[Bombay, The Times of India in English, 8 Aug 91, p.1]

Minister's Statement

The government's statement on the BCCI (Bank of Credit and Commerce International), claiming that this overseas bank was not involved in any anti-state activity or shady deal touched off uproarious scenes followed by a walk-out by the entire opposition in Parliament today.

According to PTI, the finance minister, Dr. Manmohan Singh, turned down in the Rajya Sabha a demand for a joint Parliamentary committee (JPC) inquiry into the affairs of the BCCI in India on grounds that it might affect the good Indo-Arab relations.

The ruling family of Abu Dhabi had in 1990 acquired substantial interests in the BCCI and the family could not be held responsible for what all the bank had allegedly done earlier, Dr. Singh said while responding to clarifications on his statement in both houses of Parliament.

(The specific demand for the JPC probe was made by the leader of the opposition, Mr. Jaipal Reddy.)

Protesting members belonging to the National Front and left parties charged the government with suppressing facts and trooped into the well of the Lok Sabha. They disregarded pleas by the speaker that they could get off their chest whatever they wanted during the special discussion on the subject of the house.

The opposition, barring the BJP (Bharatiya Janata Party), which had earlier boycotted the session for the day, was particularly incensed when the finance minister made a hasty retreat after making his statement on the BCCI.

Urging the speaker, Mr. Shivraj Patil, to recall the finance minister on the ground that he had treated the house with "contempt," at least four Janata Dal members went on a "dharma" in the well for some time until they were persuaded by the CPM (Communist Party of India-Marxist) leader, Mr. Somnath Chatterjee, and several other senior leaders to give up the protest.

The Janata Dal leaders, Mr. George Fernandes and Mr. Ram Vilas Paswan, sprang to their feet as soon as the finance minister had resumed his seat and charged the government with taking the house for a ride. They said the statement was a cover-up cooked up by the government to save the reputations of several important leaders and business magnates in the country.

In his three-page statement made towards the fag end of the day, the finance minister clearly states that nothing that "impinges on the security of the country has come to the notice of the government so far. However, the government is fully alert about this aspect of the matter and in case further information becomes available appropriate action will be taken."

The government had no definite information regarding allegations made in the house that Indian politicians and bureaucrats had received payments through the BCCI (overseas) Ltd., Bombay branch or that any terrorists organizations had been funded through it.

The finance minister's statement was not altogether bland about transactions by the bank and revealed that since being set up in Bombay, as a subsidiary of the Bank of Credit and Commerce International Holdings (Luxembourg) on 31 March 1983 it was involved in some irregularities which were detected and the culprits brought to book. The finance minister said some of the employees of the bank were detained under the COFEPOSA (Conservation of Foreign Exchange and Prevention of Smuggling Activities) Act following investigations by the enforcement directorate in 1986.

Giving details of this case, the finance minister said the bank was releasing foreign exchange against the foreign travel scheme to travel agents without verifying the signatures of the actual travellers with the result that a substantial amount of foreign exchange was released in the strength of forms bearing forged and fake signatures.

Subsequently four of the suspects were released in the recommendation of the advisory board that heard the cases in the COFEPOSA Act. The detention order of one employee was revoked by the government in the ground that other employees had been released under similar circumstances.

However, the case was adjourned by an order dated 20 June 1988 and a penalty was imposed in the bank, its employees as well as travel agents involved in the case. Following this order, foreign exchange amounting to $132,000 as well as the Indian currency of rupees, 1,700,057 was taken over from the bank.

The finance minister said that there were also reports in 1988 from intelligence agencies that the BCCI had made overtures for acquisition of property and was trying to enter the hotel and real estate business in Lucknow and Bombay.