What the Vodafone Case Says About India

At one level, it is very simple to explain the position of British phone giant Vodafone in India: because it paid abroad in black money for a lucrative property in the country, it claims that no taxes are owed.

How this situation developed is almost impossible to explain because much that needs understanding is buried in post-colonial debris of which most Indians, including our so-called political class and Intelligence agencies, seem blissfully unaware.

For example, how can we explain the lack of alarm that a British company has become the second largest player in the strategic Indian telecommunications market? No one seems concerned that Britain is the nerve center of the most intense international surveillance effort in history or that it has a long and consistent record of abusing every advantage it has ever been given in India.

To understand our political torpor it is necessary to look to the past and take into account the role of Indian financiers and agents in bringing on and sustaining colonial rule.

When the Europeans first ventured into Indian trade five centuries ago, they found a well-developed market system here, with local, national and international networks of commerce and finance. Indian bankers provided credit and insurance facilities, set exchange rates for a variety of gold and silver coinage from as far afield as Greece and China, and set the terms of trade. European traders found it impossible to operate without Indian partners to help negotiate the system, both to get the loans they needed and to actually buy the supplies they shipped back to Europe.

In the 17th and 18th Centuries the largest and most influential Indian banking houses were run by Marwaris from Rajasthan and Chettiars from Tamil Nadu. Numerous accounts by Portuguese, Dutch, British and French traders attest to their heavy dependence on the support of those houses and on a variety of other Indian agents to trade in the country’s principal marts.

By all accounts, the wealthiest banks in that period were two Marwari houses. One, established by the jeweler turned merchant-banker, Virji Vora operated a pan-Indian network out of Surat (the main Mughal port); it dominated for a 50-year span ending in 1670. The other, founded by a Patna saltpeter trader Hiranand Shah in the last quarter of that Century, became by the early 1700s under his descendants Fateh Chand and Mahtab Rai in Bengal, India’s formally acknowledged “Jagat Seth” (world banker).

While these merchants had excellent business acumen, they had little political sense. That was not a serious failing as long as the Mughal Empire was strong, but after Nadir Shah sacked Delhi in 1739 they were increasingly at sea.

The lack of strategic sense is nowhere clearer than in Jagat Seth Mahtab Rai’s disastrous decision to lend Robert Clive the money with which to bribe Mir Jafar to run away from the 1757 “Battle” of Pilashi (Plassey). He probably thought of it as a convenient way to get rid of the arrogant new Nawab of Bengal, the teenage Suraj-ud-Dowlah; he foresaw neither his own swift ruin and ignominious murder nor the severe famine British oppression would let loose in Bengal, killing some seven million people, a third of the total population.

Throughout British rule in India such death tolls from the famines they created were frequent; yet, amazingly, the many Indian financiers and agents that made colonial rule possible never seem to have had the least compunction about what they were doing to their own people. The nationalist movement drove them into the shadows but they continued to serve the darkest British ends, including arranging for mass communal violence and Partition. (Neither would have been possible without Indian financiers and dalals.)

In the absence of any post-colonial accounting, those who thrived under British rule became part of  independent India’s power structure, and they continued to be wedded to their old paymasters regardless of national repercussions. That continuity is the key to understanding how Vodafone arranged to sneak into India and then was able to pretend that it was the injured party.

However, the collaborators who paved Vodafone's way into the country were not the old dalal breed but two young entrepreneurs, Shashi and Ravi Ruia, whose father, Nand Kishore, had come from Marwar to Madras in 1956 to trade in iron ore. After his sudden death in 1969 the Ruia brothers, both then in their early twenties, expanded their business interests rapidly; that happened just as Britain was consolidating its post-colonial money laundering empire and finding many new clients among Indian businessmen.

In India, the face of that new empire was HSBC, the Hong Kong bank set up in the 19th Century by British drug traffickers; it took over Bombay's Mercantile Bank in 1959 and became the country’s primary conduit for black money.

All who made use of its facilities became vulnerable to blackmail, and to understand how that pertains to the Vodafone case we have to look briefly at how the British used their new clout to take control of Indian mass media.

They had begun the process before independence by arranging to sell the Times of India to a trusted comprador family, and in the decade that followed other financiers who had thrived under colonial rule took over all major publications. Even when there was no change in ownership, as in the The Hindu, British clout soon became evident in editorial content.

In newer media organizations the links were far more overt. The India Today Group emerged from a collaboration of “Lord Thomson of Fleet” and a Punjabi financier who had been neck deep in colonial British intrigues. NDTV was founded by the Anglo-Indian son of an employee of the British multinational Metal Box, and it has yet to cut its umbilical cord to the BBC.

