The Paper Route to Zero Tolerance

The Louis Berger case has raised our excitement in the past few days. Everyday we are waiting for some action. With the “free hand” there does not seem to be much disappointment.

Had it not been for Louis Berger's self declaration that their employees breached the provisions of the Foreign Corrupt Practices Act (FCPA), this issue would never have seen the light of day in Goa. What is important is that there was a change in ownership at Louis Berger. The new owners did a due diligence and these bribe payments came up. Not wanting to be party to a past breach of the FCPA, the Company declared it before the Justice Department. Almost immediately the verdict was out, a massive penalty and the employees involved will go to jail. Had the Company not declared this information voluntarily and subsequently a whistle blower leaked the information the fine would have been many times more than, 17 million USD and surely the CEO would have gone to jail. Zero tolerance in action.

The reaction here, “someone makes a statement in America” why should we bother. It is not just a statement, it cost 17 million USD to make that statement and it has been verified to be true because there were supporting documents and emails. The people who made the statement are going to go to jail. So should it not be taken seriously? At present we may not have proof as to who the money went to and how many hands shared the spoils. What we know is that a million USD was paid and we must try and find out who took it.

We will all get some kicks of seeing some stalwarts behind bars for a few days or questioned at ungodly hours, the basic fact remains, no one will be punished, despite the circumstantial evidence, despite all roads leading to a particular conclusion. No one will get convicted because you cannot prove money changed hands. Imagine, tomorrow any politician can be trapped by getting five people to say they were present when the money was paid. It will never be that simple.

So does it mean we will never or can never rid our Country of the scourge of corruption? No we must always have hope else we might as well give up the fight. To my mind that hope lies in technology. In the old days, we heard of film stars being raided and cash stuffed mattress or behind a false wall being found. Those were the days when not much could be brought with the cash, except Jonnie Walker and dinner in a five star hotel.

Today, life is different. The ill gotten cash or most of it is pumped into flashy cars, land or investments and for that bank accounts are needed. There are specialists, they come collect the cash and it can be a truckload these days, and then convert it thru various transactions and finally it ends up in an account which is controlled by the corrupt owner. Recall, Lalit Modi brought Rs 10/- shares of young Raje's company for Rs 10000/- via an off shore account. This is money returning after a round trip. These owners communicate and this communication is traceable.

The KYC norms make it difficult to create benami accounts, but easy to use accounts of drivers, butlers and confidants. A bank official once mentioned a story of finding a coconut plucker who did not know he had a dormant account with two crores in it. Apparently he had fallen out with a politician who using his details made the account of which he had no knowledge. So the key is not to focus on cash but on bank transactions, high value transactions.

This case gives us a good idea of what is possible. Wachasunda, was surprised by the raid. Given the high profile names connected he must have expected some shield rather than “free hand”. The discovery of cash foreign currency and land documents are a testimony to the fact that Louis Berger was not his only sin. He may try to use his son's so called small time contracting company to cover his misdeeds, but he will fail. The small time firm cannot have a profit margin so big that it needs the depreciation provided by a jaguar car to reduce his tax liability. Especially when one has to be lowest bidder to get a contract. You can always say you are not corrupt, but you cannot hide. The case against Jayalaitha is not about receiving a bribe, it is about disproportionate assets.

So, now the police must get forensic accountants to back track the transactions and find out who and how the money came in. No doubt this will lead to other bank accounts and transactions. Eg: the Jaguar, road tax has to be paid in cash, was it withdrawn from an account, not likely. What about the passport, it will show all the foreign trips, who paid for them. Get the drift, they have left a paper trail. Wachasunda has got caught, now study the accounts of Kamat and Churchill, if the are innocent it will show. After all Al Capone, got caught for tax evasion not murder.