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April 16, 1998


Quattrocchi got Bofors kickback, has links with Gandhis: CBI

The Central Bureau of Investigation has named Italian businessman Ottavio Quattrocchi, whom the agency has linked with late Rajiv Gandhi and his family, as the beneficiary of the Rs 640 million kickback in the Bofors gun deal.

In an affidavit filed before the Delhi high court, the investigating agency has said, ''The investigation has shown that the families of the then prime minister of India (Rajiv Gandhi) and Ottavio Quattrocchi were on very intimate terms to each other and they used to meet frequently.''

The affidavit, filed in the court on Monday by CBI's Deputy Superintendent of Police Keshav Mishra, stated that the documents received from the Swiss authorities in January 1997 made it clear that Ottavio Quattrocchi was the beneficiary of the kickback paid into A E Services Limited account, said to be a front company of the Italian businessman.

The affidavit was filed through CBI counsel A K Dutt in opposition to Quattrocchi's petition, seeking immediate quashing of a non-bailable warrant and the Interpol red alert against him.

A division bench comprising Justices Devinder Gupta and N G Nandi, before whom the matter came up for hearing yesterday, adjourned the case to April 20 for studying the affidavit.

Mishra said the Rs 14.37 billion Bofors gun deal was signed because of Quattrocchi's undoubted influence in the political and bureaucratic circles.

''In the first instance, the bid of the competitor Sofma of France was the preferred one. The situation changed dramatically later. The deadline for A E Services Limited or Quattrocchi to receive the commission was March 31, 1986,'' the officer said

''The prime minister (Rajiv Gandhi) of India visited Sweden on March 15, 1986 and announced there that the contract has been awarded to A B Bofors. On March 24, 1986, the contract with A B Bofors was in fact signed. The deadline of March 31, 1986 was, therefore, met by Ottavio Quattrocchi.''

The CBI investigation proved that ''Quattrocchi was engaged by A B Bofors as its agent contrary to the prohibition imposed by the government of India and contrary to the undertaking contained in the letter of March 10, 1986 from Bofors to the secretary, ministry of defence, only because of his proximity to the then prime minister and his family and the perception generally of bureaucrats and ministers that he was in a position of vast influence so as to determine the fate of a contract of this nature going into millions of dollars.''

''It could not be a coincidence that the contract was entered into with A B Bofors before the deadline of March 31, 1986,'' the affidavit said.

''It is obvious that the public servants concerned are guilty of offences coming under Sections 5 (2) read with 5 (1) (d) of the Prevention of Corruption Act, 1947 as well along with many other offences which are still under investigation,'' the affidavit said.

The CBI's stand was that prima facie an offence under Section 120 B read with Section 420 Indian Penal Code was made out by the facts brought out from the materials gathered through the investigation conducted so far.

''The agreement of November 15, 1985 (the consultancy agreement) is a secret agreement contrary to the clear understanding which emerged at the meeting of the defence secretary with the A B Bofors president,'' Mishra stated.

The fact that the first instalment of the commission -- three per cent -- was paid would mean that Quattrocchi had been able to successfully negotiate with the then prime minister and the then defence minister (V P Singh) and other public servants concerned to obtain the contract for his principal, the agency said. And the public servants had, in turn, in abuse of their position, conferred pecuniary benefits on Quattrocchi, constituting offences under the PCA and IPC.

Investigations were continuing to establish further violations of the PCA and IPC by the public servants, the officer said.

''What is significant is that after the undertaking was obtained from A B Bofors about the non-employment of any agent or middleman.... there was a total absence of any provision for penalising A B Bofors in the event of it coming to light that an agent had been employed,'' the CBI said.

''The only inference to be drawn from this is that the public servants concerned had abused their position for the purpose of causing wrongful loss to the government of India and corresponding wrongful gain to A B Bofors as well as to Ottavio Quattrocchi and others and also to confer pecuniary and other benefits on these persons,'' it added.

The investigation report received from Switzerland disclosed that Bofors had remitted Swedish kroner 50,463,966 (equivalent to $ 7,343,941.98) on September 3, 1986 from the account with Skandinavika Enskilda Banken, Stockholm to account number 18051-53 of A E Services Limited at Nordfinanz Bank, Zurich. This account of A E Services Limited was opened only a fortnight ago on August 20 1986 by Myles Tweedale Stott as director.

The investigations further disclosed that, from the above account, $ 7,123,900 (7,000,000 on September 16, 1986 and 123900 on September 29, 1986) was transferred to the account of Colbar Investments Limited at Union Bank of Switzerland, Geneva.

Part of the Colbar money was transferred on August 25, 1988 to Wetelsen Overseas SA at Union Bank of Switzerland, Geneva. Thereafter, on May 21, 1990 an amount of $ 9,200,000 was transferred from this account to the one of International Investment Development Corporation in Ansbbacher (CI) Limited in St Peter Port, Guernsey (Channel Islands). These accounts of Colbar and Wetelsen were being controlled by Quattrocchi and his wife Maria Quattrocchi.

Investigation in Guernsey (Channel Islands) have also revealed that the whole money was further channeled to various accounts in Switzerland and Austria within a period of 10 days of its receipt.

The CBI said the investigation has also revealed that, in this deal for 400 Howitzer 155 MM 77-B guns, towed vehicles and ammunition to the Government of India, A B Bofors have made huge payments to certain persons through some front companies in an illegal manner. This was done in criminal conspiracy with public servants in India.

Detailing the relationship of the Italian businessman with the Gandhi family, the CBI said, ''Quattrocchi and family had free access to the prime minister's house. The closeness of the two families was also proved by some of the family photographs collected during investigation.''

Evidence has also come forth to prove that Quattrocchi frequently used to contact a number of senior politicians and bureaucrats over phone during his stay in India.

''The unusual haste was also apparent from the fact that, after the meeting of the negotiating committee on March 12, 1986 in which the issuance of letter of intent to A B Bofors was recommended, a note was prepared by the joint secretary on the same date for approval of the ministers of state for defence (Arjun Singh and Sukh Ram), the finance minister and the prime minister (who was also the then defence minister) and the same was forwarded and approved by nine officers within two days on March 13 and March 14, 1986,'' the CBI official said.

''After the note, there was a flurry of activity with officials of six departments -- ministry of defence, defence (finance), defence production, economic affairs, ministry of finance and the prime minister office -- acting on the file and 11 signatures of officials and ministers were available in the file in a matter of less than 48 hours,'' he said.

Investigation in Guernsey have also revealed that the whole money was channeled to various accounts in Switzerland and Austria within ten days of its receipt.

The proximity of Quattrocchi with the then prime minister, the contractual promise of A E Services Limited to Bofors to swing the deal in their favour in a short span of time, the transfer of virtually all the commission amount of A E Services Limited to Quattrocchi's Colbar Investments Limited soon after the receipt, his giving a non-existing address in Delhi in the relevant documents in Switzerland, his contesting the execution of letter rogatory in Switzerland and his sudden disappearance from India after the disclosure of his name in the case are the factors which point towards the involvement of Quattrocchi in the offence under investigation.


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