Audit of a blown-up scandal

Rs 250 crore spent in chasing the Rs 64 crore Bofors scandal in which no one comes out unblemished

HN Special Correspondent Delhi

In one of the secret files of the government sits a letter, a testimony of the botched attempts of the former prime minister, Atal Behari Vajpayee, and his law minister, Arun Jaitley, to extradite former Snamprogetti agent in India, Ottavio Quattrocchi, to India from Italy.

Quattrocchi, known to be close to Sonia Gandhi, allegedly received a substantial amount of money for swinging a contract in favour of the Swedish arms manufacturer, Bofors, in 1987. Indian security had been chasing Quattrocchi in the hope that his arrest would reveal the truth that had been eluding them in this politically-significant scandal.

The Bharatiya Janata Party (BJP) leaders, who were in power till 2004 and are going ballistic over the manner in which the Congress-led United Progressive Alliance (UPA) government de-froze the Italian businessman's account in London, would be disinclined to reveal the contents of the letter from Rome. Highly-placed sources in the government reveal that on the eve of the aborted visit by Italian prime minister, Silvio Berlusconi to India in 2003, the Italian government wanted to know the nature of evidence Indian agencies had against Quattrocchi to entertain Delhi's repeated request for his extradition. They also wanted Delhi to withdraw the red corner notice against him.

Italians were not impressed by the quality of evidence presented by Indian investigating agency, Central Bureau of Investigation (CBI) and refused to touch Quattrocchi. The tone of the letter, it is learnt, is quite tough and hints at how the Italian businessman has been hounded by the Indian police. This was a cruel blow to the CBI and the BJP, which was hoping to build on the success whiffed by them when they managed to freeze Rs 21 crore in the Italian's account after the tip-off from Interpol. They were desperate to lay their hands on the Italian businessman before the parliament elections in 2004 and make him confess that he was fronting for Rajiv and Sonia Gandhi. But their best-laid plans collapsed soon enough.

CBI and the BJP were struck a double whammy a few months before the 2004 general elections. First, the Delhi high court judge JD Kapur exonerated all the public servants in the Bofors case and that included late Rajiv Gandhi. Once the public servants were free of taint there was nothing left in the case. After all, there is no corruption according to Indian corruption laws if the public servants have not been bribed. On March 31, 2004, the Malaysian courts refused to entertain CBI's request for the extradition of Quattrocchi to India. The CBI, for all its bluster, just could not muster enough proof to satisfy the sceptical Malaysian judges.

The end to the Bofors case was near, but no one was willing to perform its last rites, least of all BJP and its leader Arun Jaitley, whose initiation into national politics was closely linked to the investigation into the Bofors gun deal. This was the reason that the BJP leadership was reluctant to make public how they were botching up the case in their desperation to bail out their friends. 'They were keeping the Bofors alive to ensure that Sonia Gandhi remains on the defensive. After the Congress came to power, it was expected to bury the case. Who is bothered about getting to the truth,' claimed a senior political observer.

Even the CBI had a vested interest in keeping the case alive. Many of its officers used this as an excuse to go on pointless trips abroad and run up large travel bills on the pretext of consulting lawyers, delivering packets that could be sent through post, and other mundane errands. They messed up the case from the very beginning by attaching illegible documents to the letters rogatory send to the Swiss cantonal court. At least on one occasion they were asked to go back to India and get another set. On one occasion they did not have the right translation. At different stages the investigation was either sabotaged or not done properly.

The net outcome of this 18-year-old saga has cost the state exchequer Rs 250 crore in chasing a scandal involving Rs 64 crores. A large part of this expenditure has been fees to lawyers like Jaitley and Soli Sorabjee and scores of trips to different parts of the world.

So much money spent, and nothing to show. That apart, the badly-handled case has left the general impression that in India justice can be subverted through the influence of hard currency flaunted by arms dealers. Courts, government agencies, political parties and the media all come out looking poor in this unedifying saga that stretched to nearly two decades.

Despite the brouhaha that the BJP is creating on the manner in which this government has allowed the Italian businessman clean up his accounts, this was something waiting to happen. The National Democratic Alliance (NDA) was in power for six years, but they just did not do enough. Or were they not interested?

As mentioned, the seed of this move was sown when the BJP-led government was in power. Insiders in the government bear testimony as to how the BJP leaders strenuously tried to save the Hindujas from the Bofors rap. Vajpayee and Advani, did not care to conceal that they enjoyed a special relationship with these Sindhi businessmen. Both leaders showed warmth towards the Hindujas, knowing fully well that they were accused in the Bofors case. A former employee of the group was given a job in the prime minister's office to look after the group's interest. In a recent interview to a TV channel, the Hindujas openly claimed that they had done more for Advani than they had done for any other politician. It does not matter whether they were actually involved in the corruption scandal or not, but the fact that they were accused in the case and quite close to the political leadership sent an important message to the CBI top brass. If Hindujas were likely to breathe easy then there was no reason why Quattrocchi should not avail of similar succour. It was a matter of time that Quattrocchi's high-powered battery of lawyers latched on to the transformed political and judicial environment and demand similar relief. They were emboldened to carry out this de-freezing operation by the simple fact that no one made any noise about the de-freezing of the accounts of Hindujas and others.

