Why CBI’s explanation on Prannoy Roy does not wash

Kis marz ki dawa hain aap (Which is the disease you can cure), one is tempted to ask of the Central Bureau of Investigation (CBI) in the wake of its much publicised search and seizure carried out in premises owned by promoters of NDTV. It certainly has not cured corruption and it has been embarrassingly selective in whatever it has chosen to cure. What is more, it may have landed the Modi Government in a catch-22 situation by appropriating the power to go after the private sector as well.

By design or by accident, it was on the April Fool’s Day in 1963 that the Central Bureau of Investigation came into being. Thought of by the then Home Minister Lal Bahadur Shashtri, who went on to become the Prime Minister for a short while, the agency was expected to investigate corruption in central government with inter-state ramifications. Gradually cases began to be referred to it by states and the high courts, a trend which has now turned into a deluge.

It is to the credit of the pioneers that the agency built up an enviable reputation for professionalism, although its top echelons continue to be drawn from the generally poorly rated state police and para-military organisations. Not one, not two but three of the senior most officers in the CBI today belong to the Gujarat cadre, where BJP national president Amit Shah was the Home Minister. And nobody can possibly suggest that this is just a coincidence.

But while the reputation of the agency is such that even state governments run by the opposition, the high courts and the Supreme Court routinely transfer cases to the CBI, its credibility and independence has increasingly come into question. It does not have a great record in cracking cases related to cyber crime and economic offences either. In any case the proof of the pudding being in its eating, it would be safe to point out that neither judicial activism nor the CBI have helped in lowering the incidence of economic offences in the country. It has on the contrary increased in direct proportion to the increase in the Government’s budget and the GDP.

On Tuesday this week the agency put out a statement in defence of its search and seizure operations carried out in four premises of RRPR (Radhika Roy Prannoy Roy) Holdings Pvt Ltd, promoters of NDTV, a leading media house in the country. The agency made the following claims:

• It had not raided NDTV because of its faith in freedom of the Press!
• The raid in RRPR Holdings Pvt Ltd followed a private complaint by one Sanjay Dutt, a former NDTV employee and minor shareholder of both NDTV and ICICI bank.
• That the complaint was related to a loan waiver settled between the bank and the company in 2010—and not because of any default in payment.
• That the private complaint was received by the CBI in April, 2017. It found a prima facie case after due diligence, registered a case on June 2 and followed it up with a raid on June 5.
• Since the ‘investigation’ is still continuing under ‘due process of law’, the CBI statement added, it would be unfair to jump to conclusions and blame the lily-white agency of any ulterior motive.
• Responding to criticism that it had no role in a settlement between two private parties, it cited a Supreme Court ruling to point out that even private bank officials are to be deemed as ‘public servants’ in such cases!

Ironically, this explanation comes in the wake of revelation that Union Minister Nitin Gadkari and the National Highway Authority of India are exerting pressure on the Uttarakhand Government to withdraw its reference to the CBI of a case which is alleged to have caused a loss of ₹350 crore to the Government.

Besides the Supreme Court’s questionable ruling to treat private sector officials as public servants, there are not too many instances of the agency entertaining private complaints. It is however setting a precedence and reducing itself to the status of a police station. Two other high-profile private complaints it has entertained in recent months are from Paytm and a complaint from a former minister in the Delhi Government, Kapil Mishra against Chief Minister Arvind Kejriwal. Having set the precedence, will it be able to resist similar complaints from Reliance and Adani shareholders is a question that will be answered in the times to come.

The even more pertinent question is why the agency has failed to investigate the loan waivers and loan restructuring allowed by public sector banks to industrial and business houses which, unlike the Roys, are defaulters as well? And again unlike the allegations made against the Roys, they have not caused the PSU banks to suffer a loss of ₹48 crore but a loss of several lakh crore Rupees! As per its mandate, the agency does not require any permission from anyone to go after these entities, raid their premises and carry out an investigation to see if there is any malafide.

CBI’s action also betrays a willful ignorance of the negotiation that banks routinely engage in restructuring loans. And as Arun Shourie pointed out on NDTV on Tuesday, after the global financial crash in 2008 triggered by the sub-prime crisis in the US, most banks would have agreed to forgo interest if they could recover the principal amount.

There are other reasons also to believe that the CBI went beyond its call of duty while conducting searches in premises owned by Prannoy Roy and his wife Radhika Roy. Indeed the Roys have said that the agency did not even carry out a preliminary enquiry (PE in CBI’s parlance) before moving in for the kill.

What a CBI ‘raid’ does is to attach a stigma to the person and the organisation even before the trial. While the agency can claim that it is merely engaged in an investigation and the innocent have nothing to fear, its action in freezing bank accounts, attaching moveable and unmoveable assets for the pendency of the investigation imposes an immediate cost. It also makes investors, banks and other financial institutions wary and that much more difficult for the targeted individual and organisation to get assignments, sponsors, loans and opportunities.

So the investigation can continue for months or years. The agency may also file a charge sheet, which then can be thrown out by the court after five or seven years. But meanwhile, the damage is done. Or could the CBI have unwittingly done NDTV and the Indian media a favour ?