Real story of high level corruption in India in 1960s

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Real story of high level corruption in India in 1960s


(Former Air Chief S.P.Tyagi’s misfortune is that he is living in a bad period. There is no Indira Gandhi to protect him. Read how Indira Gandhi saved a retired Air Chief against whom the Income Tax Department had a fool proof case.)

Indira Gandhi patronised corruption

The Enforcement Directorate’s findings that crores of bribe money taken by the former Air Chief Marshal (Retd.) S. P. Tragi in Rs. 3586 crore VVIP chopper deal – scrapped following the scandal – were used for buying properties in Delhi, Noida and Gurgaon besides for investment in the companies floated by his cousins has reminded me of a very old but almost similar case involving one of the great grand predecessors of S. P. Tyagi. That great grand predecessor was very lucky because he made money when corruption had state patronage.

During more than 37 years of service in the Government of India, I had occasions to see from very close quarters how corruption at higher levels in bureaucracy, in armed forces, among politicians and also by high-ranking constitutional authorities was condoned, even patronised. We have made considerable ‘progress’ in the field of corruption since the days I joined the government in 1965. According to Transparency International’s Corruption Perception Index, 2015, India ranks 85th out of 175 countries. That our ranking has improved by nine steps since 2013 is hardly any consolation. We are considered one of the most corrupt countries in the world.

In October 1968, I was given charge of an income tax ward – known as Salary Circle, Delhi – which had jurisdiction over most of the persons who mattered in the country. There was a steel almirah in my office room that contained income tax records of union ministers, several ex-ministers and also some VVIPs against whom there were allegations of tax evasion. The access to the almirah, always kept locked, was restricted. No one other than me could open it.

One of the files in the almirah contained income tax records of a very high ranking Air Force officer (AFO). The Salary Circle, Delhi had no jurisdiction over the Air Force officers but was given jurisdiction over that specific case by a special order. I discovered that the AFO had filed a revised income tax return in which he had declared income from ‘undisclosed sources’. It was quite unusual for a government servant to do so. The expression is used to describe concealment of income by businessmen. I found that all the necessary legal proceedings had been completed by the previous Income Tax Officer (ITO) and I was required only to pass the formal assessment order before March 31, 1969. In fact, after going through the file notings I found that I had no option.

Out of curiosity, I talked to the ITO who had handled the case earlier. He told me that he had discovered that the AFO had invested a huge amount of money, much beyond his financial resources, in a residential house. Discreet enquiries revealed that the AFO did not enjoy good reputation. The ITO sent an IT Inspector to the AFO‘s official bungalow in Delhi for enquiry. For a couple of minutes the AFO answered the questions but when he discovered that the Inspector was not satisfied with his explanation of the sources of huge investment in the house property, he started bullying the Inspector. How could a lowly IT Inspector have the audacity to interrogate a high-ranking AFO? When that too did not work, the AFO ordered his ferocious looking dog to charge the Inspector. The poor Inspector somehow managed to run away safely to report the matter to his ITO.

The ITO brought the matter to the notice of his boss who advised him not to cause any inconvenience to such a senior AFO if he (the ITO) did not want to be harassed. That ITO, a junior Group B officer, was made of a different mettle. He passed on the information to a CBI officer he knew.

While the CBI investigation was going on, the time limit for completion of the assessment was coming to an end. The ITO completed the assessment order but to save himself from any trouble in future he put on record that if further information was received, the case would have to be reopened.

The CBI investigations took considerable time but ultimately confirmed the ITO’s suspicion. The AFO had received huge kickback in a fighter plane deal. When the matter reached the CBI Director, he thought it fit to inform the then Defence Minister who in turn reported everything to the Prime Minister, Mrs. Indira Gandhi. Mrs. Gandhi gave her verdict that any action against high-ranking officers of the Armed Forces would bring bad name to the country! (Mercifully, that view is not shared by Modi.) She ordered that the AFO should be simply asked to pay income tax on his bribe money and the matter be hushed up. By that time, that AFO had gone up in hierarchy in the Air Force. He agreed to pay a percentage of bribe money to settle the issue though he would have been happier if left with entire bribe money.

The Commissioner of Income Tax, Delhi, was asked to order the ITO to issue a notice to the AFO to file a fresh return of income for the year in which unexplained investment in the house property had been made but the time limit within which such an order could be given had already expired. The Commissioner was forced to issue a backdated order and the ITO issued a backdated notice which was promptly complied with. All the legal formalities were completed but the file was transferred to the Salary Circle, Delhi to pass an assessment order and keep the file in safe custody, away from the prying eyes of the detractors of Mrs. Gandhi.

In March 1969, when I completed the procedural formality of passing the assessment order, that AFO was India’s ambassador to a European country.

It was a blatant case of corruption flourishing under state patronage. Mrs. Gandhi publicly justified corruption in India by saying that it was a ‘global phenomenon’. How could India, led by charismatic leaders – barring unassuming Lal Bahadur Shastri – since independence be not part of ‘global phenomenon’?

The case was hushed up in the world of common people but the world in which people like that AFO, arms dealers, top politicians, top bureaucrats and business executives moved, the message was loud and clear: ‘the era of state patronage to corruption has arrived.’

Devendra Narain

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