The Shrouded Bofors Scam – A sad tale of institutional collapse, criminal sabotage and a contrived dead end, but…?

Bofors is one of the first instances that showed how middlemen could hold the country to a ransom

Bofors is one of the first instances that showed how middlemen could hold the country to a ransom
Bofors is one of the first instances that showed how middlemen could hold the country to a ransom

Let me make it extremely clear – the current investigation of the Bofors Scam is focused on exposing middlemen rather than the past ruling establishment because the Bofors scam triggered birth to a new class “dalals” in India and they have tremendous control over the crucial institutions, establishing India as one of the most corrupt countries in the world[1]. Though we are fortunate to have fiscally clean Prime Ministers in the last few decades, yet the corruption is rampant in the country at all levels. So where it did it go wrong? The answer is elementary-my-dear-Watson – the country is held hostage by the middlemen operating in politics, bureaucracy, legal, and media. The country is bleeding from corruption and the tremendous sufferings of the desperate poor class are symptoms of systemic failure. It is a shame to witness the enormous suffering of millions of migrant workers in the COVID-19 crisis wherein the government at every level was lacking resources to feed its own citizens primarily because the resources are sucked up by middlemen; of course, the booty to be distributed equally at all levels in the establishment. PGurus have recently reported the Government’s shyness in collecting Rs.1.65 lakh crores from Telecom barons even after the Supreme Court verdict[2].

In this backdrop, it is vital to explore the Bofors gun purchasing scandal which changed the politics of the country that happened 33 years ago, in 1987. With revelations in 1987 by Swedish Radio alleging kickbacks in the purchase of guns for the Indian Army, tremors started in the Indian polity that shook the roots of the Congress regime under Prime Minister Rajiv Gandhi. Unfortunately, there were several bigwigs cutting across party lines with incriminating links to this scam and they colluded to sabotage this case, allowing several culprits to escape public scrutiny and legal prosecution.

Three years ago CBI tried to revive the case by filing a bad application based on Republic TV’s interview of retired Swedish Police officer Sten Lindstrom, who was the Chief Investigator of the Bofors scandal. There is another interesting aspect of this case.

In the 33rd year of this scam, PGurus is bringing out a well-researched series in three parts on the murky tales hidden behind the sabotage of this case.

Part 1: Background

A healthy democracy evolves through Legislature, Executive, Judiciary, and Media. The Bofors scandal exposed in 1987 set in motion a process of decay in all the organs of democracy whereby they were compromised to save the guilty that were among the country’s powerful elite. Journalist Chitra Subramaniam deserves credit for exposing the Bofors Scam by reporting the revelations of Swedish Radio[3]. Her first reports appeared in ‘The Hindu’. After ‘The Hindu’ stopped publishing her reports, ‘Indian Express’ continued her series.

It may well be that the allegedly guilty head of the then ruling party may have been beguiled by his cronies for their own vested interests to take wrong decisions. It is also true that propriety demands that a dead person should not be accused since he cannot respond and clear his name (the convention will be strictly followed). However, the country has a right to know the whole truth once it was established that money changed hands in the deal.

Corruption in the defense establishment should be treated as treachery against the Nation and it must be re-investigated under IPC and stringent NSA guidelines. In 2005, the Delhi High Court quashed charges against all other people who were accused in the Bofors case, including the Hinduja brothers who were also accused of being middlemen in the deal. The Central Bureau of Investigation (CBI) plea against the High Court verdict was filed in February 2018 after an extraordinarily long delay of 13 years and was rejected by the Supreme Court. The Court should have taken note of the fact that UPA I & UPA II was in power from 2004-2014, hence the question of an appeal in top court during this period would have been impossible. However, one ex BJP leader and Advocate Ajay Agrawal had filed an appeal against the Delhi High Court judgment in 2008 itself. The Supreme Court agreed to hear Agrawal’s plea and the case is currently pending in the court. The Supreme Court told CBI that it could make itself heard during the hearings on Agrawal’s plea. Will the CBI under the BJP regime now file an Intervenor Application (IA) in the Ajay Agrawal’s case since the petitioner is sleeping over the case for reasons best known to him? Intelligence Bureau once reported to authorities that Hinduja Group’s trusted manager A K Das has been in regular touch with Ajay Agarwal and the agencies have verified proof of the connection. Three years ago CBI tried to revive the case by filing a bad application based on Republic TV’s interview of retired Swedish Police officer Sten Lindstrom, who was the Chief Investigator of the Bofors scandal. There is another interesting aspect of this case.

