Wednesday, July 27, 2016

Brexit: Political Tantrums

Political behaviour during and after the referendum was strange. Close friends like David Cameron and Boris Johnson who had similar views for a long time fell out with each other,  Boris Johnson, a former mayor of London, becoming a fanatical Brexiteer and Cameron opposing the exit option.

There were splits in both Labour and Conservative parties in their support / opposition to the exit option. Jeremy Corbin, popular among the Labour voters but despised by the Labour MPs, was listless in his opposition to exit. His lethargy contributed to many Labour voters opting for exit. UKIP (UK Independence Party) was the only one unanimously in favour of exit. Its the then leader, Nigel Farage, insisted that if the exit proposal lost narrowly by say 48-52, there should be one more referendum. In the event, exiteers won by 51.9-48.1 and Nigel Farage did not think that fairness demanded another referendum. Surprisingly, Nigel Farage has since quit leadership of his party.

David Cameron decided to quit primeministership owning responsibility for the referendum verdict.It was widely expected that Boris Johnson would try to become the prime-minister since he was mainly instrumental in the country taking the plunge. It was also expected that his friend, Michael Gove, who campaigned equally fiercely for exit, would support Johnson. But in an act of epic betrayal, Michael Gove announced his own candidacy for Tory leadership. Johnson thereafter decided not to contest. Did Johnson realise that voting for exit was easy but executing the exit was Sisyphean? Was Johnson waiting for an excuse to disown executive responsibility for his own proposal to exit?

Johnson suffered one more ignominy. He supported the candidacy of Andrea Leadsom and made flattering comments on her 'leadership skills'. Subsequently she made some most inappropriate comment on childlessness, got ridiculed and withdrew from leadership contest. In the end, only Theresa May remained in the field and she became the prime minister.

Political tamasha did not end there. Theresa May's preference was for the country to continue in EU. However she accepted voters' verdict and made the interesting observation that 'Brexit means Brexit'. She made Boris Johnson the Foreign Secretary. Johnson had earlier commented awkwardly on many leaders including Barack Obama, Hillary Clinton and Donald Trump. "Obama is half-Kenyan and his ancestral distrust of Britain is to be expected." "Hillary Clinton looks like the sadistic nurse in a lunatic hospital." (Can one be more impolite?) "Trump is not fit for the post he is aiming at." Donald Trump has now started calling his competitor 'Hillary Rotten Clinton'. Boris Johnson is a colourful buffoon though he was a successful mayor of London.

Sunday, July 24, 2016


Crises normally throw up a bunch of new words. Brexit has spawned many of which Brexcitement, Bregret and Neverendum are more colourful. 'Neverendum' is already known to Canadians.

Brexcitement means excessive excitement over any event. Brexit qualifies for this because it is a story that is a heady cocktail of historical recidivism, political tantrums, economic misinterpretation and bureaucratic bungling. Each of these four misadventures is capable of landing us in immense trouble. Together they can result in a disaster.

Europe has been repeatedly torn asunder by wars, major and minor. The Religious Wars of 1618-48 proved that religious differences could destroy societies. Desire to bring about sustainable peace resulted in the Treaty of Westphalia which brought to the fore the concept of nationhood to enfeeble religious movements. First half of the twentieth century saw two World Wars with European roots caused by the urge to uphold the superiority of one nation over others. Emotive nationalism proved cataclysmic and self-defeating.

In 1951, Europeans understood the need for uniting as a group to counter the business competition from the American behemoth and also to avoid internecine conflicts among the nations in the Continent. Thus were born the European Coal and Steel Community, European Economic Community and the European Union. The EU enabled maintenance of political independence of 28 European countries even while reaping the benefits of economic union.

Globalisation was an inexorable consequence of  the realisation that nations could achieve more through cooperation and by forgoing political sovereignty over rules of trade and investment. EU facilitated growth of globalisation which inevitably led to weakening of sovereignty of nations. Dani Rodrik, a Turkish economist with Harvard University, captured this situation beautifully when he said "societies cannot be globally integrated, completely sovereign and democratic at the same time".

Something had to give way. Some EU members started wondering if they must not reemphasise the priority of national sovereignty over the spirit of globalisation. In other words, they started going back in history to recapture the Westphalian essence. This recidivism was the foundation for Brexit.

The Telegraph captures the chronology as follows:

·         1957
Treaty of Rome is signed
France, West Germany, Italy, Belgium, Luxembourg and the Netherlands, six founding members of the European Economic Community, sign the Treaty of Rome, but Britain withdraws from early talks.
With its economy flagging, Britain makes its first attempt to join the Common Market but is vetoed by Charles de Gaulle. The French President accuses Britain of a “deep-seated hostility” towards the European initiative.

