March 18, 2008

Fiji's finance minister has been cleared of evading taxes, but as Michael Field reports, the way Mahendra Chaudhry got his money remains a puzzle - as does the way the military turn a blind eye to it. 

It was a muggy Suva afternoon when the world finally saw a haggard Mahendra Chaudhry walk out of Fiji's Parliamentary compound after 56 days as a hostage. 

On the exact anniversary of becoming Fiji's first ethnic Indian prime minister, on May 19, 2000, confused ethno-nationalist and now convicted traitor George Speight seized Parliament and took the government prisoner. 

When, on that hot July afternoon, Chaudhry walked free, helped by Red Cross head John Scott who a year later would be murdered, his premiership was over. 

The then, as now, military commander Voreqe Bainimarama, had installed a banker, Laisenia Qarase, as interim prime  minister and would not re-instate Chaudhry. 

Painting himself as a democracy martyr Chaudhry went to  Australia and New Zealand and began fundraising, nominally  for his Fiji Labour Party and a planned legal battle to overturn  the Qarase Government. 

He went onto Bahu Jamalpur in the Rohtak district of Haryana, north west of Delhi. In 1912 Chaudhry's grandfather Ram Nath had signed up believing he was joining the British Army, but instead found himself a contract worker in the sugar cane plantations in Fiji. 

During the hostage crisis relatives had called for Indian commandos to be sent to Fiji. 

"These people are savages," niece Madhu Chaudhry said at the time. "These people should be killed." 

After his release Chaudhry was greeted in India as a hero. Some of the passion was mercenary; Chaudhry's father and uncle had 

4.4 hectares of land in Bahu Jamalpur that was subject to drawn out court action. Part of the dispute turned on who was the proper heir and knowing the deposed prime minister was useful. 

India gave him a special award (along with Dunedin's ex-mayor Sukhi Turner) and Haryana began fund raising for him. 

In 2003, in a restored Fiji Parliament, Chaudhry publicly denied receiving any money. 

In May 2004 the Fiji Islands Revenue and Customs Authority  (FIRCA) learnt, through processes in a Double Taxation  Agreement with Australia, that Chaudhry had around NZ$1.8 million in Australia and New Zealand. 

They were not concerned with the source of the money, but  whether Chaudhry was paying tax on the A$220,000 in interest  it earned. 

Chaudhry then wrote to Haryana politician Harbajan Lal about  the money. 

"You have asked for details of the fund," Lal replied on  September 9, 2004 saying they had formed a committee after  Chaudhry had told them it wanted to leave Fiji and live in  Australia. They money was to help him start a new life away  from Fiji. 

"Accordingly, lakhs (tens of thousands) of people from Haryana  including traders, businessmen, landlords and non-resident  Indians contributed heavily for the cause." 

Lal said the money had poured in over three years and with the  help of the Indian Consul General in Sydney, Chaudhry  received $1.8 million. 

FIRCA's investigation remained as secret as anything can be in  Fiji, which meant most politicians knew. 

In December 2006 Bainimarama staged a coup. Chaudhry, who  had appealed for money as a defender of democracy, joined the  military regime as finance minister, which included being in  charge of FIRCA.

The coup had been justified as the only way to end high-level  corruption but it is far from clear whether Bainimarama knew  about the secret Chaudhry money. 

Despite military attempts to silence critics, rumours grew about  Chaudhry's money, and on August 16 last year FIRCA attacked  the Fiji Sun, saying it was running a "politically motivated smear campaign" over an unnamed minister. 

"FIRCA wishes to make clear that there are no tax issues  concerning ministers ... on which appropriate action has not  been taken when required or warranted." 

Finally on February 23 this year the Rupert Murdoch owned Fiji  Times ran a front page headline: "It's Chaudhry". 

Locally owned rival the Fiji Sun next day published large tracts of tax material obtained by a London based Indo-Fijian legal  academic and activist Victor Lal. 

A day later Fiji Sun publisher Russell Hunter was seized by the  military government and deported. Given the Times' multinational connections it was not so easy to hit them. 

Chaudhry instead said he would sue them for F$1 billion (NZ$836 million). 

Just back from a trip to India, Bainimarama on February 25 said  Chaudhry had discussed the allegations with him and he had  been told by FIRCA "that there were no breaches of the Income  Tax Act by the minister". 

He said the "usual opportunists and corrupt people", including  the media, were behind the claims. 

"While I was away the usual power hungry people who have no  qualms in dividing the nation for their own political gain took  the opportunity once again to incite." 

An "independent inquiry" into Chaudhry's tax affairs was  quickly put together, headed by Australian accountant Bruce  Cowley. It asked whether Chaudhry met his tax obligations and  whether he breached Fiji's Exchange Control Act. 

By March 10 the short inquiry, which held no public hearings,  cleared him. 

What was striking was that while Chaudhry had steadfastly  denied over the years that he had the money from India, the  inquiry accepted the money was there. 

"The amounts held in the Australian and New Zealand financial  institution accounts earned interest which was, in the main,  (apart from the amounts remitted to Fiji to meet tax liabilities)  reinvested back into those accounts," the inquiry report said. 

"Subject to this, none of the interest appears to have been  remitted to Fiji." 

The inquiry accepted the now infamous Lal letter about the  money raised in India. 

"Over time, Mr Chaudhry has moved amounts between different  financial institution accounts in Australia and has applied  monies in those accounts to make gifts to family members and  appears also to have used them to pay for various personal  expenses outside Fiji," the report said. 

But the report said he had not been guilty of tax evasion and his  non-disclosure of interest earned "resulted from inadvertence  and arose out of a misunderstanding of the application of Fiji  laws to interest earned outside Fiji..." 

This was no ordinary errant taxpayer; this was the Minister of  Finance and ex-Prime Minister himself. 

The inquiry only dealt with tax on interest owed; it made no  mention of whether Chaudhry should have the money at all. 

Bainimarama hails the report as proof his minister is not corrupt. 

He is silent on Chaudhry, 66, sitting on a large sum of money  given to him to flee Fiji for Australia. 

Not only did he stash the money beyond Fiji's hands, he went on  to join the next coup on the rank and found himself heading the  very body that should investigate him. 

With the inquiry declaring all is normal, Fiji's military instead  turned on the media who sought accountability. 

Little wonder Fiji celebrates under the logo "coup coup land"  but the biggest unanswered question is not what Chaudhry has  done with the money but why is anti-corruption buster  Bainimarama so adamantly protecting him? 

Lots of speculation provides options. Given what happened  when people asked about Chaudhry's money, questioning  Bainimarama's skeletons is going to be very risky.

Copyright: Michael Field