A Brief History of the Bofors Scandal

May 7, 2009 By amreekandesi

Last week the CBI removed Italian businessman Ottavio Quattrochi from its wanted list, and removed the Interpol Red Corner notice against him. Prime Minister Manmohan Singh soon supported this decision saying that the case had become an embarrassment for the government. It is not a good reflection on the Indian legal system that we harass people while the world says we have no case[link] Thats pretty much a public apology from the great nation of India to a man who never was cleared of the corruption charges against him. Bend over Bow in subservience, India! The thing is, the CBI hasnt really done a great job with this case. Their attempts to get Quattrochi extradited to India were rejected in Malaysia and Argentina, with the judges noting that the CBI never presented its case properly. Not saying anything, but this gives the impression that the CBI did a sham job at getting him extradited. Maybe someone didnt want Quattrochi to come to India?

Lets start with some history on the Bofors scandal, which remains till date one of the biggest scandals in Indian politics. It all started when India decided to purchase 400 155mm Howitzers (fancy word for really-big-kickass-gun) from Swedish company Bofors AB for $1.4 billion in 1986. In 1987 the then Prime Minister Rajiv Gandhi and several others were accused of receiving kickbacks for this deal. Ottavio Quattrochi was a businessman close to the Gandhi family and a prominent man in the hallowed passages of Indian government. His name came up as the middleman in this deal.

The Bofors scandal was huge. Rajiv Gandhi lost the 1989 elections due to the backlash of these allegations. Other accused included the Hinduja brothers and Win Chaddha, an agent of the Bofors company. (Hi! My name is win. I am here to win your contract!) Chaddha died in 2001. Gandhi was assassinated in 1991, and was cleared of the corruption charges against him in 2004. In 2005, the charges against the Hinduja brothers were dismissed by the Delhi High court. The Wikipedia page on Quattrochi throws up some interesting information about the amount of clout he used to enjoy. From roughly 1980 to 1987 Indira Gandhis final years and Rajiv Gandhis honeymoon years Quattrocchi had the Midas touch. No deal was refused to him. It was understood, remembers a Congressman from the original Mrs Gs days, that a fertiliser contract meant Snamprogetti. That was considered the favour to Sonia and Rajiv. [link] It is alleged Quattrocchi was so influential with the office of the prime minister Rajiv Gandhi that bureaucrats used to stand up when Quattrocchi visited them.[link] In 2002 a Malaysian court refused extraditing Quattrochi to India, observing that the offenses alleged against him were open to doubt. Dismissing Indias review petition for his extradition, Justice Augustine Paul of Kuala Lumpur High Court upheld the Sessions Court verdict earlier this month throwing out the extradition case on the ground that the descriptions of the offenses in the requisition papers were insufficient, vague and ambiguous. While discharging Quattrocchi unconditionally, the Sessions Court on December 2 had also ordered return of his passport and the bail. [link] The CBI chief PC Sharma attributed the failure to the fact that they were in a foreign country and had to present the case through a foreign lawyer. Maybe they should start training multi-lingual Indian lawyers? Malaysian ones are apparently no good. In December 2005 the Indian government de-froze Quattrochis bank accounts on grounds of insufficient evidence to link those accounts to the Bofors payoff. A month later the Supreme court directed the government to ensure that money was not withdrawn from those accounts. It was too late by then. Rs 21 crore ($4.6 mn) had already been withdrawn from the accounts. Quattrochi was arrested in Argentina in February 2007. The CBI tried to get him extradited to India, but their plea was rejected by the Argentinian courts. The CBI had the option of appealing to a higher court, but it failed to get a clearance from the center. We wonder why that would be. The judge noted that the CBI did not even present proper legal documents for Quattrochis extradition, which led to their request getting rejected. Besides, the Indian governments decision to de-freeze Quattrochis bank accounts did not really add credence to their request. Watch a video report here. Over more than two decades the case has dragged on like an Energizer bunny, with no end in sight. For some involved parties the case ended with death, some were cleared of charges, but the scandal lives on. Strangely enough, you cant attribute it all to the Congress. The Congress may have had an interest in this case, but we have had some non-Congress governments too during these past twenty years that have allowed this drama to carry on, culminating with Manmohan Singhs governments farewell gift to Mr Quattrochi.

Reminds us of that movie by the name of Jaane Bhi Do Yaaron. The last scene where all the politicians (and media persons) get together to come up with a deal that gives them all a piece of the pie. The loser in the entire deal? The Common Man. Our Prime Minister says that this case is an embarrassment to the government. We cant help wonder who the real embarrassment is. Also see:

Just who is Ottavio Quattrocchi?

Last updated on: January 17, 2006 21:21 IST Share this

Ask Users

Write a Comment

Print this article

The shadow of the gun once again looms large over the Indian political scenario, nearly two decades
after the Bofors scandal first rocked India in general and the Congress in particular. Recently, the United Progressive Alliance [ Images ] government wrote to the Swiss and British governments that it has no evidenceagainst Italian businessman Ottavio Quattrocchi [ Images ], one of the main accused in India's most long-running bribe scam in a defence purchase.

Thus, B Datta, additional solicitor general of India, officially requested the foreign governments to allow Quattrocchi access to his frozen bank accounts. The high court in London [ Images ] ordered the 'defreezing' of Quattrocchi's two British bank accounts. On Monday, India's Supreme Court directed the Indian government to take steps to maintain the status quo and ensure the frozen accounts are not unlocked. But Britain's Crown Prosecution said on Tuesday that banks in that country were not bound by the Indian Supreme Court's direction that Quattrocchi should not withdraw money from his accounts in London. Here is a rediff.com primer on the controversial foreign businessman: Just who is this guy? Ottavio Quattrocchi was the India representative of Snamprogetti, a Milan-based Italian multinational company involved in engineering and construction projects. Quattrocchi was Snamprogetti's Asia representative for 16 years, till the late 1980s. It is said that during his tenure, he won as many as 60 projects worth Rs 300 billion from across Asian countries for Snamprogetti.

Sheela Bhatt: This is not about Bofors How is he linked to the Bofors guns scandal? The scandal erupted in 1987 when Swedish radio revealed that Bofors -- facing stiff international competition -- had paid more than $50 million in bribes to secure a contract for the sale of field guns worth $1.4 billion to the Indian Army [Images ]. Then prime minister Rajiv Gandhi [ Images ] was named one of the suspects in the scam. Other suspects in the scandal included Quattrocchi, an Indian arms agent called Win Chadha and Martin Ardbo, the Bofors chief. How could an Italian businessman be the middleman between the Indian Army and Bofors, which is a Swedish company? The answer lies in Quattrocchi's proximity to the Gandhi family. It is said he became close to the Gandhi family because Sonia Gandhi [ Images ], Rajiv Gandhi's wife and now the Congress party president, hails from Italy [ Images ]. Quattrocchi shifted to India soon after Rajiv married Sonia. But was he politically so well connected in India to be part of a defence deal? It is alleged Quattrocchi was so influential with the office of the prime minister -- Rajiv Gandhi -- that bureaucrats used to stand up when Quattrocchi visited them. It is also alleged he could get ministers and bureaucrats sacked if they snubbed or challenged his authority. Did the Central Bureau of Investigation dig up proof of Quattrocchi's involvement in the Bofors scandal? The CBI's Bofors chargesheet against Quattrocchi claimed he was one of the beneficiaries of the bank accounts into which kickbacks in the Bofors deal were deposited. The CBI said AE Services, a firm owned by Quattrocchi and his wife Maria, had received illegal payments to the tune of $7 million from the Swedish arms manufacturer. CBI can question me: Quattrocchi If Quattrochi was in India, why wasn't he arrested? When the Swiss authorities formally communicated to the Indian government in 1993 that the kickbacks in the Bofors case were deposited in Quattrocchi's accounts, a Congress government -- headed by P V Narasimha Rao -- was in power. The Opposition immediately wanted the government to impound Quattrocchi's passport and arrest him. But that was not done, and he was allowed to leave the country.

