The “Master of the Roster”: Reforming the Role of the Chief Justice of India

“There have been instances where cases having far-reaching consequences for the nation and the institution have been assigned by the chief justices of this court selectively to the benches ‘of their preference’ without any rational basis for such assignment.” This sharp critique of the Supreme Court of India was not leveled by a losing appellant or civil society group, but rather by Justice Jasti Chelameswar. On January 12, 2018, Justices Chelameswar, Ranjan Gogoi, Madan Lokur, and Kurian Joseph, the four most senior justices of the Supreme Court of India (other than the Chief Justice), took the extraordinary step of speaking to the public about their concern with bias in how Chief Justice of India (CJI) Dipak Misra was assigning cases. The four justices accused Chief Justice Misra of selectively setting benches to shape the outcome of particular cases, which not only cuts against the rule of law and fundamental fairness, but also implicates broader concerns of judicial corruption. In publically criticizing the assignment practices of the current Chief Justice, these Justices set off an unprecedented institutional crisis for the court. Stabilizing the institution and combating corruption and bias requires serious action, including reducing the unilateral power the CJI has over case assignment.

To appreciate the significance of the CJI’s power of case assignment, and the ways this power can be abused, a bit of background on the Court is necessary. The Supreme Court of India is comprised of the CJI and up to 30 justices, although it currently only has 24 serving justices. The Court hears cases in division benches (comprised of two or three justices), and these division benches come together to form a constitutional bench (comprised of five or more justices) to settle fundamental questions of law. The CJI has the sole authority to set up division benches and assign cases, resulting in the label of the CJI as the “master of the roster.” That authority can be—and allegedly has been—abused. For example, in the Prasad Educational Trust case, although allegations of bribes paid to fix the outcomes of Supreme Court cases implicated Chief Justice Misra, he nonetheless listed the case in front of himself and several relatively junior Justices. When asked by an attorney in the case to recuse himself, the Chief Justice refused and threatened to hold the attorney in contempt.

In response to the criticisms leveled by his four colleagues regarding biased assignment of cases, Chief Justice Misra took a striking step of publicizing, for the first time, the Supreme Court’s roster, which details which types of cases will be heard by which justices. The publically released roster system, which took effect on February 5 and was recently altered, assigns cases based on subject category to different justices. For example, the Chief Justice himself is assigned, among other categories, social justice matters, election matters, contempt of court matters, habeas corpus matters, and public interest litigation (PIL) cases. The roster details subject categories for the twelve most senior justices of the Supreme Court, and there are overlapping categories (e.g. criminal matters, civil matters, etc.) between the justices. But while publication of the roster certainly makes the assignment process more transparent, it nevertheless falls short of addressing the CJI’s unchecked power and discretion in allocating cases for four primary reasons:

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What Chinese Cuisine and Deferred Prosecution Agreements Have in Common

As Kees noted Monday, the use of American-style deferred prosecution agreements (DPAs) to resolve corporate corruption cases short of trial is on the rise.  The United Kingdom, France, Argentina, and most recently Singapore now permit prosecutors to suspend or even drop altogether the prosecution of a firm for a corruption offense in return for the accused firm paying a fine, adopting measures to prevent future offenses, and cooperating with ongoing investigations.  Australia and Canada are on the verge of approving DPAs, and influential voices in India and Indonesia are urging their adoption too.

Apostles say DPAs allow governments to realize the benefits of a criminal conviction without the need for a lengthy, expensive, arduous trial against a well-funded corporate defendant where defeat is always a risk.  Former U.K. Attorney General Lord Peter Goldsmith told a New Delhi audience last October that once India begins using DPAS, companies would start coming forward and admit wrongdoing.  During the recent debate in Singapore one commentator observed that DPAs “provide an incentive to corporate entities to confront criminal conduct within their ranks,” and a group of Indonesian professors claim DPAs will be particularly valuable in their country.   In Indonesia, conviction of a corporation provides no assurance the defendant will not commit the same offense again while, they write, a DPA does.

DPA evangelists are about to learn what DPAs have in common with Chinese cuisine.  The first-time visitor to China soon discovers that Chinese food in China is unlike Chinese food at home.  Beef broccoli tastes much different outside China than in. Connoisseurs of DPAs will shortly find that what American prosecutors are able to cook up looks much different when prepared abroad.     Continue reading

India’s Political Party Finance Reform Falls Short of Ensuring Complete Transparency—But Is Still a Step in the Right Direction

On March 1, 2018, India began its latest effort to clean up the financing of political parties and elections. This efforts involves the sale of so-called “electoral bonds” at select state banks across the country. The term “electoral bonds” is a misnomer, for these “bonds” are not linked to elections, nor do they involve paying back a loan or yielding interest. Rather, these instruments are simply a new means to facilitate financial donations to political parties, and are intended to displace the undocumented cash transfers that form the lifeblood of Indian politics. As India’s Finance Minister argued, this cash-based system causes two problems: First, “unclean money from unidentifiable sources” facilitates corruption and money laundering. Second, the reliance on cash allows parties to underreport both their budgets and spending. These concerns led the government last year to reduce the limit on anonymous cash donations from $300 to $30. Electoral bonds intend to further disrupt the system and achieve at least some increases in transparency of political spending.

