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September 23, 1999

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Bofors' ghosts

In 1987, when the Bofors scandal broke, I was 30 and on the verge of making the transition from Bombay editor to national journalist. For anyone in my position, 1987 was a terrific year. It was the year that Rajiv Gandhi's Camelot collapsed; when Giani Zail Singh tried to overthrow the legally elected government of India; when the Ambani-Wadia rivalry was at its height; when both Arun Singh and Amitabh Bachchan resigned; when V P Singh turned against Rajiv and The Indian Express rehired Arun Shourie and went for the government with a vengeance.

It was also the year of Bofors.

While Bofors remained, till the end, Chitra Subramaniam's story (without Chitra there would have been no Bofors; the story would have died down after two weeks), all of us did our bit to try and find out what was really going down. For my part, I stuck to playing the analyst, though I did my share of glamorous reporting (travelling to Guildford, Surrey, to find the offices of AE Services, one of the Bofors agents -- only to discover that no such office existed, despite the joint parliamentary committee's claims). Merely analysing documents might sound dull, but Bofors was an affair of such complexity that for five years (1987 to 1992), I was completely hooked. I became, what you could call, a Bofors junkie.

All this came back to me last month as both the Congress and the Bharatiya Janata Party tried to raise the ghost of Bofors. The Italians took the money, screamed the BJP. Aha! Retorted the Congress, you people said that the gun was no good! Well, look how well it has performed in Kargil.

Both sides were, of course, telling lies. But Bofors is so complicated an issue -- it was said in 1989 that only four people in India understood it -- that anybody can get away with saying pretty much what he or she wants.

But in case you are interested in the truth, here is a brief guide to Bofors.

If you've read this far, then you care enough to know the broad outlines of the scandal. In 1986, the Indian army signed a contract to purchase the Bofors Howitzer. Nobody noticed till 1987 when Swedish radio claimed Bofors had paid bribes to secure the contract. Swedish radio's concern was not with India, but with Sweden where the Bofors company had been at the centre of a series of scandals. But predictably, Indian political parties seized the issue and demanded an explanation from the government.

An experienced prime minister would have said, "We will investigate the matter." But Rajiv Gandhi rushed to announce that not only had bribes not been paid but that no commissions had been given because the deal had no agents. This was a silly thing to do because all his critics now had to do was to prove that commissions (not, in themselves, illegal) had been handed out. And sure enough, it turned out that contrary to what it claimed, Bofors had paid commissions.

Thanks to Chitra Subramaniam, we have some idea of who got the commissions. One set of payments went to a company called Pitco, believed to be controlled by the Hindujas. Another set went to a Panamanian company called Svenska, whose Swiss account was controlled by Win Chadha, a well-known Delhi arms dealer. A third set went to a mysterious company called AE Services, which had never been heard of before and hasn't been heard of since.

For Bofors buffs, the first two sets of payments seemed predictable. The Hindujas have contacts in every party and, as businessmen, they have every right to take commissions. (Nevertheless, they have been needlessly sanctimonious in denying any involvement.) Likewise with Chadha. He was the Bofors agent in India. Naturally, he would get paid in a Swiss bank account.

Our interest centred on two areas. One: who was behind AE Services and why was it paid a commission? And two: did any of these agents pass a part of their remuneration on to a public official, a bureaucrat, a general, a minister, or even the prime minister?

Neither question has proved easy to answer. When I tracked down AE Services, I discovered that it had no offices, only one employee (a Major Bob Wilson), and a paid up capital of 100. After it received the Bofors payment, it ceased to exist. So, the AE Services link was extremely suspicious. Why would Bofors hire such a company?

There were two theories. The first was that the AE services account represented the political payoff; that the money was meant for the Congress. The second was that the company was a front for a fixer or a wheeler-dealer who helped swing the deal.

Most of us concentrated on the first theory. If the Congress had set up a front company in 1985 to receive kickbacks, who in the party would have run it? The obvious suspect was Arun Nehru. The Hindujas even suggested to me -- off the record, but this was in 1988, so I'm sure they won't mind my revealing this 11 years later -- that AE Services had been set up by Swraj Paul for Arun Nehru. (This is why it was an English company.) I investigated this angle but found no evidence of Swraj Paul's involvement.

