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Mukesh Ambani bomb scare brings Mumbai’s dirty politics into the open

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The dusty, army-green SUV, parked on a leafy street a few hundred metres from the Mumbai skyscraper that houses India’s richest man, did not look like much.

Inside, however, police made an alarming discovery: a number of explosives and a letter that local media said warned Mukesh Ambani, the billionaire chair of conglomerate Reliance Industries, that this was just a “trailer” for what was to come.

The twists and turns that followed the bomb scare in late February have escalated into one of India’s most dramatic scandals.

The man to whom the SUV was linked was found dead, floating in a creek. A policeman said to have political ties — and an allegedly violent past — was arrested. Mumbai’s police chief was ousted and went on to accuse the state home minister of running an elaborate extortion racket in the city.

The metropolis of Mumbai has long held a reputation as a city of extremes, its gleaming offices and film studios built atop a notorious underbelly of brass-knuckled politics and gangsterism.

But analysts said there was little precedent for the way in which the latest controversy had brought the messy inner workings of India’s financial capital and the behind-the-scenes dealings that bind politics, police and crime across much of the country out of the shadows.

“The real takeaway is the gross decay of the institutions,” said Suhas Palshikar, a political scientist formerly of Savitribai Phule Pune University. “It doesn’t remain merely a story of administrative decay. It also means there’s a complete failure of politics . . . The dramatic aspect is new but all the elements have always been there.”

After Mansukh Hiren, the small-time suburban businessman to whom police had linked the SUV — and who had reported the vehicle missing — was found dead, investigators arrested police official Sachin Vaze for his alleged role in the bomb plot.

Vaze said in court that he was “a scapegoat”, according to a lawyer representing him, and was not involved in the crime.

The scandal might have died down were it not for the intervention of Param Bir Singh, Mumbai’s former police commissioner, who was transferred from his post days after Vaze’s arrest.

Singh alleged in a widely circulated letter that the home minister for Maharashtra, the state that is home to Mumbai, wanted Vaze to help collect Rs1bn ($14m) a month in payments from businesses such as restaurants and bars.

A lawyer for Singh confirmed the authenticity of the letter. A case filed by Singh, demanding a central government probe into his allegations, is being heard in the Bombay High Court.

Anil Deshmukh, the home minister of Maharashtra, responded in a letter posted on Twitter that Singh’s allegations were “absolutely false and baseless”. He called it part of “a conspiracy” to deflect attention from the bomb case and undermine the state government.

Sachin Vaze, a police official, was arrested for his alleged role in the bomb plot. Vaze said in court he was a ‘scapegoat’ and not involved, according to his lawyer © Reuters

Among the many questions that remain unanswered is what, if anything, those behind the bomb plot wanted from Ambani. Reliance declined to comment but previously said it was confident police would “complete their thorough investigation quickly”.

The scandal could also have broader political ramifications. Maharashtra is run by a coalition led by the rightwing nationalist Shiv Sena party, which broke with prime minister Narendra Modi’s Bharatiya Janata party after state elections in 2019.

The events have revived memories of 1990s-era Mumbai — previously known as Bombay — when the city’s underworld was at its height. Larger-than-life police officials with a reputation for ruthless tactics, including extrajudicial killings of suspected criminals, were lauded as heroes and enjoyed political support.

Vaze, according to media reports, was reputed to be one of them. Of his alleged victims, he reportedly told the Guardian in 2011: “I don’t think about it ever. Every one of them deserved to go and they went.”

Vaze was suspended from the force in 2004 for his alleged role in a custodial death, though he called it a “false case”, according to his lawyer. But he subsequently joined Shiv Sena and was reinstated to the police last year, according to media reports. Vaze could not be reached for comment.

“This is a quintessential Bombay story,” said a journalist in the city. “It’s a typical Bollywood masala thriller. There’s as much masala as you can put into a typical Bollywood script.”

Former police officers said the scandal underscored the need to curb the politicisation of law enforcement, which allows politicians to decide appointments and transfers, leaving police beholden to ruling parties.

“In a way, it is good that it has brought out the alleged nexus between police and politicians [into the open], though an inquiry is required to prove the charges,” said Meeran Chadha Borwankar, who previously held high-level positions in the Maharashtra and national police forces.

“Political parties in power generally expect police to toe their line and act for them in grey and sometimes totally illegal black areas, as alleged in the said letter of the former commissioner,” she added. “We should pursue an independent police organisation instead of the current system where we are at the mercy of politicians.”

The grim affair could have national implications if it upsets the balance of power in Maharashtra, considered one of the country’s biggest political prizes for its size and economic heft.

