Author: Neeraj Mishra and Priya Sahgal
Publication: India Today
Date: January 30, 2006
Introduction: New documents show that the
government may be trying to bury the Bofors case with Ottavio Quattrocchi
likely to be Exonerated without facing trial for the charges of receiving
payoffs
Bofors is back, with a bang. Last week's revelations
regarding the Indian Government's decision to defreeze the London bank accounts
containing a total of Rs 21 crore belonging to Ottavio Quattrocchi, the Italian
businessman who was one of the prime accused in the Bofors payoff scandal,
have opened a new can of worms, severely damaged the image and credibility
of the UPA Government and, more importantly, put UPA Chairperson and Congress
President Sonia Gandhi under a cloud. The scandal within a scandal could not
have come at a worse time for the Government which had just suffered the ignominy
of losing its external affairs minister in the wake of the Volcker Report.
For Sonia in particular, it resurrects a political ghost which was mainly
responsible for her late husband's electoral defeat as prime minister in 1989.
Since 1986 when the Indian government signed
the Rs 1,437 crore contract with Swedish giant AB Bofors to purchase 155 mm
howitzers, the deal has become synonymous with kickbacks and corruption at
the highest official levels. Apart from the late prime minister Rajiv Gandhi
himself, the others accused of grabbing a piece of the Rs 64 crore "commission"
that Bofors paid as established in the subsequent probe by Swedish investigators,
were wheeler-dealer Win Chadha, an agent of the company (since deceased),
the influential, London-based Hinduja business family (since exonerated by
Indian courts) and Quattrocchi, then based in Delhi as representative of Snamprogetti,
an Italian engineering giant. It was Quattrocchi's Italian origins and his
closeness to Rajiv and Sonia that led to accusations of his involvement in
the scandal. The suspicions deepened when diary entries made by the then Bofors
chief Martin Ardbo referred to payments made to "Mr Q" and subsequent
investigations by Swedish authorities only seemed to confirm that money had
been paid into accounts in a London bank they alleged belonged to Quattrocchi.
At the height of the scandal, with new revelations
surfacing, on July 29, 1993, Mr Q quietly left Delhi for Kuala Lumpur, despite
being wanted for questioning by the CBI which was probing the Bofors payoffs.
That is why the latest revelations regarding the defreezing of Quattrocchi's
London accounts on the recommendation of Indian Law Ministry officials have
stirred a hornet's nest and given the BJP-led Opposition potent ammunition
to target the ruling party and the UPA Government. Like most scandals, this
latest twist in the long-running Bofors saga started quietly enough.
WHY AND HOW WERE Q'S LONDON ACCOUNTS DEFROZEN?
Two days before Christmas on December 23,
2005, R.K. Sharma, a dig of the CBI in-charge of the Bofors probe, received
an e-mail from Shane Nainappan, senior crown prosecutor of the UK's Crown
Prosecution Service (CPS). He was penning down the discussions he had had
with B. Datta, the additional solicitor general of India. Datta had arrived
in London the previous day to brief him about the new position of the Indian
Government on the British High Court's Restraining Order on the funds Quattrocchi
held in the BSI AG bank. In his e-mail, a copy of which is with India Today,
Nainappan states: "Mr Datta conveyed his instructions on behalf of the
Government of India, the Ministry of Justice and the Central Bureau of Investigation
that no useful purpose will be served by maintaining the Restraining Order
dated July 25, 2003, as there is no longer any reasonable prospect of the
case against Mr Quattrocchi proceeding to trial."
In his e-mail, which was also sent to Datta, Nainappan went on to state that
as the courts were closed for Christmas break, progress on the matter would
only be made in early January 2006. If the CBI did not agree with Datta's
assessment, as some of its officials later claimed, they had ample time to
let Nainappan know about it. But with no contrary orders emanating from Delhi,
on January 11, the Queen's High Court decided to lift the Restraining Order
against the funds-a clear victory for Quattrocchi. The verdict was conveyed
to the CBI by Nainappan the same day. It was only when the news was made public
that all hell broke loose and Sonia and Prime Minister Manmohan Singh found
themselves in the eye of a gathering storm. The opposition parties accused
the Government of trying to bury the Bofors case and acquit Quattrocchi without
even bringing him to trial. Even as Manmohan denied any interference by the
Government, the Supreme Court, acting on a pil, asked for restoration of status
quo of the accounts.
