THE BOFORS CASE

Into Act Five

The Central Bureau of Investigation files its first charge-sheet in the Bofors howitzer deal case, which is now set for trial.

SUKUMAR MURALIDHARAN
in New Delhi

IT has fallen to the lot of the Central Bureau of Investigation (CBI) to debunk one of India's most sacred political icons, whose residual aura provides all the legitimacy that the Leader of the Opposition in the Lok Sabha today possesses. The sensitivities connected to the Bofors pay-offs scandal being so acute, any decisive movement forward in the official investigation would inevitably be construed as politically motivated, irrespective of its specific content and purpose. Prudence demanded that the CBI should, for this reason, go through a rather prolonged period of cooling off before the first charge-sheet in the case was filed. The work of preparing the first set of indictments had begun immediately after sanction to prosecute the public servants implicated in the scandal was received from appropriate quarters in April. But the intervening general elections compelled the CBI to wait, since any action taken during an intensely fought political campaign could have easily been interpreted as being partisan in its motivations.

The charge-sheet that was filed before Ajit Bharihoke, Special Judge for CBI cases, on October 22 is closely modelled in its essence on the report that the agency had submitted to its administrative Ministry in May 1997. The then CBI Director, Joginder Singh, had insisted in February that year - as he took delivery of the first set of secret bank documents released through the Swiss judicial system - that his investigations would be completed by the end of April. He missed the self-imposed deadline by a few days, but that can hardly be considered a serious deficiency in an investigative process that has often been dragged out for the most unsavoury of reasons. CBI officials intimately connected to the investigation today acknowledge the debt they owe to the brief period of autonomy the agency enjoyed under Joginder Singh, during the tenure of Prime Minister H.D. Deve Gowda.

For no evident reason, the mandatory sanction required for the prosecution of public servants was delayed till April this year and finally granted only selectively. Sanction was sought for the indictment of three individuals who had been public servants when the putative offences were committed - S.K. Bhatnagar, Defence Secretary in the Rajiv Gandhi Government, G.K. Arora, Principal Secretary in the Prime Minister's Office during the same period, and Madhavsinh Solanki, Minister for External Affairs in the P.V. Narasimha Rao Government. In the case of Bhatnagar and Solanki, sanction was granted in April by the appropriate authorities. The case of Arora remains indeterminate, according to CBI sources - neither has sanction been granted, nor has it been explicitly denied.

Former Prime Minister Rajiv Gandhi. He figures in the CBI charge-sheet as an accused whose name was not sent up for trial as he is no more.

In the professional assessment of CBI investigators, Arora's indictment is not really essential to ensuring the integrity of their case. And Solanki's alleged offence, though serious, is of a different nature. He stepped into the fray when the judicial process in Switzerland was already well advanced and sought rather maladroitly to divert it off course by passing an anonymous note to his counterpart in that country. This makes him a party to the criminal conspiracy in its later phases. It is learnt that his indictment is imminent. He does not feature in the charge-sheet now filed, since this pertains to the earlier phases of the scandal.

PERCEPTIVE observers and chroniclers of the howitzer deal have analytically sought to interpret it in terms of four stages, each characterised by a specific mode of action. The first relates to the decision-making process on the choice of howitzer guns for the Indian Army. The second comprises the arrangements made for the receipt of illicit pay-offs from the Swedish arms vendor. The third is the official cover-up and crisis management effort by a small group in the Prime Minister's Office. The fourth is the journalistic expose and the CBI's criminal investigations, which were assisted by the Swiss Federal Police and the judiciary in both India and Switzerland.

In terms of this conceptualisation, Arora and Bhatnagar were deeply implicated in the first three phases of the scandal, though their specific roles would be simply incomprehensible if the guiding hand of Rajiv Gandhi were not reckoned with. It is not ill-will or political partisanship that impels the CBI to name Rajiv Gandhi as one of the accused in the charge-sheet, but the undeniable requirement of logical and legal completeness. As Joginder Singh aptly put it shortly after his investigation report was completed in May 1997, Bofors without Rajiv Gandhi would be like Hamlet without the Prince of Denmark.

The other accused in the case are (from left): Former Bofors agent Win Chadha; Italian businessman Ottavio Quattrocchi; former Defence Secretary S.K. Bhatnagar; former Bofors President Martin Ardbo.