All this led to Indian “elite” media reflecting, at best, a highly Anglo-centric worldview and at the worst becoming conduits for outright British propaganda – recent examples include the Purulia Arms Drop documentary on Times Now, and the vicious anti-Sri Lankan films on Headlines Today.

Not surprisingly, Britain’s devoted – or blackmailed – Indian claque raised no alarms as Vodafone made its stealthy entry into India.

To see just how many times the alarms could have been sounded, we have to return to the story of Shashi and Ravi Ruia, who had in 1976 reconstituted their father's company as ESSAR (S & R, their first name initials).

In 1992 ESSAR teamed up with Hong Kong-based Hutchinson Whampoa, a company that traces its origins to an opium “Dispensary” in Guangzhou established in 1828 by A.S. Watson, under which name it is now the world’s largest retail chain.

A.S. Watson is now part of a conglomerate that takes its name from two other British opium related enterprises, the Hongkong and Whampoa Dock Company and the John D Hutchison Company. Hutchinson Whampoa is now controlled by Chinese billionaire Li Shi-feng who has repeatedly been cited in American media, citing Intelligence sources, as closely linked to the Chinese People’s Liberation Army (PLA). He got his controlling share in the company from HSBC.

That dispensation of Opium Era goodies to the Chinese paved the way to the “One Country-Two Systems” deal that Margaret Thatcher negotiated in returning Hong Kong to Chinese sovereignty in 1997. It cut the corrupt Chinese political-military elite into Britain’s global criminal empire and gave enormous new heft to the “all-weather” alliance between Beijing and Britain's narco-terrorist proxy in Pakistan.

Much of this information has been in the public domain for over two decades, but none of it was reported in Indian media as ESSAR – in the wake of a sudden financial crisis – helped Hutchinson Whampoa enter the Indian market.

In May 2007, Vodafone paid $11.1 billion in black money for the Chinese company’s 67 per cent share in Hutchinson-ESSAR, beating out Reliance Communications, the Hinduja Group and ESSAR itself (which had the remaining 33 per cent of the company).

If the UPA government had not been so riddled with corruption, it could have stopped the transaction altogether on the grounds of national security (as the United States did in preventing a Hutchinson Whampoa takeover of the telecommunications firm Global Crossing). But with moral flakes like Kapil Sibal and Palani Chidambaram representing Indian interests that was never in the cards. The demand for $2.6 billion in taxes was the most assertive action the government dared to take.

Our Brit-proxy media have presented even that demand, and the retrospective law affirming its legality, as deep injury to “investor sentiment” abroad.

Not once has any Indian news organization looked at the dire implications of allowing a massive British company into the innards of our communications system. Not once has anyone complained at Vodafone’s temerity in trying to bully its way out of obeying Indian laws.

As far as our mass media are concerned, we could be back in the days when there was no one to observe or comment on Robert Clive’s insulting offer of a pension of Rs. 1250 to the scion of the Jagat Seth family that he had robbed of uncounted crores.

That is no overblown comparison. Our contemporary merchant princes are being every bit as dumb as the ill fated Jagat Seth. And it is not just the Ruia brothers.

Mukesh Ambani blindsided the Indian government and public in selling an $8 billion stake in Indian offshore gas to BP (British Petroleum), the most predatory oil company in the world; he consummated the transaction in the British Prime Minister's office.

Our media reported that Ambani then asked for police protection but showed no interest in explaining why. They also reported with the same strange lack of curiosity, the statement by the then Oil Minister Verrappa Moily that he had been threatened, as had his predecessors. No one made a connection between those strange reports and the new UPA policy of "freeing" gas prices that exposed the entire Indian economy to rampant inflationary pressures.

The Vodafone case is thus just the tip of an iceberg of British temerity.

More than six decades after our formal political independence India continues to be trapped in a network of British criminalities that range from relentless proxy wars and economic subversions to the threat of biological-bacteriological assault (on which I will elaborate in a later post).

India's Post Colonial Overhang

Just as government spokesmen voice the suspicion that foreigners are behind the Koodankulam anti-nuclear protest, comes the news that the rules restricting foreign investment in Indian media organizations are to be relaxed.

Will the real Government of India please identify itself?

No one has explained why foreign investment in the mass media is being  "liberalized" now. If it is merely to show that there is no policy paralysis in Delhi, it is ill-advised. Having foreigners in control of our mass media will unnecessarily complicate a task that must be taken in hand sooner or later: getting rid of the country's massive post-colonial cultural and intellectual overhang. It has remained largely unexamined, except in travelogues by people like Dom Moraes and V.S Naipaul.