Announcement of the new system has generated significant commentary, with the few admirers crowded out by the numerous detractors (see, for example, here, here, and here). The main focus of criticism is the new scheme’s guarantee of donor anonymity: Electoral bonds will carry no name and nobody, other than the bank and donor, can know who made the donation unless the donor willingly discloses her identity. The government has defended the anonymity guarantee as a way to prevent reprisals against donors, but critics understandably argue that the lack of transparency means that much political financing will continue to come from “unidentifiable sources,” allowing big business to keep lobbing money in exchange for policy favors while the public remains in the dark. (Moreover, the government’s emphasis on fear of reprisals as the rationale for anonymity suggests the government is unduly concerned with protecting the only class of donors for whom this would be a significant concern, namely large capitalists.) The electoral bond scheme has thus been painted as a move that potentially strengthens the crony capitalism responsible for India’s dire economic situation.

This strong negative reaction to the electoral bond scheme is, in my view, overwrought. True, the new policy does not solve the deep and serious problems with political finance in India. But it does have some notable advantages over status quo. Additionally, critics of the electoral bond system sometimes seem to treat donor transparency as an unalloyed good, when in fact donor transparency may have some drawbacks as well (even if one doesn’t take too seriously the government’s official line on political reprisals). Let me elaborate on each of these points: Continue reading

India’s 2G Spectrum Case: The Scam That Wasn’t?

It all started in May 2009 with a report filed by an NGO, Telecom Watchdog, with India’s Central Vigilance Commission. The NGO claimed that there were gross irregularities, likely due to corruption, in the allocation of licenses to operators for the 2nd Generation mobile communication standard spectrum (2G spectrum for short). By October 2009, India’s premier investigating agency, the Central Bureau of Investigation (CBI), had opened an investigation into the allegations, and in November 2010, the Comptroller and Auditor General of India estimated the losses to the government from the alleged misconduct at a whopping US$29 billion. Indian media called it the “biggest scam in the history of Independent India.” Time Magazine put it just behind Watergate as the second worst case of abusing executive power.

Petitions were filed in the Supreme Court of India pressing for cancelling the allocation and making sure that those behind the corruption would be held responsible. In 2012, the Supreme Court obliged, canceling all 122 licenses and imposing huge fines. The Court declared that the then-Minister for Communications and Information Technology, A. Raja, had used an inappropriate allocation procedure (first-come-first-served rather than an auction) to “favor some of the applicants … at the cost of the exchequer.” In an unprecedented move, the Court also ordered the creation of a “Special Court” to try the cases, and modified regular criminal procedure by curbing intermediate challenges, in order to ensure a speedy trial. The first case was instituted against the former Minister, senior bureaucrats, and prominent businessmen for conspiring to rig the allocation process and cheat the government of revenue.

On December 21, 2017, the Special Court announced its verdict—and it was not what many had expected: The Special Court acquitted all the accused, declaring that “a huge scam was seen by everyone when there was none,” and that “some people created [the perception of] a scam by artfully arranging a few selected facts and exaggerating things beyond recognition to astronomical levels.” The Court also found that, notwithstanding the earlier 2010 report (which others had already suggested was methodologically problematic), the actual losses to the government were marginal at most.

Many commentators were stunned and dismayed by the Special Court’s decision, denouncing it as “shocking” and “flawed.” But after reading the Special Court’s decision, I find myself in agreement with the Special Court’s reasoning. While it’s impossible, in a short blog post, to wade through the merits of the Special Court’s analysis for each of its conclusions, here I want highlight some of the most important arguments in support of the Special Court’s controversial decision. Continue reading

“Right to Information” or “Right to Intimidation”? The Unfulfilled Promise of India’s Right to Information Act (RTI)

On July 18, 2017, Rajesh Savaliya, a 31-year-old activist, left his home in Surat, India to visit a friend’s construction site. The next day, he was found severely injured on the side of a highway, and doctors pronounced him dead later that day. Mr. Savaliya was murdered because of his attempts to expose corruption in his hometown schools, including the education mafia extracting money from students and schools operating without proper licenses and approval letters. As part of his campaign to expose this corruption, Mr. Savaliya had filed multiple requests for information about the local schools pursuant to India’s Right to Information Act (RTI). Sadly, Mr. Savaliya’s story is not unique: Since 2005, over 60 activists have been killed, and hundreds of others have been assaulted or harassed, for filing RTI requests.