Where did he flee? He left India for Malaysia on July 29, 1993. This forced the CBI to ask the Malaysian authorities and go through the elaborate legal requirements of that country in order to get Quattrocchi to face trial. The CBI's efforts to get Quattrocchi extradited to India have not yet succeeded. The Interpol too wanted Quattrocchi. The international agency's notice on him said: 'Quattrocchi and his wife were involved in fraud and bribery committed in India between 1982-1987. A percentage of the money paid by the Indian government was illegally transferred by the AB Bofors Company to bank accounts in Switzerland [ Images ], to the benefit of certain Indian public servants and their nominees.' Does the Manmhohan Singh government's 'clean chit' to Quattrocchi absolve him of all charges? Yes, in a way. Prime Minister Singh [ Images ] said the action of defreezing Quattrocchi's London bank accounts was taken by the CBI in consultation with law officers. What does the man himself have to say? In a statement issued from Milan in Italy this week, Quattrocchi said: 'I believe it would be in interest of justice and India's reputation if this case against me is brought to an end.'

I come to bury Bofors, not to praise it

Posted By: Vir Sanghvi | Posted On: 02 May 2009 12:51 PM

Bofors! no, dont turn the page. I know your eyes glaze over every time you see the word, and that the people of India have been bored to death by 25 years of a scandal that has reached no kind of conclusion. But I come to bury Bofors, not to praise it. There was a phase in my life when I was what you might call a Bofors junkie. I was obsessed with the case. I knew every last detail of the deal. I could tell you exactly how much money was paid into each of the three accounts that received the commissions/kickbacks. I interviewed CBI directors about the investigation. I went to Guildford in Surrey to trace the office of AE Services, one the three companies in question. I asked the Hindujas for their side of the story. I did one of the first interviews with Win Chaddha. I followed the libel case filed by Ajitabh Bachchan in London against a Swedish newspaper which claimed that he received the kickbacks. But now, I am as fed up as you are. If Bofors means nothing to you and I suspect thats probably true then a brief history lesson may be in order. I promise Ill try and keep it as short and simple as possible. The case dates back to 1985 when India ordered howitzers from a Swedish company called Bofors. Nobody disputes that the weapons are good but the case took a different turn when Bofors itself was the subject of a corruption scandal in Sweden. As part of its investigations into this scandal, Swedish Radio reported, in early 1987, that Bofors had paid bribes to get the Indian contract. In the arms business, the difference between illegal bribes and legitimate commissions can be difficult to discern. But clearly some money had been paid out. Chitra Subramaniam of The Hindu found documents proving that three companies had received money from Bofors: Svenska, Pitco and AE Services. We know now that Svenska was run by Win Chaddha who was Bofors official agent in India. Pitco was a Hinduja company. But the identity of the owner of AE Services remains a mystery. Even if Chaddha and the Hindujas received money from Bofors, this is not a big deal. Companies pay commissions all the time. It is not corruption unless you can prove that a) this

money was passed on to a politician or an official and b) that it influenced the purchase decision. So, the Government of Indias investigators focused on AE Services which, Bofors had claimed, was a legitimate consultant. It was no such thing. I traced its registered office to a post box in a lawyers firm in Surrey. I tried to find its owners but the trail led to a secret trust registered in Vaduz, Liechtenstein. The governments investigators had their own theory backed by gut instinct rather than evidence. They thought that AE Services was a Congress front which had been set up by Arun Nehru (by then Nehru had switched sides, so perhaps he told them this) and then, after Nehru left the party, been taken over by Satish Sharma or Ottavio Quattrocchi or Ajitabh Bachchan. Twenty-five years later, we still havent solved that mystery. Arun Jaitley, who has investigated Bofors since 1989, says that he has proof that Quattrocchi was the beneficiary of the AE Services accounts. (But he also had proof at one stage that Ajitabh was the beneficiary). Perhaps Arun is right. But the Bofors investigators face three problems. One, the proof against Quattrocchi has not convinced courts of law in two countries. The BJP government tried to extradite Quattrocchi from Malaysia, but four different Malaysian courts threw out the evidence as not being good enough. The CBI tried again when Quattrocchi was located in South America. Once again, the courts decided there was no merit in the case. Two, even if Quattrocchi took the money, this is not proof of corruption. Quattrocchi was a boastful, wheeling-dealing kind of guy who represented an Italian infrastructure projects company. Allegations that he made deals were routinely levelled by the Opposition in the 1980s. To prove corruption, you need to prove that he was more than just a wheeler-dealer. You need to prove that he passed the money on to Rajiv Gandhi or somebody else in a position of authority. So far, theres not a shred of evidence to support that claim. Three, even if you cant prove that Quattrocchi passed the money on to an official or a minister, you must be able to show how a bribe influenced the decision to buy Bofors. Its here that the Opposition runs into its biggest problem. The Army headquarters (and not the government) chose the Bofors gun over its rivals. From the time that the Armys recommendation reached the government to the time that the decision was taken, only 24 hours elapsed.

"The government has probably spent more money investigating Bofors than the beneficiary of AE Services ever earned from the deal!"

So, even if it can be proved that Quattrocchi took the money, he could not possibly have influenced the decision unless he bought off the Indian Army as well.

And I dont see the BJP making that allegation. Why, then, is the Opposition still so obsessed with Bofors? Why has it lost interest in Chaddha or the Hindujas? Why is it focusing only on Quattrocchi, against whom the case seems so weak that it keeps being thrown out by courts? Let me ask you a counter-question. Supposing the alleged beneficiary of the AE Services account had been called Golu Mittal or Mottu Singh, would the BJP have cared so much? I think we know the answer. The only reason they go on and on about Quattrocchi is because he is an Italian. That, they think, is one way of getting at Sonia Gandhi. As Narendra Modi suggests, sons of the soil are persecuted while sons of spaghetti run free. Its a nasty, xenophobic agenda based on little more than innuendo, gossip, speculation and rumour. The case itself is full of gaps and holes. And how much money are we talking about? Well, the entire kickback amount was Rs 64 crore. I think AE Services got something like a third of that. Thats not huge by the standards of todays multi-crore scams. The government has probably spent more money investigating Bofors than the beneficiary of AE Services ever earned from the deal! It is nobodys case that we ignore a scam only because people are bored of it. But surely, after 25 years of fruitless inquiry, we should admit that this case is never going to get anywhere? Everyday the people of India are ripped off by some corrupt politician. And yet we go on and on about this relatively minor league deal from a quarter century ago. Does this make sense? To the BJP it does: because it keeps the Italian issue alive. But for the rest of us? Well, Ill go back where I started. Yes, Bofors is a tiresome irrelevance. And its no wonder that our eyes glaze over when it is mentioned

View Associated Article

Comments

Dr.Ashok Prasad 23 Apr 2010 To a certain extent I agree with Mr.Sanghvi that we should not be obsessed with the Bofors case,but there are issues that he has not touched on which are very important.Quattrocci got waya scot free because of undisputed complicity of the Congress Indira party and Sonia-there is enough evidence to justify this!Even the only leverage teh Govt had-his frozen accounts were unfrozen courtesy Sonia lackey and known corrupt Hansraj Bharadwaj!It is govt.coverup that needs investigation.

Ripul 11 May 2009 We all know India under congress had been a corrupt nation before, but now times are changing we have RTI and Media, what we need to understand is money should be spend the right way . What's more important Right now is the Issue of Money hidden in Swiss Banks, For me this issue is more important than Bofors of what happened in India way back 25 years.

Blame it on Bofors
The many fallouts of a lingering controversy. In his weekly column in the Hindustan Times today, Vir Sanghvi makes a spirited case for finally burying the Bofors controversy. The main thrust of his argument is that it is a worn out issue, with no conclusive proofs and is brought out from the closet only to embarrass Sonia Gandhi by establishing an Italian connection between Quattrocchi and her. Thedetails of the controversy are too well-known to be repeated here. Even if the complacency of the Congress governments can be attributed to complicity, the third front and the NDA governments did no better in their attempts to nail the guilty in the Bofors kickbacks. And the plethora of scams from coffins to the Barak deal have deprived the BJP of any higher moral ground on the subject. This point has been made in his recent book by DG Sundaram, the joint secretary (ordnance) during Bofors guns procurement.