·         1973

Britain joins EEC

With de Gaulle out of office, Britain is allowed into the European Economic Community at last, but within a year calls for major reform of Common Agricultural Policy as well as changes in way the budget is financed.

1975: EEC Referendum
Harold Wilson’s Labour government holds a referendum over EEC membership, which splits the party but results on two thirds of British voters saying they want to stay in.

·         1983

Michael Foot defeated

Labour leader Michael Foot promises withdrawal from EEC in his election manifesto, but his party is heavily beaten by Margaret Thatcher’s Conservatives.

1984: Thatcher wins rebate
A key victory for Mrs Thatcher sees her win a “rebate” from Brussels. She had threatened to halt contributions because Britain was receiving far less in agricultural subsidies than some other members, notably France.

·         1990

Britain joins Exchange Rate Mechanism

Britain joins the Exchange Rate Mechanism, 11 years after it was set up to harmonise European countries’ financial systems before the creation of a single currency.

·         1992

Black Wednesday

In what became known as Black Wednesday, Britain is forced to withdraw from the European Exchange Rate Mechanism, after failing to stem intense currency speculation.

·         1997

Single European Currency

Britain declares it will not be joining the euro for the duration of that parliament, after the single currency fails Gordon Brown’s ‘five golden tests’.

1999: British Beef Row:
Tensions rise over France’s ban on British beef during the “mad cow” disease outbreak. France given an ultimatum from Brussels but the ban is not lifted until years later.

·         2007

The Lisbon Treaty

Gordon Brown misses a televised ceremony of leaders signing Lisbon Treaty, which hands greater powers to Brussels. The controversial treaty took two years to negotiate, after plans for an official constitution were abandoned.

·         2011

Bank levy clash

David Cameron clashes with Europe over plans to introduce a levy on banks and restrict London’s financial sector. The Prime Minister promises to bring back powers from Brussels.

·         2013

Cameron makes referendum pledge

David Cameron promises an “In-Out” referendum if he wins the 2015 general election, which he does. He reiterates his manifesto commitment to hold a referendum before the end of 2017.

2016 Feb:
EU Referendum deal:
David Cameron negotiates “new EU deal” for UK after 30 hours of talks but has to make series of concessions. The Prime Minister then announces the referendum will be held on June 23.

2016: June 23
In a close-run vote, the British public decides to exit the European Union. An emotional David Cameron resigns as prime minister the next day.


Sundaram Finance AGM

This year's AGM of Sundaram Finance Ltd. was held on July 22nd. The meeting was unusually and even indecently vituperative.

The Chairman did not think it necessary to introduce the members of the Board despite a reminder from a shareholder. A shareholder, Mr. R.Sivakumar, was on the offensive from the word go. He took up cudgels on behalf of another shareholder, Mr.Padmanabhan, who was apparently not present. Sivakumar wanted to know from the Chairman why a legal notice was sent to Padmanabhan for making insinuation about insider trading in the last AGM. He refused to accept Company Secretary's intervention on behalf of the Chairman.

Are there limits to freedom of expression in an AGM? Is the company's reputation fragile enough to be adversely affected even if a shareholder suspects (perhaps without basis) insider trading by the company's associates? Is AGM a public forum or a private meeting?

The Chairman testily responded that Sivakumar was talking 'rubbish'. Sivakumar wanted withdrawal of this 'unparliamentary' word. The chair did not budge. After exchanging some more 'unpleasantries', Sivakumar set off for another AGM. On his way out, he was confronted by another shareholder who took exception to his behaviour. Sivakumar returned to the AGM to protest what he thought was company's practice of bullying the dissenters.

As I was coming out of the meeting another shareholder told me that Ashok Leyland which held its AGM the previous day was much more liberal in distribution of sweets to shareholders !

Added on July 27: In the Minutes of the Meeting submitted to Stock Exchanges, the company has totally ignored the allegations made by shareholders.

Saturday, July 16, 2016

Too big to jail / Too big to nail

Following contents explain themselves:




JULY 11, 2016

This report has not been officially adopted by the Committee on Financial Services and may not necessarily reflect the views of its Members.

