- 'In a Nutshell' - 13: Corporate Crookery, Legal Conundrum & Moral Trough

'In a Nutshell' - 13

In the Vodafone Context

Corporate Crookery, Legal Conundrum & Moral Trough

By Shiva Kant Jha

April 16, 2012

The Nazis had brought the technique of propaganda to the point of horrific excellence in order to hide and smother truth, and to advance their agenda now dumped into the dustbin we call history. But the MNCs and their mentors have not only outshone Hitler and Mussolini in their imperial necromancy, they have beaten Mephistopheles, who, with his pressure, persuasion, allurement and studied deception, had deluded Dr. Faustus to sell his soul to Satan for some worldly gains as this financial wizard of the ancient times believed that nothing mattered more than power and wealth conjointly facilitating to see the most beauteous Helen of Troy in his amorous vision. No better metaphor to express the lust and greed of the present-day crazy homo economicus can be found than in the story of Faustus.

After our Supreme Court's decision in the Vodafone Case, there is a deafening noise that if that decision, under which Vodafone received, in my assessment unjust enrichment, is ever undone through a legislative act of our democratic Parliament, our India would go down, as one of the financial wizards of a global firm had told me once, into the gutters, and the Indians would rue their destiny for long. The corporate imperium keeps on admonishing us in high decibels against the proposed changes in the Bill now before Parliament. It is most shocking that the hired intellectuals and the captive press keep ceaselessly encoring this thesis, spun with greed and deception, with ruthless intensity as if they are the Huns of our times.

I have read this day in the Economic Times of April 10, 2012 the summary of what the corporate hirelings and pleaders keep on repeating as the refrain of their pleading which, when all is said, is an obvious strategy to destroy our Constitution itself and its mission of democratic socialism. I am reminded of Whittier:

For all sad of tongues or pen
The saddest are these: ‘It might have been'.

My ideas aforementioned are my response to what I have read in the Economic Times of April 10, 2012. I wish my readers to re-read what the paper reported in order to appreciate my response to the points raised therein. I would express myself with utmost brevity but with utmost good faith and candour. I quote a long paragraph from the Economic Times (supra) so that my comments can be directed straight to the point raised therein:

"Two international trade bodies have joined the global chorus seeking a review of the government's move to retrospectively tax overseas transactions involving Indian assets, a proposal widely seen to be targeted at British telecom company Vodafone. The France-based International Chamber of Commerce and the Business and Industry Advisory Committee to… written to the finance ministry, cautioning that the government's proposal in its recent budget could have adverse implications for the country. We are concerned the recent introduction of retroactivity is not only unwelcome for the future of India's investment climate, it will also send a signal to other countries that….While ICC claims to represent hundreds of thousands of member companies and associations from over 130 countries, BIAC is the industry body of the OECDs business community. The letter adds to the global pressure being mounted on the government, which had earlier been warned by trade bodies representing more than 250,000 companies across US, Europe and Asia that retrospective taxation could hurt foreign investment. Britain's Chancellor of the Exchequer (or finance minister) George Osborne had last week suggested that Vodafone was being unfairly treated."

On reading the afore-mentioned lines, the following ideas well up in mind which I summarize for our citizenry to reflect for whatever worth they may be; and to act in the light of their sense of duty to the nation.

(1) Why should we tolerate the global corporate intervention in our sovereign economic and legal spheres? Who is there who does not know the U.N. General Assembly Resolutions prohibiting non-intervention and non-interference in the internal and external affairs of sovereign states and peoples? Do we not have the democratic right to shape our political economy in the light of our wisdom, and pragmatic assessment of our needs in the light of the plenitude of our national interests?

(2) What we see and hear being said day and night these days reminds us of what Pandit Nehru had written about the Big Business in the USA with his remarkable perspicacity on June 16, 1933:

“….the population of the United States was only 6 per cent of the world’s population. The general standard was thus very high, and yet it was not as high as it might have been, for wealth was concentrated in the hands of a few thousand millionaires and multi-millionaires. This “Big Business” ruled the country. They chose the President, they made the laws, and often enough they broke the laws. There was tremendous corruption in the Big Business, but American people did not mind so long as there was general prosperity.” (Italics supplied)

(3) Those, who have reasons to shun sunshine, are panicky because they cannot stand light on their ways. They are not only worried that their unjustly acquired benefit would go, they are agonized by the apprehension that if the technique of retrospective amendment works in India, it would become the standard technique for dealing with the MNCs in most other countries. They know that this may become the way to set right their misdeeds begetting corporate scandals through corporate structuring luxuriating through unknown and foggy tax havens and overseas finance centres.

(4) Where fairness demands, retrospective legislation to set the things right becomes Parliament’s duty to the nation to do so. C. K. Allen, in his Law in the Making, has thoroughly examined the rationale of the retrospective legislation; and has supported this step if on balancing of competing interests under the aspects of justice this step is considered prudent and pragmatic. I would come to the topic of the balancing of claims and interests under the aspects of justice in subsequent articles. Here it is enough to anticipate my conclusion that what our Government has decided to do through the proposed provisions in the Finance Bill is wholly right as our government represents the people of India, not the syndicate of investors of the foreign lands, or the gang of the looters of the nation through complex strategies and baffling strategems.

(5) In R (on the application of Huitson) v Her Majesty's Revenue and Customs (28 January 2010), a British Judge aptly said: “The imposition of a tax is not devoid of reasonable foundation by reason only that it may have some retrospective effect: see, for example, R (on the application of Federation of Tour Operators, TUI UK Ltd, Kuoni Travel Ltd v Her Majesty's Treasury [2007] EWHC 2062 (Admin) at 149, [2008] STC 547; affirmed [2008] EWCA Civ 752, …...”