So while Bofors is still a presumption, Tehelka (during NDA regime) has become a reality of corruption because of the visuals. [The Statesman]
Leaving the politics of the controversy apart, the real damage done by the endless pursuit of Bofors controversy was rather unintended. It made the politicians, bureaucrats and generals wary of taking a quick and timely decision on procuring any military equipment. The prevailing defence procurement procedures have become so sluggish and cumbersome that large capability gaps in defence preparedness have been created. As the Chairman of the parliamentary defence committee during the NDA regime said in Parliament

Thanks to the Bofors controversy, officers are scared and are unwilling to take decisions.
While corruption in defence deals however common all over the world cant be condoned, these delays cause far greater concern than kickbacks because they severely affect defence preparedness and the ongoing modernisation drive. Moreover, arms deals are, in effect, an instrument of foreign policy. Therefore, the spin-offs from these deals are not known to public and the media at large. Sukhoi aircraft deal signed by the lame duck Narsimha Rao government in 1996, with advances of around $350 million paid to Russia even before the final prices were negotiated, is perhaps the best example of the ubiquitous national interest.

Now the mystery of what exactly that larger national interest was that had led to such haste and a large advance payment in the last days of the Rao government. It seems that Yeltsin had told Rao that he, too, was heading for elections, that the Sukhoi factory happened to be in his constituency, was too broke to even pay salaries to its staff and if India could pay it that advance it would work like magic in his election campaign. That advance was, therefore, a political deal between the big boys, to be adjusted in the final pricing later. It was a conscious, diplomatic decision, cleared by Rao (who, in retirement many years later, confirmed this to me with a wicked smile), and executed by none else than the then finance minister, Manmohan Singh. Now, go over this story carefully, underline the cast of characters: Rao and Manmohan, Vajpayee and Jaswant, Mulayam Singh Yadav and you know why it is relevant today. Rao took an incredibly bold decision (given the Bofors background) which the BJP, locked

in a bitter electoral battle with him, was suspicious of, but did not make an issue of, in the national interest. When the BJP found the real reason (the Yeltsin request) they kept quiet they in fact said Raos government had handled it masterfully. Then Mulayam Singh, whose entire politics is based on anti-BJPism, was large-hearted enough to open the files to its leaders and take their advice, again in the national interest. In one story, therefore, you had the top leadership of all three major political groups bitter enemies involved. Yet they talked, shared confidences, and did the right thing by their nation.[Indian Express]
Every time it seems that the ghost of Bofors has been exorcised, it comes back to haunt the Indian defence services. The Swedish foreign minister has acknowledged the setback to the Indo-Swede defence relations due to the Bofors controversy.

That ghost (of Bofors) has been there for quite some timeIt (the controversy surrounding the deal) was a very painful affair for both India and Sweden.[Hindu]
Finally, there was another fallout of the Bofors controversy. As explained by AK Chakraborty in his book Dismissal of the Naval Chief: Arms Deals Expose, the level of defence reportage which was not very high even then took a further hit. Arun Singh passed an order in 1988 to keep the defence journalists out of the defence ministry, with their passes restricting their access to five rooms of DPR. These orders have never been rescinded since, leading to reduced transparency or is it increased opacity in the corridors of the defence ministry. Those who blame the pathetically abysmal coverage of defence affairs in the Indian mainstream media could perhaps take a second look at the Bofors controversy in that light. Well, this blogger agrees with Vir Sanghvi that the Bofors controversy needs to be buried. But not for the reasons of fatigue that he articulates. It is for the irreparable damage the unending Bofors saga has caused, and continues to cause, to Indias defence preparedness by bringing the defence acquisition process virtually to a halt.

NEW DELHI: The Bofors gun deal, signed between the Indian government and the now defunct Swedish arms company AB Bofors 21 years ago, has once again come to haunt the government and politics of this country. Ottavio Quattrocchi, the Italian businessman accused of being a conduit in the bribes that were alleged to have been paid to facilitate the deal, was detained in Argentina and then subsequently released on bail, much to the embarrassment of Indian investigators who have been on his trail. Following is the chronology of events in the Bofors howitzer payoff scandal: March 24, 1986: A $1.4 billion contract between the Indian government and Swedish arms company AB Bofors signed for supply of over 400 155mm howitzers. April 16, 1987: Swedish Radio claims Bofors paid kickbacks to top Indian politicians and key defence officials to secure the deal. April 20, 1987: Then Indian prime minister Rajiv Gandhi assures the Lok Sabha that neither was any middleman involved in the deal nor were kickbacks paid. August 6, 1987: Joint Parliamentary Committee (JPC) set up under B. Shankaranand to probe into allegations of kickbacks. February 1988: Indian investigators visit Sweden. July 18, 1989: JPC report presented to parliament. November 1989: Rajiv Gandhi loses power as Congress defeated in general elections. December 26, 1989: Then prime minister V.P. Singh's government bars Bofors from entering into any defence contract with India. January 22, 1990: Central Bureau of Investigation (CBI) registers complaint in the case. January 26, 1990: Swiss authorities freeze bank accounts of Svenska and AE Services, who allegedly received unauthorised commissions for the deal. February 17, 1992: Journalist Bo Anderson's sensational report on the Bofors payoffs case published. December 1992: Supreme Court reverses a Delhi High Court decision quashing the complaint in the case. February 9, 1993: Supreme Court rejects former Bofors agent Win Chadha's plea for quashing the letters rogatory sent by the trial court to its counterpart in Sweden seeking assistance in the case. July 12, 1993: Swiss federal court rules that India was entitled to Swiss bank documents pertaining to the kickbacks. July 29/30 1993: Italian businessman Ottavio Quattrocchi, who was representing Italian fertiliser firm Snam Progetti for several years, leaves India to avoid arrest warrant the CBI was seeking. January 21, 1997: After four years of legal wrangles, secret documents running into over 500 pages given to Indian authorities at a public ceremony in Berne. January 30, 1997: CBI constitutes special investigation team for the case. February 10, 1997: CBI questions ex-army chief General Krishnaswamy Sundarji. February 12, 1997: Letters rogatory issued to Malaysia and United Arab Emirates (UAE) seeking arrest of Quattrocchi and Win Chadha. May 1998: Delhi High Court rejects Quattrocchi's plea for quashing of the 'red corner' notice issued by Interpol at the request of CBI. October 22, 1999: CBI files first chargesheet naming Win Chadha, Quattrocchi, former Indian defence secretary S.K. Bhatnagar, former Bofors chief Martin Ardbo and Bofors company. Former prime minister Rajiv Gandhi's name figured as "an accused not sent for trial" as he was killed in 1991. November 7, 1999: Trial court issues arrest warrants against Quattrocchi, while summoning other four accused. December 13, 1999: CBI team goes to Malaysia to seek extradition of Quattrocchi; fails in its efforts. Early 2000: Quattrocchi approaches the Supreme Court for quashing of arrest warrant against him. Court asks him to appear before CBI for interrogation while protecting him from being arrested. Quattrocchi refuses to accept the order, saying his counsel misled the court. March 18, 2000: Chadha comes to India to face trial. July 29, 2000: Trial court issues "open non-bailable arrest warrants" against Ardbo. September 4, 2000: Chadha moves Supreme Court for permission to go to Dubai for treatment. Supreme Court rejects plea a week later. September 29, 2000: Hindujas issue statement in London saying funds received by them from Bofors had no connection with the gun deal. October 9, 2000: CBI files supplementary chargesheet naming Hinduja brothers as accused in the Bofors gun deal. December 20, 2000: Quattrocchi arrested in Malaysia, gets bail but is asked to stay within the country. August 6, 2001: Former defence secretary Bhatnagar dies of cancer. October 24, 2001: Win Chadha dies of heart attack at his New Delhi residence. November 15, 2002: Hinduja brothers formally charged with cheating, criminal conspiracy and corruption. December 2, 2002: Malaysian court denies India's request for Quattrocchi's extradition. July 28, 2003: Acting on India's request, Britain freezes Quattrocchi's bank accounts. January 4, 2004: Swiss authorities agree to consider CBI's request for providing Quattrocchi's bank details. February 4, 2004: Delhi High Court clears Rajiv Gandhi of involvement in the Bofors kickbacks scandal. May 31, 2005: Delhi High Court clears Hindujas of involvement in the scandal. Dec 31, 2005: The CBI tells Crown Prosecution Service (CPS), London, that it has not been able to link the money in two accounts of Quattrocchi with the Bofors kickbacks

Jan 7, 2006: Two accounts of Quattrocchi in London banks containing 3 million euros and $1 million were defreezed after then additional solicitor general B. Dutta met the CPS lawyers. Feb 6, 2007: Quattrocchi detained at Iguazu international airport on an Interpol lookout notice. Feb 13, 2007: CBI writes to Ministry of External Affairs for Argentinean Extradition Act and tells Interpol Buenos Aires that documentation being prepared for extradition proceedings. Feb 24, 2007: Fresh warrant of arrest against Quattrocchi obtained from Delhi court Feb 26, 2007: Quattrochhi released on bail with condition that he does not leave Argentina. Feb 28, 2007: Two-member CBI team to leave for Argentina.

