Common Wealth Games ScamINTRODUCTION The Commonwealth Games is an international, multi-sport event involving athletes

from the Commonwealth of Nations. The Games are overseen by the Commonwealth Games Federation (CGF), which also controls the sporting program and selects the host cities. The host city is selected from across the Commonwealth, with eighteen cities in seven countries having hosted it. There are currently 54 members of the Commonwealth of Nations, and 71 teams participate in the Games.

The first Games were held in 1930 in Canada. The name was changed to British Empire and Commonwealth Games in 1954, to British Commonwealth Games in 1970 and assumed the current name of the Commonwealth Games in 1978.

The 2010 Commonwealth Games, officially known as the XIX Commonwealth Games, were held in Delhi, India, from 3 to 14 October 2010. A total of 6,081 athletes from 71 Commonwealth nations and dependencies competed in 21 sports and 272 events. It was the largest international multi-sport event to be staged in Delhi and India, eclipsing the Asian Games in 1951 and 1982.

The opening and closing ceremonies were held at the Jawaharlal Nehru Stadium, the main stadium of the event. It was the first time that the Commonwealth Games were held in India and the second time it was held in Asia after Kuala Lumpur, Malaysia in 1998.

Initially, several concerns and controversies surfaced before the start of the Games. Despite these concerns, all member nations of the Commonwealth of Nations participated in the event, except Fiji, which is suspended from the Commonwealth, and Tokelau, which didn't send a team. A widely-praised opening ceremony helped improve the image of the Games.

The concerns raised during the buildup to the Games proved largely unfounded as most events progressed smoothly. The opening ceremony played a key role in improving the image of the Games. As athletes arrived and competitions started, many earlier critics changed their view. The Australian Sports Minister said that India could now aim for the Olympics, and the President of the International Olympic Committee, Jacques Rogge, said that India had made a good foundation for a future Olympics bid.

As the Games concluded, many observers remarked that they began on an apprehensive note, but were an exceptional experience with a largely positive ending. Some observers accused sections of the media of bias, unfair expectations, and negative reporting. The final medal tally was led by Australia. The host nation India gave its strongest performance yet to emerge second, while England placed third. The day after the conclusion of the Games, the Indian Government announced the formation of a special investigation committee to probe the allegations of corruption and mismanagement that had marred the buildup to the Games.

BIDDING

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The two principal bids for the 2010 Commonwealth Games were from Delhi, India and Hamilton, Ontario, Canada. A ballot of members was held in November 2003 at the Commonwealth Games Federation General Assembly in Montego Bay, Jamaica. Delhi bid won by a margin of 46 votes to 22, confirming India's first successful bid for the Games. The bid was Canada's attempt to hold the games for the fifth time. India's bid motto was New Frontiers and Friendships.

India shifted the balance in its favor in the second round of voting with a promise that it would provide US$100,000 to each participating country, along with air tickets, boarding, lodging and transport. The successful 2003 Afro-Asian Games held in Hyderabad was also seen as having showed India has the resources, infrastructure and technical know-how to stage a big sporting event. India also thanked Latif Butt, former vice president of the Olympic Council of Asia, for his support in the winning bid, by saying, "You played a vital role in the Commonwealth Games 2010 being allotted to India. Such actions are worthy of emulation by all concerned in Pakistan and India. I have no doubt that if both sides continue to live by such ideals, one day, sooner than later our generations to come will reap the benefits of and be grateful to those making such contributions. You would certainly be such person." The Indian government stated that it would underwrite the total cost of the Games.

ORGANIZING COMMITTEEThe organization of CWG 2010 was beset by delays: in January 2010, the Indian Olympic Association vice-chairman Raja Randhir Singh expressed concern that Delhi was not up to speed in forming and organizing its games committee and, following a 2009 Indian Government report showing two thirds of venues were behind schedule, Commonwealth Games Federation president Mike Fennell stated that the slow progress of preparations represented a serious risk to the event. Singh also called for a revamp of the games' organizing committees: Jarnail Singh, a former Secretary of the Government of India, was appointed as the Chief Executive Officer and Indian Olympic Association President Suresh Kalmadi was appointed as head of the committee. In spite of delays and the corruption cases levied on the organizers, commentators stated that they were confident that India will successfully host the games and do so on time.At the launch of the Queen’s Baton Relay in October 2009, the Business Club of India (BCI) was formed through the partnership of the organizing committee, the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI). The BCI was formed to both market the Games and promote Indian business interests internationally.

COSTSThe initial total budget estimated by the Indian Olympic Association in 2003 for hosting the Games was 1,620 crore (US$351.54 million). In 2010, however, the official total budget soon escalated to an estimated 11,500 crore (US$2.5 billion), a figure which excluded non-sports-related infrastructure development. Business Today magazine estimated that the Games cost 60,000 crore (US$13.02 billion). The 2010 Commonwealth Games are reportedly the most expensive Commonwealth Games ever.

