India’s latest $2m corruption scandal is a very old scam

John Elliott

Pawan Bansal India’s latest $2m corruption scandal is a very old scamThe latest corruption scandal to embroil India’s coalition government is scarcely a surprise. The nephew of Pawan Kumar Bansal (right), the railways minister, was to be paid Rs100m (about £1.2m) to fix a top Railways Board appointment. Such appointments have been fixed for decades, often financed with money from companies that later benefit, as was allegedly planned in this case

I remember talking to people about this nearly 20 years ago after I heard about a public sector corporation chairman’s job that was available in return for a payment of Rs 20m – then about £300,000. A private sector company was offering to make the payment, and the candidate knew it would expect to be given every contract or other service that it demanded while he was the chairman. The fact that the company itself was delivering the payment would, of course, increase its hold over him.

Many public servants have to pay bribes to get their jobs. They range sometimes all the way from top ministry bureaucrats to public sector corporations’ board directors and on to income tax officials and traffic police – and that is partly why corruption has become so endemic in  India. The top people need to cover their costs by making money on policy decisions and contracts they handle, as well as by helping their sponsor. Tax officials take bribes from defaulters and police charge a few hundred rupees to drivers at traffic junctions instead of formally booking them.

The more lucrative the job, the higher the price, and that is why, in the current case, companies were willing to pay $2m for their candidate to become the Railway Board’s Member (Electrical) because of large signalling and other contracts that the railways urgently needs to award to improve safety.

The accusation is that Vijay Singla, Bansal’s sister’s son, arranged to receive Rs20m bribes from Mahesh Kumar, a senior and successful railways engineer, to fix his appointment as the electricals’ board member. The money was to be paid through a contractor, Sandeep Goel, having been raised from a group of businessmen dealing with railways equipment who were promised business by Kumar. Half of the amount was to be paid before the appointment, and the rest after it was confirmed. However Kumar was appointed last week to the far less lucrative job of board member (staff), and was advised by Singla to wait till the electricals job possibly came free in a month or two.

After investigations and phone-tapping for three months, the CBI raided those involved last Friday and recovered Rs 9m (about £100,000), which was allegedly the first instalment for the board job. Singla and eight others have been arrested including the businessmen. CBI officials are reportedly working on the assumption that it was inconceivable for Kumar to have agreed to pay as much as Rs20m if he was not confident about Singla’s ability to leverage his family ties and get him the job.

Bansal was regarded as a competent and apparently clean politician. Earlier the parliamentary affairs minister and before that a minister of state for water resources and finance, he has been trying to sort out serious safety and equipment problems since he was appointed railways minister last October. Yet there is a report this morning that a rival opposition politician has named companies started by Bansal’s wife and other relatives since he first became a minister in 2006, plus links to railway catering companies and contracts. Reports are also circulating of massive long-term extortion and corruption in both the railways ministry, and in the Railways Board which runs the system.

Sons, daughters, nephews and wives and uncles frequently do run politicians’ business interests. That is part of the reason for the surge in recent years of political dynasties that broaden and protect the base of politicians’ riches and powers of patronage. Relatives also frequently use their proximity to a politician to further their own separate business interests, cashing in on perceptions of their apparent proximity to power, with or without the politician’s knowledge. For example, it is not clear how much the Gandhi dynasty knew or was linked to controversial real estate deals that were revealed last October involving Robert Vadra, son-in-law of Sonia Gandhi who heads the governing coalition.

The basis of the railway minister’s defence is that he did not know about his nephew’s activities and that he would not have benefited financially, and therefore that the payments would not have influenced his decisions on board appointments. For now, the government has decided not to ask for his resignation, though there are suggestions that it has decided to give finance minister Palaniappan Chidambaram additional charge of railways if Bansal goes.

Corruption is so widespread in India that public figures are perceived to be guilty until they prove their innocence – and the circumstantial evidence so far is stacked against Bansal, irrespective of whether he is innocent or not.

A longer version of this post is available on John Elliott’s Riding the Elephant blog at

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  • Pacificweather

    Corruption is wide spread in Britain and, for the most part, managed quite legally.

  • 4thaugust1932

    Indians are morally corrupt by birth (caste) for the past 3000 years.
    Google “90% of corrupt money is with Forward Caste people”

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