt and increasingly Recep Erdogans Turkey and Viktor Obans
Hungary, seem to regard the Rule of Law, as nice
rather than necessary. (D Gardner: Putin and Sisi
linked by common thread of illiberal leadership,
FT 11 February 2015).
The importance and resonance of the Great
Charter resides in it creating the institutional basis for
reining in the predatory state. For every states rulers
have to be given the monopoly of the power of coercion to avoid Hobbesian anarchy and to provide
the essential public goods of law and order and
defence and must also be given the power to take
euphemistically called the power to tax. But this
provides the rulers with an incentive to be predatory
by taking more than is required to provide the requisite public goods.
King John was a predatory monarch par excellence. Following the example of his Plantagenet
predecessors, the power and wealth of the Crown had
increased dramatically relatively to the barons. As
Prof James summarises: By 1212 John had achieved
a cruel mastery over his kingdom. He was vastly,
almost unimaginably wealthy, his castles groaning

with silver. He oversaw a broadly efficient legal and

financial administration with which
he could crush any
baron who was
merely suspected of
having
slighted
him. He had also
terrorised his neighDEEPAK LAL
boring princes into
submission. (p 56).
A
description
uncannily resembling Vladimir Putins Russia.
The Plantagenet kings also faced periodic fiscal
crises in defending their empire extending from
Scotland to the Pyrenees. It was Johns attempt to
recover the lands beyond the Channel he had lost to
France in 1204 which was his undoing. To fight this new
war he had to further increase the financial extortions
on his barons. They rebelled and a civil war began.
The Magna Carta was the treaty to end this civil war. It
established the Englishmans right to Habeas Corpus
but most importantly it established the idea that the
essential difference between a prince and tyrant was
that while both made and enforced laws, the prince
also subjected himself to the law. This is the essence of
the Rule of Law.
But how could this agreement between the citizen
and sovereign be enforced? This became the central
question in tethering a predatory sovereign. The charter itself had a security clause, which allowed for
licensed civil war (p 89). This happened within a
few weeks after King John had signed the Charter.
After his death there were periodic reissuances of the
Charter with that of 1225 establishing the principle of
no taxation without representation, whereby the
king swapped a concession of liberties for tax rev-

enue (p 104). Thus was the predatory states power

to take restricted.
Magna Carta was invoked in the English Civil War
between the Crown and Parliament in the 17th century, which ended with the Glorious Revolution of
1688-9 and the accession of William of Orange to the
throne. With its Bill of Rights, the Common Law and
the Rule of Law became cornerstones of the English
constitution.
In the 18th century the US Constitution was based
on the principles of the Magna Carta, as were those
of the British dominions of Canada, Australia, and
New Zealand and also the legal reforms of
Governors-General Cornwallis and William Bentinck
in India in the 19th century. These separated the
executive and judicial functions of government and
made government executive decisions contestable in
civil courts.
What of the rhetorical affirmation of the Rule of
Law in Mr Putins Russia and Mr Xis China? Many
had come to believe that Russia by 2000 had established the Rule of Law, not least the lawyer for Bill
Browders hedge fund, Sergei Magintsky who discovered evidence of a $230 million tax scam by state
officials. He refused to flee Russia saying the law
will protect me. This isnt 1937. He was murdered by
his captors, because as Browder writes (in Red
Notice) he didnt realise that Russia had no rule of
law, it had the rule of men. These men were part of
the kleptocracy created by Putin, and meticulously
analysed in Karen Dawishas Putins Kleptocracy:
who owns Russia?
But like King John, Mr Putins foreign adventures
and the economic sanctions they have evoked have
created a fiscal crisis for the state. The resulting economic hardships have reduced support for his nationalist card, with a recent poll showing that compared
with 50 per cent last March only 19 per cent now
believe Ukraine should be part of Russia. If the 110
Kremlin-connected oligarchs, who Ms Dawisha
claims own 35 per cent of the countrys assets decide
to challenge Putins adventurism, could Russia at last
see its own Magna Carta? Only time will tell.
The attempt by President Xi to establish the Rule
of Law in China is, as Jonathan Fenby has rightly
noted, playing with words. As has been the case for
more than 2,500 years, the view from the top in China
is that China needs rule by law not rule of law. Ever
since the First Emperor more than two millennia ago
with his doctrine of Legalism, the use of law to keep
the people in line is seen as an essential plank of topdown rule (Guestpost, FT.com, 6 November. 2014).
Chinas Communist party is not going to see itself
challenged by any Rule of Law.
But, as part of the Basic Law governing Hong
Kong, the Chinese government agreed to maintain
the colonial Rule of Law, with the independence of
the judiciary and its separation from the executive
guaranteed by the appointment of foreign judges to
its highest court of appeal. Despite the protests of
the democracy advocates against the Chinese governments refusal to implement a full-fledged
democracy in Hong Kong, it has not to date
despite the fears of lawyers attempted to curb its
Rule of Law. This is, after all, part of Hong Kongs
importance in providing the legal safeguards for
commercial contracts which have been an important source of the Chinese economic miracle. These
legal safeguards also protect the financial assets of
the princelings who increasingly own and control
the Chinese economy. So for the moment it is
unlikely that the Chinese government will subvert
Hong Kongs Rule of Law, even as the mainland is
ruled by more draconian rule by law rather than the
Rule of Law.