A hatchet job

Efforts are on in the Revenue Department, headed by a nominee of the AIADMK in the Union Ministry, to scuttle the process of adjudication and prosecution launched by the Enforcement Directorate against Jayalalitha's associates for alleged FERA violations.

SUDHA MAHALINGAM
in New Delhi

WHEN Union Law Minister M. Thambi Durai of the All India Anna Dravida Munnetra Kazhagam (AIADMK) replaced 33 standing counsel of the Central Government in April, it raised a storm. For it is the standing counsel who will argue the cases filed in Chennai by Central investigative agencies against former Tamil Nadu Chief Minister and AIADMK general secretary Jayalalitha, her close friend Sasikala Natarajan and Sasikala's nephews V. Bhaskaran and T.T.V. Dinakaran. The cases relate to alleged violations of the Prevention of Corruption Act (PCA), the Foreign Exchange Regulation Act (FERA), the Conservation of Foreign Exchange and Prevention of Smuggling Act (COFEPOSA) and provisions of the Income-Tax Act.

The Central Bureau of Investigation (CBI) is investigating a case against Jayalalitha relating to her alleged receipt of a remittance of $300,000 in December 1991 under the Immunity Scheme of the Union Finance Ministry. According to officials investigating the case, Jayalalitha, who was Chief Minister when she received the money, is not entitled to immunity under the scheme and she could be prosecuted under the PCA. In addition, the Income Tax Department is investigating allegations of income tax evasion by her.

Sasikala Natarajan is accused on four counts of violations of FERA and COFEPOSA. There are three cases against Bhaskaran - two under FERA and one under COFEPOSA; and two cases against Dinakaran - under FERA and COFEPOSA.

(In addition, a Special Court in Chennai has framed charges against Jayalalitha in three cases; charge-sheets have been filed against the former Chief Minister in two other cases; and she is among the accused in two other cases that are under investigation. However, the investigation/prosecution in respect of these cases is being handled by two wings of the State police - the Directorate of Vigilance and Anti-Corruption (DVAC) and the Crime Branch-Criminal Investigation Department (CB-CID). These cases will be argued by the State Government standing counsel.)

A public interest petition has been filed in the Madras High Court challenging the controversial transfer of the Central Government standing counsel. Meanwhile, however, further efforts appear to have been launched on other fronts to scuttle the process of adjudication and criminal prosecution launched by the Enforcement Directorate (E.D.) against some of these offenders.

T.A. HAFEEZ
After his arrest on November 2, 1995 for alleged violation of the FERA, T.T.V. Dinakaran being taken by Enforcement Directorate officials to the Chief Metropolitan Magistrate's Court, Chennai.

In March this year, the adjudication wing of the E.D. found Dinakaran guilty of FERA violations to the tune of $1,04,93,313. Accordingly, then Special Director A.P. Kala, who conducted the adjudication, slapped a fine of Rs.31 crores on Dinakaran.

According to the adjudication order (a copy of which is available with Frontline), in 1994, Dinakaran who was a director on the board of Dipper Investments Pvt Ltd, a company registered in the Virgin Islands, had transferred $1,04,93,313 to the company's account in Barclays Bank in Sutton in the United Kingdom. Dinakaran had had 21 instruments, including 13 bank drafts, issued in favour of the company. Subsequently, he had instructed the bank to make payments aggregating to £44,37,242 to Meer Care and Desai Westback Ltd at Natwest Bank in the U.K. and into an unidentified account in the Bank of Ireland. All these transactions contravened Sections 8(1) and 9(1)(a) of FERA.

During its raids on certain premises with which Dinakaran was believed to have been associated, the E.D. seized certain documents relating to Dipper Investments. In November 1995, the E.D. summoned Dinakaran and arrested him. In February 1996, he was detained under COFEPOSA. During the investigation, the E.D. obtained statements from him and his associates in Singapore and elsewhere. It also obtained information from the U.K. through issue of letters rogatory. Based on the evidence it had, the E.D. issued show-cause notices to Dinakaran and launched adjudication proceedings as well as criminal prosecution against him. Dinakaran contended that he was a non-resident Indian (NRI) and hence was not bound by FERA; however, a reference to the Reserve Bank of India revealed that he had not been granted NRI status.