The failure to address the issue is obvious in the embarrassingly low quality of our English language newspapers. (For some examples see here, here, here. here, here and here) It is also evident in the imported sewage spread 24/7 by "entertainment" broadcasters.

A quick scan of the Western films and television series on offer will show that I am not engaging in verbal overkill. It's mostly vampires, werewolves, zombies and serial killers (under which category I would classify the James Bond, Rambo, and other cowboy fantasies). These genres reflect the Western socio-economic experience (especially the relationship with the rest of the world), and have no cultural meaning for Indian audiences.

What pases for Indian cultural content on television is pitiable. There are soaps with lavishly overdressed characters, and low-quality retelling of stories from the epics. There is a cluster of channels providing wall to wall religion. There is the Cartoon Network with adventures of "Chota Bhim" and the blue boy "Kris." (This should effectively kill any possibility that the Indian devotional tradition, the sheet-anchor of our civilization over the millennia, will continue in the young.)

With the honourable exception of Aamir Khan's movies, most of the output from "Bollywood" is no longer "Indian" unless the term is stretched to include outright trash subversive of our cultural mores. (I have too little acquaintance with films in other Indian languages to make any judgment.)

As for "news," all the major English language broadcasters are hooked up to foreign companies and reflect their biases. Only Doordarshan tries to analyze international news but makes a hash of it, mainly because producers seem to have little knowledge of the subjects. (A talk show about the India-China relationship had as panelists a Chinese journalist spouting the Beijing line and a JNU academic who agreed with everything he said.)

The fact that nothing in our media environment provides an Indian perspective on the world is an untenable situation for a democracy with a growing role in international affairs. If the opening up of our mass media to foreign investment is intended to signal to the now dominant Western elite that India will be a team player and will not seek to have an independent view of things, it is extremely shortsighted.

The acute political, economic and environmental problems now threatening world order indicate that industrial Western Civilization is in a state of terminal crisis. India's traditional civilization, as Mahatma Gandhi pointed out in Hind Swaraj, offers a path of escape; in fact, it is the only one.      

The Next World War

With the Eurozone teetering on the verge of collapse and the export-led Chinese economy facing a disastrous crash, it is more than likely that the world will slip into another Great Depression. That will require national elites to recalibrate their perks and priorities, setting off furious power struggles that could, as in the 1930s, tumble the world into a global war.

The epicenter of the war will be in Afghanistan where, in fact, it has already begun. Arrayed behind the current confrontation between the United States and Pakistan are all the major Powers of the world, albeit without much clarity of declared purpose.

We can expect the lack of clear ideological lines to continue, for like the First World War, the coming conflict will be widely seen as a confused power struggle undisguised by Good versus Evil ideologies. However, the stakes are high, for the struggle will pit Britain, China and Pakistan, nations that have an established record of subverting and opposing democracy, against the United States, India and Russia. (Moscow is a founding member of the Shanghai Cooperation Organization that aims to exclude extra-regional players from Asian geopolitics but it has moved quietly into the democratic corner as the crisis in Afghanistan has deepened.)

The rest of the world will play a secondary but important role. Most of the nations of the Asia-Pacific will support the democracies; the recent summit in Bali showed the depth of regional misgivings about Beijing’s increasingly brusque use of power.

Africa will also support the democratic side, for neocolonial Europe has been in retreat across the continent for two decades, and as the recent anti-Chinese tenor of elections in Zambia indicated, there is growing outrage at Beijing’s predatory version of “South-South cooperation.”

Despite the efforts of al Qaeda in Brazil (where it has taken root in the sizeable Arab minority), and the pro-British drug cartels of Colombia and Mexico, Latin America will also be on the side of the democracies.

Iran’s recent confrontation with Britain shows where that important nation is likely to line up; and the inchoate struggles of the “Arab Spring” will probably be decisive in determining the alignment of the rest of the Middle East.

 It looks like an unequal struggle until we factor in Britain’s enormous corrupting influence as the primary manager of the global black market. Not only does it give the Axis Powers command of organized crime groups and terrorist movements around the world, it gives them the hidden support of elite groups in every country that have hidden their “black money” in British run tax havens. Powerful interests in the United States, India and Russia will thus be primed for treachery.

In addition, British propagandists, by far the most accomplished in the world, will be able to blur perceptions about the true nature of the struggle and create confusion globally. In that, Britain will be able to count on the reach of its own media organizations and of proxies in most of the democratic countries. Meanwhile, Pakistan’s pose as an “Islamic” champion will continue to confuse the Ummah and Beijing will be able to mobilize the support of “Leftist” sympathizers in many places. India will have to contend with all three factors.