GREEN GAMES

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The organizers signed a Memorandum of Understanding (MoU) with the United Nations Environment Programme to show the intention to host a "sustainable games" and to take the environment into consideration when constructing and renovating venues. Thyagaraj Stadium was intended to be a key example of environmentally considered construction.

In opposition to this intention, a number of environmental controversies arose and the adverse ecological impact of various aspects of the games has been protested by city residents. City residents filed a public interest petition to the Supreme Court of India against the felling of 'heritage' trees in the Siri Fort area to make way for Games facilities. The court appointed architect Charles Correa to assess the impact and he severely criticized the designs on ecological grounds. In spite of this, in April 2009 the Supreme Court allowed the construction on the grounds that "much time had been lost" and "the damage already caused to the environment could not be undone".

The Commonwealth Games village, located on the flood plains of the Yamuna, has also been the subject of controversies about the flouting of ecological norms. After a prolonged legal battle between city residents and the state, construction was permitted to continue on the basis of an order of the Supreme Court of India in July 2009, which held that the government had satisfied the requirements of "due process of the law" by issuing public notice of its intention to begin construction work in September 1999 (a date four years prior to the acceptance of Delhi's bid for the games)

Other Preparation In preparation for an influx of English-speaking tourists for the Games, the Delhi

government implemented a program to teach English, and the necessary skills for serving tourists, to key workers—such as cab drivers, security workers, waiters, porters, and service staff. In the two years prior to the Games 2,000 drivers were taught English. The program aimed to teach 1,000 people English per month in the hope of reaching all key workers by March 2010. In addition to Delhi, the Indian Government planned to expand the program to teach people in local tourist destinations in other parts of India.

To prepare for the energy-usage spike during the Games and to end chronic power cuts in Delhi, the government undertook a large power-production initiative to increase power production to 7,000 MW (from the current 4,500 MW). To achieve this goal, the government planned to streamline the power distribution process, direct additional energy to Delhi, and construct new power plants. In fact, the government had promised that by the end of 2010, Delhi will have a surplus of power.

In addition to physical preparation, India proposed to offer free accommodation for all athletes at the Games Village, as well as free transport and other benefits, such as a free trip to the famed Taj Mahal and a reserved lane for participants on selected highways. The Games Village was supposed to house over 8,000 athletes and officials for the Games. Indian states trained state police forces to handle tourist-related issues and deployed them prior to the Games.

A large-scale construction and "beautification" project resulted in the demolition of hundreds of homes and the displacement of city dwellers—at least 100,000 of New Delhi’s 160,000 homeless people had been removed from shelters, some of which have been demolished. Bamboo screens had been erected around city slums to

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separate visitors from the sights of the slums, a practice which human rights campaigners had deemed dishonest and immoral.

PROGRESS TIMELINEMarch

Mike Fennell, Chief of Common Games Federation (CGF) told everything in Delhi would be fantastic during the commencement of CWG.

April

MCD anticipated giving temporary licenses to illicit hotels and guest houses in Delhi in the run up to the CWG.

CWG, the Budget within a period of 4 yrs increased by more than 40 % 

The construction work under the scanner, yet once again it has come into notice that out of ten stadiums only five have been completely ready while the remaining are yet far from finishing line.

May Renovation of Capital’s Newest Airport Terminal by Hong Kong Firm

Landscaping.

June A major scam took place regarding the funds of CWG.

During the transfer of funds into development for the CWG, it was reported that around 450,000 pounds were transferred to a British company from the Commonwealth account to that company

CWG project causing trouble amongst government members

Mani Shankar Aiyar comments “I am very happy with the rains, firstly because it will ensure a good agriculture for the country and secondly because it will ensure that the CWG are spoilt.” The reason he stated for this point of view was that he wanted the huge investment of Rs. 35,000 crore that was done for organizing these games to be instead reverted onto the children in India who would have instead won laurels for the country at such international events.

July Jawaharlal Nehru Stadium prepared for Commonwealth Games India. Huge sum

of money, around Rs 961 crore has been spent for the development of the stadium

August Commonwealth games face security issues according to the New Zealand

diplomats.

A.R. Rehman composes the CWG at an exorbitant price of 10 Crore. The song is a huge flop among people.

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The dead line for clearing the debris is extended to August 31 from the initially circulated August 10.

September Australian government stands up to defend the incomplete preparations and

Indian government.

Many participating athletes back-out from the Commonwealth games 2010.

Rehman Comes with improved version of new CWG Theme Song

Tourists from Taiwan attacked.

Only 16 days left to CWG: Bridge collapses at JNL

False ceiling carves out at CWG stadium.

Commonwealth Games federation president annoyed with the games village preparations

Queen’s Baton RelayThe Queen's Baton Relay began when the baton, which contains Queen Elizabeth II's message to the athletes, left Buckingham Palace on 29 October 2009. The baton arrived at the 2010 Games opening ceremony on 3 October 2010, after visiting the other 54 nations of the Commonwealth and travelling throughout India, reaching millions of people to join in the celebrations for the Games. The baton arrived in India on 25 June 2010 through the Wagah Border crossing from Pakistan.