The adjudicating officer directed Dinakaran to repatriate to India $62,61,313 he held outside India, together with interest, and also pay a penalty of Rs.31 crores for violating Sections 8(1), 9(1)(a) and 14 of FERA.

Dinakaran appealed to the FERA Board to strike down the adjudication order on the ground that the funds which were transferred under his instructions to the company's accounts were not his. He also sought exemption from payment of penalty claiming that he did not have the resources. He further claimed that the adjudication order was biased since the adjudicating officer had himself directed the investigation in his capacity as E.D. Special Director.

The adjudication was being finalised in March when the Bharatiya Janata Party-led coalition took office at the Centre. Two key portfolios - Law, and Revenue and Banking - went to AIADMK representatives in the coalition. Minister of State for Revenue R.K. Kumar resigned in May and the portfolio was given to another AIADMK nominee, K. Janarthanam.

Around this time, proposals to change the composition of the E.D's investigating team in the South emanated from the Revenue Department under whose administrative control the E.D. functions. When the attempt to persuade the E.D. headquarters to change the investigation team failed, efforts were launched to change the team of lawyers who would argue the E.D's case in the Economic Offences Court in Chennai. V.T. Gopalan, the senior standing counsel who would have argued the E.D's case against Dinakaran, was replaced by R. Muthukumaraswamy, who is perceived to be an AIADMK sympathiser. Sources in Chennai say that simultaneously, written instructions were issued to the E.D. headquarters to replace K. Kumar, the standing counsel who would represent the E.D. when Dinakaran's appeal against the adjudication order was heard by the FERA Board.

Simultaneously, efforts were on to get Dinakaran's appeal before the FERA Board heard by a "sympathetic" bench. The FERA Board is under the administrative control of the Revenue Department (which is headed by Janarthanam); however, the power to constitute the bench that will hear appeals rests with the Chairman of the Board. The Board comprises one full-time member, Sarvesh Chandra, who is also its Chairman, and two part-time members, K.D. Singh and D.P. Sharma, both of whom are from the Law Ministry. Attempts to have Dinakaran's appeal heard by the two part-time members came to naught when one of them went on leave. There is nothing in the statute that forbids two part-time members from hearing an appeal, but in a case involving such large-scale violations by close associates of high-profile persons, such a move would have been most unusual.

Eventually, on June 24, Dinakaran's appeal was heard by a FERA Board bench comprising the Chairman and K.D. Singh. After prolonged hearing, the case was adjourned for June 29 at the E.D's request.

If the FERA Board admits the appeal and dismisses the case against Dinakaran, the criminal prosecution launched by the E.D. against Dinakaran will automatically cease to exist. For if a FERA offence cannot stand the scrutiny of adjudication (which is a weaker process), there is little chance of successful criminal prosecution. The attempts to have a "sympathetic" bench hear Dinakaran's appeal before the FERA Board should be seen in this context.

There are other cases against Sasikala and Bhaskaran in which either the process of adjudication or criminal prosecution is under way.

THE power to appoint government counsel who will represent the Central investigative agencies rests with the Union Law Ministry. The agencies themselves have no say in the matter. This leaves the door open for such "hatchet jobs" whenever there is a change of government.

The public interest petition against the replacement of the 33 standing counsel was filed by C. Vijayakumar, an advocate of the Madras High Court. All 33 counsel, the Union of India and the Secretaries in the Union Finance Ministry and the Union Home Ministry have been named as respondents.

The petitioner drew attention to Thambi Durai's statements at a press conference soon after he assumed office in which the Minister said that he would review all the cases against Jayalalitha that were pending in court. Vijayakumar alleged that "hasty and crude attempts" had been made to scuttle the investigation against and prosecution of Jayalalitha and others. He alleged that soon after taking office, the BJP-led Government had asked for the resignation of lawyers representing several agencies of the Central Government in Chennai; in their place were appointed "either members or supporters of the AIADMK party." He further alleged that the 33 lawyers who were chosen to replace the standing counsel were picked by Jayalalitha. Vijayakumar said that all this was part of an "evil design" to subvert the legal process; the appointments, he said, had been made with the ulterior motive of demolishing the cases against Jayalalitha, Sasikala and others. The petitioner sought a court directive declaring the "arbitrary, irregular, illegal and unjust" appointments null and void.

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