An Open Investigation
PR Ramesh and Ullekh NP | 25 Jun, 2015
Gaya, Bihar’s second biggest city, is crowded and dirty. Yet, thanks to its historical and mythological significance as a holy place for Buddhists, Hindus and Jains, it attracts hordes of tourists who mostly crowd outside the temples along the ghats of the Phalgu river before and after darshan. Despite the filth all around, the narrow roads in this eastern Indian city pulse with energy as people chat animatedly over tea and samosas or the typical local delicacy sabudana badam bhoonja. Located 100 km from state capital Patna, this ancient city of imposing old buildings and tall Buddha sculptures that seem to watch over the rest from above is a salad bowl of cultures and religions. The silence of the Buddha idols in stone is in complete contrast to the chaos and noise on the streets. And over time, the whole district has earned notoriety for breaking laws and snapping itself from the spiritual moorings of its past. Gaya has recently got a bad name for anchoring a multi-crore global racket of spurious drug makers. Doctors argue that various governmental departments are in cahoots with criminals, making it difficult to unmask racketeers who have amassed huge wealth at the cost of the ailing.
Lately, it has also been a nerve centre for illegal activities of the most nefarious kind, resulting in a humongous loss of public money on account of non-payment of freight charges and related taxes by truckers. While the Gaya check post at Dobhi—which clears trucks carrying thousands of tonnes of coal every day—alone contributes crores of rupees to this loss, people close to the matter put the national figure due to non-payment of taxes on roads by freight carriers at a whopping Rs 10,000 crore a year. “The Gaya check post (at Dobhi) on Grand Trunk Road offers a microcosmic picture of the dreaded evasion of taxes on this highway that spans the nation. It’s a crucial centre in that it controls flow of freight traffic from the east to the west of India along one of the country’s oldest and longest roads,” says a senior government official who has closely monitored the nexus between criminals, police, commercial tax officials, transport officials and others on the road that now links Kolkata in east India to Amritsar in the west. For centuries, this arterial road had connected South Asia to Central Asia. At its prime, after the 16th century Afghan invader Sher Shah Suri rebuilt the old trading route, the 2,500 km-long road ran from Chittagong in east Bengal (now Bangladesh) to Kabul in Afghanistan.
“The syndicate or the road mafia that controls Indian roads is perhaps the most organised in Bihar, which has five check posts, including the one at Gaya. The problems in Gaya mirror those in the rest of the country in freight traffic on the road,” concurs a senior official at the Union Ministry of Road Transport and Highways.
At the Gaya check post, until his ‘empire’ was busted by a brave officer early this May, the man who called the shots was Mohammed Aurangazeb Urfa, popularly known as Rajuwa Khan, who had risen in 20 years from a petrol bunk attendant to a multi-billionaire kingpin whom truck owners had to bribe to ensure the smooth passage of their vehicles along GT Road. His ascent was rapid but not surprising in a coal-rich area where the police and government officials often forge alliances with local criminals to engage in illegal activities. “His fortunes are linked to a district-level police officer who later became a senior state-level officer,” a senior police officer tells Open.
“Khan built his reputation around the perception that trucks could not ply in the area without paying him a fee. What we had to do to crush him was break that perception which made truck owners resign themselves to their fate,” notes senior police officer Shaleen, a 2001 batch IPS officer earlier posted in Gaya.
In early May, under Shaleen’s orders, police officers raided a petrol bunk owned by Khan from where they recovered ‘suvidha’ documents and several invoices. Typically, these ‘entry mafia’, as the likes of Khan are called by locals, operate from a motel or dhaba not far from the check post where the transport department booth window stays invariably shut all through the year. “It is like they ran a parallel government out there, and it was like an unwritten rule that neither the police nor transport/commercial tax officials would act on any complaint. After all, all of them were beneficiaries without exception,” says a senior Patna-based road official.