CONCERNS AND CONTROVERSIES Several concerns were raised over the preparations of the Games and these included

excessive budget overruns, likelihood of floods in Delhi due to heavy monsoon rains, infrastructural compromise, poor living conditions at the Commonwealth Games Village, delays in construction of the main Games' venues, the withdrawal of prominent athletes, widespread corruption by officials of the Games' Organizing Committee and possibility of a terrorist attack by militants. The 2010 Commonwealth Games in Delhi was criticized by several prominent Indian politicians and social activists.

One of the outspoken critics of the Games is Mani Shankar Aiyar, former Indian Minister for Youth Affairs and Sports. In April 2007, Aiyar commented that the Games are "irrelevant to the common man" and criticized the Indian government for sanctioning billions of dollars for the Games even though India requires massive investment in social development programs. In July 2010, he remarked that he would be "unhappy if the Commonwealth Games are successful".

Miloon Kothari, leading Indian expert on socio-economic development, questioned the justification of spending billions of dollars on a 12-day sports event "when 46% of India's children and 55% of women are malnourished".

Concerns raised by Aiyar were echoed by several others in India. Initial concerns about the 2010 Commonwealth Games included delays in completion of projects,

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poor construction standards, corruption by Games' Organising Committee officials and possibility of a terrorist attack. The Indian media also alleged that Games' Organising Committee officials were involved in serious corruption and these allegations included acceptance of bribe during the process of awarding construction contracts for the Games' venues.

The Commonwealth Games Organising Committee on 5 August 2010 suspended T S Darbari (joint director in the organising committee) and Sanjay Mahendroo (deputy director general in the organising committee) following the report of the three-member panel which was probing the financial irregularities related to the Queen's Baton Relay.

Organising Committee treasurer Anil Khanna resigned from the post in the wake of allegations that his son's firm had secured a contract for laying synthetic courts at a tennis stadium. On September 23, The Daily Telegraph UK showed photographs taken of child labour working on the Games sites. There were also multiple cases of items being rented for the 45 days for more money than it would cost to actually buy the item. In one such case, 72 golf carts were hired for 4.23 lakh (US$9,179.1) each, when they could have been purchased for 1.84 lakh (US$3,992.8) each.

Weeks before the start of the Games, Indian media outlets highlighted the poor construction standards at several of the main Games venues. In late September 2010, the president of the Commonwealth Games Federation remarked that the Games Village were far from completion and needed a "deep clean" and New Zealand's chef de mission even claimed that the Games might not take place given the amount of work to be done. The concerns came to media attention in late September 2010 after media outlets began reporting on "filthy and unlivable conditions" and taking photos of paan stains and excrement in living quarters at the games village.

Just a day after these remarks, a footbridge under construction near the Nehru Stadium collapsed, injuring 27 and seriously injuring five. On 22 September 2010, some tiles at the wrestling stadium's false ceiling caved in; however, there were no reported injuries. After the start of the games, a large scoreboard at the rugby stadium toppled over, though before any competitions had started in the stadium. Security concerns were highlighted by an Australian TV crew from the Seven Network who claimed to have walked past security with a suitcase containing a dummy bomb casing and its detonator on 15 September, although the claim was later revealed to be 'bogus' and dishonest journalism. Concerns of a terrorist attack were also raised following a gun attack that took place outside the Jama Masjid on 19 September 2010. However, the Indian authorities stated that the shooting was a "one-off incident".

More than a dozen athletes from Australia and England, mainly swimmers, fell ill in the initial days of the swimming competitions. Early suspicions rested on the quality of water in the swimming pools of the SPM Complex, but other competing teams, including South Africa, reported no such illness. Daily water quality tests were being carried out on the water of the pools, as mandated by the event standards. Additional tests were ordered after news of the illnesses, but they also did not find anything amiss. The Australian team's chief doctor, Peter Harcourt, ruled that the "chances of the [Delhi] pool being the cause of the problem is very remote" and praised the hygiene and food quality in the Delhi Games Village. He suggested that it could be a

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common case of Traveler's diarrhea (locally called Delhi belly), or the Australian swimmers could have contracted the stomach virus during their training camp in Kuala Lumpur, Malaysia. English Olympic and Commonwealth gold-medalist swimmer Rebecca Adlington said that the water quality was absolutely fine.

In another incident, three Ugandan officials were injured when the car they were travelling in hit a security wheel stopper at the Games village. The chairman of the Games' Organising Committee, Suresh Kalmadi, apologized to the Ugandan High Commissioner to India for the freak car accident.

The negative pre-event publicity and heavy security presence played in part in low spectator attendance during the initial events. However the numbers picked up as the Games progressed.

