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Scandal In India: Making News, Creating Corruption

Aired March 14, 2001 - 5:00 p.m. ET


JONATHAN MANN, INSIGHT: Under the table and on the tape. An Indian Web site stages an elaborate sting and says it bribed senior officials. Now the opposition is in an uproar, and the government may be on the line.

Hello, and welcome.

India's parliament has had to suspend its last two sessions because the debate got too raucous. Thursday, it will try again in a special session devoted exclusively to an unfolding scandal, a scandal that was dreamed up by Internet journalists who say they were trying to lure government and military leaders into doing something wrong. The journalists say they were shocked at their own success.

On our program today - making news, creating corruption. We begin with this look from CNN's Ram Ramgopal.


RAM RAMGOPAL, CNN CORRESPONDENT (voice-over): It was the second scoop in less than a year for the fledgling Internet site, which had exposed an alleged cricket match-fixing scandal that tarnished the image of the sport.

In a sting operation lasting several months, two Tehelka journalists set up an elaborate cover using a fictitious company that offered to broker the sale of defense equipment. The videotape released on Tuesday purports to show bureaucrats, defense officials and officials in the ruling BJP-led coalition accepting money.

The Web site says these were bribes paid to get defense contracts approved.

TARUN TEJPAL, TEHELKA.COM: You know, the sad thing was the levels of greed. The greed was blinding. I mean, these are basically two very fine reporters, but amateurs in the world of military hardware and financial skullduggery. But nobody - nobody blew their cover. Every week, I thought their cover would go. But the greed was so blinding that people were just looking at the money. They really weren't worried.

RAMGOPAL: One of those on the videotape, the president of the BJP, Bangaru Laxman, says he accepted the money thinking it was a donation to the party. Laxman denies any wrongdoing but has resigned his post.

BANGARU LAXMAN, FMR. BJP PRESIDENT: My conscience is clear. I'm ready to face a thorough inquiry into the matter, which I am sure will clear my name.

RAMGOPAL: Laxman and other BJP officials are alleging a conspiracy.

VENKAIAH NAIDU, BJP CABINET MINISTER: Let the parliament debate it, discuss it, and then we are ready for any sort of inquiry. We have nothing to hide, nothing to fear.

RAMGOPAL: But the opposition, backed by protests on the streets, says the government is in no position to investigate this matter.

KAPIL SIBAL, CONGRESS PARTY MEMBER: The government has to decide who to arrest and who to prosecute. For now, the public must have confidence in the prosecuting agency. That is why I said the accused cannot investigate himself. And so the entire government is the accused, how can the government investigate itself?

RAMGOPAL: While the allegations are just that at the moment, political observers are disturbed by what they see.

J.M. DIXIT, FMR. FOREIGN SECRETARY: It's left me with a very deep sense of shock. More than shock, I think it's a very sad and frightening political moment to be seen, and this is the state of a vital aspect of our national life, namely management of our defense, management of our defense supplies. And the type of people who have been shown in the film, they are the senior-most figures in our armed forces, in the political circles.

RAMGOPAL: India is no stranger to controversy over defense deals. In the 1980s, then prime minister Rajiv Gandhi was dogged by persistent reports of a kickback scandal surrounding an artillery purchase from Bofors of Sweden. The controversy was enormous and is thought to have contributed to Gandhi's massive defeat in elections in 1989.

His Congress Party never recovered from the damage to its reputation. And the damage isn't over. Court hearings into the Bofors kickback scandal more than 15 years ago are just getting under way in India, even as questions and controversy mount over the new scandal just unfolding.

Ram Ramgopal, CNN.


MANN: Bangaru Laxman is a Dalit, a member of a lowly caste that traditionally performed the most menial tasks in Indian society. In a statement, Laxman said he was a target of a campaign by those who don't like his profile in the party.


LAXMAN: I'll come across the scandalous report today on Internet Web site Tehelka, which drags my name into a vicious (ph) defense deal. This is a conspiracy to defame me, the party, the democrat party which I serve for all (inaudible) years, and our government, headed by Atal Behari Vajpayee. The report alleging my involvement in the corrupt defense deal is totally baseless and malicious.

At no point of time (inaudible) spoken to the prime minister, his principal secretary or any other official of the government about such a deal. It seems that this conspiracy has been edged (ph) by political opponents of my party who could not reconcile themselves to seeing that a Dalit has for the first time become the president of the BJP.