The CBI under the stewardship of the new director, Vijay Shankar, has shown rare courage in owning up to the crucial fact that his agency did not have the evidence to link Quattrocchi's money in his account with the Bofors kickbacks. This important admission helped in saving the face of the government. Shankar, who has resolved to work together with the government, by this act, would create a precedent where the agency would have to take a call on all those cases that are probed endlessly.

CBI froze Ottavio Quattrocchi's account when the Interpol brought to its notice that the Italian had money in two accounts in the Swiss branch of BSI-AG. The total amount was around Rs 21 crore. The gravamen of the CBI plea was that these formed 'part of the proceeds of the crime relating to the case'. The CBI had given a noting of the special judge who said that he was satisfied with the prima facie evidence that showed that Quattrocchi had received $7.123 million as kickbacks in the Bofors deal. The Italian businessmen had protested at this freezing, but the London high court had upheld CBI's plea.

 Quattrocchi's lawyers started putting pressure on the Crown Prosecution Service (CPS) after Delhi high court threw out the Bofors case and discharged the Hindujas on May 31, 2005. They claimed to the CPS that their case was linked with Hindujas who were charge-sheeted along with them in October 2000. Quattrocchi's counsel claimed that if Hindujas were discharged on the same evidence, why should the same benefit not to be extended to the other accused in the case? It was a compelling argument and the CPS wanted to know the position of the Indian government. Around this time, the CBI was dithering whether it should file a special leave petition in the supreme court against the high court discharge. At the behest of the then CBI director, US Misra, an opinion was sought from KP Pathak, law officer attached to the law ministry. Pathak suggested that 'in the absence of any authenticated documents in terms of the evidence act, I am of the opinion that proceeding against all accused persons such as the Hindujas, Bofors and Quattrocchi will be nothing but an abuse of the process of the court.' He also stated that there was no connection between the money and the crime and it cannot be sustained in the court.

Under pressure from Quattrocchi, the CPS asked whether the restraining order on the accounts should stay. At this juncture, the CBI sent a law officer, B Datta, to London. Initially, he was to be accompanied by another CBI official, but the expenditure department shot it down. Datta parroted the opinion of Pathak stating that the CBI had no evidence to link the money in his account to the Bofors kickbacks. The CBI also owned up to the CPS that Quattrocchi had managed to stave off extradition proceedings in Malaysia, where he was arrested for a short while. Subsequent court orders in India had made it difficult to nail the Italian businessman. On January 11, 2006, a TV channel exposed the manner in which Quattrocchi's account was de-frozen.  All hell broke loose. An impression was created that the prime minister, Manmohan Singh, was not kept in the loop about this decision. Media reports tried to show that the de-freezing had taken place at the behest of the law minister, HR Bharadwaj, without even the CBI knowing about it. This impression was strengthened by the remarks of Bharadwaj where he stated that 'It is wrong to keep someone's money frozen when there is no proof against him.' For three days, the opposition leaders and the media had a free run. Prime Minister Singh and his handlers portrayed that they had nothing to do with the decision and they did not want to dirty their hands by commenting on the unsavoury incident. The law minister, Bharadwaj, was reportedly told not to speak to the press. The CBI officials, through off the record briefing to mediapersons, disseminated suggestions that they were quite upset about how the de-freezing had taken place behind their backs. They also expressed their resolve to get Quattrocchi extradited from Italy. For those three days, before the CBI in an unprecedented manner cleared the confusion and detailed the procedure by which Datta went to London, there were all kinds of aspersions against the government floating about. CBI chief's decision to clarify its stand urged Prime Minister Singh, too, to state that there was no interference from the government in the case. Meanwhile a lawyer, Ajay Agarwal, filed public interest litigation (PIL) over the manner in which Quattrocchi's account had been unlocked. SC ordered the CBI to ensure that the money did not leave the bank. Though the CBI did send a message to the CPS, but by then it was too late. The money flew out of the nest on January 16, just before the SC ordered the re-freezing.

On January 23, the CBI told the supreme court the circumstances in which the account was de-frozen. The CBI through the emails exchanged with CPS tried to prove that the decision to de-freeze the accounts stemmed from a query from London. This was a tenuous suggestion that did not convince.

The Quattrocchi de-freezing would have not got this publicity if the CBI did not leak the way it did. Highly-placed sources allege that the entire itinerary of Datta's trip to London was leaked to a senior leader of the opposition, who allegedly passed it on to the news channel. Datta was shown on camera going to the CPS. Also, documents were released to a section of the media, which tried to prove that the law ministry did not take the CBI into confidence in helping Quattrocchi de-freeze his accounts. 'The manner in which the Quottrocchi affair acquired scandalous proportion clearly shows a divided government which was conniving with opposition leaders,' revealed a CBI source. The impending cabinet reshuffle contributed further in giving edge to the Quattrocchi affair.

Be that as it may, the delayed response of the government has hurt it immensely and it would be one of the issues that is likely to be raised during the budget session of parliament.