Searching for scams
Maharashtra Deputy Chief Minister Ajit Pawar and others have been targeted by the BJP using Central agencies as part of its persistent
attack on the MVA government.
THE SPOTLIGHT IS ONCE AGAIN ON AJIT Pawar, Maharashtra Deputy Chief Minister and senior Nationalist Congress Party (NCP) leader. Although he prefers to avoid the limelight, his mercurial temperament ensures that he is thrust into public focus on and off. His last shock appearance was in 2019 just before the tumultuous post-election government formation in the State. Despite being a senior NCP Minister and nephew of the party supremo Sharad Pawar, Ajit Pawar joined the Bharatiya Janata Party (BJP) and took oath as Deputy Chief Minister in the Devendra Fadnavis government in a swearing-in ceremony held after dawn on November 23. His alliance did not last long because he was brought back to the NCP fold within 78 hours.
Within a week, the newly created Maha Vikas Aghadi (MVA), a post-election alliance of the Shiv Sena, the NCP and the Congress, formed the government. Ajit Pawar took his ministerial oath for a second time as Deputy Chief Minister with additional charge as Minister of Finance and Planning, this time in the government led by Shiv Sena leader Uddhav Thackeray. The BJP was understandably angry with Ajit Pawar not only because his exit from the Fadnavis government cost them the State but also because during his 78-hour alliance with the BJP he had managed to have his name cleared in at least nine cases relating to the Rs.70,000-crore irrigation scam in which he was allegedly involved. This then is the background to the current situation.
Ever since it lost power in 2019, the BJP has concentrated its energy on hitting out at the MVA government. In June 2021, the party’s State executive meeting passed a resolution stating that an inquiry by the Central Bureau of Investigation (CBI) will be sought into allegations of financial manipulation by Ajit Pawar in his companies.
SUGAR MILL ATTACHED
On July 1, a month after the resolution was passed, the Enforcement Directorate (E.D.) announced that under the Prevention of Money Laundering Act (PMLA) it had attached a sugar mill valued at Rs.65.75 crore, which was allegedly linked to a scam in the Maharashtra State Cooperative Bank (MSCB). The mill was the Jarandeshwar Sahakari Sakhar Karkhana in western Maharashtra’s
Satara district. In a statement the E.D. said: “The assets are currently held in the name of Guru Commodity Services Pvt Ltd (an alleged dummy company) and leased to Jarandeshwar Sugar Mills Pvt Ltd…. Sparkling Soil Pvt Ltd is holding majority shares of Jarandeshwar Sugar Mills and investigations revealed that the former firm is a company related to Ajit Pawar, deputy chief minister of Maharashtra and Sunetra Ajit Pawar [his wife].”
The E.D.’S action was based on an ongoing investigation. In 2019, the Mumbai Police’s Economic Offences wing had registered a first information report (FIR) under orders of the Bombay High Court, which claimed that Jarandeshwar was undervalued and sold by the directors of the MSCB to their own people and relatives without following the provisions of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act. The Act allows banks to sell assets to recover loans.
A statement from the E.D. had said: “Ajit Pawar was one of the prominent and influential members of Board of Directors of MSCB at the relevant time. The Sahkari Sugar Karkhana [SSK] was purchased by Guru Commodity Services Pvt. Ltd. and was immediately leased to Jarandeshwar Sugar Mills Pvt. Ltd., which is presently operating the Jarandeshwar Sahkari Sugar Karkhana.” Officials allege that a large part of the funds used to purchase Jarandeshwar came from Jarandeshwar Sugar Mills Pvt. Ltd. which, in turn, got the money from Sparkling Soil Pvt. Ltd.
The statement also said: “Further, the SSK has been used as a vehicle by Jarandeshwar Sugar Mills for obtaining loan to the tune of Rs.700 crore from Pune District Central Cooperative Bank & others during the period from the year 2010 till date. Thus, the assets held in the name of Guru Commodity Services Pvt. Ltd. (leased to Jarandeshwar Sugar Mills Pvt. Ltd.) in the form of Land, Building & Structure, Plant & Machinery of Jarandeshwar SSK, being proceeds of crime, the same has been provisionally attached under PMLA.”
On October 7, the Income Tax Department conducted simultaneous raids at the Daund Sugar factory in Baramati, the Jarandeshwar sugar factory in Satara, the Ambalika sugar factory in Ahmednagar and the Schreiber Dynamix Dairy in Baramati, Pune. All the companies are supposed to be associated with Ajit Pawar and his three sisters. The normally quick-tempered Ajit Pawar maintained his cool and issued a statement saying that the Income Tax Department had a right to conduct raids but he, being the Finance Minister was “very well acquainted with income tax rules and [had] always maintained stern fiscal discipline. Hence, [his] companies have never defaulted on paying taxes”. He was, however, upset that his sisters were dragged into what he hinted was a politically motivated action.
“One of my three sisters stays in Kolhapur and the other two in Pune. They were married 35 or 40 years ago. If the raids were conducted because they are my sisters, then the people of Maharashtra should think about the low level of politics being played out and the misuse of Central agencies,” he said.
The BJP said the raids were part of an investigation by a Central agency and was not political vendetta.
Rallying around the leader, the NCP held a show of strength in Pune staging protests at various locations, including the E.D.’S office and the local BJP office, against the raids.
