For the first time Tihar jail has many biz execs!

The arrests of senior executives and the slow pace of justice have made India Inc jittery. Veenu Sandhu, Arijit Barman & Surajeet Das Gupta examine the fear psychosis.

There's an undercurrent of fear in business circles these days. Three high-profile businessmen - Shahid Balwa and Vinod Goenka of Swan Telecom and DB Realty, and Sanjay Chandra of Unitech - along with Kalaignar TV honcho Sharad Kumar and senior executives of Reliance ADAG and Kusegaon Fruits and Vegetables are inside Delhi's Tihar Jail in the company of terrorists, rapists and other felons.

Never before has the prison, the largest in Asia, seen so much net worth and managerial bandwidth inside its high walls.

The chargesheet filed by the Central Bureau of Investigation (CBI), the country's premier investigation agency, has over 80,000 pages.

It is anybody's guess how much time it will take the judges of the Delhi High Court to plod through it. More chargesheets could come!

Lalit Modi, ex-commissioner of the Indian Premier League, is in London, his family unsure when his trial will start, given that the CBI's hands are full with the 2G spectrum and Commonwealth Games probes.

The plight of investment banker Nimesh Kampani is fresh in the minds of businessmen, especially those on the boards of companies owned by friends.

The Andhra Pradesh police, starting in December 2008, filed 93 complaints against him after Nagarjuna Finance, a company whose directorship he had relinquished in 1999, defaulted on payments to depositors.

Kampani left the country (lookout notices were issued against him at major international airports) and returned only in October 2009 when the Andhra Pradesh High Court stayed all proceedings against him.

With the anti-corruption movement in the country gaining ground, the government's job is cut out: It has not only to act against offenders but, more important, must also be seen as acting tough against them.

With the next general elections slated for 2014, there is no way it can let the momentum slacken for the next three years.

Businessmen don't want to talk about it on record. But, at the first scent of an investigation, they now apply for anticipatory bail. And if they are called to another city for "questioning", a transit bail is recommended, says corporate lawyer Harish Vaidyanathan.

There are real business fears from prolonged investigation and detention. Take Chandra, for instance.

The Chandras have pledged two-thirds of their 48.57 per cent stake in flagship Unitech to creditors. The share price has fallen from Rs 42 to below Rs 32 in the last two months ever since Chandra's arrest became imminent.

There are fears that the creditors may offload their stock in the market at this price. Last time the stock fell to Rs 32, the Chandras had paid extra to the creditors to keep them from selling the Unitech shares they possessed.

Uninor, Unitech's mobile telephony joint venture with Telenor of Norway, finds it difficult to raise debt in India and abroad, thanks to the 2G spectrum probe.

"There is a negative impression among our employees and customers, though they believe that we will deliver the properties," a DB Realty executive puts on a brave face but is unwilling to come on record.

Business has been tough: the company's image and credibility have taken a serious beating, half the board has resigned, the stock price has plummeted, and lenders are tightening the screws.

Ansal Properties & Industries had to scrap the proposal for a public issue when its promoter, Sushil Ansal, was under investigation for the Uphaar Cinema fire of June 1997 in which 59 people died.

The verdict - two years of imprisonment - was delivered only in November 2007. It was later brought down to one year.

"Corruption allegations are sticky with global investors," says a Mumbai-based businessman who closely follows the telecom tangle unfolding in Delhi. "We should look at settlements, even if it is outside the court. But that doesn't happen and it is a huge blow to business. I know of cases that have dragged for 40 years," adds Godrej Chairman Adi Godrej.

"For years we have harassed somebody like Keshub Mahindra. We tell people to invest in India due to our strong legal system but the efficacy of the legal system is non-existent," says HDFC chairman Deepak Parekh.

"The regulations are always grey so it will always be open to interpretation and there will always be disputes."

Little surprise, there is tension all around over the ongoing 2G spectrum investigations. After the first round of chargesheets and arrests, the scanner is on Essar and its alleged dual investments in Loop and Vodafone Essar.

"Unlike many, Essar did not profit from it, and that needs to be kept in mind," says an insider. Nobody in Essar will talk about it openly but there is palpable tension.

"The worry is that bail is being denied to many. That is making people paranoid," says a person aware of the developments.

"Trial by embarrassment and punishment by denial of bail have substituted the rule of law," says senior Supreme Court lawyer Harish Salve.

The wheels of justice move at an agonising pace in India.

When disgraced stock broker Harshad Mehta died in a suburban Mumbai prison on December 31, 2001, he had been convicted in only one of the 72 criminal cases and more than 600 civil action suits he faced for the Rs 5,000-crore (Rs 50 billion) Securities Scam that was uncovered in early 1992.