My conscience is clear. I am ready to face a thorough inquiry into the matter, which I am sure will clear my name. However, pending inquiry and in keeping with the high moral standards of the BJP, I hereby offer to step down from the office of the president of the party. I have taken this decision after consulting the prime minister.


MANN: Those remarks notwithstanding, the reporters are sticking to their story. A short time ago, we spoke with the editor-in-chief of about the elaborate operation and the outcome.


TARUN TEJPAL, TEHELKA.COM: We started working on the story in August of last year. So that means about eight months of working on the story. It was basically two - the editor investigations, Aniruddha Bahal, and a senior correspondent called Samuel Mathew, who worked on the story throughout.

Towards the end of it, when we had finished the field work, about 12 to 15 of the office staff would actually cooped themselves up in a room for seven, eight weeks to transcribe and edit the story.

MANN: And what did you actually find? Was there a trade of money for influence? What specifically did the officials do?

TEJPAL: Well, I mean, the idea was - the thing is in India for the last 16 years, defense middlemen have been a constant controversy ever since the Bofors scandal broke. Legally, defense middlemen are not meant to exist, but no one has ever nailed one or indicted anybody in any defense scam.

So we just decided to see what happened if you tried to create a dummy company and sell a dummy product, and the decision was to start at the bottom of the food chain and see how far we could go. The staggering truth, as we discovered, was that the degree of avarice and greed was so much that you could actually work yourself all the way up.

MANN: Let me ask you about that because you yourself used the word "create." Did you entrap these officials? Did you create the conditions for the wrongdoing that you subsequently accused them of?

TEJPAL: Yes, absolutely. What we did was we actually created a company and created a hardware. We made an attempt to find out what was it that the Indian army was going to be looking for. One of the items was a hand-held thermal camera. So we went and said - the reporters went and tried to sell the hand-held thermal camera.

And then what they found was they were just sucked in by various people. There were some farcical incidents where defense agents were actually queuing up to give interviews to become the paid off defense agents for the company. I mean, the degree of greed was just unbelievable.

MANN: As you were assembling this charade, how much did your journalists, your staff have to lie to the people involved, and how much does their lying undermine the confidence anyone can have in what you say you found?

TEJPAL: Well, you know, this is something that I don't think is at issue at all. I think it was a journalistic story. The story was done by posing. That's fair. But we were looking at people who operate in the public arena. We were looking at people who misuse public funds. We were looking at people who have been lying to the public.

I mean, so the only way to expose these guys was the way we took. And personally, we didn't have a shadow of doubt at any point during the investigation.

MANN: Let me ask you about one of the men in particular, the president of the BJP, Mr. Laxman, who said that he turned over the money that was given to him to the party and that the people who identified themselves to him as businessmen never mentioned that the money was in any way associated with an arms deal. Is that true?

TEJPAL: That's not true at all because, I mean, he hasn't seen the entire film which was shown yesterday to a select audience of eminent citizens. He's just reacting to some clips that he saw, the highlight clips. The truth is the film actually has him discussing the deal, not only discussing the deal, actually asking for $30,000, which are to be delivered to him the next day.

He also talks about the people in the prime minister's office who will make the deal happen - all of which is going to be released to the press.

MANN: Let me ask you more about that. You say the prime minister's office. Up until now, though the prime minister has been roundly criticized and condemned in parliament, he himself has not been touched by what the rest of us know about this. Is his office an issue? Is the prime minister himself a figure in these tapes or in your allegations?

TEJPAL: The prime minister himself is certainly not on the tapes. But if the prime minister's office is indicted, I think the prime minister inevitably just has to take some of the rap.

MANN: How much more video is there? How much more of it will be released?

TEJPAL: I mean, how does it - No, the bits that we are putting out are from the four and half hour long investigative document that had already been screened. So I mean, these are being put out because some of the people who have been indicted by us on the tape are now coming out to give some completely ludicrous explanations out of context.

So we are just providing the context for the explanation which exists in the film.

MANN: One last question for you. As you know, the prime minister has been called a thief in parliament. There's some question about the future of his government. What are your thoughts about the storm that all this has caused?

TEJPAL: This is one thing I'm completely out of. You know, I mean, we operated as just pure journalists and reporters. We've broken the story. We think it was a good story. The political fallout or the political drama that is following is really now - I mean, we're out of that altogether.


MANN: Tarun Tejpal of

We have to take a break. But when we come back, a broader look at corruption on the subcontinent.

Stay with us.


MANN: Welcome back.

