HSBC Money Laundering Case: “Too Big To Fail” does not mean “Too Big to Jail”

September 24th, 2013 by Kara in Case Studies

The Problem

Some banking institutions have become so large criminal prosecutions resulting in revocation of banking charters may negatively affect the national, and perhaps the global, economy. The U.S. Attorney General and other prosecutors are thus left with a moral dilemma: ensure justice through prosecution or forego criminal proceedings to protect the economy and society at large.

HSBC and Money Laundering

In December 2012, multinational banking institution HSBC was penalized a record $1.92 billion by the United States for violating laws designed to prevent money laundering and other illegal financial activity. HSBC was under consistent suspicion and twice given warnings and orders to strengthen its anti-money laundering programs by the U.S. between 2003 and 2010 but failed to make the proper adjustments. The $1.92 billion penalty, issued under the Bank Secrecy Act, was handed down after a report and subsequent investigation that confirmed the bank had set up offshore accounts for drug cartels and suspected criminals in Jersey. HSBC banking executives admitted to laundering as much as $881 billion dollars.

Players

HSBC North American Holdings, Inc.: parent company of HSBC Group, one of the world’s largest banking and financial services groups. HSBC has more than 6900 offices in over 80 countries.

HSBC Bank USA: federally chartered subsidiary of HSBC North American Holdings, Inc.; headquartered in McLean, Virginia with its principal offices in New York City. HSBC Bank USA is the specific entity charged with violating the Bank Secrecy Act.

Eric Holder: United States Attorney General; publicly defended the decision not to criminally prosecute HSBC Bank USA executives. HSBC Bank USA Executives: Specifically those responsible for the lax monitoring programs and other negligence that violated the Bank Secrecy Act.

HSBC Bank USA Employees: would lose their jobs if HSBC were forced to cease banking operations in the United States.

The United States’ (and possibly the global) economy: As stated by Attorney General Eric Holder, the national economy will suffer greatly if HSBC’s U.S. banking charter is revoked.

United States Department of the Treasury: As one of the regulators of HSBC Bank USA’s financial affairs the Treasury is tasked with advising the Department of Justice on the economic effects of prosecuting HSBC.

Office of the Comptroller: As the regulator of HSBC Bank USA’s banking charter, the Comptroller can revoke HSBC Bank USA’s banking privileges in the U.S. if its executives are prosecuted and convicted.

Instruments

Bank Secrecy Act (31 USC §5311): enacted by Congress to require banks and other financial institutions to create and maintain anti-money laundering programs and other practices to prevent terrorist financing and other financial crimes. In addition to internal programs and monitoring, the Bank Secrecy Act (BSA) also requires ongoing employee training and due diligence for foreign correspondent accounts.

Deferred Prosecution Agreement: To avoid criminal prosecution for violations of the BSA, HSBC executives agreed to pay a $1.92 billion fine and comply with elevated monitoring standards for a probationary period of five years.

Events

From 2003-2006, HSBC Bank USA was under heavy suspicion by United States regulators and operated under a written agreement to correct the deficiencies of their operational practices. HSBC Bank USA specifically agreed to enhance its anti-money laundering program to achieve adequate compliance with the Bank Secrecy Act.

Between 2006 and 2010, HSBC Bank USA violated several components of the BSA: Money laundering risks associated with doing business with certain Mexican customers were ignored, compliance issues at HSBC Mexico were overlooked, and a BSA-adequate anti-money laundering program was not implemented. The Court notes four significant HSBC Bank USA failures:

1. HSBC failed to obtain and maintain due diligence on HSBC Group Affiliates. 2. HSBC failed to adequately monitor over $200 trillion in wire transfers between 2006 and 2009 from customers in nations classified as “standard” or “medium” risk ($670 billion in wire transfers specifically from HSBC Mexico).

3. HSBC Bank USA failed to adequately monitor billions of dollars in U.S. banknote purchases.

4. HSBC Bank USA failed to provide proper staffing and resources necessary to maintain an effective anti-money laundering program.

As part of the Deferred Prosecution Agreement, HSBC Bank USA admitted to gross violations of the Bank Secrecy Act, including failure to establish and maintain an effective anti-money laundering program, failure to establish due diligence, and involvement in the laundering of over $881 billion.

The Penalty

The record-setting fine, comprised of $1.256 billion in forfeiture and $665 million in civil penalties, allows HSBC to temporarily thwart criminal prosecution pending a probationary period of compliance with anti-money laundering standards. The probationary period consists of a five-year agreement with the U.S. DOJ that includes an independent monitor of HSBC’s internal anti-money laundering programs, bonus deference by the bank’s top executives, and retraction of bonuses from some current and former executives who had particular involvement in the willful breach of U.S. regulations.

Public Controversy

In March of 2013, Attorney General Eric Holder defended the U.S. government’s decision not to pursue criminal prosecution of HSBC by claiming that prosecution of such large institutions has a negative impact on the national economy. His statement stirred some outrage. The notion that the largest corporations, deemed equal to people under the law by the U.S. Supreme Court in the Citizens United case in 2010, are now afforded freedom from criminal prosecution as well.