COMMONWEALTH GAMES SCAMThe day after the conclusion of the Games, the Indian Government announced the formation of a special committee to probe the allegations of corruption and mismanagement against the Organizing Committee. The probe committee was led by former Comptroller and Auditor General of India VK Shungloo. This probe was done in addition to the Central Bureau of Investigation, Enforcement Directorate, and Central Vigilance Commission investigations already underway. The probe committee was tasked with looking into "all aspects of organizing and conducting" the Games, and "to draw lessons from it." It was given three months’ time to submit its report. The Indian Sports Ministry had directed the Organizing Committee of the 2010 Commonwealth Games (led by Suresh Kalmadi), to not release any staffer from their positions till the probe committee's work got finished.

CWG was infamously known as “Corruption Wali Games” - Name first appeared in Times of India in an article by author Chetan Bhagat

Estimated scam of Rs. 70,000 – 80,000 crores.

Civic Bodies Involved Sports Authority Of India (for building sports infrastructure) Organizing Committee (for conducting games) Delhi Development Authority (for Games Village) GNCT-Delhi Government (Civic Infrastructure)

Civic Bodies probing the Scam A panel has been set up by the government to look into the corruption charges in

the Games. Headed by former Comptroller and Auditor General, VK Shunglu, the panel will submit its report within three months to the Prime Minister. It has the mandate to review every transaction, if needed.

The special panel appointed by the government will probe the financial bungling and administrative lapses.

The Comptroller and Auditor. General (CAG) is looking into financial misappropriation; and the Enforcement Directorate (ED) is probing the routing of funds, which have been traced to tax havens like Mauritius.

The Central Bureau of Investigation (CBI) will be examining tenders issued for various Games related projects, which are already under scrutiny after exposes on items being bought at absurdly inflated rates.

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The Central Vigilance Commission (CVC) is looking into allegations of corruption in all infrastructure projects like the stadia and Games' venues.

MAJOR ALLEGATIONS It is estimated that the expenditure bills have been inflated by 30% of the actual

value of services or commodities procured. The Income Tax department is scrutinizing financial documents relating to the

broadcast rights for the CWG following charges of tax evasion The Central Vigilance Commission is examining 11 major project tenders which

were awarded at artificially hiked rates causing a loss of over Rs.500 crore The Enforcement Directorate is looking into a case of alleged violation for foreign

exchange regulations related to the Queen Baton Relay in London. Infrastructure developer Emaar-MGF is in the dock for alleged irregularities in

the construction of the CWG Village in Delhi. The Rs.183 crore bank guarantee furnished by Commonwealth Games village builder Emaar-MGF was ordered to be confiscated on charges of irregularities. A Rs. 760 crore bail-out package given by Delhi Development Authority (DDA) for Emaar-MGF also came under the scanner.

The CWG Organizing Committee head office being burglarized several times to steal or destruct the data which is being probed

The Central Vigilance Commission has initiated an inquiry into an alleged recruitment scam in the Commonwealth Games Organizing Committee (OC) following complaints that it showed ghost employees on its muster rolls and violated norms while inducting people. A total of 2,100 people were shown as having worked between May 2009 and November 2010 in different capacities and together drew salary running into several crores.

Kalmadi delayed catering contract in CWG which inflated the budget by more than Rs 20 cr.

The CVC has found alleged financial and administrative irregularities in over 30 Commonwealth Games projects in the national capital and overlays deals by the Organizing Committee for the mega-sporting event. 

CBI registered the fourth FIR in connection with the overlays contracts given out to four firms. The total value of these contracts was over Rs. 600 crore.

The lawn bowling tracks to be used during the Games had been built at around Rs 1.36 crore when it could have been done at just Rs 27 lakh.

There were a number of teenagers between the ages of 14 and 16 who worked at these places, obviously lured by an adult salary.

Allegations pertaining to PMO The Bharatiya Janata Party blamed the PMO and the union cabinet for not

verifying the costs before approving the ‘inflated budget’ The BJP president, Nitin Gadkari mentioned that out of the Rs 70000 crore spent,

only Rs 350 crore was spent on Indian sportspersons. Another big question asked by BJP president was how the total budget for staging

the games escalated by a huge percent and why didn’t the PMO or Dr. Manmohan Singh himself ask questions?

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VIOLATION OF BUSINESS ETHICSInstitute of Business Ethics, London defines it as – “Business ethics is the application of ethical values to business behavior. It applies to any and all aspects of business conduct, from boardroom strategies and how companies treat their employees and suppliers to sales techniques and accounting practices. Ethics goes beyond the legal requirements for a company and is, therefore, about discretionary decisions and behavior guided by values. Business ethics is relevant both to the conduct of individuals and to the conduct of the organization as a whole.”Causal FactorsThe various factors that led to such a huge scam were as follows:

Presence of avenues for corruption

Lack of Accountabilty

Psyche of citizenry to believe that corruption is ‘normal’

All praise for the Indian ‘jugaad’

DYNAMICS INVOLVEDFrom the perspective of purchasing process, the following control issues are apparent:

Improper and inadequate vendor selection and evaluation procedures were followed.  