Freedom of Information laws like India’s RTI Act can be a powerful pro-transparency tool for combating corruption and mismanagement in government. The RTI Act, which was adopted following a nationwide grassroots campaign, provides every Indian citizen the right to request information from a public authority—a right which is invoked by 4–6 million citizens each year. Yet the RTI Act is unlikely to be effective in exposing serious corruption—especially in cases where criminal elements have infiltrated or coopted state organs—unless those filing RTI requests are adequately protected and insulated from intimidation.

Not only are current protections for RTI requesters inadequate, but India seems, if anything to be moving in the wrong direction. Early this year, as a part of a package of proposed updates to the rules governing the RTI Act, India’s Department of Personnel and Training (DoPT) proposed a new rule (Rule 12), which would allow RTI requestors to withdraw their appeals of decisions refusing disclosure, and would also require all such appeals to terminate upon the death of the requestor. Proposed Rule 12 has been widely criticized (see here, here, and here), in part because these changes would further incentivize threats and violence against RTI requesters like Rajesh Savaliya. As the Human Rights Initiative noted, “Draft Rule 12 will only legitimize such attacks and embolden vested interests who wish to keep corruption and maladministration under wraps.”

Instead of adopting counterproductive measures like Draft Rule 12, the DoPT and Indian Parliament should instead amend the Act and governing rules to better promote the safety and security of RTI requesters. Here are three potential changes—in order of likelihood of success and impact—that would serve this objective:

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Fixing India’s Anti-Money Laundering Regime

In the past year, India has been among the most zealous countries in the world in stepping up the fight against money laundering and related economic and security issues. The effort that probably got the most attention was last year’s surprise “demonetization” policy (discussed by Harmann in last week’s post), which aimed to remove around 85% of the total currency in circulation. But to assess India’s overall anti-money laundering (AML) regime, it’s more important to focus on the basic legal framework in place.

The most important legal instrument in India’s AML regime is the Prevention of Money Laundering Act, which was enacted in 2002, entered into force in 2005, and has been substantially amended since then. The Act defines a set of money laundering offenses, enforced by the Enforcement Directorate (India’s principal AML agency), and also imposes a range of reporting requirements on various institutions. Furthermore, the law gives the Enforcement Directorate the authority to freeze “tainted assets” (those suspected of being the proceeds of listed predicate offenses), and to ultimately seize those assets following the conviction of the defendant for the underlying offense.

How effective has India been in its stepped-up fight against money laundering? On the one hand, over the past year (since the demonetization policy was announced), banks logged an unprecedented increase of 706% in the number of suspicious transaction reports (STRs) filed, and reports from last July indicated that the total value of the assets frozen under the Prevention of Money Laundering Act in the preceding 15 months may have exceeded the cumulative total of all assets frozen in the prior decade-plus of the law’s operation. And the government further reported that its crackdown on shell companies had discovered around $1.1 billion of unreported assets.

Yet these encouraging numbers mask a number of serious problems with India’s AML system, problems that can and should be addressed in order to build on the momentum built up over the past year. Here let me highlight two areas where greater reform is needed: Continue reading

India’s Demonetization One Year Later: A Failed Tool to Combat Corruption

One year ago, in an unscheduled live televised address, India’s Prime Minister Narendra Modi announced that within weeks the ₹500 and ₹1000 banknotes would become worthless. Prime Minister Modi framed this so-called “demonetization” policy as part of the battle against corruption and illicitly-obtained “black money,” which had “spread their tentacles” through the India economy. The Prime Minister identified two ways that demonetization would combat corruption. First, the surprise devaluing of currency would leave criminals, including corrupt officials, with millions of rupees’ worth of currency that would suddenly become worthless, and those holding large stashes of black money would be unwilling or unable to exchange it without having to explain where the money came from. Second, going forward, demonetization would make it more difficult to hold, transport, or exchange large quantities of cash (particularly since the Indian government was demonetizing the two largest notes in circulation); as the Prime Minister emphasized, “[t]he magnitude of cash in circulation is directly linked to the level of corruption.”

One year out, it is increasingly clear that India’s demonetization experiment imposed tremendous social and economic costs but failed to achieve either of these objectives (see here, here, and here). A closer examination of the reasons for this failure may help us understand both the potential and limits of demonetization as a tool to combat corruption and the underground economy.

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