The Bofors scandal was a major corruption scandal in India in the 1980s; then the Prime Minister Rajiv Gandhi and several others were accused of receiving kickbacks from Bofors AB for winning a bid to supply India's 155 mm field howitzer. The scale of the corruption was far worse than any that India had seen before, and directly led to the defeat of Gandhi's ruling Indian National Congress party in the November 1989 general elections. It has been speculated that the scale of the scandal was to the tune of Rs. 400 million.[1] The case came to light during Vishwanath Pratap Singh's tenure as defense minister, and was revealed through investigative journalism by Chitra Subramaniam and N. Ram of the newspapers the Indian Express and The Hindu.[2]

Ottavio Quattrocchi was accused as the middleman in the scandal because of his intimacy with Rajiv and his Italian-born wife Sonia Gandhi. Magazine cover from India Today

The name of the middleman associated with the scandal was Ottavio Quattrocchi, an Italian businessman who represented the petrochemicals firm Snamprogetti. Quattrocchi was reportedly close to the family of Prime Minister Rajiv Gandhi and emerged as a powerful broker in the 1980s between big businesses and the Indian government. While the case was being investigated, Rajiv Gandhi was assassinated on May 21, 1991 for an unrelated cause. In 1997, the Swiss banks released some 500 documents after years of legal battle and the Central Bureau of Investigation (CBI) filed a case against Quattrocchi, Win Chadha, also naming Rajiv Gandhi, the defence secretary S. K. Bhatnagar and a number of others.[3] In the meantime, Win Chadha also died.[4] Meanwhile February 5, 2004, the Delhi High Court quashed the charges of bribery against Rajiv Gandhi and others,[5] but the case is still being tried on charges of cheating, causing wrongful loss to the government, etc. On May 31, 2005, the High Court of Delhi dismissed the Bofors case allegations against the British business brothers, Shrichand, Gopichand and Prakash Hinduja.[6] In December 2005, the Mr B. Daat, the additional solicitor general of India, acting on behalf of the Indian Government and the CBI, requested the British Government that two British bank accounts of Ottavio Quattrocchi be unfrozen on the grounds of insufficient evidence to link these accounts to the Bofors payoff. The two accounts, containing 3 million and $1 million, had been frozen. On January 16, the Indian Supreme Court directed the Indian government to ensure that Ottavio Quattrocchi did not withdraw money from the two bank accounts in London. The CBI, the Indian federal law enforcement agency, on January 23,

2006 admitted that roughly Rs 21 crore, about US $4.6 million, in the two accounts have already been withdrawn. The British government released the funds based on a request by the Indian government.[7] The deals cost the Government of India an extra 160 crore rupees.[8] However, on January 16, 2006, CBI claimed in an affidavit filed before the Supreme Court that they were still pursuing extradition orders for Quattrocchi. The Interpol, at the request of the CBI, has a long-standing red corner notice to arrest Quattrocchi.[9] Quattrocchi was detained in Argentina on 6 February 2007, but the news of his detention was released by the CBI only on 23 February. Quattrocchi has been released by Argentinian police. However, his passport was impounded and he was not allowed to leave the country.[10] However, as there was no extradition treaty between India and Argentina, the case was presented in the Argentine Supreme Court. The government of India lost the extradition case as the government of India did not provide a key court order which was the basis of Quattrochi's arrest. In the aftermath, the government did not appeal this decision owing delays in securing an official English translation of the court's decision.[11] The Italian businessman no longer figures in the CBI's list of wanted persons and the 12-year Interpol red corner notice against the lone surviving suspect in the Bofors payoff case has been withdrawn from the agencys website after the CBIs appeal.[12] A Delhi court discharged Quattrocchi from the case, as there was no credible evidence against him, on 4 March 2011.[13]

Bofors scam
The Bofors scandal is known as the hallmark of Indian corruption. The Bofors scam was a major corruption scandal in India in the 1980s; when the then PM Rajiv Gandhi and several others including a powerful NRI family named the Hindujas, were accused of receiving kickbacks from Bofors AB for winning a bid to supply Indias 155 mm field howitzer. The Swedish State Radio had broadcast a startling report about an undercover operation carried out by Bofors, Swedens biggest arms manufacturer, whereby $16 million were allegedly paid to members of PM Rajiv Gandhis Congress.
Contents
[hide]

1 People involved 2 Scam 3 Investigation 4 Prosecution

People involved

Win Chadha

A Dubai-based businessman and arms agent named as one of the key accused in the scandal died in October 2001, days before a court was to give its verdict on his application to visit his family in the Gulf country. A former agent of Swedish arms manufacturer AB Bofors, Chadha was accused of receiving kickbacks in the Rs.14.37 billion deal signed in March 1986 for the supply of 400 155mm Howitzer field guns to India. He was extradited to India from Dubai in March 2000. He was given bail but was asked not to leave the country.

SK Bhatnagar,former defence secretary

A key figure in the long-running Bofors arms case, died in 2001 at the age of 71. Bhatnagar was heading the Price Negotiating Committee that allowed the Bofors bag the contract. He was accused of misusing his official position to tilt the scales in favour of the Swedish firm. He was given two extensions in office by Gandhi before he retired in 1989 and was made governor of Sikkim.

Martin Karl Ardbo

The former AB Bofors president, who signed the gun deal, died a 'proclaimed offender' in Sweden in July 2004. He was 77 and was suffering from cancer in his last days. It was he who had authored a diary in 1987 that hinted at the involvement of Gandhi, his Swedish counterpart Olaf Palme, the Hinduja brothers and Italian businessman Ottavio Quattrocchi in the case. He was a former Swedish naval officer.He was called called for trial in India in 1999 but refused to appear.

Rajiv Gandhi

Accused of having received kickbacks

Ottavio Quattrocchi

An Italian businessman who represented the petrochemicals firm Snamprogetti. Quattrocchi was reportedly close to the family of Prime Minister Rajiv Gandhi and emerged as a powerful broker in the 1980s between big businesses and the Indian government.

  

Shrichand Hinduja

Gopichand Hinduja

Prakash Hinduja

Scam
The Bofors scandal was a major corruption scandal in India in the 1980s; the then Prime Minister Rajiv Gandhi and several others were accused of receiving kickbacks from Bofors AB for winning a bid to supply India's 155 mm field howitzer. The scale of the corruption was far worse than any that India had seen before, and directly led to the defeat of Gandhi's ruling Indian National Congress party in the November 1989 general elections. It has been speculated that the scale of the scandal was to the tune of Rs. 400 million.The case came to light during Vishwanath Pratap Singh's tenure as defence minister, and was revealed through investigative journalism by Chitra Subramaniam and N. Ram of the newspapers the Indian Express and The Hindu.[2] Ottavio Quattrocchi was accused as the middleman in the scandal because of his intimacy with Rajiv and his Italian-born wife Sonia Gandhi. Magazine cover from India Today The name of the middleman associated with the scandal was Ottavio Quattrocchi, an Italian businessman who represented the petrochemicals firm Snamprogetti. Quattrocchi was reportedly close to the family of Prime Minister Rajiv Gandhi and emerged as a powerful broker in the 1980s between

big businesses and the Indian government. Even while the case was being investigated, Rajiv Gandhi was assassinated on May 21, 1991 for an unrelated cause. In 1997, the Swiss banks released some 500 documents after years of legal battle and the Central Bureau of Investigation (CBI) filed a case against Quattrocchi, Win Chadha, also naming Rajiv Gandhi, the defence secretary S. K. Bhatnagar and a number of others. In the meantime, Win Chadha also died. Meanwhile February 5, 2004 the Delhi High Court quashed the charges of bribery against Rajiv Gandhi and others, but the case is still being tried on charges of cheating, causing wrongful loss to the Government, etc. On May 31, 2005, the High court of Delhi dismissed the Bofors case allegations against the British business brothers, Shrichand, Gopichand and Prakash Hinduja.

