The scam that made Lalu the fodder of India

On March 1, while most of the country was focused on the UP Assembly elections, in Patna another aspect of democracy made headlines. This was the framing of charges in the special court of the

Published: 13th March 2012 11:18 PM  |   Last Updated: 16th May 2012 06:34 PM   |  A+A-


On March 1, while most of the country was focused on the UP Assembly elections, in Patna another aspect of democracy made headlines. This was the framing of charges in the special court of the Central Bureau of Investigation (CBI) against former Bihar chief ministers Lalu Prasad Yadav and Jagannath Misra in connection with the multi-crore fodder scam.

VK Srivatsava, the designated CBI judge, charged them in the case relating to a fraudulent withdrawal of `47 lakh from Banka and Bhagalpur treasuries by Animal Husbandry department officials, who presented allegedly forged and fake documents. This happened between 1994 and1996. Lalu Prasad Yadav, the leader of the Rashtriya Janata Dal (RJD), was the chief minister of Bihar at that time, and the scam forced him to resign.

In the same case the CBI chargesheeted Janata Dal (United) MP Jagdish Sharma and RJD MP RK Rana on March 3, 2003. This exercise is part of an ongoing, 16-year-old investigation of the fodder scam by the CBI.

The scam-driven 1990s

The fodder scam case, arising from then undivided Bihar, is the longest running one in recent memory. The 1990s witnessed quite a few high-profile scams, such as the Harshad Mehta Securities scam and the Kerala palm oil scam (1992). These were followed by the Puruila arms drop case (1995). The year 1996 was rocked by a series of scandals, including the Sukh Ram telecom equipment scandal, the `1000-crore CR Bhansali securities scam, and the fertiliser import scam topping well over `130 crore. Still it was the `950 crore  fodder scam that became the talking point among all sections of society for two reasons.

First, everyone, even those without education, could understand the scam which is held to have caused the exchequer a multi-crore loss. Second, the fodder scam showed the nexus between politicians, the bureaucracy (some sections of it) and the business community. The term ‘mafia raj’ came to be associated with the scam in a big way.

What is the fodder scam about?

As scams go, the fodder scam is believed to be an ingenious one. People involved in the scam reportedly hit upon a simple idea: of ‘cooking up’ bills for expenses that never took place. Numerous herds of cattle that never existed were shown as existing, and fodder, machinery and other animal husbandry equipment were reportedly purchased against the cattle that lived only on paper.

One of the things Lalu Prasad is accused of doing is approving bills for unnecessary equipment such as trucks. In reality the number plates listed were allegedly from two-wheelers.

Who spotted the scam?

The Comptroller and Auditor General (CAG), which played a role in unearthing the 2G spectrum scam, also unearthed the fodder scam.

It was in February 1985 that T N Chaturvedi, then head of the CAG pointed to serious delays in filing of bills by the Bihar State government officials. He wondered if the delay was due to embezzlement (misappropriation of funds) in certain quarters.

For years watchdogs such as the CAG made warning noises, but successive Bihar governments ignored the matter. This led many to suspect that the rot in Bihar’s public life had set in, cutting across all parties.

Seven years after Chaturvedi’s letter to the Bihar chief minister, BB Dvivedi, a police inspector in the State’s anti-corruption wing, submitted a written report detailing the fodder scam and hinting at collusion at top levels, leading all the way to the chief minister’s  chair. Dvivedi was forcibly transferred and also underwent a brief suspension, but by then the fodder scam had turned into a can of worms.

What Happened When the Scam Was Unearthed?

On January 27, 1996, Amit Khare an official in West Singhbhum district conducted raids in the animal husbandry department and submitted a report indicating a close nexus between local officials and businessmen.

When the report was made public, Lalu Prasad ordered the setting up of an enquiry committee. However, given the nature of the scam — which pointed to involvement of State government officials — there were apprehensions that the State police machinery would be unable to do a thorough job. A PIL brought matters to a head.

Apex Court steps in

The public interest litigation (PIL) filed in the Supreme Court brought the scam at that stage under its purview. Like it did in the 2G case, India’s apex court gave strong guidelines in March 1996 and the Bihar High Court ordered the transfer of the probe to the CBI.

The probe took a torturous route, with the CBI alleging that officials and legislators were blocking the inquiry, while the MLAs rebutted such claims and even sought to initiate a privilege motion against some CBI officials. But the threat to the probe was averted when U N Biswas, the CBI director tendered an apology to the MLAs. The probe then continued, and in May 1997 the CBI sought the governor’s permission to prosecute chief minister Lalu Prasad Yadav.