At the forefront of prosecution advocates is Senator Elizabeth Warren, who voiced publicly her disdain for the decision not to prosecute HSBC for money laundering. She posed this question to the Department of Justice (DOJ): “How many billions of dollars of drug money do you have to launder…before someone will consider shutting down a bank?” Not one Treasury or Justice Department official offered her a direct answer. One thing is evident: The Justice Department seems to hold all the cards in deciding the fate of HSBC’s ability to continue operating in the U.S. The Comptroller cannot revoke its charter without a criminal conviction and the role of the Treasury is simply to advise the DOJ on an institution’s impact on the economy. Regardless of the economic reasons, the decision not to prosecute questions the integrity of the entire justice system. Can we justify deferring prosecution for willful criminal activity in the name of protecting the national economy? The debate presents an ethical dilemma between justice and utilitarianism. Utilitarian Approach

Utilitarianism, also known as the “greatest happiness principle” holds that decisions and actions are proper as long as they promote proportional utility, and by the same accord improper as they produce an overall negative utility. A utilitarian view, then, would advocate an act if a greater benefit would be afforded to a larger number of individuals in society. This principle supports the Department of Justice decision not to prosecute HSBC, because not prosecuting HSBC benefits a greater number of individuals in society through protecting the economy from harm, even at the expense of letting criminal activity go largely unpunished.

Under a traditional utilitarian view, then, the Justice Department’s decision not to criminally prosecute HSBC officials seems sound, as a larger portion of society benefits from HSBC maintaining operations (not to mention the number of saved jobs) and keeping the economy from further suffering in already difficult financial times. The record-setting monetary penalty and the probationary monitoring period are presumably aimed at deterring future wrongdoing by HSBC and other large financial institutions. However, in spite of $1.92 billion being the largest fine imposed on any banking institution in history, it does not reflect an amount that could effectively deter a financial institution the size of HSBC. According to Bankers Almanac, HSBC’s annual before-taxes profit totals more than $23 billion.

The $1.92 billion fine handed down by the U.S. represents roughly a month’s profit.

If HSBC and other large banks are not effectively deterred from continuing illegal and unethical financial practices, at some point in time the utilitarian outcome of laundering money for illegal organizations becomes adverse to the greatest number of people in society.

In fact, a deeper analysis shows that pursuing criminal prosecution of HSBC’s executives likely yields a greater utilitarian outcome in the long run. While the immediate effect of prosecution may adversely affect a great number of individuals in society by means of a blow to the economy and the loss of jobs, the long term effects of allowing a banking institution like HSBC to engage in criminal activity with no risk of criminal prosecution, jail time, or even the loss of its banking license, presents a moral hazard. A $1.92 billion fine for laundering upwards of $881 billion hardly seems like incentive to exercise due diligence in future practices. In fact, the outcome of HSBC’s case can actually provide incentive for other banks to be more lax with their anti-money laundering practices.

Among the most alarming effects the non-prosecution decision produces is the harm done to the large number of individuals affected by drug trade. That being the case, both justice and utility seem best served by criminal prosecution of HSBC executives.

Justice Approach: Retribution and Deterrence

Society has always had a keen interest in providing justice for the wrongdoings of individuals. As for the intentional breaking of U.S. laws and sanctions by HSBC executives, justice can be readily sought in the forms of retribution and deterrence. Retributive justice is simply providing adequate punishment to lawbreakers in accordance with their offenses. Retribution provides two important results: disincentive for the offender to recommit the wrongful act and a general deterrence to the rest of society who may contemplate acting wrongfully. While retribution is generally served as a calculated punishment proportional to the wrongful act, deterrence is most often pursued by a punishment that outweighs the wrongful act, to ensure avoidance of future wrongdoing in general. Often, these punishments come in the form of large fines.

The conduct of HSBC’s executives in knowingly failing to adhere to U.S. sanctions and regulations is certainly unjust. In making the decision to defer prosecution of HSBC Bank USA executives, the primary consideration of the United States government was to prevent harm to an already struggling economy. While instances may exist when other consequences may mitigate an application of justice, the long-term effects of avoiding prosecution for the criminal acts of HSBC are too great. When government allows big financial institutions to go largely unpunished for laundering vast sums of money for criminal organizations such as drug cartels, it is essentially endorsing the immeasurable amount of harm associated with the day-to-day activities of global drug trade. Justice for perpetuating such criminal enterprises cannot be adequately administered by a mere financial penalty.

Deontological Aspect: Prosecutorial Duty

A deontological approach asserts individuals are morally obligated to act according to a set of principles regardless of outcome. Rational people have a duty to act ethically, no matter the consequences. The criminal justice system of the United States is based largely on deontological ideals. Prosecutors have a duty to carry out justice.

Prosecutors and Attorneys General, like all government officials, are elected or appointed under the promise to uphold the laws. Prosecutors, by design, are charged with the responsibility to fairly and appropriately pursue punishment for wrongdoers in society. While all human beings have the same general obligation to act morally, prosecutors take on a special obligation, or duty, when taking office. Prosecutors assume an elevated duty to make certain decisions as a part of their role in the justice system. As prosecutors accept taking on the role of pursuing justice for illegal behavior, they assume an ethical duty to do so fairly and diligently no matter the offender.