Conflict of interest was not disclosed while signing contracts with related parties.

Tenders were not given to bidders quoting lowest price of the product.

Vendors did not deliver the contracted quality and quantity as per the delivery schedule.

Vendor payments were not linked to delivery of products or completion of deliverables.

There was no segregation of duties. The same officials authorized the contract and approved payments.

Vendors were not penalized for sub-standard quality or late delivery

Purchase contracts signed with varying rates for the same product;

Prices over-inflated in some contracts;

Contracts given to relatives and friends;

Sub-standard products purchased;

Vendor payments made without confirming quality and delivery;

Payments made to non-existent vendors.

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The government is legally required to place Auditor General’s reports in the Parliament. Yet, somehow, this particular report on the Commonwealth Games, results, managed to miss its tabling deadline. It was to be tabled during the budget session that ended in early August 2009. But, it never happened.

Some practices that could have been followed to prevent such a huge scam were as follows:

An independent evaluation of contracts by risk managers may have prevented misappropriation of funds.

A periodic audit by government agencies could have highlighted these issues at an earlier stage

Consultants Event Knowledge Services, Fast Track Sales Ltd, Sports Marketing And Management (SMAM) and AM Films are supposed to have received undue benefits

Legal Requirements to place report in parliament

VIOLATION OF MORAL RESPONSIBILITYSome cases which clearly highlight the violations on the part of the several people involved in the scam are as follows:

The organization committee members ignored the Prevention of Corruption Act and government procedures for contracts and tenders

Indicates  misutilization of public funds.

PMO silent and unobservant

Mr. Lalit Bhanot, SCG of OC: “some false ceiling has fallen down, which means nothing,” and “these things happen even at your house.”

Government has “urged” public sector units to shell out, CSR investments

Diversion of Funds: Scheduled Caste Sub Plan;  100,000 poor slum-dwellers evicted.

CONSEQUENCES Bad publicity of the nation.

Tarnished image in terms of hygiene.

Loss of faith in the system

Refusal of athletes to participate in games or withdraw from games.

The incomplete work added unnecessary cost burdens

Unnecessary laundering of tax payers money

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India perceived as more corrupt after CWG scam – 87 th out of 178 countries surveyed

A marginal decline in India's integrity score to 3.3 in 2010 from 3.5 in 2007 and 3.4 in 2008 and 2009

Innocent employees at the OC still waiting for their salaries

Effect on Brand India India had a unique opportunity to prove that they have the necessary infrastructure

to host such a huge game. The members should have been more ethical and morally responsible to make the citizens believe that not all politicians are corrupt

Indian politicians should have taken a lesson from their neighbor country – China which was able to showcase an excellent performance by hosting Beijing Olympics. The image of India suffered because of the greed of a handful of politicians

The corruption to the tune of thousands of crores have snatched away all the pride that India could have boasted of, had the games gone without a black spot. But the situation went out of control and have left India high and dry.

India’s position degraded in global list of corruption where they went from a rank of 82nd to 81st as soon as this huge scam came to light.

SUGGESTIONS“ the scheme of fighting against systemic corruption comprises a global fostering of democratic ethos, universal ideology of public service, and public ethics, education and training” -Gerald Caidin

The contagious disease of scams demands perfect healing and a thorough clean-up. This can be made possible if we implement the recommendations of The Santhanam Committee. The Santhanam Committee emphasized four major causes of corruption:

Administrative delays

Government taking upon themselves more than what they can manage by way of regulatory functions.

Scope for personal discretion in the exercise of powers vested in different categories of government servants.

Cumbersome procedures of dealing with various matters which are of importance of citizens in their day to day affairs

Recommendation for First Cause Review of existing procedures and practices to find out the points at which delay

occurs and device suitable steps to minimise

Prescribe definite time-limits for dealing with receipts, files etc., which should be strictly enforced

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Recommendation for Second Cause Each Ministry/Department should undertake a review of the regulatory functions

which are its responsibility, with a view to see whether all of them are strictly necessary and whether the manner of discharge of these functions and of the exercise of powers of control are capable of improvement

Recommendation for Third Cause Adequate methods of control should be devised over exercise of discretion.

The right to act according to discretion does not mean right to act arbitrarily.

The fairness of the method by which the discretionary decision was arrived at may certainly be looked into

Recommendation for Fourth Cause Citizens should be educate properly with regard to the procedures of dealing with

various matters

They should also be provided with an easy access to administration at various level without the need for the intervention of touts and intermediaries

Indian black money scamBlack money refers to funds earned on the black market, on which income and other taxes has not been paid. The total amount of black money deposited in foreign banks by Indians is unknown, but many estimates that a total of US$1.5 trillion are stashed abroad. According to Central Bureau of Investigation (CBI) Indians are the largest depositors in banks abroad with an estimated $500 billion of illegal money stashed by them in tax havens.