Although New Delhi has wisely rejected the concept of anti-China military cooperation with the United States and Australia, it would be folly to ignore the realities of the current situation. In a period of supposed relaxation of tensions, China has been building up its forces all along our northern border; it now has a permanent presence in Pakistan-Occupied Kashmir. The thaw in relations between Islamabad and Delhi is in the context of American pressure on Pakistan; it is unlikely to lead to anything meaningful. Britain continues its long-standing effort to subvert India through its political, corporate, media and Naxal proxies.

In dealing with the coming crisis, official India is handicapped in many ways. The most serious problems are the lack of strategic direction in our fractured political culture and the subservience of much of our “elite” media to British interests. In combination, those two factors have created a sense of national drift and growing disillusion. Unless our political class mobilizes to meet these and other challenges that lie ahead, the country will be in great danger.

NYT Blog: Why no Indian Steve Jobs?

The New York Times blog on India has an item asking, “Where’s India’s Steve Jobs?” The writer, an Indian journalist by the name of Samanth Subramaniam who seems to cater mainly to foreign magazines, admitted it was perhaps a “hollow, even narcissistic, question" because "Brazil hasn’t produced a Steve Jobs; neither has China, the Philippines, Zambia, Australia or any one of dozens of countries around the world.”  But he proceeded to address it anyway.

In doing so he did not hazard a personal opinion on the matter but noted several from a supposed expert, a business consultant on “knowledge societies,” who blamed India’s failure to produce a Steve Jobs on the inadequacy of our educational system, the years of “flirtation” with socialism, and the incapacity of the Indian economy to support success on so grand a scale.

The piece is a textbook example of feel-bad journalism.

First, consider the false presumption that Indian entrepreneurs have failed to innovate spectacularly.

As Raghunath Mashelkar pointed out in his excellent book Reinventing India (Sahayadri Prakashan, Pune, 2011, 403 pages Rs.499. jadanghadan@gmail.com), there have been many cases of huge success.

There is Narayana Murthy’s Infosys, founded in his small apartment with Rs10,000 in capital, growing to a valuation of Rs. 60,000 Crores and vaulting into the front ranks of the global Information Technology industry.

There is Mumbai’s Dabbawala tiffin delivery system, a daily miracle of business organization without parallel anywhere in the world.

There is Dr. Kurien’s “white revolution” that helped make India the world’s top milk producer and Dirubhai Ambani’s soap company that emerged from a Mumbai chawl to become India’s largest business conglomerate.

There are the anonymous scientists of C-DAC who developed an indigenous supercomputing capacity in three years after Cold War politics denied India access to the Cray XMP-1205 in the 1980s.

There is the Indian Space Research Organization, overcoming the same Cold War restraints to design and build domestic capacity from scratch, making India one of the leading nations in the field.

As Mashelkar's book noted, innovation has also thrived outside the organized sector and without government support. When the National Innovation Foundation set up three years ago under his chairmanship organized an annual competition, it received over a thousand submissions the first year and 16,000 the second year. The winners included illiterate and semi-literate people. An illiterate farmer won with a disease resistant pea he had developed, another with a cardamom variety that now accounts for 80 per cent of the crop in Kerala; a high-school dropout got an award for building a complex robot.

 The problem in India is not that we lack success stories but that we do not celebrate them and do not see ourselves as winners. Despite awards ceremonies to recognize excellence and the occasional programme on successful people, our mass media focus consistenly on the negative. Even in reporting the grand and glamorous success of the Indian film industry, the largest in the world, they emphasize the negative. Their label, Bollywood, focuses on the monkey-see-monkey-do aspect of Indian films, ignoring their homegrown verve and grace. Can you imagine the Japanese media labelling their film industry Jollywood? Or the Chinese describing their’s as Chollywood?

The other side of the mass media projection of India as a semi-comic failure is a consistent promotion and celebration of the meretricious foreign. Our major television channels are slavishly imitative of Western trends, with much of the programming lifted from British sources. People are so used to this that few are aware of how bizarre it is, or indeed, how subversive. HBO India is running a month-long programme of James Bond movies sponsored by Tata Manza, with daily email updates on “Bond Girls” delivered to your computer.

The “HB007” promo promises to trace the “evolution” of the “licensed to kill” operative over the years. I am pretty sure it won’t include any reference to the real-life license to kill that Britain exercised in India, targeting not oversize “Bond villains” but Indian freedom fighters, with vast collateral damage. The death toll, if we include the punitive “man-made” famine of 1943 in Bengal and the engineered Partition “riots,” runs into the millions.

As Mashelkar says, the problem “is not the Indian mind but the Indian mindset.”