The Attorney General and the DOJ failed in their prosecutorial duties. They did not prosecute HSBC officials because of an uncertain forecast outcome (economic harm). Ultimately, they failed to provide justice for gross wrongdoing. The decision not to prosecute also prevents other regulators from punishing HSBC. The Court, in upholding the financial penalty and the Justice Department’s decision not to prosecute, stated its need to give broad prosecutorial discretion to the Executive Branch in matters like these. Hence, the Comptroller is unable to completely revoke HSBC’s U.S. banking privileges without some form of conviction by the Justice Department. The Deferred Prosecution Agreement essentially lets HSBC off the hook with a $1.92 billion pass for laundering more than $880 billion.

Conclusion

The ethical analysis above applies theories of justice, utilitarianism, and deontology to the Department of Justice decision not to pursue prosecution of HSBC executives. The analysis suggests that criminal prosecution is probably the right move, rather than the deferred prosecution agreement currently in place. The reasons are:

1. The $1.92 billion fine and 5-year probationary monitoring period is unlikely to deter future misconduct.

2. The long-term consequences of the Deferred Prosecution Agreement may outweigh its immediate utility.

3. The DOJ is not fulfilling its prosecutorial duty to pursue punishment for those who violate the law.

While some may believe the Deferred Prosecution Agreement promotes the best interests of the United States, its long-term effects may ultimately pose a greater danger. Money Laundering in the EU

Home

Methods and Stages of Money Laundering Methods and Stages There are three stages involved in money

laundering; placement, layering and integration. The explosion of money laundering Placement –This is the movement of cash from its source. On occasion the source can be easily disguised or misrepresented. This is followed by Macroeconomic Consequences placing it into circulation through financial institutions, casinos, shops, bureau de change and other businesses, both local and abroad. The process of placement can be carried out through The Risks to Financial Institutions many processes including:

1. Currency Smuggling – This is the physical illegal movement of The Risk to the Financial System currency and monetary instruments out of a country. The various methods of transport do not leave a discernible audit trail FATF 1996- Money Laundering as Tax Evasion 1997 Report on Money Laundering Typologies.

2. Bank Complicity – This is when a Social and Political Costs financial institution, such as banks, is owned or controlled by unscrupulous individuals suspected of conniving with drug dealers and other organised crime groups. This International Conventions makes the process easy for launderers. The complete liberalisation of the financial sector without adequate checks also EU Directives on Money Laundering provides leeway for laundering.

3. Currency Exchanges – In a number The Achilles Heel of transitional economies the liberalisation of foreign exchange markets provides room for currency movements and as such laundering schemes can benefit from such Bibliography and some useful links policies.

4. Securities Brokers – Brokers can facilitate the process of money laundering through structuring large deposits of cash in a way that disguises the original source of the funds.

5. Blending of Funds – The best place to hide cash is with a lot of other cash. Therefore, financial institutions may be vehicles for laundering. The alternative is to use the money from illicit activities to set up front companies. This enables the funds from illicit activities to be obscured in legal transactions.

6. Asset Purchase – The purchase of assets with cash is a classic money laundering method. The major purpose is to change the form of the proceeds from conspicuous bulk cash to some equally valuable but less conspicuous form.

Layering – The purpose of this stage is to make it more difficult to detect and uncover a laundering activity. It is meant to make the trailing of illegal proceeds difficult for the law enforcement agencies. The known methods are:

1. Cash converted into Monetary Instruments – Once the placement is successful within the financial system by way of a bank or financial institution, the proceeds can then be converted into monetary instruments. This involves the use of banker’s drafts and money orders.

2. Material assets bought with cash then sold – Assets that are bought through illicit funds can be resold locally or abroad and in such a case the assets become more difficult to trace and thus seize. http://www.irs.gov/uac/Examples-of-Money-Laundering-Investigations-Fiscal-Year- 2014

he following list notes some common of .

This list is incomplete; you can help by expanding it.

Contents

 1

 2 Animals

 3 and auspiciousness

 4 Ghosts and other beings

 5

 6 Sexuality and reproduction

 7 See also

 8 References

 9 Further reading

Astrology  Rahukaalam (or Rahu kala) is an inauspicious period of time every day.[1]

 A person born under the influence of Mars is called a manglik or having Mangal Dosha. People avoid marrying such a person, especially if she is a woman. Marriage with such a person is believed to cause marital discord and divorce, even sometimes death. However, it is believed that if two mangliks, marry the effects of both cancel out.[2][3]

Animals

 It is believed that snakes can drink milk. During the festival of Nag Panchami, snakes are captured and force-fed milk. As a result, several thousand snakes die annually.[4][5]

 To see a peacock before a journey is considered auspicious.[6]

Luck and auspiciousness

 Adding one rupee to a gift sum is auspicious, i.e., sums like 21 or 101 rupees are considered more auspicious than say 20 or 100.[7][8]

 There are several methods of warding of an "". Lemon-and-chilli totems are a common method.[9] Mothers put kohl on their babies' face, to ward off evil eye, by making it imperfect.[10]

 In some parts of India, it is considered inauspicious to sweep the floor at night.[11]

 Widows are considered inauspicious in many parts of India.[12]

 Saturdays are considered very inauspicious, as it is associated with the god Shani (Saturn).[13]

 It is believed that looking in a broken mirror may bring bad luck.[14]

 If a crosses your way, it is treated to be very bad day. It may harm your work, health and wealth.

