When the Narendra Modi government gave Karnal Singh a six-month extension as the chief of the Enforcement Directorate on February 17, it did not come as a surprise. South Block, which houses the prime minister’s office, had been abuzz with rumours of him getting an extension as his second three-month tenure was coming to an end, and there was unfinished job.
Singh was made the temporary in-charge of the ED in August after the government abruptly removed Rajan S. Katoch, who was in the middle of an extended term, in August last year. In a week, Singh started a few high-profile investigations by overturning an order Katoch had issued in January 2015 regarding cases where a magistrate had taken cognizance of the offence but no FIR had been registered by a police agency. “For registering an Enforcement Case Information Report (ECIR), the requirement of First Information Report... and its forwarding to a magistrate under section 157 of the Code of Criminal Procedure, 1973 is essential,” said the circular. Because of this, the ED could investigate only cases in which an FIR had been registered.
Karnal Singh issued a new circular on August 26, 2015, which allowed the ED to investigate cases where an FIR had not been filed, if a court had taken cognizance of a complaint. “While registering the Enforcement Case Information Report (ECIR), the paramount consideration should be only the potential money laundering aspect,” it said. And, it cleared the decks for an investigation into the National Herald case against Congress leaders such as Sonia Gandhi and Rahul Gandhi.
The ED had cited Katoch's circular as the reason for not carrying out any investigation in the National Herald case. The case was filed as a private complaint by BJP leader Subramanian Swamy in a court in Delhi in November 2012, accusing Sonia and Rahul of fraud and land grabbing. The complaint says the Congress party granted an interest-free loan of 090.25 crore to Associated Journals Limited (AJL), owner of the National Herald newspaper which was founded by Jawaharlal Nehru and other freedom fighters in 1938. Swamy alleged that the loan was either not repaid or repaid in cash, which was a violation of Section 269T of the Income Tax Act, 1961. Young Indian, a private company, was registered in November 2010 with a capital of Rs 50 lakh, and it acquired AJL, which is said to be worth Rs 5,000 crore. Sonia and Rahul are among the six managing committee members of Young Indian.
Swamy argued that it was illegal for a political party to lend money for commercial purposes as per Section 29A to C of the Representation of the People Act, 1951, and Section 13A of Income Tax Act, 1961. On June 26, 2014, metropolitan magistrate Gomati Manocha summoned Sonia, Rahul, Congress leaders Motilal Vora and Oscar Fernandes, journalist Suman Dubey and technocrat Sam Pitroda to appear in the court.
The ED had initiated an investigation on any possible money laundering in the deal. But it was not going ahead with the probe in August 2015, saying that no case was registered against Sonia and Rahul. But, in a month, Katoch was sacked, Karnal Singh was brought in and the case was reopened.
The case, by all means, is a potent political weapon for the BJP. And, the Congress alleges the ruling party is misusing the ED to settle political scores. “It is being used as a tool,” said former Union minister Kapil Sibal, who represents the Gandhis in the court. “Himachal Pradesh Chief Minister Virbhadra Singh has been implicated in a false and baseless case while other Congress leaders have also been targeted. They register the cases and don't even share the reports with us and keep sending and issuing notices on one issue or the other to keep troubling our people.” It is, however, not just about the Gandhis. The new circular has helped the agency in dealing with international cases where no complaint is registered in India. A source in the ED cited a recent example where the agency busted an international drug racket operating from Thailand and Australia. The racket was routing money through India. “We could apprehend the culprits in India through raids in Delhi and Amritsar even though no complaint was registered in India,” he said.
The ED has registered a money laundering case against industrialist Vijay Mallya for defaulting on repayment of a Rs 900-crore loan from IDBI Bank. The agency has summoned him for interrogation on March 18. The case was filed by ED based on an FIR registered against him by the CBI. Mallya is currently in Britain and it is not clear if he would appear before the ED. On March 13, Karnal Singh briefed Home Minister Rajnath Singh on the actions taken against Mallya.
Mallya's Kingfisher Airlines owes 09,000 crore to a consortium of banks. The ED has started questioning his staff, including A. Raghunathan, former chief financial officer of Kingfisher Airlines. The agency has asked Mallya to furnish documents related to his personal finances along with the financial transactions of Kingfisher Airlines in the last five years. Summonses have also been issued to a dozen officials of the IDBI Bank. “The financial status of the bank officials would also be looked into and their financial transactions would also be obtained to see if they had benefited in any way,” said a source. The ED has a severe staff crunch—it has only 700 operatives against the sanctioned strength of 2,050. That, however, has not stopped it from going on an overdrive. In the past few months, it has registered cases against a clutch of leaders on the other side of the political spectrum. In September 2015, it registered a criminal complaint against former Rajasthan chief minister Ashok Gehlot, state Congress president Sachin Pilot and former finance minister P. Chidambaram's son Karti in connection with the Rajasthan ambulance scam case. The CBI had registered an FIR in the case. Karti is under ED scanner in the alleged money laundering in the Aircel-Maxis deal as well.
The ED case against Virbhadra was registered in November 2015 under the Prevention of Money Laundering Act. The CBI had registered a corruption case against him and his wife, Pratibha Singh. It accused them of amassing Rs 6.1 crore when he was Union minister. Apparently, showcasing the government’s intent to humiliate the opposition leaders, the ED raided Virbhadra's house on his daughter’s wedding day.
The ED recently held a selective briefing where it said Karti built an empire through investments in real estate and other financial dealings across the world. The agency had recovered many documents in a recent raid on Karti. Sources said these documents and those provided by some other countries had details of his business deals in 14 countries.
Chidambaram, however, denied the allegations, saying Karti was being “targeted” because he was his son. He said if the government proved the charge, he would offer the so-called “undisclosed assets” to the government of India for a rupee.
Swamy rejected the allegation that government was misusing the ED. “There has been a campaign being run by the Congress and its party members to malign the reputation of the agency so that it comes under pressure while carrying out action in their corruption cases. In the 2G scam, the ED officer Rajeshwar Singh was removed by the UPA government from the probe but he was brought back after the court intervened. He was removed again after the BJP government came to power and I had to go to court against it to get the officer back,” he said. Rajeshwar Singh is a deputy director in the ED and has been a key investigator in the 2G scam.
Swamy alleged Katoch was working hand in glove with the Congress in the National Herald case and had been briefing the Congress about the developments in the case. “Katoch was regularly in touch with Congress general secretary Digvijaya Singh and briefing him about the developments in cases related to the Gandhi family and the Congress, and the prime minister removed him after receiving complaints in this regard,” he said. “Moreover, he was also an ad hoc arrangement as he was granted four extensions in his temporary charge.”