And the Court succinctly put forth ideas which guided it to adopt its view. What it said deserves to be noticed by our courts too. It said:

“Parliament was also entitled, having regard to the background that I have set out, to legislate with retrospective effect, particularly in order to ensure a "fair balance" between the interests of the great body of resident taxpayers who paid income tax on their income from a trade or profession in the normal way, and the taxpayers, like the Claimant, who had sought to exploit, by artificial arrangements, the DTA, in plain contravention of the important public policy set out above, and in full knowledge of how Parliament had maintained that public policy after Padmore.”

On 25 July 2011, a British Court decided in R (on the application of Shiner and another) v Revenue and Customs Commissioners the effect of which is thus stated in the summary of the major points therein: to quote---

“Tax avoidance - Retrospective operation of statute - Income tax - United Kingdom resident claimants seeking to take advantage of double taxation agreement in order to reduce liability to income tax in the UK - Parliament enacting legislation with retrospective effect to counter operation of such schemes - Claimants seeking judicial review of Revenue's decision to impose retrospective liability - Whether transfers made by claimants' transfers of £10 to trust foreign companies comprising movement of capital within relevant legislation - European Community Treaty, art 56 - Finance Act 2008, s 58(4), (5).”

(6) The MNCs love crony capitalism as that helps them. If they have their way they would like the local state to become mere facilitator, protector, sentinel, and an agency to work symbiotically with them even by riding roughshod over the nation’s Constitution. It is shocking to see that those who cherish the principles of territorial sovereignty are deliriously passionate in intruding into our sovereign space. When we hear some Prime Ministers and Finance Ministers of other countries giving us unsolicited advice, veiled threats, and big-brotherly homilies, we, as citizens of this Republic, feel that some creatures are out to play the role of that rabid imperialist we call Palmerston. I quote from my Autobiographical Memoir, On the Loom of Time (Taxmann, 2011, at p. 34) , to express with brevity what we see at work these days:

“The outcome of the corporate imperium would be a corporate empire to which the peoples of the world must remain obedient. The global consortium of the corporations would look after the corporate interests. Any global corporation, wherever incorporated, would receive the protection by the consortium. Like the Concert of Europe in the European political history, the corporate consortium would work for the corporations. The structure of ‘government’ must remain only to protect the corporations from people’s wrath. We all know how Palmerston justified his intervention to protect the commercial interests of Don Pacifico by invoking the doctrine of the Roman Empire: civis Romanus sum ( “I am a Roman citizen”), by which an ancient Roman could proclaim his rights throughout the empire to get his native State’s protection.”

India can never be a mere bleating little lamb tagged behind the MNCs and the politicians whom they support, and the economists whom they hire to brag greed-driven shibboleths for the media to overcast our realm. My reflections had led me to write in my Memoir the above lines.

(7) The days have gone when engineered psychosis, and bribed pressure-groups had compelled the Mughal Emperor to break and bend to sign the infamous Treaty of Allahabad, or when in other countries a mix of propaganda and coercion had led to the morbid situations portrayed in the Treaty of Nanking, or the Treaty of Wanghia, or the Treaty of Whampoa while spreading imperialism in the 18th and the 19th centuries. Even those bad days have gone when we signed the WTO Treaty bypassing our Parliament, and by deceiving even our nation. Our Constitution stood bruised and battered, and it is not difficult to see where its blood is still oozing out. Tawney rightly felt, in his The Acquisitive Society that capitalism was, at bottom, incompatible with democracy.

(8) I have an edict imparting wisdom to the silhouettes we see looming large from the secret jurisdictions to pounce on us. They conceal the identity of the operators from the U.K. and the USA, and those lands where God is evicted from pedestal, and Mammon installed thereon and glamourised. My edict of wisdom can run thus in the imperishable words of Pandit Nehru insightfully commenting on the Fall of Bastille:

“It is curious how these people become even more foolish as the crisis
deepens, and thus help in their destruction. There is a famous Latin
saying which just fits them —-quem dues perdere vult, prius dementat,
whom God wishes to destroy, he first makes mad. There is an almost
exact equivalent in Sanskrit —-vinash kale viparit buddhi.”

If you want to go deeper into my reasons for my prognosis of what has gone wrong in the economic management of our world, please read the Chapter on ‘The Realm of Darkness’ in my Memoir, On the Loom of Time.

(9) The cat is out of bag when we read the great point shortly made: “We are concerned the recent introduction of retroactivity is not only unwelcome for the future of India’s investment climate, it will also send a signal to other countries that….” What has let the Trojan horse straddle our space these days is precisely this reason. They apprehend that what India intends doing now, even other countries would do; hence India must be tamed so that others get frightened even in pursuing what they consider a public cause. In their definition of ‘other countries’ neither comes the U.K., nor the USA. Why should they come when their rich and the MNCs rule the Oceania operating the systems of the Rogue Finance from the Caribbean and other regions resembling them? Once I felt I heard what passed between Macbeth and Lady Macbeth before the King was stabbed by the treacherous crook. I am not going to put my gloss on their words. You can try reading the following lines to discover for yourself the sub-text of what the lines conceal from many, but reveal to most:

Lady Macbeth :

Wouldst thou have that
Which thou esteem'st the ornament of life
And live a coward in thine own esteem,
Letting ‘I dare not' wait upon ‘I would,'
Like the poor cat in the adage? . . . . . . .




If we should fail?



Lady Macbeth:

We fail!
But screw your courage to the sticking place
And we'll not fail - Links on Shivakantjha - Links on Shivakantjha

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