Murky disclosure

The massive income declaration of little-known businessman Mahesh Shah throws up a gamut of questions on the presence of politicians on the black money trail.

Mahesh Shah (centre) during his arrest in Ahmedabad.

L’AFFAIRE Mahesh Shah may have hit the headlines in the extraordinary economic and social conditions created by the Narendra Modi government’s demonetisation drive, but the manner in which the investigation in the Rs.13,860 crore case is progressing is extremely predictable. It follows the pattern set by earlier investigations into dubious financial transactions with political connections and ramifications, such as the Jain hawala scandal of the late 1990s and the more recent Aditya Birla and Sahara bribery scandals that came up over the last few months. As in these earlier cases, investigation agencies, including the Income Tax Department, are increasingly talking about confusing leads and projections that are weakening the case. Still, the twists and turns, including the expressions of helplessness emanating from the investigating agencies, have greatly enhanced the sense of intrigue surrounding the case.

The case came to the fore on September 30 when the little-known businessman presented himself before the Income Tax authorities along with Tehmul Sethna, a chartered accountant, and declared that he had Rs.13,860 crore in cash lying across several States, but mostly in Gujarat. He claimed he was seeking to make use of the voluntary income disclosure scheme announced by the Finance Ministry, the last date for which was September 30.

As per the disclosure, Shah was supposed to pay Rs.6,237 crore as 45 per cent tax as stipulated by the scheme. The first instalment of this was fixed at Rs.1,560 crore and it was to be paid by November 30. But Shah went missing in the run-up to this date. He surfaced again dramatically in Ahmedabad on December 3 in the studio of a television channel. Even as he was making a statement delineating the reasons for his disappearance, he was whisked away by the police and the tax authorities and detained. Before these dramatic developments Shah had made a few revelations. First, he said that he had fled to Mumbai because he realised he would not be able to pay the first instalment of his taxes. Second, he said that the money he declared was not his but belonged to some politicians. He also said that these politicians had backed out from giving him the money, which was why he had been forced to go into hiding. Shah also said that he would reveal the names of the politicians who had goaded him to make the disclosure with promises of paying him a commission. But before he could actually do so, he was detained.

Indeed, the question as to why Shah was whisked away before he could make the names of the politicians public is one of the central issues in the case. But after nearly two weeks of investigation, the refrain from the agencies investigating the case is that no concrete evidence has emerged. Of course, there has been no formal statement from the agencies, but snippets of information are being given out informally. These contain suggestions that Shah was involved in money laundering but he did not have the kind of scale he fancied for himself. However, he used to fly often to various business destinations, including Mumbai and Hyderabad, the purpose of which has still not been ascertained.

There was also the suggestion that he was a secretive and reclusive person who did not reveal his identity even to his neighbours. Then there was the information that he used to smoke expensive cigarettes. Shah apparently referred to some land deals he was involved with in Gujarat and Maharashtra, but again the leaks from the investigating agencies hold that he did not reveal the details of the deals or the names of his associates. All in all, the investigation seems to have thrown up fairly useless information without any substantive merit. Or at least that is what observers deduce from the snippets coming out from the investigating agencies.

The confusion has naturally added fuel to the fire of allegations and speculation. The allegations have been aired by certain political opponents of the Bharatiya Janata Party (BJP), the ruling party both in Gujarat and at the Centre, and they have been picked up by several social organisations and prominent individuals too.

Among those who have raised concrete allegations is Suresh Mehta, who was the BJP’s Chief Minister of Gujarat in 1995-96. Mehta left the BJP in 2007 and became one of the founder members of the Gujarat Parivartan Party (GPP). Hardik Patel, convener of the Patidar Anamat Andolan Samiti (PAAS), is another political adversary of the BJP who has raised allegations, although a little figuratively. Mehta’s statement, however, was pointed. In an interview with an online portal first and later while speaking to newspersons, Mehta said that he knew Mahesh Shah as a man with free access to the Gujarat Chief Minister’s Office (CMO) both when Narendra Modi was Chief Minister and later.