The BJP has maintained a fierce rivalry with the Shiv Sena-led government, and has decried its alleged conduct. Political analysts said this could ultimately give Modi’s party another shot at power in the state if the coalition was sufficiently weakened.

“For the BJP, this is a tailor-made political opportunity,” said Milan Vaishnav, a senior fellow at the Carnegie Endowment for International Peace think-tank. “Even if they don’t get back to power, they can go to the bank on this when elections come around.”





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Toyota faces Thai bribery probe over tax dispute

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Toyota is under investigation in Thailand over allegations that consultants hired by the world’s largest carmaker tried to bribe local officials in a tax dispute, according to Thai authorities, court documents and a person with knowledge of the matter.

The probe followed a filing last month in which Toyota revealed that it had reported “possible anti-bribery violations” related to its Thai subsidiary to the US Department of Justice and Securities Exchange Commission.

Toyota is one of the biggest foreign investors in Thailand, where it makes a large range of cars, vans and pick-up trucks for the local market and for export. The country is Toyota’s biggest manufacturing hub in south-east Asia. Prior to the Covid-19 pandemic, car sales had been strong in a market, where it has a 31 per cent share.

This month, Thailand’s Court of Justice said in a statement that it would take action against any of its judges found to have taken bribes. The statement, which the court described as a move to “clarify facts” in a news report on a foreign website, directly referenced a tax dispute involving Toyota.

“If the Court of Justice has received information or explicitly found that any judge committed an act of corruption to their duty, whether it is about bribery or not, the Court of Justice will resolutely investigate and punish any action which dishonours judges, undermines the neutrality of the court, or causes society [to] lose faith in the Thai justice system,” it said.

According to the court, the case involved a tax dispute worth Bt10bn ($320m) between Toyota Motor Thailand and tax authorities over imports of parts for its Prius hybrid model. 

The affair dates back to 2015, when Toyota’s Thai subsidiary was accused by local customs authorities of understating taxes by claiming that the imported Prius vehicles were assembled from completely knocked down kits, or imported parts that were later assembled in Thailand.

CKDs would have been subject to a discounted tax rate under a Japanese-Thai free trade agreement, but if the cars were fully assembled before being imported they would have attracted a much higher rate. 

Toyota appealed against a decision by customs authorities to impose a higher duty in 2015, but lost. 

Thailand’s Court of Justice has said that it had accepted a petition to review the case, but had not yet begun hearing it.

In its regulatory filing last month, Toyota warned that the US investigations regarding its Thai subsidiary could result in civil or criminal penalties, but the company has not disclosed any detail on the allegations.

In a statement, Toyota said it was co-operating with the investigations and declined to comment on the tax dispute in Thailand. “We take any allegations of wrongdoing seriously and are committed to ensuring that our business practices comply with all applicable government regulations,” it said.

The SEC and the DOJ declined to comment.



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Boris Johnson cancels India trip after Covid cases surge in country

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UK prime minister Boris Johnson’s trip to India this month has been cancelled as the country battles a new variant and a surge in coronavirus cases that is overwhelming hospitals.

A joint statement by the British and Indian governments said the decision to scrap the visit scheduled for next week was prompted by the “current coronavirus situation”.

The trip, during which Johnson had hoped to discuss the prospects of a closer trading partnership with India, was initially planned to run for four days but had been scaled back. The two leaders will speak remotely instead, with plans to meet in person later this year.

The cancellation came as India’s capital city region has been put under lockdown and authorities have prohibited the use of oxygen except for essential services, as the country battles a surge in coronavirus cases that is overwhelming hospitals.

India continues to set single-day records of coronavirus cases, reporting more than 273,000 new infections and 1,619 deaths on Monday, with the number of new cases growing by an average of 7 per cent a day, one of the fastest rates in any big country.

The surge is believed to be linked to a new B.1.617 variant that was first discovered in the country.

British health officials are investigating whether the variant should be reclassified from a “variant under investigation” to a “variant of concern” following the discovery of 77 cases in the UK.

“To escalate it up the ranking we need to know that it’s increased transmissibility, increased severity, or vaccine-evading, and we just don’t have that yet, but we’re looking at the data on a daily basis”, Dr Susan Hopkins, a senior medical adviser at Public Health England, said on Sunday.

Officials in Delhi announced it would impose a strict lockdown for a week, following Mumbai and other cities that have already placed curbs on movement.

States are running short of beds, drugs and oxygen, leading the central government to restrict use of the gas. “The supply of oxygen for industrial purposes by manufacturers and suppliers is prohibited forthwith from 22/04/2021 till further orders,” the central government said.