Black money in Swiss banks While official numbers are not available, Swiss banking officials have said that the

largest depositors of illegal foreign money in Switzerland are Indian. In August 2010, the government revised the Double Taxation Avoidance Agreement

to provide means for investigations of black money in Swiss banks. This revision, expected to become active by January 2012, will allow the government to make inquiries of Swiss banks in cases where they have specific information about possible black money being stored in Switzerland.

In 2011, the Indian government received the names of 782 Indians who had black money saved in HSBC. As of December, 2011, the Finance Ministry has refused to reveal the names, though they did confirm that no current MPs are on the list. In response to demands from the Bharatiya Janata Party (BJP) opposition party for the release of the information, the government announced on 15 December that, while it would not publish the names, it would publish a white paper about the HSBC information.

In February 2012, Central Bureau of Investigation (CBI) director A P Singh speaking at the inauguration of first Interpol global programme on anti-corruption and asset

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recovery said: "It is estimated that around 500 billion dollars of illegal money belonging to Indians is deposited in tax havens abroad. Largest depositors in Swiss Banks are also reported to be Indians". In a hint at scams involving ministers, Singh said: "I am prompted to recall a famous verse from ancient Indian scriptures, which says – Yatha Raja Thatha Praja. In other words, if the King is immoral so would be his subjects"

The Ministery of Finance through the Central Board of Direct Taxes released a White Paper on Black Money in May 2012 giving the Income Tax Department increased powers.

Supreme Court on black money In January 2011, the Supreme Court of India (SC) asked why the names of those who

have stashed money in the Liechtenstein Bank have not been disclosed. The court argued that the government should be more forthcoming in releasing all available information on what it called a "mind-boggling" amount of money that is believed to be held illegally in foreign banks.

The SC on 4th July 2011, ordered the appointment of a Special Investigating Team (SIT) headed by former SC judge BP Jeevan Reddy to act as a watch dog and monitor investigations dealing with the black money. This body would report to the SC directly and no other agency will be involved in this. The two judge bench observed that the failure of the government to control the phenomenon of black money is an indication of weakness and softness of the government. The government subsequently challenged this order. The bench (consisting of Justice Altamas Kabir in place of Justice B Sudershan Reddy, since Justice Reddy retired) on September 23, 2011 pronounced a split verdict on whether government plea is maintainable. Justice Kabir said that the plea is maintainable while Justice Nijjar said it is not. Due to this split verdict, the matter will be referred to a third judge.

Hasan Ali case

In April 2011, Hasan Ali Khan was arrested by Enforcement Directorate and the Income Tax Department on charges of stashing over 36,000 crore in foreign banks.ED lawyers said Khan had financed international arms dealer Adnan Khashoggi on several occasions.

However, this case is becoming yet another perfect instance of how investigative agencies like Income Tax Department go soft on high-profile offenders. Ali's premises were raided by ED as far back as 2007. According several news reports, the probe against him appears to have been proceeded at an extremely slow pace and seems to have hit a dead end.

Public protests and government's response

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Government committee on black money After a series of ongoing demonstrations and protests across India, the government

appointed a high-level committee in June 2011 to study the generation and curbing of black money. The committee finalised its draft report on 30 January 2012. Its key recommendations were:

The two major national parties (an apparent reference to Indian National Congress, BJP) claim to have incomes of merely Rs 500 crore and Rs 200 crore. But this isn’t “even a fraction” of their expenses. These parties spend between Rs 10,000 crore and Rs 15,000 crore annually on election expenses alone. 1. Change maximum punishment under Prevention of Corruption Act from the

present 3, 5 and 7 years to 2, 7 and 10 years rigorous imprisonment and also changes in the years of punishment in the Income Tax Act..

2. Taxation is a highly specialised subject. Based on domain knowledge, set up all-India judicial service and a National Tax Tribunal and giving Income Tax Department extra judical powers.

3. Just as the USA Patriot Act under which global financial transactions above a threshold limit (by or with Americans) get reported to law enforcement agencies, India should insist on entities operating in India to report all global financial transactions above a threshold limit.

Setting up of Directorate of Income Tax Intelligence and Criminal Investigation

Directorate of Income Tax Intelligence and Criminal Investigation (DCI) is an agency of the government of India which investigates potential criminal violations of the Income Tax Act, 1961 and related financial crimes in a manner intended to foster confidence in the tax system and compliance with the law.[1][2] The Directorate was created in the Central Board of Direct Taxes, Department of Revenue, Ministry of Finance, with immediate effect.[3].The DCI will perform functions in respect of criminal matters having any financial implication punishable as an offence under any direct tax law including, inter alia –(i) Chapter XXII of the Income Tax Act 1961 (Act 43 of 1961); and (ii) Chapter VIII of the Wealth Tax Act 1957 (Act 27 of 1957).This was started after protests on the Black Money issue.

Tax Information Exchange Agreements

To curb black money, India has signed TIEA with 10 countries - Bahamas, Bermuda, the British Virgin Islands, the Isle of Man, the Cayman Island, the British island of Jersey, Monaco, St. Kitts and Nevis, Argentina and the Marshal Islands - where money is believed to have been stashed away.