Is anyone anywhere surprised anymore by allegations of government corruption? Maybe, but few Indians. Whether or not these latest accusations are borne out, India knows that it has a problem with corruption.

Joining us now to talk more about that is Gautam Adhikari, senior consultant for the Asian Center for Democratic Governance at the National Endowment for Democracy. Thanks so much for being with us.

The subject is corruption. So on a day like today, I have to ask you if you're responding in any particular way to the news coming out of India.

GAUTAM ADHIKARI, NATL. ENDOWMENT FOR DEMOCRACY: Well, I mean, a couple of firsts have been achieved here. One is that it's been broken on the Internet, which is something that's brand news, or rather by an Internet news company. Secondly, bribery cases are notoriously hard to pin down because you have to rely on circumstantial evidence most of the time to nail people.

In this case, for perhaps a different set of journalistic ethics than traditional is the way I would put it, this case has actually got people taking money on film, and no matter what they say after that, it's very difficult to back out of it when that case -- in that sense also, it's a first. So I agree that there is very little that's surprising when you talk about corruption in the Indian system.

MANN: Let me ask you more about that. In a general way, how corrupt is India?

ADHIKARI: It's again very difficult to nail down in precise terms. But some organizations have tried to do that -- Transparency International, for instance. They have a yardstick by which they judge corruption levels in various countries. India curiously is not right at the top or, in this case, bottom perhaps is the word we should use. But it's somewhere between the middle and the most corrupt of nations, and India and China more or less figure at the same level.

But the problem is different. I think it's partly a problem of poor economic development, partly a problem of low levels of education. But also in a big way, it's a problem of public policy and the way public policy has been administered in India over the years. And this has created a stage of corruption or rather a state of corruption in which you have a kind of all-pervading corrupt system, where people at middle and lower income levels also are affected, ordinary people are affected very much more than in, say, many other countries where there is a lot of corruption.

I mean, this country, the United States, has a lot of corruption. But usually the corruption is restricted to particular sectors -- the drug trade, for instance - or in certain sectors of the police where there might be police officials in league with crime mafias. But in India, it's much more pervasive, and that is a result of certain circumstances out there.

MANN: If I want to get a phone in India, if I want to get a child into a university, if I want to do business with the government, if I want to do business with an impersonal institution, is there a good chance that money is going to change hands?

ADHIKARI: Well, 10 years ago, I would have said yes to all of those points. But ever since the liberalization of the Indian economy from 1991 or so, where the rent-collecting points, so to speak, of the government, where the government, for instance, controlled the system of licensing of industries. The government controlled almost everything in terms of economic possibilities. People would have to do a lot of things, and there was a shortage of telephones.

Now these things, ever since that liberalization was undertaken in 1991, these things - the number of areas where corruption used to occur has probably gone down. But perhaps the volume has not been affected, and much of the corruption is now restricted to areas where, for instance, defense where national interest can be cited.

Where you can say, look, for reasons of state, we cannot be more transparent than we are. So therefore, the system of bidding for defense contracts and the way defense contracts are organized, well, they leave a lot of scope for doubt. And for in this case, again as I said for by journalistic means which I do not necessarily agree with, they have it on tape that this has been happening, something that people for the last 15 years at least have been suspecting -- that there is a lot of - a lot that's going on in defense deals that doesn't meet the eye.

MANN: It's intriguing that you say the economy is helping matters because in other societies, people would have turned to the police or the democratic system or to journalists to address these problems. Those institutions, I guess, have not been doing it in India.

ADHIKARI: Well, Indian press has been very, very active. Indian press has been remarkably active in exposing corruption and the abuse of power. However, I mean, there is corruption that goes into the press as well. There are parts of the press which I wouldn't put past that.

The police at the lower level certainly, perhaps sometimes at the higher levels also, they do wield extraordinary power in certain areas. But however, with a free press, the possibility of exposing abuse of power, exposing cases of corruption is much higher. So the Indian press, I must say, has been doing a fairly good job and over a number of years now.

And in this case also, it's really a journalistic group - this time, by using the Internet and modern technology -- that they have managed to expose something that would normally not have come out because, as I said, bribery cases are notoriously difficult to nail.

MANN: Gautam Adhikari of the Asian Center for Democratic Governance. Thanks so much for being with us.

We take another break. But when we come back, one of the world's biggest armies, one of the world's most dangerous regions. The other side of this scandal - the arms race.

Stay with us.