It all began in late June 2003 when Interpol
alerted the CBI headquarters that it had detected two accounts, 5A5151516M
and 5A5151516L, held by Quattrocchi and his wife Maria with the BSI AG bank,
London, that contained Euros 3 million and $1 million (a total of Rs 21 crore),
respectively. It suspected that the money had been transferred from a Bahamas
account. It seemed a curiously large savings for a salaried executive.
CBI officials were quick to understand the
significance of the tip off. Quattrocchi had been charged by the CBI special
court in 1999 of being an illegal recipient of a commission of $7.3 million
(Rs 33 crore at the current rate) paid by Bofors in September 1986 into an
account in a Zurich bank for a front company called AE Services in the UK.
The funds were then immediately transferred to the Geneva account of the Panama-based
Colbar Investments Limited said to be directly controlled by Quattrocchi and
his wife. From there, the money was further transferred to other accounts
in various parts of the world.
Realising that there could be some links with
the alleged payoff money, the CBI acted with alacrity in getting the accounts
frozen. It obtained a Letter Rogatory from the designated special court handling
the Bofors case requesting the cps to get a restraining order from the Queen's
High Court in London. For Quattrocchi, the court's order of July 25, 2003,
freezing his funds in the London bank was a major blow. He was already under
tremendous pressure after the CBI filed a chargesheet against him for the
first time in the special court on October 22, 1999. The NDA government was
in power then and initially seemed determined to pursue the payoff scandal
knowing it would put Sonia on the backfoot. After the special court issued
a non-bailable warrant against Quattrocchi, on March 7, 2000, the Indian government
requested Malaysia to extradite him. Even though there was no extradition
treaty between the two countries, the Malaysian Home Ministry had a magistrate
issue a warrant for his apprehension. Quattrocchi was arrested on December
20, 2000, in Kuala Lumpur and let off on bail.
A defiant Quattrocchi then challenged the
proposed extradition before the Malaysian courts and turned the tide in his
favour. The session court in Kuala Lumpur rejected the Indian government's
request on the grounds that the allegations against Quattrocchi were vague
and no specific offence was listed. When the Indian government moved the high
court, it upheld the lower court's discharge order. Finally, the Indian government
approached the Federal Court, Malaysia's highest court, for a review. On March
31, 2004, the Federal Court dismissed the Indian government's appeal and Quattrocchi
was a free man. The NDA government appeared to have botched the case. According
to a former BJP cabinet minister, "the judgement came on Wednesday, our
appeal was listed in the Malaysian courts on Friday but the judge was absent
so it was postponed to Monday". During that weekend Quattrocchi is said
to have left Kuala Lumpur with his wife for Milan where he now resides. From
the safety of Italy, he began making moves to defreeze his London accounts
and, more significantly, have the charges against him quashed in India.
By then the events had already begun swinging
in the Italian businessman's favour. In February 2004, Justice J.D. Kapur
of the Delhi High Court exonerated all public servants in the Bofors case,
including Rajiv. It was a major political triumph for Sonia and flanked by
both her children, she told the media, "We have gone through 17 years
of abuse, 17 years of vilification since the first accusation to the last
indignation inflicted by the BJP-led NDA government by placing my husband's
name on the chargesheet." And with that the Congress kicked off its 2004
general election campaign. Caught on the wrong foot, the NDA surprisingly
did not file an appeal against the order in the Supreme Court. Importantly,
for the Bofors accused, the high court order makes the charges against them
under the Prevention of Corruption Act inapplicable.
WHY DID THE CBI FLIP-FLOP?
In May 2004, with a Congress-led government
coming to power, the CBI did a volte-face and actively began closing the cases
against Quattrocchi and defreezing his accounts. On September 20, 2004, Sharma
sent a letter to Datta asking for advice on the course of action in the extradition
proceedings in Malaysia against Quattrocchi and also on the restraint order
on his funds in London. Meanwhile, on November 24, 2004, Quattrocchi approached
the Queen's High Court with an appeal to have his accounts defrozen. Datta's
advice to the CBI on December 9, 2004, gave the first indication of the track
the UPA Government would follow. In his letter he argued vigorously against
pursuing extradition proceedings against Quattrocchi in Malaysia. Elsewhere
in the letter citing the CBI information, Datta states blandly that "Quattrocchi
is believed to be living in a third country with which again India does not
have an extradition treaty and which is not prepared to extradite him".