According to Mehta, during 2006-07 Mahesh Shah was constantly in the CMO and was also involved in making arrangements for the auction of the gifts Modi received as Gujarat Chief Minister.

“The money from the auction went into government welfare schemes and when one particular auction did not generate as much response as expected, Mahesh Shah himself bought all the items. However, the money spent by him was later reimbursed by the Ahmedabad District Cooperative Bank, of which Amit Shah was the chairman until 2003 and where he continues to be one of the directors,” Mehta told newspersons.

Hardik Patel’s statement was that “the main face behind Mahesh Shah is ‘General Dyer’”. This was perceived as an allegation against BJP national president Amit Shah as Patel has repeatedly used this epithet to refer to Amit Shah. “‘General Dyer’ has been guiding in the pre-disclosure period as well as in the post-disclosure period. That is why this investigation is going forward in fits and starts,” Patel told Frontline . Other political adversaries of the BJP, such as Delhi Chief Minister Arvind Kejriwal and Prashant Bhushan, a consistent campaigner against black money and president of the Swaraj India party, have demanded a probe into the issue on the basis of these allegations. “Amit Shah should respond to Hardik Patel’s allegations. Very serious. It should be investigated,” Kejriwal tweeted.

Even as political leaders and social activists were making statements, the discussions in the political circles of Gujarat, especially in Ahmedabad, revolved around Mahesh Shah’s connections with a clutch of BJP leaders from the State. These discussions neither corroborated nor negated the allegations of Mehta and Patel but only threw up more information, such as Mahesh Shah also being close to three Ministers in the current Gujarat Cabinet and one former BJP Minister. However, there was no final word on whether these Ministers had any involvement in Mahesh Shah’s disclosure and later events.

On its part, the Gujarat BJP officially held that the party had nothing to do with Mahesh Shah. “No one in the party knows him,” BJP spokesperson Bharat Pandya told mediapersons. “At no point of time was any private individual involved in government auctions. These were always organised and conducted by District Collectors,” he added.

Ajay Patel, chairperson of the Ahmedabad District Cooperative Bank, told the media that the bank had not reimbursed anyone for buying in auction gifts received by Modi as Chief Minister. While Pandya was emphatic that Mahesh Shah had no connections with the BJP, several leaders at different levels of the party organisation said in private that although the small-time businessman had no direct links with the BJP, he had been doing “liaison work” in association with some corporate entities and the State government.

Ahmedabad-based senior advocate Yatin Oza, who was formerly with the BJP and is now with the Aam Aadmi Party (AAP), told Frontline that while the exact reasons for Mahesh Shah’s declaration as well as the real nature of his association with the BJP leadership would be known only after a thorough investigation, there was little doubt that the businessman was a known presence in the corridors of power in Gujarat.

“Now, what it led to and what kind of deals and financial transactions came out of it are not clear. That is exactly why it needs to be investigated comprehensively. Given the names that are being linked to the case, it is also not clear how far and how deep the investigations will go,” Oza said.

It is against this backdrop that parallels are being drawn to the Jain hawala case as well as the Aditya Birla-Sahara exposes. The hawala case broke out after the unravelling of business diaries of the Surinder Kumar Jain family in 1996. The dairies, investigated then by the Central Bureau of Investigation, pointed to payments made by the Jain brothers to a number of senior politicians including L.K. Advani and Madan Lal Khurana of the BJP and Madhavrao Scindia, Balram Jakhar, V.C. Shukla, and P. Shiv Shankar of the Congress, along with others. The investigations went through several agencies and the incomplete results were presented before the judiciary, ultimately producing no tangible results.

A similar trajectory is now being charted in relation to the exposes of payments by the Sahara India group and the Aditya Birla group to many senior politicians, including Modi and former Delhi Chief Minister Sheila Dikshit. If early signals from the investigation are anything to go by, the investigation into the Mahesh Shah affair will also end up as a deadwood case that fails to yield any concrete result, in terms of either revelations about wrongdoing or conviction of the guilty.