Aniruddha Bahal, editor, Cobrapost, announced the details of the second part of his organisation’s expose on how banks – both private and public – and insurance companies are aiding money laundering and facilitating the conversion of black money (illegal) into white (legal).
Following up on its sting on three of India’s premier private banks – HDFC, ICICI and Axis Bank – which exposed how its mid-level and top-level managers facilitated money laundering, Cobrapost’s latest expose shows 23 institutions – both public and private – doing the same.
In an interview, Bahal told INN that such practices seem to be the norm and not the exception in the Indian financial system. He also said that the rot will not stop till our ‘toothless’ regulator takes strict action and the government decides to investigate the practices of these banks.
Q: Bank, real estate broker, politician and hawala operator. How does this nexus work?
A: Banks have an interest in cheap deposits.When people are converting black money to white, they are not looking at great returns but looking at safety for money and a conversion mechanism so that nobody questions the money after a few years. So the banks and insurance companies suggest ways in which the cash can still be ingested in the financial system but the money laundered doesn’t attract authorities. The money can be laundered by sending money abroad through hawala, by buying gold, through benami investments in insurance companies, by making multiple accounts and through a list of other processes.
Q: First private banks were found guilty of violating KYC norms, Money Laundering Act, etc. Now we see the public sector and insurance companies are also involved. What does this tell us about our banking system, our banking regulatory bodies and our businesses?
A: It says that our regulator has totally failed in its duty. The main reason for these practices is that the regulator is not punishing banks for violations. They (the regulator) have to use the teeth and claws that they have, impose stringent fines and cancel the licences. Otherwise the rot will not go away.
Q: Cobrapost has named Andhra politician Sailijanath Saake as one of the politicians complicit in encouraging money laundering by saying he will stand guarantee for any of his friends. Did the names of any other politicians, businessmen crop up during the investigations?
A: Yes, they have come up in the tapes – in the sense that they have been laundering politicians’ money . But some of this was hearsay…so we decided not to run the names.
Q: While KYC norms have become stricter and misselling by insurance companies to the tune of $1.5 trillion between 2005 and 12 has come to light, why do you think no strict action has been taken yet on your previous expose on HDFC, ICICI and Axis bank? Is it because well known, powerful and the society’s respected professionals head these organisations?
A: The same people are giving us gyaan, sitting in jury awards, writing columns and telling us what we should do with our money and what the policy of the government should be and the media is giving them a lot of indulgence, which it shouldn’t be giving because there’s a nexus – they get sponsorship from these banks, they get equity loans from these banks. I think any newspaper doing stories on banks should put a disclaimer about the advertisements they have got from the banks.
Q: Do you think any action will be taken against these erring banks at all?
A: I have no idea what the government of India contemplates to do to make the financial sector hawala free and black money free. No one (government authorities ) contacted us – the RBI, ED, CBI didn’t contact us. Only the Income Tax department contacted us and we gave them the Cds.
Q: What makes insurance companies like the ones named in your expose, be so brazen about their illegal acts ?
A: If they (insurance companies like Reliance Life, Birla Sun Life and Tata AIG) are going to get banks, God knows what they are going to do. They get away with it because they are criminal syndicates – all of them. If the regulator is not bothered why should they bother? So ultimately the regulator has to set things right. The regulator is responsible. A class teacher is responsible for discipline in a class. If a class teacher is absent there will be no discipline in a class – they will all be doing their own thing. Here, the regulator and its activities are missing.
Q: You co-founded Tehelka with Tarun Tejpal, started off with a sting on members of Indian cricket team accepting bribes, then on awarding of defence contracts and then Operation Duryodhana – or the cash for questions scandal. What next for Aniruddha Bahal and Cobrapost?
A: We are working on several investigations. You will know when they come out.
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