Investigation
CBI was given investigation but too much interference by government made the agency ineffective.

Prosecution
Most of the accused died of old age while the investigation still hasn't been concluded

Quattrocchi bribed in Bofors deal: IT panel

Sumon K Chakrabarti , CNN-IBN Updated Jan 03, 2011 at 07:42pm IST

0 inShare Share on Tumblr

Click to play video New Delhi: The Income Tax Appellate Tribunal has nailed Italian businessman Ottavio Quattrocchi in Bofors scam. The tribunal says kickbacks were paid to Quattrocchi and Win Chadha in the nearly Rs 1,500 crore worth Bofors deal. It notes that 242.62 million Swedish kroners were paid to Quattrocchi and Chadha in kickbacks. The bribes were paid into accounts of M/s Colbar Investments Limited Inc and M/s Wetelsen Overseas, controlled by Quattrocchi and his wife Maria Quattrocchi. The kickback was paid by M/s AB Bofors as commission to Quattrocchi and Chadha through M/s AE Services and M/s Svenska. The tribunal says Quattrocchi is liable to pay income tax in India for the bribes he received as he was staying in India then. Even the money received by Chaddha as kickback is taxable, the tribunal said. The kickbacks also violated rules as middlemen are illegal in defence deals in India. Due to the kickback paid to the duo, India had to pay an excess amount of 242.62 million Swedish kroners for the guns. Despite having full knowledge about the India policy that there should not be any agent in the deal, Bofors continued with its old agent. The company acted in violation of the Indian defence policies and rules and harmed the public exchequer, besides committing breach of propriety. Despite Indian government's insistence not to appoint or pay any agent, Bofors entered into a fresh consultancy agreement with M/s AE Services Limited of UK on November 15, 1985 at the behest of Quattrocchi. Quattrocchi's son, Massimo Quattrocchi said the Bofors issue was a "closed chapter" for him. "It does not concerrn me. It's a closed chapter. I really don't care. I was 14 when the case broke out. I don't give a damn. I am not involved. I have nothing to say nothing to add," said Massimo.

The BJP said the ruling proves their allegation that kickbacks were paid in the Bofors deal. "How can it be that CBI says that there were no kickbacks paid and the top revenue agency is saying that kickbacks are taxable. This is a discovery of truth by default. After this judicial order CBI cannot even hide its face," said BJP spokesperson Arun Jaitley.

The name Bofors has been associated with the iron industry for more than 350 years. Located in Karlskoga, Sweden, the company originates from the hammer mill "Boofors" founded 1646. The modern corporate structure was created in 1873 with the foundation ofAktiebolaget (AB) Bofors-Gullspng. A leading Swedish steel producer by the early 1870s, Bofors expanded into weapons manufacture when steel produced via the Siemens-Martin process began to be used for gun manufacture. The company's first cannon workshop was opened in 1884. Bofors' most famous owner was Alfred Nobel, who owned the company from 1894 until his death in December 1896. Nobel played the key role in reshaping the former iron and steel producer to a modern cannon manufacturer and chemical industry participant. The powder manufacturer AB Bofors Nobelkrut, later an explosives and general organic-chemical producer, was created in 1898 as a wholly owned subsidiary. By 1911 AB Bofors-Gullspng had outcompeted, bought and closed down its Finspng Swedish competitor in cannon manufacture. The company's name was shortened to AB Bofors in 1919. In 1999 Saab purchased the Celsius Group, then the parent company for Bofors. In September 2000 United Defense Industries (UDI) of the United States acquired Bofors Weapons Systems (the heavy weapons division), while Saab retained the missile interests. Thus Bofors is today split in two parts: BAE Systems Bofors (BAE Systems acquired United Defense and its Bofors subsidiary in 2005) Saab Bofors Dynamics

 

The name Bofors is strongly associated with a 40 mm anti-aircraft gun used by both sides during World War II. This automatic cannon is often simply called the Bofors gun and saw service on both land and sea. It became so widely known that anti-aircraft guns in general were often referred to as Bofors guns. Another well-known gun made by the company was the Bofors 37 mm anti-tank gun, a standard anti-tank weapon used by a variety of armies early in the war. It was built under license in Poland and the USA and was also used in a variety of tanks, including the 7TP and M3A3 Stuart. In recent years Bofors has lost much of its reputation in Sweden due to various suspect affairs,[citation needed] the most scandalous being the alleged but never proven kickbacks involved in securing a contract with the Indian Army in 1986.

KNOW YOUR BOFORS

The facts, the issues, and what lies ahead. N. RAM THE long-drawn-out Bofors drama has reached a legally and politically interesting stage. The Central Bureau of Investigation has concluded its investigation in the main and filed charge-sheets against five of the accused in the bribery case registered in 1990. They are S.K. Bhatnagar, former Defence Secretary; Ottavio Quattrocchi, wheeler-dealer and "close family friend" of Prime Minister Rajiv Gandhi; W.N. ('Win') Chadha, Bofors' longstanding agent in India; Martin Ardbo, former president of A.B. Bofors; and A.B. Bofors (which now goes by the name of Celsius). In striking contrast to the official stance during the prolonged cover-up of the Bofors scandal, Column 2 of the charge-sheet includes the "late Rajiv Gandhi" himself as an accused who cannot be sent up for trial for obvious reasons. If charges have not yet been laid against the three Hinduja brothers, G.P., Prakash and Srichand, who find mention in the document as co-conspirators and recipients of Bofors payoffs, the indications are that a charge-sheet will be filed against them once the final set of bank documents - sought by the CBI from Switzerland and blocked by the brothers through dogged legal manoeuvres - are in hand. With Judge Ajit Bharihoke of the Special Court for CBI cases taking cognizance of the charge-sheet, recording the opinion that "there is sufficient prima facie material on record to proceed" against the five accused parties, and directing issue of a non-bailable warrant against Quattrocchi and summons against the other four, the Bofors drama has entered a stage that could prove politically damaging for the Congress(I) and its president, Sonia Gandhi. In October-November 1999, she put her party in an unenviable position by requiring it to defend the indefensible, thus making it hostage to Bofors once again. This attitude is very much in line with the famous official response of the Rajiv Gandhi government, in April 1987, to the original bribery charges that surfaced in the Swedish media: "false, baseless and mischievous." With Sonia leading from the front and proclaiming in Parliament that her party "shall not tolerate the framing of an innocent man who is not in a position to defend himself", loyal camp-followers have been reduced to twisting the documented facts ludicrously and denying the crux of the criminal case in a confused, shrill, almost hysterical way. One camp-follower has even put out a new line that Rajiv Gandhi, who was squeaky clean on Bofors, might have been the victim of a 'sting' set up by Quattrocchi and Arun Nehru, and that Bofors itself, which paid no bribes but only 'winding-up' charges, might have been among those who were "cheated".1 IN the face of such attitudes, the crux of the Bofors criminal case, as investigated by the CBI, deserves emphasis. It is laid out in legalese, but clearly enough, in the CBI's charge-sheet: "... between 1982 and 1987, certain public servants entered into a criminal conspiracy with W.N. Chadha, Martin Ardbo, G.P. Hinduja and others in India and abroad, and in pursuance thereof, committed offences of criminal conspiracy, bribery, criminal misconduct by public servants, cheating, criminal breach of trust, forgery for the purpose of cheating and using as genuine a forged document in respect of the contract dated March 24, 1986 entered into between Government of India and M/s. AB Bofors." Further, the charge-sheet alleges, "the accused S.K. Bhatnagar, W.N. Chadha... Ottavio Quattrocchi, Martin Ardbo, M/s. Bofors and the late Shri Rajiv Gandhi entered into/were parties to a criminal conspiracy with some persons at New Delhi (India), Sweden, Switzerland and other places during the period 1985-87 and thereafter, with an object to award a contract by Government of India in favour of M/s Bofors" for the purchase of Bofors

