Jailed Indian businessman likely innocent

UPDATE: RAVI BHALLA WAS FREED FROM RUZYNĚ PRISON JUNE 30. READ MORE IN THE JULY 5 EDITION OF The Prague Post, INCLUDING AN EXCLUSIVE INTERVIEW.

Justice is supposed to be blind, but from the inside of a cell at Prague's Ruzyně Prison, Ravi Bhalla would probably settle for color-blind. 

Bhalla, 47, is six months into a five-year prison sentence for a crime he says he didn't commit, and evidence appears to back his claim.

He is awaiting an appeal to the Supreme Court, and his current stint under lock and key comes after spending 14 months in custody awaiting his initial trial. He looks thinner than he did just a few months ago, and his jet-black hair is graying. On June 18, Bhalla's son Umang celebrated his first birthday. His father was unable to attend.

Bhalla's two other children from an earlier marriage - a 16-year-old daughter and a 14-year-old son, who both hold Czech passports - now only see their father in a small visitation room containing a panic button for calling prison guards.

The case of Ravi Bhalla, an Indian entrepreneur who moved here in 1991, sheds light on a system where the wheels of justice turn slowly and arbitrarily, where missteps are common and brushing those missteps under the proverbial carpet even more so.

In the best-case scenario, his case points to gross incompetence and apathy by public officials from the bottom up: police officers, prosecutors, judges. But more so it points to a complete breakdown in the rule of law.

Bhalla was accused and convicted of tax evasion related to the two businesses he owned on Dlouhá street in Old Town: the Bombay Bar and Rasoi restaurant. The problem is that the key evidence prosecutors presented was so flawed that one hesitates to call it evidence, and even that was collected illegally.

"I am innocent. I don't feel any justice here," Bhalla said from the visitation room. "It's like my time and life mean nothing."

The state argued Bhalla underpaid taxes for his restaurant and bar businesses by some 60 million Kč over the course of five years, an important monetary amount as police are only legally allowed to get involved in tax cases involving amounts of at least 50 million Kč.

"It's completely ridiculous," said Jack Levy, managing partner at Auditor EU, a local accounting firm and the man who used to file annual tax returns for Bhalla's business. "It's nonsense. There is no proof."

But why was it the police that brought this case against Bhalla and not the Finance Ministry - the body actually responsible for collecting and monitoring taxes? If the Finance Ministry had evidence he wasn't paying taxes, why didn't they do anything for five years?

"The Financial Office has nothing on him," Levy said. "He was paying his taxes."

That the police took such an interest in Bhalla spurs a raft of speculation - about racism, a neighborhood protection racket involving police officers and well-connected competitors who wished to take over the lucrative Old Town address - from anybody vaguely familiar with the case.

Bhalla is not interested in such theories.

"I want to fight legally to prove I am innocent," he said.

Bhalla's conviction hinged on two key pieces of evidence - computer accounting records and personal notebooks - collected by authorities under likely unconstitutional conditions and subsequently mishandled by police. Nonetheless, they were admitted as evidence at the trial. The notebooks even disappeared from a police station, never to resurface, and yet an alleged photocopy of a page was allowed as evidence.

The investigation

In the interest of time and space - one of which Bhalla has too much of and the other very little - the story begins in 2006, although the state argued Bhalla cheated on taxes between 2003 and 2007.

Police began investigating Bhalla in late 2006 and received a warrant from a Prague District Court to "monitor" the offices above his restaurant and bar. In addition to confusion about the dates the court permitted monitoring to begin and when it actually began, the police used this to enter and search the offices twice in spring 2007.  

By law, when police are searching a business's premises, either the owner or an appointed coworker must be present. Besides certain privacy guarantees granted by the Constitution and the European Court of Human Rights, this regulation exists for other rather obvious reasons. 

"Tomorrow they put two kilos of drugs and say I am a dealer?" Bhalla asked.

In Bhalla's case, police twice broke into the building. They followed this up by breaking into a password-protected computer and a password-protected accounting program. They then used the USB port to download accounting information and burn it on to a DVD for use as evidence. In an added twist, the DVDs the police used were in the DVD-RW format - and thus rewritable - giving those disks the potential to be altered at any time between the initial collecting of the data and the trial's beginning some two years later.

After breaking into the offices in May 2007, police did virtually nothing on the case for a full year, or at least nothing that was later presented as evidence.

In March 2008, a warrant was issued - this time by a state prosecutor, not a judge - allowing police to again search Bhalla's offices and home. At the time, this was a legal procedure, albeit a strange one; not using a judge to obtain a warrant, despite having previously done so, raised questions about whether a judge would have granted a second search warrant.

Just four months later, the Constitutional Court ruled all future search warrants must come from a judge on the grounds that a state prosecutor is not an impartial party in a potential criminal prosecution.

During this second round of searches, police seized a series of notebooks, which they later used to assert that Bhalla had some alternative bookkeeping method. But some 10 months later, in January 2009, the police reported they had lost this evidence, including the nine "diaries." During the trial, an allegedly photocopied page from one of these books was presented as evidence, but, in a final unusual turn, Bhalla's defense was unable to submit the evidence to examination by their own handwriting expert in an attempt to refute its authenticity.

As an example of just one year's worth of evidence presented at the trial, the prosecution argued Bhalla claimed 12,292,000 Kč in revenue for 2004 but actually earned 39,500,696.38 Kč. If Bhalla's business had earned the amount presented by the state - more than 39 million Kč - it would have ranked in the top 1 percent of restaurants nationwide, alongside the Michelin star-winning Allegro restaurant at the Four Seasons hotel. The prosecution's argument is further harmed by a survey of Finance Ministry tax records for all the restaurants located on Dlouhá street: All but one of them reported losses over the same five-year period for which authorities targeted Bhalla.