Arvind Kejriwal, chief minister of Delhi, said “oxygen has become an emergency” in the region because its quota had been diverted to other states. He warned there were “less than 100 ICU beds” available.

The new restrictions have been imposed even as Prime Minister Narendra Modi and his ruling Bharatiya Janata party have hosted huge political rallies and allowed religious festivals attended by tens of thousands of maskless people in recent weeks.

Amit Shah, India’s home minister, told the Indian Express newspaper that he was “concerned” about the variant and the “surge is mainly because of the new mutants of the virus”. But he was “confident we will win” over the disease and said there was not yet a need to impose a national lockdown.

Bed shortages in India have forced authorities to re-establish emergency coronavirus hospitals in banquet halls, train stations and hotels that had been shut down following the previous peak in September. Crematoriums in the state of Gujarat and Delhi are running 24 hours a day, while cemeteries are running out of burial spaces.

Coronavirus patients have also been struggling to access medicines. More than 800 injections of remdesivir, an antiviral drug commonly used in India as part of Covid-19 treatment, were stolen from a hospital in Bhopal, Madhya Pradesh, at the weekend.

India is also facing a vaccine supply crunch and has frozen international exports of jabs to meet domestic demand. New Delhi pledged on Friday to increase monthly production of Covaxin, a vaccine made by Indian manufacturer Bharat Biotech, to 100m from 10m by September. The government also said last week that it would fast-track the approval of foreign vaccines in an attempt to boost supply and cleared Russia’s Sputnik V for use in the country.

The majority of the more than 120m Indians that have been vaccinated have received the Oxford/AstraZeneca jab manufactured by Serum Institute of India, the world’s largest manufacturer. The Serum Institute has struggled to increase its monthly capacity of more than 60m doses a month due to a fire at its plant earlier in the year and equipment supply shortages from the US.

Additional reporting by John Burn-Murdoch in London





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The limits of China’s taming of tech

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The record fine handed out this month to Alibaba, the Chinese ecommerce giant, was a welcome step toward combating anti-competitive behaviour. The $2.8bn penalty put Alibaba and other tech companies on notice that creating siloed fiefdoms designed to trap customers and merchants within their ecosystems will not be tolerated.

It was addressing a longstanding problem. Many of China’s ecommerce companies operate “walled gardens” that prevent interactions with rival platforms. For example, Alibaba’s Taobao ecommerce app keeps users from paying for goods using the payment app of rival Tencent. Tencent’s social media app, WeChat, prevents clips from being shared directly from ByteDance’s video-sharing app. 

Last week China’s internet and market regulators signalled the seriousness of their intent. They gave tech companies one month to fix anti-competitive practices, telling them to conduct “comprehensive self-inspections” and “completely rectify” problems, following which they would need to publicly promise to abide by the rules. The aim is create a commercially open and competitive internet.

It is tempting to argue that regulators in the west could take a leaf out of China’s book. But to hold China up as an example of competitive best practice would be to ignore the elephant in the room. Although Beijing is giving its monopolistically-minded internet companies — which are almost all private enterprises — a rap on the knuckles, it shows no sign of applying the same standards to vast swaths of the economy that have been dominated by state-owned giants for decades. 

The market dominance of these behemoths of state capitalism is an issue that affects not only domestic competitors but also foreign multinationals that operate in China. A trenchant joint paper last week from the European Council on Foreign Relations, a think-tank, and the Rhodium Group, a consultancy, took aim at the increasingly unfair advantages that this system gives China.

While it is true that China has opened up sectors such as financial services to foreign capital in recent years and allowed foreign brands to win market share in luxury goods and pharmaceuticals, broad sectors of the economy remain fully or partially closed or to overseas investors. 

Often the barriers erected to block or stymie competition are informal. Authorities can deliberately favour domestic companies in public procurement, are more ready to grant approval for licenses, subject foreign firms to arbitrary inspections or require them to re-engineer products to meet idiosyncratic domestic standards.

Such drawbacks are not new. But they are taking on an extra urgency as Chinese companies become leaders in an increasing number of industries and the country’s technological prowess draws level with the US and Europe in a list of industries. The key problem now, says the ECFR/Rhodium report, is that Chinese multinationals are using the advantage of a protected home market to build up resources that they then deploy in competition with western counterparts abroad.

This sets the scene for friction. China should extend its anti-monopolistic scrutiny from its own privately owned internet companies to several state-dominated sectors of its economy, taking care to open to foreign multinationals as much as domestic competitors. If it decides against doing this — as is likely — it will be furnishing Europeans and Americans with ammunition to argue against extending access to Chinese corporations in their own markets.



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