155 mm howitzers "by abuse of official position by the abovesaid public servants and for causing wrongful gain to private persons/others and corresponding loss to the Government of India in the said gun deal." Take away the vital part played in the Bofors case by "public servants", as defined under the Prevention of Corruption Act 1947, and the bribery charges have no leg to stand on. A bank document involving A.B. Bofors, Pitco, Sangam Ltd, Skandinaviska Enskilda Banken and Sveriges Riksbank, the Swedish Central Bank. It is an application for making a foreign exchange remittance, payable as "provision" (commission), to Pitco c/o Sangam Ltd, London, by Bofors. The document is dated November 17, 1982. Yet, the documented facts have bribery written all over them. A massive order of illegitimate and unacknowledged payments, termed "commissions" and calculated on a percentage basis, was made by the Swedish arms manufacturing company into secret Swiss bank accounts after the Indian howitzer contract was won on March 24, 1986. The internal Bofors documents, seized by the Swedish police, gained by The Hindu's investigation in 1988-89, and verified in the CBI investigation, have made it absolutely clear that the payoffs made by Bofors were directly contingent on winning the contract. The payments were specifically for 410 field howitzers and accessories the Rajiv Gandhi government purchased from Bofors as part of an SEK 8.41 billion or Rs. 1,437.72 crores advanced 155 mm gun system. Had Bofors lost the contract to its French rival, Sofma, or to any other bidder, there would have been no question of paying these "commissions" to the contracted parties. THE $50 million payoffs were in flagrant contradiction with assurances repeatedly given by Bofors to the Government of India to the effect that it had no agents or representatives in India for the howitzer deal. Between May and July 1984, the Negotiating Committee set up, for the howitzer acquisition, by the Ministry of Defence was officially informed by the four shortlisted suppliers, Sofma, Bofors, the International Military Services Ltd of the United Kingdom and Voest Alpine of Austria, about their agents in India. Bofors identified W.N. Chadha as its agent. Following a discussion of the matter in the Negotiating Committee, its chairman, Defence Secretary Bhatnagar, met representatives of the four shortlisted howitzer manufacturers on May 3, 1985. He informed them that "the present Government did not approve of the appointment of Indian agents acting for foreign suppliers"; that in case they had made provision for any commission for their Indian agents, they should make a suitable reduction in their offers; and that they would be "disqualified" if it came to the notice of the Government of India that they had appointed Indian agents. Ardbo was specifically given this message. In response, he confirmed to

Bhatnagar that Chadha was acting as Bofors' agent in India, and promised that he would consider the advice of the Defence Secretary on the Indian Government's policy and take "necessary action". Ardbo, however, did not disclose the name of any other agent. On July 22, 1985, a telex message arrived from the Military Attache at the Indian High Commission in London mentioning Chadha as a Bofors representative in India, but Bhatnagar failed to ask Bofors for a clarification on this. So squeaky clean did the Indian Government want to appear in the matter of defence deals that in October 1985 Prime Minister Rajiv Gandhi (according to a 1987 official communication from Bofors) "emphasised" in a New York meeting with Swedish Prime Minister Olof Palme that "Bofors should not utilise middlemen for the purpose of winning the contract". The percentage-based "commissions" were subsequently declared by Bofors, when the storm over bribes broke out in Sweden and India, to be "winding up costs", that is, out-of-court settlements of contractual obligations. And this version was touchingly accepted by the Rajiv Gandhi government, even after the documentary evidence gained by The Hindu (from unimpeachable sources in Sweden) that demolished the "winding up" story continued to pile up. WHO were the principal recipients of the Bofors payoffs? What is interesting is that the answer to this question furnished in 1988-89 by the journalistic investigation has been vindicated fully. The payment documents, read along with the relevant Ardbo diary entries and notes, have established the following. Win Chadha, the acknowledged Bofors "agent", and the Hindujas, who have always denied that they had anything to do with the Bofors-India howitzer deal, had to be paid as owners of older 'commission entitlements' (the Svenska-Chadha entitlement and the Pitco-Moresco-Hinduja entitlement) while the mysterious shell company, A.E. Services Ltd, was a new entrant that could not possibly have performed any service other than a politically corrupt one. The 1987 diary and "daily notes" kept by Ardbo, the Bofors chief executive, offer dark hints about the involvement of Rajiv Gandhi ("R" of Ardbo's handwritten record), Olof Palme ("P"), Arun Nehru ("Nero" and "N"), the Hindujas (referred to variously as "Hanssons", "G.P.H.", "H", and "S.P.,G.P.", Ottavio Quattrocchi ("Q"), Bob Wilson ("Bob") and others involved in the affair. Subsequently, it came to light in the Swiss legal and official process that the seven appellants whose cases were dismissed by Switzerland's highest court, the Federal Court, in July 1993 were Gopichand Hinduja, Srichand Hinduja, Prakash Hinduja, Jubilee Finance Corporation, W.N. Chadha, Svenska Inc., and Quattrocchi. This revelation set the stage for the arrival of some 500 pages of Swiss bank documents and related papers containing explosive information on the recipients and the deep end of the payoffs. The bank documents relating to the three Hinduja brothers as recipients of Bofors payoffs are awaited. But so far as Chadha is concerned, the CBI investigation has nailed him as the person behind the Panamabased Svenska Inc., which received a payment of SEK 188.40 ($29.44 million) for the Bofors-India howitzer deal. The charge-sheet mentions that although Chadha denied "any connection with or even knowledge of Svenska Inc." before the Joint Parliamentary Committee and the Income Tax authorities, the investigation had established that Chadha had "full Power of Attorney with the fullest rights and power to substitute any one's else name in place of its own, to open and operate an account on behalf of M/s Svenska Inc." Furthermore, the investigation found that the Bofors payoffs were credited to Chadha's Account No. 99921-TU with the Swiss Bank Corporation, Geneva. Chadha, it turned out, had given full powers of Attorney for this account to his wife, Kanta W. Chadha, and his son, Hersh W. Chadha. But the real investigative breakthrough relates to Quattrocchi, the 'Q' of the Ardbo diary, as the mover behind Bofors' payment to the shell company, A.E. Services Ltd. The Swiss bank documents, and the