Ramalinga Raju is still in Hyderabad's Chanchalguda prison, almost two-and-a-half years after confessing on January 7, 2009 that he had bloated the books of his company, Satyam Computers, for seven long years not for personal gain but to show that his company was as big as peers like TCS, Infosys and Wipro.

CBI has found little to add to what Raju had confessed, though its chargesheet runs into over 10,000 pages and names almost 250 witnesses.

The Supreme Court has directed the special court hearing the case to conclude proceedings by July this year.

While the CBI lawyers labour their case at the special court, the company is back in business under a new owner, Tech Mahindra.

Forensic experts from KPMG and Deloitte have assessed 30 terabytes of information stored in the Satyam computers, reviewed over 2 million emails, imaged over 300 hard disc drives, analysed over 1 billion lines of transaction data, scrutinised over 200 bank accounts, and reviewed more than 7,000 consumer contracts.

This has given them 7,500 inflated invoices. There have been over 6,000 reconciliations in bank accounts and over 200,000 adjustments in the books as more than 300 different income heads were found impacted.

Compare this with Raj Rajaratnam's case in the United States. The Sri Lanka-born billionaire investor (he ran the Galleon hedge fund and was valued at $7 billion in 2008 and $3.7 billion in 2009 by Forbes) was recently found guilty of fraud and conspiracy.

Over nine months in 2008, federal investigators tapped his conversations as he exchanged insider information with others. On October 16, 2009, federal agents arrested him at his Manhattan apartment.

Earlier this month, a federal jury in Manhattan found him guilty. He will be sentenced on July 29. In less than two years, the case will have moved from arrest to conviction.

Our courts are clogged with cases and it could take centuries to clear the Augean Stables.

"The delay happens at the trial stage. In India, we need 50 judges for every 1 million people; we have only 12.5. Compare that to the US which has 104 judges per million people, and the UK and Canada which have 60," says former CBI Director Joginder Singh.

That may be true, but the investigation agencies - CBI for corruption, Enforcement Directorate for money laundering and Serious Frauds Investigation Office for high-value offences - inspire little confidence.

The Central Bureau of Investigation, though it now employs chartered accountants, bankers and officers from Securities & Exchange Board of India to investigate economic offences, is perceived to be understaffed.

On the positive side, it now has a separate budget for hiring "professional services".

CBI officers say that some 200 investigators have been trained by bankers in the last one year, and its cyber and forensic experts have been trained in the latest techniques in the US. The agency claims its success rate is high - about 70 per cent cases end in conviction.

Lawyers who have argued against CBI have a different take.

"In our country the conviction rate is abysmally low, less than 6 per cent, which means that 94 per cent of those who are acquitted had been wrongfully arrested," says advocate K T S Tulsi who, along with Ram Jethmalani, is fighting Chandra's case in the Delhi High Court.

"There is no system of awarding exemplary damages for wrongful arrest.

If we were to start doing that, the state will go bankrupt. Even in custodial deaths, the damages paid are abysmal."

Sure enough, the Delhi High Court earlier this month directed the Delhi government and the Tihar administration to pay compensation of Rs 10 lakh to Nina Pillai for the custodial death of her husband, "Biscuit King" Rajan Pillai, in 1995!

Pillai calls it "blood money" and wants to use it to free those who cannot afford bail.

Some are convinced the investigating agencies have become tools in the hands of the high and mighty to harass rivals.

"CBI needs to be freed from government control because there are some corporations which reach deep within the government," says Supreme Court advocate and anti-corruption activist Prashant Bhushan.

"They have amassed so much wealth and leverage such influence that their top people get away. Instead, lower-rung officials who might have functioned as accomplices are made scapegoats."

Some telecom barons insist the 2G probe has been launched at the behest of some incumbents who want to limit competition in the sector.

India may be the fastest-growing market for mobile telephony in the world but it is also the most competitive; most companies work on wafer-thin or negative margins.

Or take the curious case of Manu Chhabria. After the Enforcement Directorate launched investigations into alleged money laundering by him, Chhabria (he died some years ago) had moved to Dubai in 1995.

Later, around 300 creditors had taken him to court after his Shaw Wallace defaulted on inter-corporate deposits worth Rs 150 crore (Rs 1.5 billion).

In 2000, Chhabria returned, paid off the creditors, made up with his estranged brother, Kishore, and the investigation moved to the backburner!

The charges against Kampani came up, so the grapevine says, after he invested in Eenadu, the Hyderabad-based media outfit that rivaled Sakshi, the newspaper of then chief minister Y S R Reddy's son, Jagan.

"India today is a very dangerous country to live in, for we have convinced ourselves that all businessmen and all politicians are corrupt and dishonest, and any allegation made against them, irrespective of who makes the allegations, deserve to be believed until proved to be false, especially if it is carried in a 'respectable newspaper' or telecast on a national channel," says Salve.

"The moment such allegations are made against a businessman, his best option is to pray." That's scary.