At these motels, truck managers or drivers would meet point persons of the local don and pay a fee—mostly in the range of Rs 2,000 to Rs 2,200—in exchange for ‘suvidha’ documents, invoices and others papers, all fake. Those who pay up are assigned a code word of the day to ‘deal’ with police officers in case they are stopped on the highway. “Usually, once the ‘fee’ is paid, nobody stops anyone on the way,” reveals the mild-mannered Shaleen, emphasising that the quantum of corruption is beyond imagination. Meanwhile, senior Finance Ministry officials in Delhi argue that only the roll-out of a Goods and Services Tax (GST) that will eliminate barrier-point ‘octroi’ taxes and allow hassle-free freight movement across inter-state borders will end this menace. Notes Bibek Debroy, well- known economist and member of the NITI Aayog: “Inter- state restrictions and hold-ups at borders between states aren’t only caused by fiscal issues. There are non-fiscal restrictions associated with laws on motor vehicles, agricultural products, forests and the environment. GST enables harmonisation and standardisation for the fiscal part and thus reduces some barriers.” The GST is a comprehensive tax levied at the national level on the manufacture, sale and consumption of goods and services. The new tax, which is set to be implemented from the start of the fiscal year 2016-17, envisages the integration of state economies in a way that will boost India’s overall economic growth. The Constitution (122nd Amendment) Bill, 2014, introduced in the Lok Sabha on 19 December 2014 by Union Finance Minister Arun Jaitley, will subsume various Central indirect taxes, including central excise duty, countervailing duty and service tax. It also subsumes state value added tax, octroi and entry tax, luxury tax and so on.
CRIME DOESN’T PAY
After Shaleen’s men raided Khan’s ‘offices’, a Jharkhand- based truck owner contacted the police and offered comprehensive tips of how the “entry mafia” operated, leading to huge losses for the state and central governments while lining the pockets of officials who connived in the crime.
At least 4,000 trucks pass through the Gaya check post a day. “Forget the fine on not carrying proper pollution certificates and other such papers. Just factor in value added tax alone, the loss would be mind-boggling even if 1,000 of them crossed the check post illegally,” notes a senior police officer.
Consider this. Typically a truck carries 15 tonnes of coal, the cheapest grade of which is worth Rs 4,000 per tonne. At a check post, the truck owner has to pay 5 per cent value added tax. Which means that even for the cheapest coal, the tax liability is Rs 3,000 per truck. Even if only one-fourth of all trucks cross the check post illegally, the daily loss to the exchequer would be Rs 30 lakh at a single check post, which translates into a loss of Rs 10 crore per month. “This is the lowest loss that is plausible,” adds the senior officer, noting that the volume of cash transactions is very high. “This means each year Rs 10 crore that is due to Bihar is lost per check post per month,” he says, reeling out the numbers. For a state that has five check posts on GT Road, the loss widens to more than Rs 600 crore a year. “The worst case scenario is much worse, and mind you, all these are cash transactions,” says Shaleen, now a Patna-based DIG.
On 21 May this year, Shaleen’s men struck again, raiding multiple locations where Khan’s lackeys operated from. The petrol bunk has since been razed to the ground. “Since the police and other officials were hand-in-glove with him, nobody could defy him and say that we would manage the police ourselves. The police would detain the driver and send the truck back to the don, asking them to come through the ‘proper route’,” says the second senior police officer. “[The policemen’s] problem, it seems, was not that truck owners are not doing things illegally. But if someone was plying vechiles illegally, they have to ply vehicles illegally though ‘entry dons’ ,” explains this officer.
Until Shaleen’s squad bust Khan’s racket, the message was clear to truck owners plying vehicles on GT Road in Bihar: at all five check posts, you have to operate through Khan. “Policemen were convinced of his muscle power to move things on the route and so were all the officials who benefitted from him. Nothing moved without his knowledge. He was like a de jure king and he behaved like one,” notes a senior government official in Patna, referring to Khan.
In return for favours from police officers and other government officials, Khan offered them a cut. The perks of being Khan’s friend didn’t end there. “Besides all that, he managed their things. Suppose an officer’s brother-in- law had to be sent on honeymoon to Thailand, he arranged it. Suppose the son of a senior police officer had to be sent abroad for higher education, he paid for it. If there is a funeral or a marriage in the family of a conniving officer, Khan handled things. He made the lives of government officials absolutely easy. Which explains how he stayed powerful,” says the second senior police officer.
An FIR registered at Aamas police station against Khan on 16 May under Section 120 of the Indian Penal Code and other ‘categories of crime’ refers to consignments caught on which tax had been evaded via fake documents. Open has access to this FIR. “Until that day, he was the uncrowned king on the Bihar stretch of GT Road,” says a Patna-based official.
Within 20 days of the massive raid, the police “went hammer and tongs”, according to an officer close to the matter, and his gang went bust, much to the anguish of many government officials and key police officers who had made their millions thanks to their association with this criminal. Recalls another police officer: “When Khan was king, he used to call up the police and say ‘catch them’ or ‘leave them’ in case trucks were detained by police on the highway. It is tough to imagine that his era has ended. It all happened in record time.”