"How can I make 27 million a year?" Bhalla said. "Is it possible?"

Bhalla was arrested in March 2008 at Ruzyně Airport as he was about to embark on a family trip to his native India. Police held a warrant for his arrest for five days before acting on it.

"I was in the bar drinking that weekend; they know where I live," Bhalla said.

Instead, his two older children watched as their father was marched away in handcuffs. Despite the premeditated nature of his trip, as evidenced by plane-ticket reservations, authorities made the argument Bhalla was a flight risk, and he was kept in prison for the entire duration of pretrial proceedings: 14 months.

As his trial began in May 2009, the state was suddenly convinced - by, among other things, 5 million Kč posted in bail - that he was no longer a flight risk. He was released under the supervision of a probation officer.

"When they released me May 8, I had only 10 days before appearing in court again," Bhalla said. "I needed time to prepare a case; 14 months inside, and they don't even give me time. Ten days with 35 witnesses coming [and] 70 pages of lies."

In December 2009, Bhalla was convicted and sentenced to five years in prison and a 4 million Kč fine.

Appeal and aftermath

Bhalla and his lawyers immediately filed a blanket appeal citing, among many other things, the catalog of investigative shortfalls, as well as a series of factual inaccuracies presented by prosecution expert witnesses. Bhalla remained outside of prison as the appeal process unfolded. For the second time since the case began, little happened for nearly a year. In September 2010, Bhalla's lawyer submitted arguments, and the court went silent again.

On Nov. 30, 2010, Bhalla's lawyer called the court to receive an update on the status of his appeal and was told the court had nothing to report and had scheduled no hearing on the case.

"They said my file was closed, that they aren't doing anything with it," Bhalla said.

Four days later, Dec. 3, in a closed session that was not attended by Bhalla, his attorney or the state prosecutor, the High Court denied his appeal.

"Boom, finished," Bhalla said.

Unexpectedly, the public prosecutor's office launched its own appeal of the five-year sentence, pushing for more jail time, before withdrawing it just a day later. Also in December 2010, the Constitutional Court ruled any cases where evidence had been seized with a search warrant issued by a prosecutor and not a judge - as it was in Bhalla's case - still unresolved by the end of the calendar year would be thrown out of court.

Thus, after virtual inaction on the Bhalla case for a year, in a matter of weeks prosecutors and the High Court ruled against Bhalla's appeal, appealed and withdrew their own appeal of the prison sentence, all without Bhalla's knowledge and just days before a statute of limitations on the case was to expire.

"They can't call me in two weeks, so they do everything in a few days," Bhalla said. "Where are my rights? I don't have the right to defend myself even?"

On Dec. 29, 2010, en route to a holiday party, Bhalla and his current partner, Alesia Ziljajeva (the mother of 1-year-old Umang), decided to stop at the post office to see if they had any mail. Bhalla did, and, as he didn't have his reading glasses with him, Ziljajeva read him a letter. It said he had to report to prison for his sentence by Jan. 12. Bhalla's lawyer was not alerted to the pending prison time by official letter until Jan. 5.     

"He wasn't prepared [for that]," Ziljajeva said of Bhalla. "We didn't go to the party."

Bhalla petitioned the court for more time before having to report to prison and was denied.

The Prague Post attempted to visit Bhalla starting in January. He was initially held in Pankrác Prison. After calling the prison and asking the proper procedure, the Post submitted a letter to the prison director. The request was ignored until Bhalla was transferred to another prison.

The Prague Post then contacted that second facility, Ostrov Prison near Karlovy Vary. That request was rejected within a day.

During his stay at Ostrov, Bhalla, a vegetarian for religious reasons, was forced to subsist on only cheese and bread for months, according to friends and family - a direct violation of his human rights under both Czech and European Union law.

Finally, he was transferred to Ruzyně, whose staff immediately cleared us to visit. Bhalla is currently awaiting a ruling on his appeal to the Supreme Court.

"According to Judge [Vladimír] Veselý, the decision will be made in six to eight weeks," said Supreme Court spokeswoman Dana Haisová. "I say eight to make sure the decision will be made, because during the holidays some judges may go on vacation."

Bhalla has also sent a letter directly to Justice Minister Jiří Pospíšil. Ministry spokeswoman Tereza Palečková acknowledged receiving the letter and said it was forwarded to the Supreme State Attorney Office.

"The minister will wait for the Supreme State Attorney Office's reaction, and then will consider whether to file a petition that the law was broken," she said.

The Supreme State Attorney is waiting to hear the Supreme Court's ruling, she added. 

The Prague Post sought comment from the Indian Embassy in Prague. Ambassador D.P. Srivastava's office referred us to First Secretary Mahinder Khurana. As of press time, he had not answered the phone or returned e-mails.  

Asked what the first thing she will do if Bhalla is freed, Ziljajeva said, "I will send him to his mama [in India]."

The consequences of this judicial debacle for Bhalla and his family are clear.

"Who will give me my six months back?" he asked. "My son is celebrating his first birthday. What money will buy that back?"

But the repercussions on the Czech Republic's international reputation are likely to be equally as harmful.

"Why would I ever do business here?" Bhalla asked.

- Filip Šenk contributed to this report.

Benjamin Cunningham can be reached at
bcunningham@praguepost.com