CBI's resourceful investigation of the neck-deep involvement of this "close family friend" of Rajiv Gandhi, have taken our knowledge of the powerful interest behind A.E. Services Ltd much beyond what the media investigation was able to discover in 1988-1990. In a sworn affidavit dated December 10, 1993, Myles Stott of A.E. Services Ltd disclosed that "the initial approach to me came from Ottavio Quattrocchi" and that "as a result of this approach, I requested R.A. W(ilson) to contact Ardbo". He added that "consequently, a contract was drawn up between A.E. Services and Bofors dated November 15, 1985". Stott also revealed that he received key transactional instructions from one S.I. Mubarak ("SIM"). "In August 1986 I was requested to open an account with Nordfinanz (NFZ) Bank in Zurich in the name of A.E. Services Ltd. On September 8, 1986, NFZ account was credited with a transfer made by Bofors of $7.3 million... SIM was informed of this receipt and instructed me to make various disbursements of which the largest sum... was to be made to Colbar Investments, a Panamanian company." THE documents in the CBI's possession establish Quattrocchi's deep-end involvement in the Bofors corruption scandal. On September 3, 1986, Bofors remitted a sum of SEK 50.46 million ($7.34 million) to Account No. 18051-53 with Nordfinanz Bank, Zurich. In September 1986, amounts totalling $7.25 million were transferred out of this account into Account No. 254.561.60 W of M/s Colbar Investments Limited Inc., Panama with the Union Bank of Switzerland, Geneva. On July 25, 1988, an amount of $7.94 million was transferred out of the Colbar account to Account No. 488.320.60 X of M/s Wetelsen Overseas SA with the Union Bank of Switzerland, Geneva. On May 21, 1990, an amount of $9.20 million was transferred out of the Wetelsen account to Account No. 123983 of International Investments Development Co. with Ansbacher (CI) Limited, Guernsey, Channel Islands. Within ten days of its receipt in Guernsey, the amount of $9.20 million was channelled into various accounts in Switzerland and Austria. Quattrocchi has maintained that he had "nothing to do with Bofors", that he did not receive any payment from Bofors, that he did not introduce Bofors to A.E. Services, and that he did not have "any connection with A.E. Services" ("Quattrocchi breaks his silence", cover story interview in Outlook, March 22, 1999). More surprisingly, on August 13, 1999, Sonia Gandhi felt confident enough to speak up for Quattrocchi at her first press conference: "The CBI has found him suspect. But we have not seen till today the papers that he has done something." A devastating factual answer came within months in the CBI's charge-sheet. The criminal investigation has established beyond any dispute that Quattrocchi made "the initial approach" to Stott and that, in consequence, Bob Wilson contacted Ardbo, a contract, dated November 15, 1985, was drawn up between A.E. Services Ltd and Bofors, an account was opened for the shell company in Nordfinanz Bank, Bofors paid a hefty bribe into this account, and this money was subsequently channelled, in a chain of secret transactions in new places, to a very deep end. The CBI's investigation has also been able to establish that the Colbar and Wetelsen accounts into which the Bofors bribe was transferred were controlled by Ottavio and Maria Quattrocchi. ANALYTICALLY, the Bofors-India kickback affair can be understood in terms of five modes of action. The first is the decision-making on the choice of howitzer. The second comprises the arrangements for the payoffs. The third is the cover-up and crisis management. The fourth is the journalistic investigation and expose. The fifth is the CBI's criminal investigation, assisted by the Swiss Federal Police and the Swiss courts, and prosecution before Judge Bharihoke's Special Court for CBI cases. The first two modes of action - the process of decision-making and the related arrangements for secret payoffs into the Swiss bank accounts - constitute a set and belong squarely to the past. The three other modes of action - the cover-up and crisis management, the journalistic investigation, and the CBI's

criminal investigation and prosecution - form the other set. They are still in progress, although the end of the road may not be too far away. What is the hard information we have on the decision-making on the howitzer? The record available to the official investigation shows that from 1980 the Government of India was looking out for a state-ofthe-art 155 mm howitzer system to meet defence operational requirements that were said to be urgent. The competition was short-listed in December 1982 to M/s Sofma of France, M/s A.B. Bofors of Sweden, M/s International Military Services of the United Kingdom, and M/s Voest Alpine of Austria. In November 1985, the Government of India's choice, based on advice from the Army Headquarters and a recommendation by the Negotiating Committee, narrowed down to Sofma and Bofors. The official record also shows that between October 1982 and February 1986, the Indian Army did no fewer than seven evaluations of the relative merits of the howitzer systems offered by the bidders. In the first six, the Sofma 155 mm TR howitzer was clearly preferred to the Bofors gun. Financial considerations also gave the French manufacturer what looked like an unbeatable lead. However, it is now clear, Prime Minister Rajiv Gandhi and a small coterie that knew his thinking had made up their minds from the start to award the contract to the Swedish arms manufacturer and to no one else. Since they knew no way to make Army Headquarters budge from its preference for the French gun, they patiently waited it out, notwithstanding the supposed urgency of the Army's strategic requirements. When General A.S. Vaidya's retirement neared and even before General K. Sundarji formally took over as Army chief, they moved swiftly to clinch the decision for Bofors. With Army Headquarters reversing in February 1986 a succession of earlier professional judgments that had gone against Bofors, the stages of final decision-making were telescoped and rushed through, resulting in the formalisation of the choice of Bofors on March 24, 1986. The CBI charge-sheet reveals, among other things, that after the Negotiating Committee recommended, on March 12, the issuance of a Letter of Intent to Bofors, the file was approved by five officials and three Ministers on March 13 and finally approved by Rajiv Gandhi on March 14. The decision-making mode must now be related to the payments mode. The documents published by The Hindu established beyond the shadow of a doubt that secret payoffs totalling $50 million were made by Bofors to three or more recipient arrangements and that these payments, far from representing any "winding up costs", were percentage payments tied to specified supplies against the total order and to realisation of the payments by the Government of India. The media expose of the payoffs and some of the recipients appears to have had the beneficial effect of cutting off the payments. This by itself is significant. If the payments had been legitimate or legal, Bofors surely would not have had any difficulty in completing them as per the contracted 'entitlements'. However, Bofors' saving on the payoffs did not result in any lowering of the price of the howitzers for India. BUT that is not all we now know about the payments mode. The CBI's investigation has nailed down the recipients of the bulk of the Bofors payments, and once the final set of bank documents reaches the CBI the Hinduja involvement as recipients of the Bofors payoffs will also be nailed down. We also know a good deal about the modus operandi employed, in an environment of secrecy, to protect the endrecipients. The very fact that the Swiss authorities and courts have, after looking into the requested bank documents, allowed the bulk of them to reach official Indian hands means that they are reasonably satisfied that bribes to Indian public servants are involved. Cover-up of corruption in high places may be a natural response where the rule of law is not guaranteed in relation to the high and mighty; but what is understandable does not become legitimate under cover of realpolitik. This is what the Rajiv Gandhi dispensation and the Congress(I) learnt to their cost.

The line of dismissing the documented media allegations as "false, baseless and mischievous"; the repeated assertion that Bofors made no payments to "middlemen", to "agents", to "Indians", to Rajiv Gandhi or to anyone associated with his family; the soft approach, suggesting collusion, to the Hindujas, Chadha, Quattrocchi et al; getting the "Gandhi Truste(e) lawyer" to talk to Bob Wilson of A.E. Services Ltd at a time the Rajiv Gandhi dispensation had supposedly no knowledge of the existence of Bob Wilson or A.E. Services Ltd; Defence Secretary Bhatnagar's criminally culpable failure to act in the interest of the Indian Government and to avoid causing it wrongful loss and his attempt to shield Bofors from any sanction or pressure after the fact of illegal payoffs became known; fierce resistance from Rajiv Gandhi to any suggestion that the threat to cancel the contract should be used against Bofors to gain the full truth about the payments - all these are integral parts of the cover-up and crisis management mode. CONSIDER the implications of the following pieces of the action detailed in the charge-sheet. In April 1987, as soon as the Swedish media broadcast allegations about Bofors paying bribes to Indians, the Indian Ambassador to Sweden, B.M. Oza, pursued a no-nonsense line of pressing the Swedish government to investigate seriously into the allegations (rather than accepting Bofors denials at face value). But he learnt soon enough that Prime Minister Rajiv Gandhi did not want the truth to be revealed. The CBI's investigation has revealed that after receiving Bofors' letter of denial, dated April 24, 1987, as well as the views of Ambassador Oza, Rajiv Gandhi spoke to Swedish Prime Minister Carlsson and told him that in view of Bofors' letter of denial, there was no need for any further investigation of the allegations. This high-level message was, in fact, "just the contrary" of "what the Government of India had requested through official channels" and, not surprisingly, Ambassador Oza was "kept in the dark" about this development. When, in consequence of Rajiv Gandhi's request to Carlsson, the Swedish government reversed its stand on an official investigation and announced that there would be no investigation, Ambassador Oza stubbornly persisted with his original demand - until Prime Minister Carlsson informed him about what Prime Minister Rajiv Gandhi actually wanted. The upshot was that Rajiv Gandhi was obliged to reverse his stand and send a letter, dated April 28, 1987, to Carlsson stating that "though facts furnished by Bofors tend to confirm the position that there were no middlemen, clarifications are necessary to set the controversy at rest" and that "in this context, the enquiry promised by the Swedish Government is of great importance". The consequence of Ambassador Oza's refusal to let the truth be buried was the enquiry by the Swedish National Audit Bureau that was to cause so much distress and trouble to Rajiv Gandhi and the recipients of the Bofors payoffs. In June-July 1987, Prime Minister Rajiv Gandhi asked the Ministry of Defence for an evaluation of the cost to, and effect on, national security of the cancellation of the Bofors contract. Asked for his views on the subject, General Sundarji wrote a note, dated June 13, 1987, stating that obtaining complete information about the moneys paid by Bofors in connection with the contract was very essential and that, if Bofors did not part with the required information, "we should go to the extent of threatening to cancel our contracts." He recommended that the Army could take a calculated risk: "in the interest of vindicating National Honour we apply full pressure on Bofors to part with the information needed for legal action against the culprits and accept the risk that this might in the worst case lead to a cancellation of the contract." Bhatnagar received General Sundarji's recommendation on June 13, 1987 and kept it to himself. A week later, he personally returned the note to the Army Chief, requesting him to change his recommendation regarding the cancellation of the contract. Sundarji refused to do so and reiterated his views in a note dated July 15, 1987. This document was also withheld from the man who was directly handling the matter, Minister of State in the Defence Ministry, Arun Singh.