Ghosts and other supernatural beings

 Peepul trees are believed to be the abode of ghosts and they are avoided at night.[15] Banyan trees are also believed to be inhabited by malevolent spirits. [16]

 Spirit possessions are also reported frequently in India. Exorcisms may be used to ward off the spirit.[17]

Witchcraft  Belief in witches is common in some parts of India. Witches are believed to capable of killing cattle and humans, destroying crops and causing illness. Witch-hunts have been known to happen.[18]

 In parts of Jharkhand, it is believed that if the name of a witch is written on a branch of a Sal tree, the branch would wither away.[18]

Sexuality and reproduction

 It is believed that masturbation may cause health problems including impotence.[19][20]

 Dhat syndrome is culture bound syndrome where the sufferer believes he is losing dhat or semen in urine.[21]

See also

in India

Superstition in India is considered a widespread social problem. Superstition refers to any belief or practice which is explained by supernatural causality, and is in contradiction to modern science.[1] Some beliefs and practices, which are considered superstitious by some, may not be considered so by others. The gap, between what is superstitious and what is not, widens even more when considering the opinions of the general public and scientists.[2] This article notes beliefs or practices in India, which have been deemed of being superstitions or , though opinions may vary on some issues.

Contents

 1 Overview

 2 Past

o 2.1

. 2.1.1 Death of Roop Kanwar

o 2.2

 3 Prevalent

o 3.1 Astrology and fortune telling

. 3.1.1 Criticism . 3.1.2 Defence

. 3.1.3 Historical predictions

. 3.1.4 Challenges and empirical tests

o 3.2 Godmen and faith healers

. 3.2.1 Notable persons and incidents

. 3.2.2 Criticism

o 3.3 Solar and lunar eclipses

. 3.3.1 Triple eclipses

o 3.4 Witch-hunts

. 3.4.1 Recent cases

o 3.5 Vastu Shastra

. 3.5.1 Notable incidents

. 3.5.2 Criticism

o 3.6 Other notable superstitions

. 3.6.1 Animal and bird sacrifice

. 3.6.2 Menstruation

. 3.6.3 Widows

 4 Incidents

o 4.1 1995 Hindu milk miracle

o 4.2 2001 University Grants Commission announcement

o 4.3 2012 and the Jesus statue incident

 5 Surveys

o 5.1 Worldviews and Opinions of Scientists in India (2007)

o 5.2 Superstitions at Workplace (2012)  6 Legal aspects

o 6.1 Article 51 A (h),

o 6.2 Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954

o 6.3 , Section 295A

o 6.4 Regional laws

 7 Lawsuits

o 7.1 2001 Bhargava vs UGC, Andhra High Court

o 7.2 2004 Bhargava vs UGC, Supreme Court

o 7.3 2011 Janhit Manch vs Union of India,

 8 See also

 9 References

 10 Further reading

Overview

Superstitions are usually attributed to the lack of education.[3] But, in India educated people have also been observed following beliefs that may be considered superstitious.[4] The literacy rate of India, according to the 2011 census is at 74%.[5] The beliefs and practices vary from region to region, with many regions having their own specific beliefs.[6] The practices may range from harmless lemon-and-chilli totems for warding off evil eye [7] to serious concerns like witch- burning.[8] Some of these beliefs and practices are centuries old and are considered part of the tradition and religion, as a result introduction of new prohibitory laws often face opposition.[9][10]

Past

Sati Main article: Sati (practice)

According to Commission (Prevention) of Sati Act 1987, Sati is defined as the act of burning alive or burial of a widow (or any women) along with the body of her deceased husband (including relatives, or object belonging someone like that), irrespective of whether it was voluntary.[11] After he watched the Sati of his own sister-in-law, began campaigning for abolition of the practice in 1811.[12] The practice of Sati was abolished in British India in 1829 by Governor General .[13] Although it has been therefore illegal in India for almost two centuries, some incidents have been in recorded in recent years.

Death of Roop Kanwar

Main article: Roop Kanwar

On 4 September 1987, 17 (or 18) year old Roop Kanwar of Deorala village in Sikar district in , who had been married for only 7 months,[14] burned to death on her husband's pyre.[15] It was alleged that the victim had tried to escape, but she was drugged and forced on to the pyre. [16][17] On 1 October 1987, Rajasthan legislative assembly passed an ordinance against Sati, which was later turned into an Act.[18] It was followed by pro-Sati rallies and protests in .[18][19] On 3 January 1988,[20] the Indian parliament passed a new law, Commission (Prevention) of Sati Act 1987, based on Rajasthan's legislation of 1987.[14] This act also criminalised glorification of Sati. [14] Police charged her father-in-law and brother-in-law of allegedly forcing her to commit the act, but they were acquitted in October 1996.[21]

Human sacrifice See also: Human sacrifice in India

Although, human sacrifices are not prevalent in India, rare isolated incidents happen occasionally, especially in rural areas. In some cases, human beings have been replaced by animals and birds. But after backlash from animal rights groups, in some places they have been replaced by human effigies.[22] The beliefs behind these sacrifices vary from inducing rainfall to helping childless women conceive.[23] It is alleged that some cases often go unreported or are covered up.[24]

