Subversion of Investigation

T

It is worth recounting the Bofors story, lest we forget the trail of deception, interference and incompetence that has characterised the saga. Forget we surely will, given the enthusiasm with which governments have been anxious to close the case. In 1985 the government on the lookout for a field gun constituted a committee under the then defence secretary, S K Bhatnagar to make the selection. The final shortlist had Bofors (of Sweden) and Sofma (of France) heading the selection. In February 1986, the army headquarters chose Bofors on the ground that the Swedish gun was better because it had the shoot and scoot ability which Sofma did not have. Prime minister Rajiv Gandhi, who at that time was crusading against corruption (his speech in the Congress Party centenary at Bombay to rid the party of power brokers had been delivered in January 1985), declared that unlike other defence deals, the Bofors contract excluded middlemen. The Swedish National Radio, however, revealed later that the gun manufacturer had paid $ 250 million (Rs 64 crore according totherulingexchange rate) into three coded accounts in a Swiss bank: Svenska (later shown to be operated by W N Chadha), Pitco (by the Hindujas) and AE Services, a shell company operated by Colbar Investments, incorporated in the Panama and controlled by Quattrocchi and his wife. Quattrocchi represented Snam Progetti, an Italian firm involved in the setting up of fertiliser plants in India since 1964 and had become an influential player in Delhi after 1984. Bofors had engaged him to help them swing the gun deal and clinch it before March 31, 1986. The deal for 400 field guns was announced on March 24. Of the Rs 64 crore that were paid into the three coded accounts, $ 7.3 million (Rs 18.7 crore) went into Quattrocchi’s in the Nordfinanz Bank in Zurich on September 3, 1986. Most of this money was transferred to the Union Bank of Switzerland, Geneva into the account of Colbar Investment within a couple of months and then to yet another bank account in the British Channel Islands.

The CBI got to investigate the case only after the Congress lost power in 1989 and with the cooperation of the Swedish and Swiss authorities, it moved slowly towards unearthing the facts of the case. But the Congress returned to power in 1991 and the then foreign affairs minister, Madhavsinh Solanki, handed an anonymous note to his Swiss counterpart asking that the investigation into the Bofors deal be slowed down. Quattrocchi, meanwhile, continued to stay in India and was trying to block the release of his bank papers by the Swiss authorities. The Swiss courts, however, confirmed in July 1993 that he was the person behind AE Services; Quattrocchi then suddenly left India for Malaysia on the night of July 29, 1993. The next small step was possible only when the United Front came to power in May 1996. Papers obtained by the CBI from the Swiss banks confirmed all that were only presumptions until then. The first charge sheet implicating Quattrocchi (along with others) was filed in 1999. The Congress, we know, was not in power then. This case is pending trial even now in the special court. Quattrocchi, meanwhile, shifted his money from one bank to another and successfully fought a legal battle against being extradited to India.

This was the context in which the CBI, through the Crown Prosecution Service in London, managed to have Quattrocchi’s account in a London branch of the BSI-AG Bank frozen. This action was upheld in 2003 by the UK courts. But after the Congress-led United Progressive Alliance assumed office, the CBI failed to present legally sustainable evidence against the Hindujas and the Delhi High Court dismissed the case on grounds that the papers presented by the investigating agency hadnotbeenauthenticated by the Swiss authorities. The agency could have gone on appeal after rectifying the technical shortcomings but it did not do so.And in late 2005, B Datta, the assistant solicitor general, travelled to London and asked the Crown Prosecution Service to lift the restrictions on Quattrocchi’s account. The argument was that “no useful purpose will be served by” keeping the accounts frozen “as there is no longer any reasonable prospect of the case against Quattrocchi proceeding to trial”. In other words, it is time to close this high profile case of corruption.

EPW

Economic and Political Weekly February 4, 2006