The Volcker Report - Continuing Agony for the Congress?

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Finally, the Congress Party seems to have decided upon a course of action to try and maintain its credibility and control the fallout of the information contained in some of the Tables that are part of the Volker Committee Report.

But the different directions in which the actions are being taken, give an impression of continuing confusion. It is hard to decipher whether the actions show method, madness or method in madness.

First, even while the political ramifications of the issues were being considered, the administrative machinery under the Finance Ministry already swung into action by putting immense pressure on one of the pawns in the game. It is unlikely that the ED and DRI, who are learnt to be regularly briefing the Finance Minister, would have started their actions like a loose cannon without authority from the highest level, considering the sensitivity of the matter. This has already led to the speculation that the actions are intended to ensure that there does no exist any incriminating evidence and further as a way to put pressure on the External Affairs Minister to submit to the party diktats. It remains to be seen whether the actions of the agencies take any formal shape in the coming days and weeks.

The next action was the appointment of Mr. V. Dayal to liase with foreign agencies to get their co-operation. As mandates go, he seems to be having a mandate as obscure as can be, when the country already has established channels to do precisely such work. Perhaps, with some justification too, the Government intends to ensure single source handling of this delicate task, bypassing a multiplicity of bureaucrats in Missions abroad.

Then followed the most significant action, that of divesting Mr. Natwar Singh of his portfolio. The divesting of his portfolio while retaining Ministership has been attributed to a combination of reasons. The initial reason was that as the Ministry would be involved in the work of obtaining various details from other Governments and agencies, it would not be fair for him to continue heading the Ministry, since his name was also involved. However, when seen in the light of the fact that Mr. Dayal was already appointed to do this job and subsequently, Mr. Justice Pathak, Retired, has been given independent authority, this reason could only be interpreted as a smokescreen. The more plausible reason is to take some of the wind out of the Opposition’s attack and to demonstrate the Government’s credibility in the eyes of the people. The other strong reason has to be found in the internal politics of the Congress party. It has been reported that several party colleagues and functionaries have been against him for quite some time. Apart from heavy weights like Pranab Mukherjee, others like Ambika Soni and Ahmed Patel also are not exactly fond of him. To a lesser extent, the name of the Finance Minister has also cropped up in this context. It is no secret that many within the party have not been amused by Mr. Natwar Singh’s supposed proximity to Mrs. Sonia Gandhi and his constant air of superiority (“we, the intellectuals” as he sometimes said during his interviews).

Be that as it may, this compromise solution has certainly gone some way to restore the party’s credibility to an extent and deflect from the Opposition’s sustained attacks.

It has been also declared that the Income Tax authorities will ‘look into’ the Returns of the private Indian entities named in Table 7. This announcement is apparently only to confuse the issue as these entities were essentially engaged in commercial transactions which have to be judged as such. They cannot certainly be equated with the issue of securing oil allocations in the name of a political party and its senior member.

All these steps were followed by the Government appointing Retired Chief Justice of India, Mr. R.S.Pathak with ‘full powers’ to examine all aspects related to this matter. It is not exactly clear yet what the precise Terms of Reference of this Commission would be and from what, would he derive his authority to do all that is necessary, particularly to obtain evidence or examine witnesses from foreign jurisdictions, other than mere ‘requests for co-operation’.

Before he could prepare a concrete plan of action, the Government already asked the Ambassador to U.S. to meet Mr. Volker, which he dutifully did.

All this makes one wonder whether the Government is taking a methodical approach or just trying to throw pebbles here and there to disturb the waters. As of now, there is just a slim chance that anything concrete will come out of the efforts to get at the truth, notwithstanding the impeccable credentials of the gentlemen who are given the tasks.

Now, for some nitty-gritty related to the Volker Report..

Without discounting the relevance of the names of Congress Party and Mr. Natwar Singh, it has to be said that there are some aspects related to the Report that do raise legitimate questions about the Report’s credibility in some ways.