In 2006, in a village in state, a boy was kidnapped, mutilated and killed by a woman and her two sons to cure her nightmares and visions. She had been advised to do so by a tantric or witch-doctor.[24][25] In 2009, in a village near Vidarbha in state, a childless couple were advised by a tantric to sacrifice eleven children, which would allow them to conceive. The couple managed to kill five children, between December 2009 and March 2010, by poisoning before they were discovered and arrested. A sixth child survived the poisoning.[23] In 2011, the mutilated body of a girl was found in the Bijapur district of , she was suspected to have been killed under the belief that it would ensure a better harvest.[26]

Prevalent

Astrology and fortune telling See also: Hindu astrology and Astrology and Science

Astrology plays a great role in people's lives in India. People consult astrologers to decide names for their new born children.[27] People compared horoscopes before marriage and marriage only between couples with compatible horoscopes.[28] Marriages and other functions are conducted at auspicious times (muhurta) specified by astrologers.[27][28] Several politicians also reportedly go to consult astrologers before important decisions.[29]

Criticism

U. R. Rao, former chairman of Indian Space Research Organisation, has criticised astrology noting that astrology is more popular than astronomy, which may be affecting India's recognition in science.[30][31] Meera Nanda, historian and author, has written that India cannot become a superpower in science, unless it eradicates its various superstitions including astrology.[32] Others who have criticised astrology include, Jayant Narlikar (astrophysicist), [28] P. M Bhargava (founder of Centre for Cellular and Molecular Biology), Ram Puniyani (former IIT professor) and (physicist and educator).[33]

Defence

Ashis Nandy, political psychologist, has argued that astrology should be considered a science and it is considered superstition only due to modern science being defined from a western viewpoint.[34] In the Judgement, in 2004, said that teaching of 'Jyotir Vigyan' can under no circumstances be equated with teaching of any particular religion.Court further said that it was for the pupil concerned to select any particular field or subject in furtherance of his future career, and merely because the subject has got its basis or origin traceable to some cult, it cannot be held that the same would only result in propagation of a particular religion.

Historical predictions

 In September 1951, responding to a newspaper article about an astrologer predicting an imminent war with Pakistan, the first , expressed his desire to pass a law against astrology and sooth-saying.[35]

 In January 1962, Indian astrologers predicted a global catastrophe on Sunday 4 February 1962. People took refuge in hills to escape the event. The Maharajah of , Palden Thondup Namgyal postponed his marriage to Hope Cooke to 1963 on the advice of some astrologers. Business and travel also slowed down.[36] People organised mass prayer meetings. Prime Minister Jawaharlal Nehru called it a "matter for laughter".[37][38]

 In January 1981, several astrologers predicted 12 more months of Iran-Iraq war, a Indian general election in 1983 and a world war in March 1984. A doomsday prediction was also made by an astrologer for 1995, when 70–80 percent of the world population would be destroyed.[39]  In June 1981, an astrologer made the prediction that , then Prime Minister of India, would be assassinated in September 1981. Her son would also be assassinated shortly afterwards. Then, following these events H. N. Bahuguna would become the Prime Minister. The astrologer was arrested in December for questioning.[40] Indira Gandhi reportedly consulted astrologers herself.[41]

 In October 2004, several Indian astrologers predicted that John Kerry would win the 2004 US presidential election. They also predicted it would "rejuvenate" the United States, and bring to peace in in Iraq, the Middle East and Afghanistan.[42]

 In February 2008, some astrologers predicted victory for then senator Barack Obama over senator John McCain in the 2008 US presidential election.[43]

 In January 2012, several astrologers predicted that there will be no doomsday in 2012 and it will be a good year for India and the Indian economy.[44][45]

 In March 2012, some astrologers predicted victory for Obama in the 2012 US presidential election.[46]

Challenges and empirical tests

 Before the general election in 2009, rationalist activist laid an open challenge to any soothsayer to answer 25 questions correctly about the forth coming elections. The prize was set at ₹1,00,000 (about US$1,500). About 450 responses were mailed to him, but none were found to be correct. [47]

Godmen and faith healers Main articles: and Faith healer

The word godman is a colloquial blanket term used for charismatic spiritual leaders in India.[48][49] Locally, they may be referred to as baba, swami, guru, shastri, bapu or bhagat.[50] Many of them claim to have magic or psychic powers and perform miracles.[48][49] On the other hand, some only provide spiritual advice.[51] There are also female gurus.[52] Many of them are worshipped by their followers as avatars or living gods.[52] Many of them belong to ancient ascetic lineages or claim to be successor to some previous spiritual predecessor.[52] Some of them have built large pan- Indian or international networks.[52] Their recent success has been attributed to the use of mass media and public relations techniques.[48][51]

Notable persons and incidents

 Originally from Sri Lanka, moved to India in 1984 and founded an ashram in Pudukkotai, Tamil Nadu, in 1989.[53] In 1996, one of the girls living the ashram escaped and reported that she was raped and was pregnant.[54] In view of the so-called spiritual powers of the accused, which included doing miracles like materialising and regurgitating small , an illusionist was invited to the court and he performed both the miracles in the open court.[53] In 1997, the Swami was sentenced to life imprisonment and fined ₹60 lakh for 13 counts of rape and a murder.[55]

 Chandraswami, astrologer and spiritual guru, was a close associate of former Prime Minister Narasimha Rao.[56] He was indicted in several lawsuits including in the assassination of Prime Minister Rajiv Gandhi.[57] In 2011, the Supreme Court of India fined him ₹9 crore (US$1.4 million) for multiple violations of the Foreign Exchange Regulation Act (FERA).[58]