MANN (voice-over): Building bridges across the seas. The Indian navy hosted its first international fleet review last month, inviting the navies of more than 20 other countries to Mumbai. The organizers said the aim was to stress the role of India's navy as a tool of diplomacy and friendship. It was not intended, they said, to parade India's maritime capabilities.

(on camera): Welcome back.

Whatever the intention, one thing is clear - the Indian navy is on a mission to expand its reach in the Indian Ocean and become a blue water force. In fact, the entire Indian military has been on a push to modernize. India hiked its defense budget by 14 percent this year, building on a 28 percent increase the previous year.

Joining us now to talk about the Indian military is Waheguru Pal Sidhu of the International Peace Academy, an independent think-tank in New York. Thanks so much for being with us.

They seem to be spending money in India on the military. What are they trying to achieve?

WAHEGURU PAL SIDHU, INTL. PEACE ACADEMY: Well, to some extent, establishing their importance in the region but also as a global power, but more basic I think is really to defend the vital interests of the country, which have undergone a tremendous change since the end of the Cold War.

MANN: Tell us more about that and how the military is changing to defend those interests.

PAL SIDHU: Well, there's always been two extremes of the debate, both within India and South Asia and, indeed, other parts of the world. One of them is that you do need a certain amount of stability and security which is provided by militaries to ensure a certain amount of growth. The other element is that the more you grow, the more vulnerable you become to external forces, if you like. And therefore, you also need to contribute a certain amount of that growth towards protecting your economic development in order and all that you've achieved.

And in this context, certainly the economic liberalization which has occurred in India since the 1990s has also made India much more dependent on external sources of energy, particularly from the Middle East and the Gulf region. This would be one of the reasons why you would see the Indian navy wanting to enhance its role in protecting its maritime assets and interests.

MANN: Is it just the navy, or are all of the forces of the Indian armed forces spending their way to greater strength?

PAL SIDHU: Well, there is -- I wouldn't perhaps use the phrase "spending their way to greater strength." Perhaps strength - you know, spending their way to revive the weaknesses which have crept over the last 10 years or so.

And here is a wonderful irony in the Indian case because part of the economic crisis at the end of the 1980s was, indeed, brought upon by fairly ambitious defense spending during the 1980s. And this, in turn, led to the economic reforms. But one of the fallouts of the economic reforms in the 1990s was that the Indian military budget was cut quite substantially, and this continued right until the late `90s.

So in some ways, there's almost a decade of modernization that all the Indian military -- the army, navy and air force - needs to catch up on. And some defense analysts have argued that the amount being spent even now may not be adequate.

MANN: We used the phrase going into the commercial break, and other people have used it a great deal, talking about an arms race on the subcontinent. Is that what we're seeing?

PAL SIDHU: Well, if it's an arms race, it's certainly a snail- paced one.

MANN: Tell me more.

PAL SIDHU: Well, to the extent that if you're looking - I mean, first of all, I suppose you're looking at two actors, you know, who are the two people you're racing with? There should be at least two people in a race. And if you're comparing it with Pakistan, then clearly there is not a race because the Pakistani military and their outlook is very much designed in an incredibly narrow way. Whereas for India, the world is certainly not a stage at the moment, but the region is, and the interest ranges from, if you like, the Persian Gulf all the way to the South China Seas.

India is worried about ensuring supplies at one end to piracy in the Straits of Malacca. This is certainly a much broader canvas than, say, for example, Pakistan. And to that extent, the Indian military is building up to meet those requirements. But on the other hand, you do not see a tit-for-tat race which one has seen at perhaps the heights of the Cold War between the U.S. and Russia, particularly with regard to missiles.

MANN: Let me jump in there and just ask one last question in the moments that remain to us.

PAL SIDHU: Certainly.

MANN: We began this program by talking about a scandal, about corruption that seems to touch on the Indian military. Is that a shock to people like you who study the Indian military? Is that in some way news to you?

PAL SIDHU: Well, what's shocking is the rapidity, the instant karma with which it has come back to bite the people who were in the center of this all. Kickbacks, paybacks have been part of the deal for a while. The only difference was that in the past, it took forever to have a lot of these scams and scandals exposed. And even then, the repercussions were not immediate.

The classic case of the Bofors in the 1980s is still with us and still, some would argue, the guilty have not been brought to trial. But in this case, the justice was almost nearly instant.

MANN: Waheguru Pal Sidhu of the International Peace Academy, thank you so much for being with us.

PAL SIDHU: Thank you.

MANN: That's INSIGHT for this day. I'm Jonathan Mann. There's more news ahead.




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