Shaleen and his team had collected the phone call records of Khan and members of his gang—which contain incriminating evidence against several key government officials—and submitted all details to the authorities concerned. A police officer Open spoke to in Gaya says that “authorities are sitting tight on evidence. Nothing has happened so far”.
A NATIONAL HAZARD
A senior Road Transport Ministry official based in Delhi says that the ‘nexus’ between criminals, police officers, commercial tax officers and transport officials is “the same story everywhere”. He adds, “It may vary in degree from state to state. But more or less the kind of illegal activity they promote is similar, causing huge losses to governments. It is public money and officers involved stand to gain and therefore nobody is complaining,” he rues. “At nearly 90 per cent of the check posts in the country, things are as they are in Gaya,” he explains. “In Gujarat, the police may be a bit sophisticated. In Haryana, they may be a bit crude. In Maharashtra, they are less sophisticated than the counterparts in Karnataka. Those are the only differences across the country. The scale of the scam may vary, but it is there all across,” he says.
The senior Finance Ministry official says that the real loss could be much more than the figure of Rs 10,000 crore a year pegged by some government officials. According to him, the revenue loss is often underestimated because “most people don’t take into account what could have been gained if things were perfectly in order at check posts”. “The amount of money paid to transport officers on leave masquerading as working is huge,” says he. Transport and commercial tax officials are often coy, though they are equally complicit, avoiding any direct contact with local dons who ‘manage’ check points. “They often act through intermediaries, unlike the police who have to deal directly and therefore are blamed most for all the losses,” he says, adding that “in fact, the biggest gainers are the transport officials, then commercial tax officers and then police officers. That is how the cut of profits is distributed”.
“The loss could be 5-6 times bigger than estimated,” avers the Finance Ministry official. “Not just the officials, no political party in the country takes this problem into cognisance because of the funds they get from the so-called entry dons who contribute generously to party coffers so they can continue to thrive with impunity. With the country building new highways, their ‘significance’ is only going to become much bigger,” he adds.
The Road Transport Ministry official says, “These dons feel threatened by the prospect of the country rolling out GST next April. Certainly, GST is going to make their life miserable. But they are betting big on their contacts to find new ways to beat the rap.” He goes on, “Who will pay for the losses that the country has incurred so far due to non-payment of road fee and other charges? It is even difficult to quantify the loss. The fact that most of it is by cash-only transactions shows how much black money is being pumped into the system at a time when the Government has vowed to fight it tooth and nail. It is a Herculean task and these kinds of activities only add to the hardship of having to fight black money.”
More road work is in the offing. The total length of the country’s national highway network, as of today, is 70,548 km. The development and maintenance work of national highways is done through multiple agencies: the National Highways Authority of India, State Public Works Departments and Border Road Organisation.
Large-scale reforms and modernisation are in order to combat the road mafia threat, say police officers and Road Transport Ministry officials. “CCTVs have to be installed and monitored 24X7 at all check posts. At the moment, most officials don’t even make a visit to check posts. When you fight them, you have to fight with all your might and use legal means and take them by surprise because all their life they have not seen anyone take them on. They have always managed to bribe their way through. That system will change only when we bring in accountability and use technology to do that,” says a senior Delhi-based government official who describes the Gaya incident as “the tip of the iceberg”.
At least three police officers who spoke to Open say that it is ironic that several of the policemen who benefit from the ‘entry mafia’ end up becoming officers of the country’s financial investigative unit, which is meant to investigate financial crimes. “I call it perfect irony. How can you expect these officers to investigate crimes in which they have stood to benefit? They would seek more money for covering up a probe. That is what usually happens. Most likely, it is impossible to quantify the loss caused by the unholy alliance between those in power and these criminals,” says a police officer based in Patna. The Road Transport Ministry officer says the problem is expected to peak in the run-up to the GST roll-out because the dons would want to make the most of their opportunity before time runs out. Some states with long road networks, besides Bihar, include Uttar Pradesh, Rajasthan, Andhra Pradesh, Madhya Pradesh, Maharashtra, Tamil Nadu, Karnataka, Odisha and Gujarat.
“Our success in Gaya was because we took [the mafia] by surprise. They expected the police to connive [with them] by force of habit. It didn’t happen. Besides, we did everything through lawful means, and they didn’t expect that either,” says Shaleen, giving an inside, up-close account of the group run by Khan, how they operated and made their crores.
“Such operations can be replicated elsewhere, too, with some good planning. That is the incredible, tragic truth,” says a Delhi-based police officer, alluding to lack of political will. Easier said than done.