India 'loses $500bn to tax havens' The chief of India's federal investigation agency says Indians have illegally deposited

an estimated $500bn in overseas tax havens. Central Bureau of Investigation (CBI) director AP Singh said Indians were the largest

depositors in foreign banks.

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Funds were being sent to tax havens such as Mauritius, Switzerland, Lichtenstein and the British Virgin Islands among others, he said.

Analysts say this flight of capital has helped widen inequality in India. Mr Singh was speaking at the opening on Monday of the first Interpol global

programme on anti-corruption and asset recovery in the Indian capital, Delhi. "It is estimated that around $500bn of illegal money belonging to Indians is deposited in tax havens abroad. [The] largest depositors in Swiss Banks are also reported to be Indians," The Press Trust of India (PTI) quoted him as saying. Mr Singh said getting information about such illegal transactions was a time-consuming and expensive process as each country where money had been sent had to be approached for help with investigations. He said there was a lack of political will in the tax havens to part with any information because they were aware of the extent to which their economies had become "geared to this flow of illegal capitals from the poorer countries", PTI reported.

In a report in November 2010 the US-based group, Global Financial Integrity, said India had lost more than $460bn between 1948, a year after Independence, and 2008 because of companies and the rich illegally funnelling their wealth overseas.

India's underground economy accounted for 50% of the country's gross domestic product, it said. The report said the illicit outflows of money had increased after economic reforms began in 1991.

In recent months, India's Congress party-led government has been on the back foot on the issue of black money and corruption.

The Supreme Court has also chided the government for not doing enough to unearth illicit money.

COALGATE SCAM

Coal Mining Scam or Coalgateis allegedly a corruption scandal in which Comptroller and Auditor General of India (CAG) office accused the Government of Indiafor providing the nation's coal deposits to private and state-run entities in an irregular and arbitrary manner instead of publicly auctioning them off to the highest bidder, resulting 1,067,000 crore (US$212.87 billion) losses from 2004-2009.[1][2][3] It is called by the media as the Mother of all Scams.

According to the Comptroller and Auditor General of India, this is a leak of the initial draft and the details being brought out were observations which are under discussion at a very preliminary stage. [6] On 29th May 2012, Prime Minister Manmohan Singh offered to give up his public life if found guilty in this scam.

Full Report on Coalgate Scam CBI starts preliminary inquiry .CBI will not probe PM Manmohan Singh. A draft report of the Comptroller and Auditor General (CAG) had stated that the government's decision not to auction coal blocks caused a loss of Rs.1.8 lakh crore to the public exchequer that is loss to the each Indian citizen.

A complaint was given by Bharatiya Janata Party (BJP) MPs Prakash Javadekar and Hansraj Ahir to CVC. Team Anna has also alleged the scam in the Coalgate.Team Anna has questioned the role of Manmohan Singh in the suspected scam. The prime minister held the coal portfolio from November 2006 to May 2009.Team Anna member Arvind Kejriwal, said, that The Governments decision to forgo

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profits of 2 lakh crores was not taken by the Coal Ministry or Coal Secretary it was taken by someone from the PMOs office. Prime Minister Manmohan Singh headed the coal ministry when most allocations were done. Coalgate scam happened between years 2006 to 2009. Team Anna member Arvind Kejriwal said that In three years, 145 blocks were allocated while prior to his tenure only 75 mines were allocated in 12 years. It shows that the demand for coal was high only in three years. In fact, only one coal block has been allotted since he left the charge of coal portfolio,"

Kejriwal said the blocks were allocated to companies which had "nothing to do with steel cement and power. Their motive was to sell the mines".

Year 2012 – The Central Vigilance Commission (CVC) has asked the CBI to probe coal block allocation between 2006 and 2009. CVC has also asked the CBI to complete the inquiry in three months.

Because of the CVC request and pressure from Team Anna The Central Bureau of Investigation (CBI) on Friday registered a preliminary enquiry into the coal block allocation.

Media has reported that CBI told to media that Prime Minister Manmohan Singh will not be probed for alleged irregularities in the allocation of coal blocks between 2006 and 2009.

Media reported that CBI will investigate

1. misuse of allocation of coal blocks 2. misuse of coal blocks by private companies3. calculate loss due to any irregularities in the auction process4. Role of all bureaucrats, officials, private companies and ministers, and the

screening committee which recommended the names. 5. scrutinize 156 companies and 65 coal blocks

UPA II Congress Government adopted a first-come-first-serve basis for allocation of coal blocks to benefit some private companies. The complaint also alleged that allocation of blocks to 156 companies was improper, as they had handed over operations to other companies at a premium. The complaint also alleged the allottees of coal blocks did not start production themselves and outsourced the operation to third parties at a premium and pocketing the benefit. The price of 1,700 crore metric tonne of coal worth Rs.51 lakh crore was given almost free to private companies.