In the same cavalier manner, he dismisses the importance of the frozen funds
in the London bank stating, "There is no evidence that these funds arrived
in these bank accounts either directly or through a chain of transfers from
any of the bank accounts to which the original payment made to the alleged
front company of Quattrocchi had been traced. There is no material record
to believe, still less conclude, that these funds are a part of the proceeds
of the alleged criminal act." Datta then goes on to point out other infirmities,
including why Quattrocchi cannot be declared a proclaimed offender and his
properties and funds be attached. Stunned by the counsel's advice, the CBI
initially disregarded it and told the cps that it needed more time to investigate
the source of the funds and therefore the order to freeze them should not
be lifted. But months later the agency would do another U-turn on the Bofors
probe.
WAS THE PRIME MINISTER AWARE OF THESE DEVELOPMENTS?
The CBI's cases against Bofors accused soon
got another body blow. On May 31, 2005, Delhi High Court's Justice R.S. Sodhi
dismissed the case against the Hinduja brothers. Sodhi's ruling was largely
based on the technical issue that the CBI had not certified the photocopies
of the vital documents from the Swedish authorities it had submitted to the
court. The Congress pointed out that since the hearings had begun during the
NDA's tenure, it should have ensured that the documents were properly certified.
If the NDA did not seem keen on pursuing the
case against the Hindujas vigorously enough, the UPA was no different. The
CBI sought the advice of K.P. Pathak, another additional solicitor general
of India, on filing a special leave petition in the Supreme Court against
the Delhi High Court judgement exonerating the Hindujas. In his reply on October
7, 2005, Pathak surprised CBI officials with his advice to stop all action
against the Bofors accused. He vehemently stated:: "In the absence of
any authenticated documents in terms of the Evidence Act, I am of the opinion,
that proceedings against all accused persons such as the Hindujas, Bofors
and Quattrocchi will be nothing but an abuse of the process of the Court."
On Quattrocchi, he backed Datta's advice not to restart the extradition process.
On the frozen funds Pathak stated, "There is no authentic evidence to
connect him with the alleged offence and the case against him cannot stand
in a court of law."
So in December when the cps sent a query asking
whether the restraining order on Quattrocchi's funds should stay, the CBI
decided to send Datta and an investigating officer to brief it on the agency's
opinion. The Law Ministry and the Expenditure Department cleared only Datta
for the trip. When the news broke out about the accounts being defrozen, Law
Minister H.R. Bhardwaj virtually gave Quattrocchi a clean chit, saying, "It
is wrong to keep somebody's money frozen if there is no proof against him."
Sonia was reportedly upset at his indiscretion. Adding to her discomfort,
Quattrocchi then said from Milan, "I am proud to be a friend of the Gandhi
family but please leave the friendship alone." As part of the Government's
damage control, the CBI owned up that it had sanctioned Datta's visit. Manmohan
then held a press conference in Guwahati and stated that "neither the
freezing was done on government orders nor has the defreezing been done on
government orders". But Nainappan's e-mail from London seems to suggest
otherwise. For it even goes on to state that the Government does not think
bringing Quattrocchi to trial was "a reasonable prospect."
Under fire even from its allies, the Government
and the CBI then began backpedalling on their assertions. The Supreme Court's
order asking for a status quo on the funds has put the Government in a tight
spot. A cps spokesperson told India Today, "It would have to be a fresh
application satisfying the usual criteria. However, the High Court is likely
to query any application for a further restraining order given the application
to discharge the original order. The court is likely to ask for evidence as
to how/why has there been a change in circumstances." Worse, there is
every likelihood that Quattrocchi has already withdrawn the funds. Bofors
is likely to continue to haunt Sonia and the Congress for a long while to
come.
-with Vijay Rana in London and Sandeep Unnithan