Then, Chitra Subramaniam gold hold of the diary of Martin Ardbo, the Bofors boss who signed the deal. The diary revealed that after the scandal broke, Ardbo was in regular touch with the Hindujas who were acting as trouble shooters. The Hindujas, he noted, told him that their enemies included (Nirmal) "Sethia" and "Serge Paul". So, perhaps that was why they were so keen to implicate Paul in this scandal.

But Arun Nehru's involvement started out from page after page in Ardbo's diary. There was a reference to "Nero" and many references to the consequences of the revelations on "N". But, Ardbo noted, he didn't really care what happened to N.

He was more concerned about the consequences for "Q". Though there was nothing in the diary to suggest who Q was, many of us thought it was a reference to Ottavio Quattrochi, the high flying representative of Snamprogetti, an Italian public sector company, in New Delhi. These suspicions were strengthened when Chitra Subramaniam traced some of the AE Services money to an account controlled by him. Moreover, Quattrochi also filed an appeal to stop the Swiss from revealing the details of his account to the Central Bureau of Investigation and skipped India one step ahead of the investigators.

So, had we been wrong to follow the first Congress payoff theory and to consider Arun Nehru a suspect? Should we have followed a second approach and treated AE Services as a front for a well connected wheeler-dealer -- assuming that Quattrochi was that wheeler-dealer?

The jury is still out on that one.

But the other key questions remain. If the agents passed the money on as bribes, then who got the pay-offs? And what were they paid for?

The simplest way of looking at the deal is this: Rajiv Gandhi took the bribe and decided to buy the Bofors gun. But there is a problem. Bofors was the choice of army headquarters and more specifically, of General K Sundarji. Between the time the army HQ sent its recommendation in favour of Bofors to the time that the government announced Bofors had got the contract, there were just 24 hours. So, if the choice of Bofors was dictated by financial considerations, then regardless of whether the politicians took the money or not, the army had to also have been involved.

A fortnight ago, General Mayadas (retd), an early critic of the Bofors gun, told the press that Bofors was Sundarji's baby. Other critics of Bofors have claimed -- perhaps unfairly -- that army AQ misrepresented Bofors' superiority over Sofma (the other candidate) because the army brass wanted the gun.

We will never know what the truth is -- Rajiv and Sundarji are dead, and the general's mentor, Arun Singh (like Arun Nehru, a part of the ruling establishment) is keeping his mouth shut. Certainly, there is nothing in Sundarji's record to suggest a whiff of financial impropriety. On the other hand, most investigators believed the money paid to Svenska couldn't have been meant for Win Chadha alone -- he wasn't important enough to merit such a large sum (especially if the Hindujas, Arun Nehru or Quattrochi were involved). The suspicion is that Svenska served as a slush fund from which generals and civil servants were paid off, at Chadha's level.

What is clear, amidst all the murkiness, is that neither the BJP nor the Congress is telling the full story. For the Congress to say, "Look, the gun has performed so well in Kargil" is to miss the point. Of course, Bofors is a good gun -- at that level, they all are -- but that does not mean the deal was clean. Equally, for the BJP to act as though the Gandhi family's involvement is a matter of record, is to overstate the case.

So far there is not a shred of evidence to link Rajiv Gandhi to the financial improprieties in the deal. Yes, he was defence minister when the deal was signed, but the ministry was being run from the prime minister's office by Arun Singh, who later became minister of state for defence, and who was Sundarji's guru. Though Arun Singh is a part of this government, nobody is asking him questions. Likewise, there are legitimate questions to be asked of Arun Nehru. But instead of asking him anything, the BJP has given him a ticket.

It is now 12 years since I started following Bofors. Everything about the deal now seems curiously dated. Even the money involved -- Rs 640 million -- is peanuts by today's standards. Worse still, I've come to the conclusion that no political party has any interest in the truth. Why bother to find out what really happened when you can score political points by misrepresenting the facts? Consequently, all that will remain are the many questions. I doubt if we will ever get the answers.

Vir Sanghvi

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