Expectedly, the Congress(I) has responded with unconcealed fury to the charge-sheet. There was no evidence implicating Rajiv Gandhi in the scandal, claimed Congress(I) spokesman Kapil Sibal, shortly after briefing the party's highest executive body, the Congress Working Committee, on the legal background and implications of the CBI's move. Even the supposed proximity between the Rajiv Gandhi family and Ottavio Quattrocchi, the Italian businessman who was for long resident in India, is far from being an established fact, he claimed. More ominously, a statement issued by the Congress(I) headquarters denounced the charge-sheet as an effort at "vilifying and maligning the late Rajiv Gandhi" - an action that would not be tolerated by "millions of Congressmen and women".

The emotive appeal fails to carry credibility since the legal evidence that has been marshalled by the CBI is unambiguous. Quattrocchi is known to have elbowed his way into the howitzer contract in November 1985, in the guise of a shadowy company called A.E. Services. To all appearances, this company had no previous existence, far less any knowledge of the armaments business. But for a concern with such obvious limitations, it was willing to take on onerous responsibilities. Its agreement with Bofors promised to deliver the howitzer contract signed and sealed to the Swedish firm before April 1, 1986. Failing this, its entitlement to an agreed percentage of the contract value would be rendered void.

A.E. Services' sense of self-assurance was obviously underwritten by high-level connections in the Indian government. Between November 1985 and March 1986, the Indian Army was prevailed upon to revise its preference ordering of howitzer guns that were on offer. The Bofors weapon, which featured as the second preference to a French product until November, was catapulted to the premier position. And a contract in favour of the Swedish manufacturer was signed on March 24, 1986.

In March last year, Quattrocchi had in his quest for legal exculpation played his last card. Pleading that the CBI's arrest warrant and the Interpol red-corner alert issued against him amounted to a gross infringement of his right to free movement, Quattrocchi petitioned the Delhi High Court for remedies. The CBI's counter-affidavit, based in essence on the May 1997 investigation report, frontally took on this plea, recording in graphic detail all the available evidence on the Italian businessman's culpability.

Crucial in this regard has been the deposition before an examining magistrate in Geneva by Myles T. Stott, Director of A.E. Services, whose essential function was to act as a fiduciary agent in the operation of the company's Swiss accounts. According to Stott, the "initial approach" for the Bofors-A.E. Services agreement "came from Mr. Ottavio Quattrocchi", who he surmised had "a consultancy role". A.E. Services, in turn, in Stott's understanding, was a wholly-owned subsidiary of Quattrocchi's firm CAV, and acted in the Bofors matter purely as a "trustee".

This reading is corroborated by the Swiss bank documents in the CBI's possession, which show a remittance of just over 50 million Swedish kroner (then equivalent to over $7.3 million) into A.E. Services' newly opened account at Nordfinanz Bank in Zurich on September 3, 1986. A few days later, the bulk of these funds was again transferred to an account maintained by Colbar Investments Ltd - a company registered in Panama - at the Union Bank of Switzerland in Geneva. Colbar was then controlled by Quattrocchi and his wife Maria - both of whom were in Switzerland at the time the account documents were signed. In July 1987, the funds in the Colbar account were moved to the credit of Wetelsen Overseas at the Union Bank of Switzerland. After a further transit through Guernsey in the British Channel Islands, the monies were lodged in Switzerland and Austria.

Quattrocchi's entry into the deal and his subsequent exertions in shifting vast sums of money through a tortuous course of secret bank accounts would be incomprehensible if cognisance were not taken of his proximity to the Rajiv Gandhi family. The CBI's averments in the Delhi High Court record that "the families of the then Prime Minister of India and Mr. Ottavio Quattrocchi were on very intimate terms and they used to meet frequently." Certain family photographs collected during the investigation, the CBI further claimed, bore testimony to this proximity.

THE first hearing of the Bofors case is scheduled for November 3, when the court will be requested to take cognisance of the charges and issue summons to all the accused. It is learnt that the CBI has secured assurances of cooperation from Myles Stott, an Englishman who often takes up fiduciary management responsibilities on the basis of the impeccable reputation he enjoys. The CBI could also consider summoning a senior Delhi-based lawyer, who was instrumental in recruiting Stott's services for the Bofors deal. The diary of Martin Ardbo, president of the Swedish armaments manufacturer all through that stormy period, bears a few enigmatic references to a certain "Gandhi Truste lawyer" he was sporadically in touch with during the crisis management phase. It seems a reasonable surmise from the CBI's point of view that this could be the same lawyer who brought Stott into the deal as trustee for the A.E. Services funds.

