The Anna Hazare Scam
by Analytical Monthly Review
Analytical Monthly Review, published in Kharagpur, West Bengal, India, is a sister edition of Monthly Review. Its April 2011 issue features the following editorial. — Ed.
In the last weeks we have had an illuminating example of how a thoroughly corrupt regime can manipulate a thoroughly pliable media. One can hope that in time we will see some careful academic examinations of how Anna Hazare was put to use by the Manmohan Singh/Chidambaram regime in late March and early April of 2011. It is too soon to speculate how long the Anna Hazare Scam will succeed in its goal of diverting outrage at the rising exposure of crimes at the highest level of government. With Anna Hazare on the scene, supposedly now all will be well. But already by the second week in April the “non-political Gandhian social activist” gives off a stench in the embrace of the blood-soaked Narendra Modi, and well-meaning persons momentarily caught up by the media frenzy may be experiencing a bit of disgust, or at least having some second thoughts.
Before the onset of the neoliberal regime in 1991, “anti-corruption” campaigns were a regular project of the business press. Typically such reporting would involve a hero from a merchants’ association, who had succeeded in trapping into a bribery case some sub-inspector from the State Excise Department or the Railway Protection Force, or some hapless underpaid official of the local Municipal Corporation. The steady drumbeat of such stories, combined with what everyone knew of the entrenched culture of real political corruption, contributed to the media campaign that accompanied the turn to neoliberalism. In this story, the obstacle to development was the “license raj” that opened up prospects for such “corruption.”
No sooner had the turn to “de-regulation” and “economic freedom” been set in motion by a government that featured Manmohan Singh as finance minister and Chidambaram as commerce minister, than we were given a startling glance at the real corruption waiting in the wings. The early days of the neoliberal turn was accompanied by a stock market boom. As we have since seen ad nauseum, the business press loudly celebrated with drums and bells the rise in share prices, a proof of success for the emerging neoliberal policies. Super-stockbroker Harshad Mehta was made into a media star, the “Big Bull”.
But quickly, as with every boom since, came the bust. By the summer of 1992 it became known that Harshad Mehta had engineered much of the rise in prices through fraud. The mechanism was simple enough. Agreements to sell and repurchase securities at a higher price after a period of time (“repos”) are among the leading options open to banks in their dealings with each other. At the time such dealings were done through broker intermediaries. The securities did not actually change hands, rather a “bank receipt” assured the purchasing (or lending) bank that the securities existed, and on its receipt the broker was furnished with the cash. Harshad Mehta found some banks willing to issue bank receipts on non-existent securities for payment of a fee. The cash was then invested in securities, and since prices were going up the “repurchase” was easily accomplished, leaving a growing sum of money in the hands of Harshad Mehta and his backers. When the scam was exposed and prices collapsed, among the victims was president of Vijaya Bank, who committed suicide. In this single scam, a harbinger of what was to come, surely more money was lost than in a decade or more of all the “license raj” sub-inspectors’ bribes put together.”