Minister of State Arun Singh wrote a reasoned minute dated June 10, 1987, which was approved and endorsed by Defence Minister K.C. Pant. The minute argued that "we as GOI must pursue this matter to a logical conclusion." It specifically recommended that the Indian Ambassador in Sweden should be instructed to "inform both the Swedish Govt., and the company that unless they give us the information we want, we will have no alternative but to cancel the contract for the FH 77B 155 mm Howitzers." Arun Singh's minute concluded: "I am fully cognisant of the fact that this cancellation will have some negative impact on our defence preparedness but you may like to reconfirm with COAS (Chief of Army Staff) whether we can live with that. In my view we must be prepared to go to this extent of cancellation because our very credibility as a Govt. is at stake and what is worse, the credibility of the entire process of defence acquisitions is also at stake. I would be most grateful if this note and the draft letters could be forwarded by you to the Prime Minister after you have seen them." And what was Rajiv Gandhi's response to this reasoned suggestion endorsed by Defence Minister Pant? In a minute ostensibly dated June 15, 1987 (which appears to have been recorded later and antedated to cover up the Prime Minister's embarrassment over Arun Singh's resignation over the Bofors affair on July 18, 1987), he lashed out against his ex-friend: A telex message (TX 5425) of 1981 from Hans Ekblom, Vice-President, Marketing, A.B. Bofors, for the attention of "Mr. Marshi". It deals with "ten per cent of the total contract value(s) as the 'remuneration' to be paid to the Pitco account." The references are to Bofors' attempt to sell various items of military hardware to India. "It is unfortunate that MOS/AS has put his personal prestige above the security of the nation before even evaluating all aspects. I appreciate his feelings as he had been dealing with Def. almost completely on his own with my full support but that is not adequate reason to be ready to compromise the security of the nation. Has he evaluated the actual position vis-a-vis security? Has he evaluated the financial loss of a cancellation? Has he evaluated the degree of breach of contract by Bofors if any? Has he evaluated the consequences for all future defence purchases if we cancel a contract unilaterally? Has he evaluated how rival manufacturers will behave in the future? Has he evaluated how GOI prestige will plummet if we unilaterally cancel a contract that has not been violated? To the best of my belief the Swedish Audit report upholds GOI position and does not contradict it. What we need to do is to get to the roots and find out what precisely has been happening and who all are involved. Kneejerk reactions and stomach cramps will not serve any purpose. RRM has run the Ministry fairly well but there is no need to panic, specially if one's conscience is clear."

This minute is signed by Rajiv Gandhi. Can anyone reading this reaction of fury, along with the documented facts and circumstances of the Bofors case, arrive at a conclusion that this Prime Minister's conscience was clear? But this is not all. Following an Arun Singh-guided effort in the Ministry of Defence to press Bofors to reveal the truth on pain of losing the contract, the Swedish side decided that Anders Carlberg, chairman of the Nobel group of industries, and two others would come to India on July 6, 1987 to reveal the truth confidentially to the Government of India. Meanwhile, Attorney-General Parasaran, whose advice had been sought, opined that Bofors had clearly breached the contract; this expert legal advice reached the Ministry of Defence on July 4, 1987. And what did Prime Minister Rajiv Gandhi do? He intervened officially to stop the Bofors team from coming to India with its dangerous information. The crux of the case pressed in the CBI's charge-sheet is that public servants headed by Rajiv Gandhi, aided and abetted by various private individuals, were involved in a criminal conspiracy to cause "wrongful gain" to Bofors, Quattrocchi and Chadha and "corresponding loss" to the Government of India. The criminal conspiracy involved several other offences. Covering up corruption is an extension of corruption and also amounts to obstructing justice. The chief players in the cover-up and crisis management that failed were Prime Minister Rajiv Gandhi, two Congress(I) governments, the Swedish Social-Democrat government, Bofors, Defence Secretary Bhatnagar, the Hindujas, Quattrocchi and Chadha. In an entry for July 2, 1987, Martin Ardbo, the managing director of Bofors, records that the two directors of "AE Services" have met the "Gandhi Trust(e) lawyer" in Geneva. This diary entry was simultaneously reproduced in several newspapers, including The Hindu, Indian Express and The Statesman, on October 31, 1989. The cover-up of the truth behind Bofors continued long after the death of Rajiv Gandhi. This unstated Congress(I) policy was reflected, in the post-Rajiv period, in the motivated internal decision to transfer K. Madhavan, the upright and independent CBI officer, from the case (October 1991); the transfer of Joint Director M.D. Sharma (February 1992); and various obstructive tactics and collusive proceedings that culminated in External Affairs Minister Madhavsinh Solanki's hard-to-believe act of malfeasance and political stupidity in Switzerland. The main players in the investigation and expose of the Bofors corruption scandal have been Dagens Eko (the news service of Swedish Public Radio), sections of the Indian press, the Swedish police, the CBI when it has been allowed to do its job by its political masters, and the Swiss authorities. The leading contribution made by journalistic investigation to this case must be understood as a response to the challenge, an extraordinary attempt at cover-up and obstruction of justice. Had there been no cover-up of this kind, making a mockery of the rule of law and also professions of public morality in India as well as in Sweden, the role of the media in the investigation would have been far less important. L'affaire Bofors is an example of an issue where the relatively independent press, under the press of circumstances, performs better than most other institutions in society. The CBI, under independent professional

leadership, has demonstrated in the recent past that it can do as well as any criminal investigation agency anywhere in the world. BOFORS is independent India's most important corruption scandal. It might have had its ups and downs, its ebb and flow, in the public mind. But unlike previous corruption scandals, it has refused to go away as a national issue because the political, moral and systemic issues it raises are both deep-seated and dramatic. The distinction of Bofors has been to serve over more than a decade as a continuous symbol and metaphor for political corruption at the top. It has served to raise public consciousness against corruption in a way previous scandals put together failed to do. It has also helped us gain a larger and more reliable perspective about how various institutions perform in relation to corruption. It is important for the health of the Indian political system to ensure that the lawful attempt to uncover the full truth and make an example of the corrupt succeeds.

1. See the article, "More sting than scam," by Mani Shankar Aiyar in The Indian Express, New Delhi, November 2, 1999, page 8. The ludicrousness of the falsehoods presented in this article extends to asserting that "the relevant extracts" from the Ardbo diary (the explosive references to "Q", "Gandhi trust", "Nero", "N", and "R") "were scooped by this newspaper." The record shows that the first excerpts from the Ardbo diary and handwritten notes were published (as part of a detailed analytical expose by Chitra Subramaniam and N. Ram) over three pages of The Hindu of November 25, 1988; and that further explosive excerpts, including the famous July 2, 1987 reference to the "Gandhi Truste(e) lawyer", were published simultaneously in several leading Indian newspapers, including The Hindu, Indian Express andThe Statesman, on October 31, 1989 under the same bylines. I happened to make these "relevant extracts" available to a representative section of the Indian press, and subsequently, after a criminal case was filed in early 1990 on Bofors, handed over photocopies of the Ardbo diary pages and handwritten notes to the CBI, as required by law.