In Baramati, Sharad Pawar spoke openly in support of his nephew and nieces and tried to make light of the situation referring to the income tax officers as “guests”. He said, “Guests have been visiting Ajit Pawar. We are never scared of guests.” But at a public meeting in Solapur,
he reminded the Central agencies about the reaction of the people when the E.D. sent him a notice in 2019, ahead of the State Assembly election in September. “I was sent a notice by the E.D. [regarding alleged irregularities] in the Maharashtra State Cooperative Bank. I had nothing to do with the bank. All of Maharashtra reacted to this accusation, the BJP was made a fool of,” he said. Pawar had then been issued a summons by the E.D. and he had been willing to visit its office but NCP workers gathered at the location in large numbers forcing the Mumbai Police and the State government to tell Pawar to cancel his visit as they feared a law-and-order situation could emerge. The NCP performed very well in the Assembly election subsequently, especially in its own stronghold of western Maharashtra.
Pawar also remarked that the raids were an “excessive use of power” and said that perhaps they were a reaction to his comments condemning the October 3 violence in Lakhimpur Kheri, Uttar Pradesh, in which four Sikh farmers were killed, likening it to Jallianwalla Bagh.
Ajit Pawar, like his uncle had done earlier, appealed to his Pune supporters to let the “guests” do their work. He said: “I don’t want to disturb the guests. Let them complete their duty. We did not get any notice before the raids. I follow all rules and comply with tax-related formalities. Later I will speak with evidence over the deals of the sugar factories and the people behind their sale.”
ASSETS LINKED TO AJIT PAWAR’S FAMILY
On November 2, the Benami Wing of the Income Tax Department declared that it had served an attachment order and provisionally attached assets linked to the Ajit Pawar family under the Prohibition of Benami Property Transactions Act (PBPTA), 1988. The list included the Jarandeshwar sugar mill valued at about Rs.600 crore, a Rs.250-crore resort in Goa, an office in Mumbai belonging to Ajit Pawar’s son and valued at about Rs.25 crore, and a Rs.20-crore residential flat in New Delhi. The list included 27 lots of land across Maharashtra valued at Rs.500 crore. The department also revealed that it had found unaccounted income of about Rs.184 crore after searching the premises of two real estate company offices.
In a statement, the Income Tax Department said: “The preliminary analysis of the flow of funds indicated that there has been an introduction of unaccounted funds in the group by way of various dubious methods like introduction of bogus shares premium, suspicious unsecured loans, receipt of unsubstantiated advance for certain services, collusive arbitration deals out of non-existent disputes.” While no specific name was mentioned, the statement said, “It has been observed that such suspicious flow of funds has taken place with the involvement of an influential family in Maharashtra.”
The Pawar family has been given 90 days to show that its members are the legitimate owners of the properties. There is also the E.D. probe into the Jarandeshwar Sahakari Sugar Karkhana for an alleged Rs.750-crore mismanaged mortgage.
On November 3, Ajit Pawar’s office said that none of the properties were linked to him and that the Central agency had not sent any notice on this count. His office also said that reports of attachment of assets were planted in the media and were “baseless, inconsistent with facts and motivated by slander…. Deputy Chief Minister Ajit Pawar has nothing to do with the action of the Income Tax Department…. We appeal to the media to check their facts before reporting any news and not fall prey to any propaganda.”
THE MOTIVATION
While due process will reveal the truth in these allegations, what needs to be explored is the motivation behind them. They seem to be meant to hit out at Ajit Pawar personally and the entire Pawar clan as also other Ministers. The final goal seems to be to oust the MVA from power, and what better way to do this than hammer away at Sharad Pawar who is not only the architect of the MVA but also the glue that keeps it together.
The alleged accusations can be seen in the context of the upcoming local body elections. The case against senior NCP leader and former Home Minister Anil Deshmukh, who is being investigated by the E.D. and the CBI in extortion and money laundering cases, has provided more fuel for the opposition.
Ashok Chavan of the Congress, who is the Public Works Department Minister, is also under the scanner. In October, the Income Tax Department questioned officials of the Buldana Urban Cooperative Credit Society over suspected irregularities in loans given to a sugar factory linked to Ashok Chavan. On November 7, the Income Tax Department froze 54 crore deposits in the credit society citing irregularities in adhering to KYC norms. A press note issued by the Central Board of Direct Taxes said: “The Chairman, CMD and the manager of the branch, could not explain the source of cash deposits and accepted that these were done at the behest of one of the directors of the bank, who is a prominent local businessman engaged in trading of grains. The account opening forms were filled in by the bank staff and they have put their signature or thumb impression.”
In the rarefied world of the Pawars and various government investigative agencies, the battle over alleged irregularities can possibly be sustained for long. But the implications of the machinations are immediate and severe for sugarcane farmers who sell their produce to the mills.
Attaching the Jarandeshwar mill could mean uncertainty for the 50,000-odd sugarcane farmers in the region. Will the sugar factory accept their produce? Will it be allowed to crush the cane sold by them The Jarandeshwar mill has a crushing capacity of 7,500 tonnes a day. This capacity was recently increased to 10,000 tonnes a day. In the last season, more than 14 lakh tonnes were crushed. This season, the mill was registered to crush 20 lakh tonnes. There is, however, a problem with payment. In the last season, the total fair and remunerative price to be paid to all cane growers was Rs.420 crore but the factory paid only Rs.402 crore. This led to the Sugar Commissioner withholding the crushing licence. The payment could not be made because the E.D. had attached the bank accounts of the mills. m