But it was not until almost a month later — on June 17, 1997 — that the governor gave his nod for the prosecution of Lalu.

Lalu chargesheeted

On June 21, the CBI raided Lalu’s house of Lalu and houses of his relatives, and two days later, on June 23, Lalu was chargesheeted by the CBI, along with 55 others, who were co-accused in the fodder scam.These included former chief minister Jagannath Mishra, as well as politicians from the Congress, the BJP, the RJD and IAS officers. Apprehending arrest, Lalu filed for an anticipatory bail, but his request was rejected, He appealed to the Supreme Court, which also rejected his application on July 29. Lalu was arrested the next day.

Beginning of a new career

Anticipating calls for his resignation, Lalu,who belonged to the Janata Dal at the time and had been Bihar’s chief minister from 1990, floated his own party, the RJD. By the time of his arrest, he had managed to take with him almost all the JD MLAs.

By the end of July 1997, he had installed his barely literate wife Rabri Devi as the chief minister of Bihar. But it was hardly the end of Lalu Prasad. He became a vital pivot in national politics, at a time when coalition politics became a way of life at the Centre.

Prosecution and Prison

As the probe progressed over the years, more cases in the fodder scam were unearthed. By 2007, close to 63 cases had been filed by the CBI in the fodder scam. In 2000, the State of Bihar had been bifurcated into two states, Bihar and Jharkhand. Most of the cases were transferred from the Patna High Court in Bihar to the Ranchi High Court in Jharkhand. But the multi-pronged probe, involving scores of suspects has continued for close to 16 years.

While Mishra and Lalu were the most high profile of those named by the CBI, the probes against Lalu became a matter of media attention, especially since Lalu continued to be a national figure. Both Lalu and Mishra were remanded many times in various cases in the fodder scam.

The first charge sheet against Lalu, in 1996 was focused on the `37 crore fraudulent withdrawal from the Chaibasa treasury in undivided Bihar, and the charge fell under criminal conspiracy. Therefore, an arrest was imminent. But Lalu spent only 135 days in judicial custody and by December 12, 1997, he was out on bail. Ten months later, he was arrested on conspiracy charges in another case in the fodder scam, and was held in the Beur jail in Patna for a few days. A few years later, in 2000, he spent one day in jail, on yet another fodder case.

Case still grabs attention

Between 1996 and 2012, a number of other scams occurred, but the fodder scam continues to be tracked. In the last few years over 200 people have been sent to jail, for periods ranging from two to seven years on charges related to this scam. The trial, based on the March 1 charges framed against Lalu, Mishra and over 30 others, is set to commence soon.

Lalu’s image makeover

The 63-year-old Lalu, who was only 29 when first elected to the Lok Sabha in 1977, was re-elected to the Lok Sabha in 2004, and was given charge of the all important Railways Ministry. In his five -year tenure, he turned the loss-making Indian Railways profitable, netting over `25,000 crore in profits.

He did this without increasing the rail fare of passengers. He also introduced padded seating in unreserved compartments.

He was a bit of a showman as well. He banned plastic cups on trains and introduced earthenware instead, saying it would encourage cottage industries. He also boarded a train at midnight in Patna, for a ‘surprise’ inspection.

He often entertained the media in his home town, in rural style, clad in his ‘home’ clothes often with cattle roaming around the periphery. An ironic reminder of the fodder scam, which originated in feeding and caring for cattle that simply did not exist.

But his feat in turning around the fortunes of the Indian Railways without replacing the bureaucrats or downsizing the huge labour force employed by the Railways made him an object of interest to students from all the leading business schools in America, including Harvard and Wharton. He has addressed management students in America and in India on this.

Luck doesn’t last

However, Lalu’s luck in elections has not been too favourable in recent years. In the 2005 Bihar State Assembly elections, his party came third, after the JDU and the BJP. His party’s tally of 54 seats was further reduced to a mere 22 in 2010 elections. Lalu and his RJD which had been a key player in coalition governments since the ’90s, and particularly in the UPA I (United Progressive Alliance), found himself edged out by Mamata Banerjee’s Trinamool Congress in the UPA II.

The Future

In Bihar, Lalu’s successor Nitish Kumar continues to be a popular chief minister and his name, along with that of Gujarat chief minister Narendra Modi’s often pops up during discussions of future prime ministerial candidates.

Lalu has always maintained that he was ‘framed’ in the fodder scam, and has even hinted at a conspiracy aimed at ruining his chances of becoming India’s prime minister. With the trial of the March 1 charges set to begin, Lalu’s woes are far from over.

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