Of the five accused in the October 22 charge-sheet, three are in relatively safe havens overseas. Quattrocchi fled the country and has been resident in Malaysia since he was identified in July 1993 as one among seven individuals who had filed appeals in the Swiss Federal Court against a lower judicial order transferring key bank documents to the CBI. W.N. ("Win") Chadha took flight in 1988, even before Rajiv Gandhi was ousted from power. As a long-serving agent for Bofors in India, Chadha had reason to feel done out of a fair share of the pickings from the deal on account of Quattrocchi's late entry. His early retreat from the arena was a recognition that he was badly exposed both by virtue of his long association with the arms manufacturer and his relative remoteness from the centres of political power. From his sanctuary in Dubai, he has repeatedly indicated his willingness to submit to CBI interrogation. But the Indian investigators have been equally insistent that they will not conduct any part of their inquiries on foreign soil.

Martin Ardbo remains a resident of Sweden and could benefit from the legal immunity conferred by the statute of limitations. CBI officials are not very clear about the pertinent legal provisions and are working on the premise that they will deal with any such encumbrance when it crops up.

Among the witnesses who could be summoned in the hearings is Arun Singh, who was Minister of State for Defence in the Rajiv Gandhi regime and a close confidant of the then Prime Minister. He and General K. Sundarji, then Chief of the Army Staff, are known to have repeatedly affirmed that the threat of cancelling the Bofors deal would quickly bring the recalcitrant arms manufacturer around to naming the beneficiaries of the illicit pay-offs. On every occasion, this seemingly reasonable position was thwarted by Defence Secretary Bhatnagar, obviously on the instructions of Rajiv Gandhi.

Viewing the matter from the other side, B.M. Oza, who was India's Ambassador to Sweden during that stormy period, has recorded how he had gone out of his way to issue visas for a group of Bofors officials to visit India early in 1987, to depose before an inquiry into bribery allegations. Again, the effort at uncovering the truth behind the burgeoning scandal was scuttled by a direct intervention from the office of the Prime Minister. Oza too figures as an important witness in the case.

ANU PUSHKARNA
CBI Director R.K. Raghavan.

Frontline Editor N. Ram is another witness listed by the CBI; the series of articles that he ran in The Hindu between 1988 and 1989, laid open the sordid inner workings of the nexus between international arms merchants and politics. Ram has been closely tracking the official investigation since it was launched by the CBI under the directorship of Rajendra Shekhar in 1990. His inputs and expertise were extensively utilised by the agency when Joginder Singh was its Director.

OCTOBER 22 could be justifiably viewed as the inauguration of Act Five in the Bofors drama. A relatively minor theme - perhaps Scene Two in Act Five - will commence when the indictment is served on Madhavsinh Solanki for his effort to defeat the process of the law through an anonymous note of dubious provenance. But another major Act could commence when the Swiss judiciary finally disposes of a batch of appeals pending before it, relating to another set of bank accounts where the Bofors pay-offs were lodged.

It is known that the appellants in this case are the Hinduja brothers - Gopichand and Srichand - enormously influential businessmen of Indian origin, settled in London. They were identified as interested parties in the Bofors scandal as far back as July 1993, when the Swiss Ministry of Justice released the names of the individuals who were contesting the order transferring the Bofors documents to the CBI. But unlike Quattrocchi who seemingly had exhausted all his legal options by then, the Hindujas managed to take the matter further up in appeal. From the examining Magistrate's Court, they took it up to the Cantonal Court. Losing the case there, they appealed to the Federal Court. Again having suffered a mortifying defeat, they are learnt to have taken their plea to the Federal Councillor - a higher judicial official whose jurisdiction is invoked only in the rarest of cases. The CBI is confident that the Hindujas will win no sustenance from this quarter. But being unsure of the time-frame involved, it has decided to proceed with one round of indictments and file additional charge-sheets when further evidence becomes available.

VIVEK BENDRE
Former CBI Director Joginder Singh.

Indian politics may have plumbed fresh depths since Bofors exploded on the scene as a powerful metaphor for corruption in public life. But the Swedish arms manufacturer's name - since effaced on account of a series of corporate takeovers and supplanted by the relatively untainted appellation of Celsius - continues to evoke deep resonances. Above all, Bofors is about the democratic principle of accountability. It is about a democratically elected leader squandering an enormous fund of public goodwill through sheer arrogance of power, trampling upon every process of accountability and subverting institutions in his effort to evade responsibility.

L'affaire Bofors still remains far from its final consummation. But the mere fact that it has been committed to trial represents a much needed affirmation of the resilience of the rule of law in India.