                                                                 Executive Summary

 In March 2013, the Committee on Financial Services (Committee) initiated a
review of the U.S. Department of Justice’s (DOJ’s) decision not to prosecute HSBC
Holdings Plc. and HSBC Bank USA N.A. (together with its affiliates, HSBC) or any
of its executives or employees for serious violations of U.S. anti-money laundering
(AML) and sanctions laws and related offenses. The Committee’s efforts to obtain
relevant documents from DOJ and the U.S. Department of the Treasury (Treasury)
were met with non-compliance, necessitating the issuance of subpoenas to both
agencies. Approximately three years after its initial inquiries, the Committee
finally obtained copies of internal Treasury records showing that DOJ has not been
forthright with Congress or the American people concerning its decision to decline
to prosecute HSBC. Specifically, these documents show that:

 Senior DOJ leadership, including Attorney General Holder, overruled an
internal recommendation by DOJ’s Asset Forfeiture and Money Laundering
Section to prosecute HSBC because of DOJ leadership’s concern that
prosecuting the bank would have serious adverse consequences on the
financial system.
 Notwithstanding Attorney General Holder’s personal demand that HSBC
agree to DOJ’s “take-it-or-leave-it” deferred prosecution agreement deal by
November 14, 2012, HSBC appears to have successfully negotiated with DOJ
for significant alterations to the DPA’s terms in the weeks following the
Attorney General’s deadline.
 DOJ and federal financial regulators were rushing at what one Treasury
official described as “alarming speed” to complete their investigations and
enforcement actions involving HSBC in order to beat the New York
Department of Financial Services.
 In its haste to complete its enforcement action against HSBC, DOJ
transmitted settlement numbers to HSBC before consulting with Treasury’s
Office of Foreign Asset Control (OFAC) to ensure that the settlement amount
accurately reflected the full degree of HSBC’s sanctions violations.
 The involvement of the United Kingdom’s Financial Services Authority in the
U.S. government’s investigations and enforcement actions relating to HSBC,
a British-domiciled institution, appears to have hampered the U.S.
government’s investigations and influenced DOJ’s decision not to prosecute
 Attorney General Holder misled Congress concerning DOJ’s reasons for not
bringing a criminal prosecution against HSBC.
 DOJ to date has failed to produce any records pertaining to its prosecutorial
decision making with respect to HSBC or any large financial institution,
notwithstanding the Committee’s multiple requests for this information and
a congressional subpoena requiring Attorney General Lynch to timely
produce these records to the Committee.

 Attorney General Lynch and Secretary Lew remain in default on their legal
obligation to produce the subpoenaed records to the Committee.
 DOJ’s and Treasury’s longstanding efforts to impede the Committee’s
investigation may constitute contempt and obstruction of Congress.

 The Committee is releasing this report to shed light on whether DOJ is
making prosecutorial decisions based on the size of financial institutions and DOJ’s
belief that such prosecutions could negatively impact the economy

Friday, July 15, 2016

Does Supreme Court want deaf , dumb and blind Governors?

Supreme Court's observation in the Arunachal Pradesh judgment that the Governor must keep clear of any political horse-trading, and even unsavoury political manipulations, irrespective of the degree of their ethical repulsiveness is intriguing. Isn't Governor's role partly that of a watch dog? Should the post be reduced to a rubber stamp of the Chief Minister?

Thursday, July 14, 2016

Justice Ruth Bader Ginsburg on Donald Trump

Justice Ruth Bader Ginsburg's vituperative comments on Donald Trump only proves that even evolved minds like those of supreme court judges are not free from overpowering prejudices which make them forget the role of their office. The learned judge's observations have attracted disdain from all quarters.

In allowing emotions to overwhelm her rational self, she has even downgraded the majesty of the highest court. She has since realised her folly but has stopped short of apologising to Donald Trump. Strangely, Trump's response has been measured and unemotional. An apology to the likely presidential candidate will be in order.

Ginsburg has fatally shot down the assumption that judges will be unbiased in disposal of matters before them. She has lost the right to sit in judgement over possible petitions in the supreme court involving Trump. It is remarkable that even decades of experience as a judge do not elevate the human mind into an objective faculty.

Monday, July 11, 2016

Who is the next Prime Minister of UK?

Andrea Leadsom has withdrawn from the contest for next prime minister of UK making it all but certain that Theresa May gets into the hot seat next. Boris Johnson, the buffoon, must be regretting the flattering comments he made about Andrea Leadsom.

Andrea Leadsom made some nasty observations on childlessness to show herself to be better than Theresa May who is childless. Insensitive comments do not make for a good leader.

Theresa May has ably managed the ministry of interior for six years and has proven leadership and reconciling abilities. UK must have learnt a big lesson from the Brexit referendum. It is reasonable to hope that UK's future will be brighter than what we assume now.

Thursday, July 07, 2016

Conflict of interest: who is to blame?

It is argued by some that Jayant Sinha, an alumnus of IIT, Delhi and Harvard Business School and a former investment banker, was packed off from the Finance Ministry because of conflict of interest emanating from his spouse being nominated as an independent director by Infosys. Dr.Punita Kumar Sinha is an alumnus of IIT, Delhi and Wharton School.

"Conflict of interest" may well be a red herring. Jayant Sinha's shift from Finance to Civil Aviation is more likely a message to his rebellious father, Yashwant Sinha, who keeps criticising the NDA government off and on. A minister's spouse occupying a position by one's own merit should not normally be mistaken as conflict of interest.