 In December 2002, Santosh Madhavan defrauded an Indian expatriate woman living in Dubai of AD400,000 (₹50 lakh) by claiming he had supernatural powers, and disappeared. The Interpol issued an alert for his arrest on the advice of Dubai police. Later in 2008, his photograph was recognised by the woman in a magazine and she realised that the person was living in Kochin pretending to be a godman called Swami Amritha Chaitanya. [59] On learning of the Interpol alert, he denied the allegations, but the local police were suspicious and decided to search his properties. The police discovered CDs containing child porn from the premises.[60] He was convicted of raping under-aged children and sentenced to 16 years of imprisonment in May 2009.[61]

 In August 2002, when psychic surgeon Reverend Alex Orbito visited from Philippines, some rationalists file a case in the city case. The city court declared to be a trick and ordered the organizers to stop the event. The organizers ignored the order and decided to go ahead. The court ordered arrests for contempt of court but Alex Orbito evaded arrest and escaped from the country.[62][63] Bangalore police has stated that there are no plans to extradite him but he will be arrested if he tries to return to Bangalore.[64]

Criticism

Sanal Edamaruku, president of the Indian Rationalist Association, has criticised TV channels broadcasting shows featuring godmen. Narendra Nayak, president of Federation of Indian Rationalist Associations, has stated that politicians patronising godmen serves to sanction superstitions of the general public.[65] Nayak has also debunked several so-called miracles of godmen like psychic surgery,[64] materialising vibhuti, money, jewellery, and fire eating. He travels through villages demonstrating the tricks behind these miracles.[66]

Solar and lunar eclipses There are several superstitions associated with solar eclipses. Solar eclipses are associated with war, violent events and disasters.[67] Any cooked food considered to have become impure during the event, they are thrown away or given to beggars.[68] People don't eat or cook food during the event.[69][70] Temples are closed before the event and reopened after the event is over. Many shops also remain closed.[69][71] It is also believed that asuras are worshipped during the period.[69] Pregnant women are advised to stay indoors. It is considered inauspicious to give birth during the event. Solar eclipse are also said to cause miscarriages[67][72] Other people also avoid venturing outside.[70] It is believed that the sun rays become toxic during the event and a bath must be taken after the event.[72] Indian stock exchanges also observe a drop in trades during eclipses.[70] There are some reports of disabled children being buried neck-deep in sand or mud in hopes of curing their disabilities.[71][73] Similar beliefs exist around lunar eclipses, where food is avoided and people refrain from venturing outside.[74] Rationalist organisations have been trying to eradicate these superstitions by organising events during eclipses, where people are encouraged to drink water and eat food.[75]

Triple eclipses

It has been claimed by some astrologers that years with three eclipses have brought great disasters in the past, including the fall of Dwarka supposedly in the year 3031 BCE.[76] Before the solar eclipse of 22 July 2009, D. K. Hari, an astrologer, published a book called Will History Repeat Itself? Triple Eclipse of July 2009, which was released by the Art of Living Foundation. The citing events from Hindu mythology and history the book claims disasters and wars supposedly coincided with three eclipses. The author clarified that this book is not a doomsday prediction, but points to parallel events in the past. The year 2009 had three eclipses, two lunar and one solar, visible from India.[77] Sanal Edamaruku, the president of Indian Rationalist Association, rejected such claims saying astrologers are merely seeking to enhance their business.[78] The director of the Nehru Planetarium, N. Rathnasree, also discredited any cause for apprehension, citing that eclipses are not a new phenomenon.[79]

Witch-hunts Some people, mostly in villages, have the belief that witchcraft and are effective. On one hand, people may seek advice from witch doctors for health, financial or marital problems.[10] On the other hand, people, especially women, are accused of witchcraft and attacked, occasionally killed.[80][81] It has been reported that mostly widows or divorcees are targeted to rob them of their property.[82] Reportedly, revered village witch-doctors are paid to brand specific persons as witches, so that they can be killed without repercussions. The existing laws have been considered ineffective in curbing the murders.[83] In June 2013, National Commission for Women (NCW) reported that according to National Crime Records Bureau statistics, 768 women had been murdered for allegedly practising witchcraft since 2008 and announced plans for newer laws.[84]

Recent cases

Between 2001 and 2006, an estimated 300 people were killed in the state of .[85] Between 2005 and 2010, about 35 witchcraft related murders reportedly took place in 's .[86] In October 2003, three women were branded as witch and humiliated, afterwards they all committed suicide in Kamalpura village in Muzaffarpur district in .[87] In August 2013, a couple were hacked to death by a group of people in in Assam.[88] In September 2013, in the Jashpur district of Chhattisgarh, a women was murdered and her daughter was raped on the allegation that they were practising black magic.[89]

Vastu Shastra See also: Vastu Shastra

It has been compared to China's Feng Shui.[90]

Notable incidents

 In 2008, after a Member of the Legislative Assembly (India) Member of the Legislative Assembly (MLA) was killed in a car crash, some MLAs pointed out the Madhya Pradesh Legislative Assembly building is not Vastu compliant. The building, which was designed by Charles Correa and completed in 1996, has been connected to the deaths of 18 sitting MLAs.[91][92][93]