CBI is still opposing Ajay Agrawal’s petition while it supported Republic TV’s expose in 2017 and lost the case based on the petition based on the TV Channel’s report. It is still a mystery as to why the CBI is keeping quiet till now on Advocate Ajay Agrawal’s appeal challenging CBI’s closure report during the Congress regime in 2008. Agarwal, who was BJP’s candidate in Rae Bareli in 2014 against Sonia Gandhi, also was silent on his petition against CBI’s case closure. Now BJP is ruling and CBI is free to change the position it was possibly made to adopt during the Congress regime in 2008.

BJP leader Subramanian Swamy many times petitioned to Central Governments on probing the role of Vinci who got a major cut in the deal and later buzzed off from Sonia’s family.

The Scam

Former bureaucrat Mohan Guruswamy, in a detailed article, wrote investigative reports on the case to know the scam’s political background and the business nexus behind it[4]. Olaf Palme, the Prime Minister of Sweden was an influential and respected name in world affairs and had strenuously opposed the US war on Vietnam. He inspired Rajiv Gandhi to take the initiative on nuclear disarmament[5].

Olaf Palme-Rajiv Gandhi quid pro quo
Olaf Palme-Rajiv Gandhi quid pro quo

The quid pro quo for facilitating Rajiv Gandhi’s easy entry to the global high table was the purchase of the Bofors FH45 Howitzer. According to Guruswamy’s article, Palme was also facing re-election and his party’s coffers needed topping up. The Indian Army’s Howitzer order would do the trick. The competition was shortlisted to M/s Sofma of France, M/s AB Bofors of Sweden, M/s International Military Services of the United Kingdom and M/s Voest Alpine of Austria. In the first six evaluations, the Sofma 155mm TR howitzer, with its extended range, was decisively preferred to the Bofors gun. Financial considerations also gave the French manufacturer what seemed to be an unbeatable lead. The donation by the Bofors Foundation at Karlskrona to the Swedish SDP is well reported[6].

V P Singh leaves Congress

Losing this lucrative order made the Arun Nehru propped up Austrian competitor Voest Alpine furious since it was confident of bagging it, its product is the best gun and preferred choice of the armed forces technical committee.  Austrian leader Eisenberger told the parliamentary committee that the funds they wanted accounted for were paid to the Congress party and that a kinsman of the Indian Prime Minister had received them. The Austrian government then advised the Indian government to have this money returned and close the matter.

Money adjustment between two companies
Money adjustment between two companies

This was the first time the new Indian Prime Minister heard about the dirty game played by his own set of close people. He was furious leading to the sacking of the powerful Minister VP Singh. Now, a way was sought to set this account right. Bofors was required to close this hole. This was being arranged via a Swiss banker Francis Laffont. The route went like this. Bofors pays Laffont and Laffont pays Voest Alpine and the money already paid in India stays where it is. Eisenberger alleged that Voest Alpine’s representative in Delhi, a man called Unterweger was Ottavio Quatrochhi’s neighbor in New Delhi. Being expatriate businessmen, they became good friends and both were good friends of Rajiv Gandhi’s wife Sonia Gandhi, and her sister Anushka’s then-husband Walter Vinci. It is a well-documented fact that Vinci was on the trip of Rajiv Gandhi’s delegation which signed the Bofors deal. BJP leader Subramanian Swamy many times petitioned to Central Governments on probing the role of Vinci who got a major cut in the deal and later buzzed off from Sonia’s family.

As was the well-established practice then, Unterweger also cut a deal with Quattrocchi. What Unterweger did not know was that Quattrocchi had similar deals cut with Bofors and Sofma, the French howitzer manufacturer. When the Voest Alpine deal collapsed, Quattrocchi was required to close that account, as did the Congress party. So, one more pay off-stream was organised by Bofors to Quattrochi to close this hole.