Last year in a statement BJP said that 1. 51 companies were allotted coal blocks in 20062. 19 companies in 20073. 41 companies in 2008 4. 32 companies in 2009

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"Coalgate scam" should draw attention to India's wholesale destruction of the environment

The worst news, though, is that the environmental impact of this "collusive corruption" promises to be devastating. The supposed "Coalgate scam" has neither been proven nor even investigated fully yet, of course, so one can't say for sure what its full effect was. But, in general, statistics suggest that the phenomenon of "collusive corruption" identified as on the increase by Transparency International may be undermining environmental protection -- even as the prime minister and others say environmental concerns are slowing down "development."

The numbers tell a different story. Over the past 30 years, only 6 percent of proposed industrial projects were blocked on environmental grounds, according to the New Delhi-based Center for Science and Environment (CSE). And about a quarter of the total forest land devoted to industrial projects since 1981 was allotted between 2007 and 2011, during which more than 8,000 projects were granted environmental clearance. Meanwhile, though official statistics maintain, beyond all reason, that India's forest cover has actually increased since 1987 despite development and massive population growth, the reality is that the so-called forests are mostly single-species timber plantations, according to environmental writer Jay Mazoomdar. Even worse, in many cases, state governments tapped “compensatory afforestation” funds to plant them.

Moreover, in coal mining -- which is essential for India's power industry -- the picture is particularly grim. India has some 575 coal mines, producing 550 million tonnes of coal per year, CSE reveals. But some 180 projects were given clearance by the Ministry of Environment and Forests (MoEF) to start mining or increase capacity over the past five years, which CSE projects will double the country's coal output. 

Worse still, nobody appears to be paying attention to the cumulative environmental impact of the increase. Many new projects are slated for already critically polluted areas, while one-third of the existing mines are already violating pollution laws. 

Steel firms hit by coal sale report( March 2012) Steel stocks fell 0.3 percent, weighing down on the broader indexes, after the CAG

draft said India lost up to $210 billion in revenue by selling coal deposits too cheaply.

The report from the Comptroller and Auditor General's (CAG) office, leaked to newspaper Times of India, is making traders worried about a potential new scandal that could hurt foreign investments and hit a sector reliant on coal

"Steel, which is the backbone of country's infrastructure, will be in a big mess if this report by CAG is true, said Vivek Mahajan, head of research at Aditya Birla Money.

"This has the potential to scare off FDI as well as FIIs from India," he added, referring to the foreign investor flows that are crucial to Indian stock markets.

Jindal Steel And Power (JNSP.NS), one of the companies listed by Times of India as benefiting from the reported sale of coal deposits, dropped 5.8 percent.

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CBI launches fresh investigation into 'Coalgate'

The CBI on 1st June, 2012 registered a preliminary enquiryto probe the allegedscam in the allotment of coal blocksto private companies between 2006 and 2009 during the first term of the UPA government. Sources said the probe has been registered against unknown persons and that the agency would summon all filesfrom the coal ministry. It could take a few weeks before the CBI can decide to register a regular case. The CBI believes government officials and private companies colluded to cause losses to the exchequer. The charge against government officials is that at least 155 coal blocks were allotted to private companies on first-come first-served basis and these firms in turn sold them to other companies at a huge premium, causing massive losses to the government.The sources said the CBI will look into the allocation of 65 coal blocks to over 156 companies and whether these private companies were ineligible and violated terms of their contracts. Prime Minister Manmohan Singh was in charge of the coal ministry for much of the period when the alleged scam took place. The government has denied the allegations and said that the allotment to private companies at a modest price was driven by the need to provide cheap electricity. On Friday, minister of state in prime minister's office V. Narayanaswamy hit out at Team Anna aide Arvind Kejriwal and sought to turn the tables on the NDA government for the coal policy. Narayanaswamy insisted that it was the same policy that the UPA regime followed. He wanted to know why NDA leaders not being questioned.

'The allocation of coal block was done by the NDA government when Atal Behari Vajpayee was the Prime Minister. We followed the same system so where is the question of corruption,' Narayanasamy asked. Narayanaswamy also said that Team Anna had no valid documentsto blame the UPA since the Comptroller and Auditor General (CAG) report has not been made public yet.

CBI to probe role of 4 state governments

New Delhi, Jun 8: With the Coalgate scam rocking the boat for the UPA government at the

Centre, the Central Bureau of Investigation (CBI) is likely to investigate the role of four state

governments in the coal block allocation row. The matter was revealed by sources to popular

media channels. The four state governments that will be under the scanner will be West

Bengal, Odisha, Chhattisgarh and Jharkhand.

The matter that will be probed will be on the signing of the MoU's with private partners. The

CBI is also understood having sought information from the Coal and Power Ministry on the

allotment of coal mines to 220 companies from 2005 to 2008.

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The investigating agency will also look into if a fair allocation was made on the mines as well

as the recommendations by the seven screening committees were fair. Sources have stated

that the CBI will look into the selling of the coal blocks by the said 220 companies.

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