 The new symbol for the (₹), which was introduced in early 2012, has been blamed by some for the recent (2012–2013) fall in the value of the rupee, as the symbol is not considered to be compliant with the Vaastu Shastra.[94][95]

 In August 2012, a government official demolished a wall in the office allotted to him in the Vidhana Soudha, the Legislative Assembly building, to make it more Vastu complaint.[96] In June 2013, another wall was demolished for similar reasons.[97]

Criticism

Narendra Dabholkar, rationalist and anti-superstition activist, considered Vastu Shastra a superstition and had built his house against Vastu principles.[98] Others who have criticised it include Jayant Narlikar (astrophysicist),[99] Alan Sokal (physics professor and perpetrator of the Sokal hoax)[100] and Innaiah Narisetti (chairman of Center for Inquiry, India).[101]

Other notable superstitions Animal and bird sacrifice

See also: Animal sacrifice in Hinduism

The ritual sacrifice of animals like goats and buffaloes is observed around some festivals among followers of some deities.[41] Owls are used in black magic rituals, their sacrifice notably spikes around festival of Diwali.[102]

Menstruation taboo

Main article: Menstruation taboo Menstruating women are considered impure.[103] In many places, they are not allowed to cook or enter temples during their periods.[104]

Widows

Widows are considered inauspicious. Some consider it bad luck to see a widow first thing in the morning.[105] Many are driven away by their husband's families, who want to prevent them from inheriting any property. Many of them migrate to the holy city of Vrindaban in Uttar Pradesh. It is estimated that 5000–6000 widows live in the city.[106][107]

Incidents

1995 Hindu milk miracle Main article: Hindu milk miracle

On 21 September 1995, a idol in Delhi was reported to have drunk the milk offered to it. Soon, as the news spread, similar phenomenon were reported from all over India and a few from abroad.[108] Other idols, like those of and Shiva, were also reported drinking milk. The price of milk soared due to shortage and policemen had to be placed at temples to maintain order. Yash Pal, scientist and educator, called it an illusion. National Council for Science & Technology Communication (NCSTC) scientists demonstrated that it was caused by capillary action by mixing red dye with the milk.[109]

2001 University Grants Commission announcement In 23 February 2001,[110] University Grants Commission (UGC) of India, a government controlling body for higher education, announced that it had decided to provide non-recurring grants of ₹15 lakh (about US$30,000) to universities to establish Vedic astrology and some other related courses in colleges. About 35 universities expressed immediate interest.[33][111][112]

This drew strong criticism from Indian scientists. Hari Gautam, then chairman of UGC, defended the move by claiming that Nobel laureate scientist C. V. Raman considered astrology to be science. S. Ramaseshan, physicist and nephew of C. V. Raman, expressed dismay and stated that C. V. Raman actually considered astrology to be irrational. About 100 scientists from various institutes signed a statement demanding Hari Gautam's resignation as the chairman of UGC.[27] [111][112] P. M. Bhargava, founder of the Centre for Cellular and Molecular Biology, was upset that not many from scientific community were condemning that move, especially the Indian National Science Academy. He later filed a series of petitions in various courts. Yash Pal criticised the move in strong words, the well-known physicist and former UGC chairman, said that he was unopposed to the introduction of such courses in private institutions but he was against use to public funds for such courses.[33][110] Sanal Edamaruku, president of Indian Rationalist Association, condemned this move and called the use of public funds to teach astrology a "crime against Indian society".[113] In 2006, Delhi University introduced Jyotisha (astrology), and Vaastu Shastra in the third year Bachelor of Arts, Sanskrit syllabus, as compulsory subjects.[113]

2012 Sanal Edamaruku and the Jesus statue incident Main article: Sanal Edamaruka blasphemy case

On 10 March 2012, Sanal Edamaruku investigated a so-called miracle in Vile Parle, where a Jesus statue had started weeping and concluded that the problem was caused by faulty drainage. Later that day, during a TV discussion with some church members, Edamaruku accused the Catholic Church of miracle-mongering. On 10 April, Angelo Fernandes, President of the Maharashtra Christian Youth Forum, filed a police complaint against Edamaruku under Indian Penal Code Section 295A.[114] In July while on a tour in Finland, Edamaruku was informed by a friend that his house was visited by the police. Since, the offence is not bailable, Edamaruku decided to stay in Finland.[115]

Surveys

Worldviews and Opinions of Scientists in India (2007) In 2007, a survey was conducted by the Institute for the Study of Secularism in Society and Culture of the Trinity College with the help of Center for Inquiry (India) called "Worldviews and Opinions of Scientists in India". 1100 scientists surveyed from 130 institutes. 24% admitted to believing that holy-men can perform miracles and 38% believed that God could perform miracles. 50% believed homoeopathy to be effective and 49% believed in the effectiveness of prayers. Whereas belief in was 16%, in Vaastu it was 14%, and in astrology it stood at 14%. 31% strongly disapproved introduction of astrology courses in universities. 33% strongly disapproved the tradition of seeking blessings of before rocket launches. However, a majority of them agreed that the aim of development of , which is a fundamental duty according to the Constitution's Article 51A (h), is not being fulfilled. [116] Y. S. Rajan commented on this saying that most Indians don't feel there is a dichotomy between science and .[117] Other the hand, Innaiah Narisetti, chairman of Center for Inquiry (India) and Pushpa Bhargava, the former director of the Centre for Cellular and Molecular Biology, pointed out the lack of scientific temper among Indian scientists.[118]