But since Caesar's wife must be above board, it is advisable to avoid such positions. In the instant case, Infosys also needs to be blamed. The company needs to introspect and truthfully satisfy itself that the appointment would have taken place even if Jayant Sinha was not in the Finance ministry. It may not be blatant cronyism, but is cronyism nonetheless. This is a test for Infosys's much-vaunted corporate governance standards.

Wednesday, July 06, 2016

An open letter to Rahul Gandhi

The following was written when there were thick rumours that Rahul Gandhi was about to become the president of GOP. But he is still in no mood to take up the challenge.

                                    An open letter to Shri Rahul Gandhi

Dear Shri Rahul Gandhi,

It is widely believed that you will soon be selected as Congress president. I am avoiding words like ‘coronation’ because I fondly hope that Congress continues to be a democratic party.

You are taking over presidentship of the Grand Old Party of India at a time when the party’s fortunes are at the lowest ebb. This is a daunting challenge. Tough challenges have the knack of bringing out the best in all of us. As a concerned citizen of our country, I hope and trust that you will prove your critics totally wrong and energise the party to regain its lost splendour.

You are the fifth person from the Nehru family to become president of the Congress party. At 46, you may feel diffident because of your young age. But your great-grandfather assumed this position when he was only 40 years old. Your grandmother was 42 and your father 41 when they became party’s chief. You have been the vice president of the party from January, 2013 and therefore you are not unaware of aspirations of the party members and expectations of the public from your party.

The country now desiderates a strong national party that will fulfill the democratic requirement of an effective opposition. A party with hoary traditions like Congress owes it to the nation to be effective whether it is a ruling or an opposition party. This is possible only if the grassroot members of the party are motivated enough to place total confidence and trust in their leaders.

Belonging to the Nehru-Gandhi family is at once both an advantage and a handicap. You would have gained enormous experience with leaders around you all the time. At the same time, there will be accusations that you are only a beneficiary of crass nepotism till you prove that you are a leader in your own right. So you are starting your term as president with a blessing and a burden.

Chief of the Congress party is a potential prime minister of India. Therefore your presidentship of the party attracts nervous and expectant attention not only from the party members but also from the citizens at large. You would have learnt from the circumstances which have shaped you so far, what is in the nation’s interest and what is not.

You must assemble a team of young and experienced persons with unquestionable integrity to provide honest feedback to you. You must desist from the dangerous desire to associate with a coterie of sycophants who will tell you only what they think you want to hear.

Politics is not a part-time job. It will demand your 24 x 7 attention. Of late, Congress party has gained a worrisome reputation as an obstructionist party. If you enable the party to get rid of this negativism and start offering constructive support to the government while being eagle-eyed to notice its misdoings, you will easily convince the concerned citizens that you are the leader that the party and the country need at this crucial hour.

Wishing you all the best,

Yours expectantly,
A concerned citizen.

Tuesday, July 05, 2016

Wow! What a great leader!

Andrea Leadsom is one of the contestants for leadership of the Tories and hence prime ministership of the UK. Her leadership qualities have been recently discovered by Boris Johnson after he was double-crossed by Michael Gove in the aftermath of the referendum.

Says Boris Johnson, " Andrea Leadsom offers the zap, the drive, and the determination essential for the next leader of this country. She has long championed the needs of the most vulnerable in our society. She has a better understanding of finance than almost anyone else in Parliament. She has considerable experience of government. She is level headed, kind, trustworthy approachable and the possessor of a good sense of humour. She has specialised in the EU question and successfully campaigned for leave and will be therefore well placed to help forge a great post Brexit future for Britain and Europe. Above all she possesses the qualities needed to bring together leavers and remainers in the weeks and months ahead. I will be voting for Andrea Leadsom tomorrow."

Johnson's perversion keeps growing after he realised that his campaign for Brexit was an overshoot that would boomerang on him.

Added on July 8: The race for UK premiership is now between Theresa May and Andrea Leadsom only. The former seems to have an edge despite Boris Johnson's flattery of the latter. May the better candidate win !

Monday, July 04, 2016

Letting go in the fifties

There seems to be something remarkable in one's life when the fifties are reached. One takes a deep breath and begins to wonder if life should take a different turn.

Nigel Farage is the latest exemplar of this trait. He fought hard, some would say he did so nastily, to make Brexit a reality. And now, he has quit leadership of UKIP saying he never wanted to be a career politician. It is quite possible that he wanted to depart in glory.

A similar urge had affected Raghuram Rajan some days ago. We have no right to question their personal choice. But there is no need to pillory or eulogise them either for their decision. Farage is 52 years old and Rajan 54.