Robert Vadra cannot be termed as private citizen, say legal experts

New Delhi, Oct 19: After Congress president Sonia Gandhi's son-in-law Robert Vadra came under public scanner for his controversial business deals with DLF, the Congress party has been trying to defend him primarily on the ground that Vadra is a private citizen and the entire matter relates to a business deal between two private parties and therefore no fingers can be raised over these business transactions. According to a report published in financial daily ‘Mint', many legal and financial experts believe that the Congress party's position on Robert Vadra may not be tenable in view of international law and even a circular issued by the central bank. These experts point out that India is a full signatory to the Financial Action Task Force (FATF) on money laundering, which clearly defines a “Politically Exposed Person” (PEP) and the set of people who qualify to be PEPs and cannot, therefore, be treated merely as private citizens. India became a full signatory of FATF in 2010. FATF is an inter-governmental body established in 1989 by the ministers of its member jurisdictions... to set standards and promote effective implementation of legal, regulatory and operational measures for combating money laundering, terrorist financing and other related threats to the integrity of the international financial system. FATF defines domestic PEPs as “individuals who are or have been entrusted domestically with prominent public functions, for example, heads of state or of government, senior politicians, senior government, judicial or military officials, senior executives of state-owned corporations, important political party officials”. It goes on to say that the “requirements for all types of PEPs should also apply to family members and close associates of such PEPs”. The experts point out that the government cannot ignore the FATF guidelines as doing so would amount to reading the law too narrowly. “Domestic politically exposed persons are now covered by the standards and financial institutions are required to take into account the associated risks of doing business with them,” says a June 2012 report to Group of Twenty leaders presented by FATF. “Family members and close associates of politically exposed persons are also to be treated in a similar way to politically exposed persons,” the report adds. An expert who served on the board of stock market regulator Securities and Exchange Board of India (Sebi) told ‘Mint', “You cannot have different standards for different people when you have signed a set of regulations framed by an international body.” Even a report, prepared by the Wolfsberg Group, a grouping of global banks the objectives of which are similar to those of FATF, defines the concept of “close family” in relation to PEPs.It says that while considering PEPs, “close family” should include “a PEP's direct family members including spouses, children, parents and siblings of the PEP”. “In any of these cases, there may be circumstances which mitigate against such a categorization including separation and estrangement, although these facts should be investigated and recorded,” the report adds. The Wolfsberg report also defines the concept of a “close associate”, who it says will include “a PEP's widely and publicly known close business colleagues and/or personal advisors, in particular financial advisors or persons acting in a financial fiduciary capacity”. The Indian experts point out that on July 2, the Reserve Bank of India (RBI) sent an advisory to banks on PEPs that pretty much repeats what FATF and the Wolfsberg Group said, specifically adding that “the norms may also be applied to the accounts of the family members or close relatives of PEPs”. It should be noted that the entire thrust of Arvind Kejriwal's allegations against Robert Vadra-DLF deal was on the fact that there was some quid-pro-quo between Robert Vadra and DLF. Kejriwal was clearly hinting on political favours done to DLF in lieu of the unsecured loan that DLF provided to Robert Vadra. Kejriwal had also accused DLF of selling immovable properties to Robert Vadra at undervalued rates for political favours. Arvind Kejriwal and his team had demanded a thorough probe into the entire business deal between Robert Vadra and DLF which was rejected by the Congress party citing the fact Robert Vadra was a private citizen and the business deals in question were finalized between two private parties. ‘Mint' quotes an unnamed expert who said that if an RBI or Sebi circular includes FATF guidelines, in whole or in part, it implies that the guidelines are legally applicable in India to that extent. And if that is the case then it will be difficult for any body, including both legal and financial experts as well as commoners, to believe that Robert Vadra is like any another private citizen.