Superstitions at Workplace (2012) In a survey, titled "Superstitons@Workplace", carried out by a staffing company called TeamLease in 2012. The survey covered 800 companies in 8 cities. 61% of respondents admitted to believing in a superstition and 51% admitted to following a superstition at their workplace. 48% believed that these practices had a positive effect on their productivity. It was noted that managements didn't object to the practices as long as it didn't affect productivity. Most practices were related to Vaastu Shastra or Feng Shui, but other personal practices were also observed. 80% of female employees were comfortable with the practices being followed in their workplace, while it was 68% for males, and 63% admitted thinking that female employees are more superstitious.[119][120][121]

Legal aspects

Article 51 A (h), Constitution of India The Article 51 A (h) of the Constitution of India, lists "to develop the scientific temper, humanism and the spirit of inquiry and reform" as a fundamental duty for every Indian citizen. [122] Rationalist Narendra Nayak has argued the Article 51 A (h) is contrary to IPC 295A and the constitution should be held over to IPC 295A.[123] There has been calls to implement this article more widely (e.g., 2011 Janhit Manch vs Union of India, Bombay High Court).[124]

Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954 Main article: Drugs and Magic Remedies (Objectionable Advertisements) Act, 1954

This act prohibits advertisements of magical remedies, like or spells, for certain diseases. The law lists 56 of these diseases. The law also curbs sales and promotion of so-called miracle drugs and cures.[125][126] But, the law is rarely enforced and several such products are freely available to the public.[127] The law is considered severely outdated as 14 of the diseases in the list are now curable, and newer diseases like AIDS are not on the list.[128] Some advertisements of these categories are also known to appear on cable television channels without much repurcussions.[129] Proposed amendments to this law has also raised questions regarding the status of traditional medicine systems like and Ayurveda with respect to modern medicine.[130]

Indian Penal Code, Section 295A Main article: Hate speech laws in India

The Section 295A of the Indian Penal Code criminalises "deliberate and malicious acts intended to outrage religious feelings of any class by insulting its religion or religious beliefs", it includes "words, either spoken or written, or by signs or by visible representations". The offence holds a maximum penalty of three years of prison.[131] It has been argued that this law is unconstitutional under Article 19 (freedom of expression) in the past (e.g., 1957 Ramji Lal Modi vs State of Uttar Pradesh, Supreme Court).[132] It has also been stated by rationalist Narendra Nayak and T. V. Venkateswaran of the Vigyan Prasar that IPC 295A is being used with a very wide definition to prosecute critics of religion, anti-superstition activists and rationalists.[123][133]

Regional laws The Prevention of Witch (Daain) Practices Act of 1999 outlaws witch-hunting in Bihar. It has also been adopted by the state of Jharkhand. It carries a sentence of 3 months for accusing a woman of being a witch and 6 months for causing any physical or mental harm.[134] In 2005, Chhattisgarh passed the Tonahi Pratadna Nivaran Act. It holds a sentence of 3 years for accusing a women of being a witch and 5 years for causing her physical harm.[135] The upcoming Women (Prevention of Atrocities) Bill of 2012 in Rajasthan also covers witch-hunting.[136][137] In December 2013, Odisha passed the Odisha Prevention of Witch-Hunting Bill which has a maximum penalty of seven years.[138] Also in the same month, the Anti-Superstition and Black Magic Act was passed in Maharashtra.[139]

Lawsuits

2001 Bhargava vs UGC, Andhra High Court In 2001, following the UGC announcement of introducing astrology courses in universities, P.M. Bhargava, founder of Centre for Cellular and Molecular Biology and others, filed a petition in the Andhra Pradesh High Court against UGC. The court dismissed the case on 27 April 2001, stating that it has no expertise in the subject and thus it cannot interfere unless UGC has clearly violated a law.[33][140]

2004 Bhargava vs UGC, Supreme Court In 2004, P.M. Bhargava and two other petitioners, filed a Special Leave Petition (SLP) in the Supreme Court of India challenging the UGC decision to introduce astrology in universities. It argued that astrology is considered a , several members of the Indian scientific community have opposed the move, and it would undermine India's scientific credibility. The responded by stating that the course was not compulsory, but optional and several western universities allow astrology as a course choice. It sought dismissal of the case stating that the petitioners' concerns were unfounded. The Supreme Court dismissed the case on 5 May 2004.[140]

2011 Janhit Manch vs Union of India, Bombay High Court In 2010, Janhit Manch, a non-profit organisation, filed a Public Interest Litigation (PIL) in the Maharashtra High Court seeking legislation to make teaching of scientific temper in schools compulsory, under Article 51 A (h) of the Constitution using Article 266, which defines the powers of the High Courts. It also requested that a disclaimer be added to advertisements about astrology, Vaastu Shastra, Feng Shui, tarot cards etc., under The Drugs and Megical Remedies (Objectionable Advertisements) Act, 1954, stating that these are for entertainment only. On 3 February 2011, the Bombay High Court disposed the plea citing the 2004 Bhargava vs UGC, Supreme Court case. It further stated that Article 51 A (h) was too vague to be implemented using Article 266.[124][141]