First, the Report seems to have gone beyond its strict Terms of Reference (see here). As can be seen from the wording of the Terms, the intent was mainly to focus on whether the Oil-for-Food-Programme was handled properly or did something go wrong as far as the Management of the Programme by the UN was concerned. The reason for formation of the Committee itself arose out of allegations that some UN bureaucrats were involved in wrongdoing or mismanagement and that controls were lax. Considering the exhaustive details provided by the Committee naming thousands of entities with the implication that they were involved in wrongdoing, it clear that the Committee has covered a much broader canvas. It has gone into such great detail that it was not strictly not required to do, to come to conclusions on the precise, and carefully drafted questions raised in the Terms of reference. Unfortunately, the UN Secretary General being under pressure himself, was perhaps unable to do anything about this. He has done only what he could do, by merely ‘taking note’ of the final Report that covers these details.

Secondly, more important from the point of view of both the Congress Party as well as Mr. Natwar Singh, it is apparent that neither were served any notice. Only Table 1 of the Report (Oil Allocations and Sales Summary by Contracting Company) mentions against each of the entities named their responses. The Congress Party and Mr. Natwar Singh have been shown only as beneficiaries (Table 3 ), and there is no mention against their names regarding their response, implying that no notices were sent to them. The only notice that was sent was to the Contracting Party i.e. in this case Masefield AG, who did not respond to the same. Strangely, responses were also sought from entities supplying goods (Table 7), but apparently not from the beneficiaries of oil allocations (Table 3), nor from entities who are supposed to have paid the oil surcharges(Table 5) where the names of Sahgal and Hamdaan appear.

This point is particularly relevant to understand how the Committee has gone about doing its job. There were a set of Guidelines issued called “Investigating Guidelines” that clearly provided under No. 2 (g) that before the Committee makes an adverse finding against a ny person or entity in a written report, such person or entity shall be informed of the proposed findings…”. (See here). If this has not been done – and there is no indication in the Report that it has been done – this creates a serious infirmity in the Report. This, in effect, compromises the entities named without even a basic opportunity to respond. Unfortunately, the Guidelines themselves state that they shall not form the basis of any legal action if they are not followed.

The third point of relevance is that the Guideline further provides (Para E.2) that “consideration will be given to referring investigative information and findings to the appropriate national authority”. There is no indication that this has been done.

As has been seen from denials of wrongdoing by various private entities in the last few days, it is unfortunate that the publication of the Tables is causing serious harm to public perceptions about the named entities without their having a chance to clear their position. The Report has been made available to the world by the Committeee itself when it would have been more appropriate for the Report to be published by the UN Secretary General who set up the Committee and assigned it the task of inquiry.

For such reasons and the manner in which data has been collected from various authorities involved (in terms of a so-called Memorandum of Understanding with them), doubts have been raised about the Committee’s credibility elsewhere too.

Even if motives are not attributed, it does show its sloppiness and disregard for any adverse effect of the publication of the Tables on thousands of entities. After all, it was the management of the Programme that was under scrutiny NOT the third parties named and prejudged in the Report without due process.

Coming back, however, to the central point that has given rise to the political storm in the country, viz. the mention of the Congress Party and Mr. N. Singh, the question still remains : WHY should their names be there at all in the first place? The oil allocations were made by the Iraqi Government to various entities in a systematic manner and in accordance with certain internal procedures. It would be foolhardy to think, as some have suggested, that perhaps some other individuals obtained the allocations falsely using these two names. Even if the Iraqi regime was defeated in a subsequent unjust war, it would be naïve to assume that the Government was run by novices who would be taken in by any individual claiming allocations in the names of such important individuals or political parties. The fact of the matter is that no one who was a party to the transactions would have imagined in their wildest dreams that information available with a sovereign country's Government would some day fall into the hands of others not entitled to have access to such data and moreover, would be misused in a sense by publicising the same in a near-cavalier manner.

As things stand, the Congress Party, as much as Mr. Natwar Singh, will have a lot of explaining to do even though in a legal sense, the inquiry may be vitiated.

Incidentally, but importantly, it is hoped that all these events will not indirectly lead to any subtle shifts in foreign policy that may please any foreign power.

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