The importance of being Quattocchi
The importance of being Quattocchi

Hindujas

The Hinduja brothers take this to the next level. People like the Hindujas have friends in all parties and many countries. Lest we forget, it was Atal Bihari Vajpayee who wrote to then Prime Minister PV Narasimha Rao seeking closure of the Bofors case against the Hinduja brothers. And it was Srichand Hinduja who accompanied Vajpayee’s Principal Secretary Brajesh Mishra to his meetings with then British PM Tony Blair and then French PM Jacques Chirac after the nuclear tests in 1998. Vajpayee and Mishra were actively canvassing for approval of the controversial proposed Hinduja power plant at Visakhapatnam[7]. Not surprisingly, even today the plant is under tremendous debt burden and the public sector banks are at high risk of losing taxpayers’ money. Adding to the trouble, there is massive litigation going on between the State Government, State power regulator, and the Hindujas.

So far, the Indian Government has been given two names by the Swedish journalists who are involved in the story. One is Win Chadha, a Delhi-based arms dealer who represents a number of companies abroad, including Bofors. Chadha has denied that he received any payments and claims he stopped representing Bofors in 1985 after the agreement between Rajiv and the then Swedish premier Olof Palme, that no middlemen would be involved. A photograph published in several Swedish dailies, which elicited amused comment in Stockholm, was that of a jubilant Chadha celebrating with champagne, with Bofors officials, after the contract was clinched. The other name given is that of Commander M. R. A. Rao, who used to represent Bofors in the late ’70s but retired from the arms business after Chadha’s appointment. Moreover, there is a big hidden aspect in this Bofors saga. The kickback money paid to Quattrocchi and Walter Vinci came from a shell firm AE Services. BJP leader Subramanian Swamy, who was also Law Minister during 1990-91 and saw many prosecution files and investigators reports, repeatedly state that M/s AE Services was first promoted by Congress leader P Chidambaram’s elder cousin and industrialist AC Muthaiah. Swamy many times demanded a probe into Muthaiah’s role in Bofors kickback arrangement. However, CBI even during the BJP regime – 1998 to 2004 and now – kept silent on this fact. Even BJP leader Arun Jaitley, whose career brightened as Additional Solicitor General (ASG) in charge of the Bofors case during the VP Singh regime, always kept quiet on this aspect due to his proximity with Chidambaram. Like Jaitley, all BJP leaders kept silent on the role of Hinduja brothers due to the latter’s proximity to the Vajpayee. The worst role in the cover was that of the Law Minister Ram Jethmalani who handled the files of Bofors and later, against all norms administrative and political morality, became the advocate of Hinduja Brothers.

Such is the sordid and nefarious saga of the Bofors case in which powerful businessmen and politicians cutting across party lines colluded to milk the Indian public and the nation. More murky details of the hush up in Bofors case will be published in the next episode, tomorrow.

Continued…

References:

[1] India continues to rank among the most corrupt countries in the worldMay 7, 2018, Forbes.com

[2] Telecom AGR dues case exposes the connivance of Government and Corporate Houses in fooling the Supreme CourtAug 27, 2020, PGurus.com

[3] Chitra Subramaniam – Wikipedia

[4] Who got the Bofors money? Oct 23, 2018, AsianAge.com

[5] Swedish Arms scandals mar peacekeeping imageSep 5, 1987, Washington Post

[6] Sweden’s Bofors Arms Scandal: A Summary of the Diversions, Investigation, and ImplicationsMar 4, 1988, CIA.Gov

[7] Hinduja land allotment: PAC faults governmentApr 11, 2012, News18.com

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8 COMMENTS

  1. the whole procurement was a scam from the beginning. The competition to select a howitzer was held like 5 times, the first four times the French gun was the winner and Bofors gun came second.The Bofors gun was twice the cost and about half the range of the french gun.
    In the 5th test, the specifications were twisted to favor Bofors and it was selected and the confirmation for purchase happened in a day after it was selected (This is the fastest procurement for Indian army from shortlisting to procurement).
    Now coming to the Kargil war, it took us a week or so to move the guns and ammunition to the front lines. In that time period we lost about 150 to 200 soldiers.

  2. The Shrouded Bofors Scam -A sad tale of institutional collapse, criminal sabotage and a contrived dead end, but…? Good one Sree Iyer Ji.

    Yes nice to recollect reminiscences of the past ……33 years the then Swedish pop group ABBA and Bjorn Borg ace tennis player winning Grand slams dominated the world and Arun Shourie and Jaswath Singh were in flow gusto on BOFORS in The Indian Express after The Hindu left the scene. Chitra Subramaniam did fantastic exposse.

    AB Vajpayee coined corruption in water, sky and on land….we the college students used to write to the Letters to the Editor Columns!! Every kick back used to be measured in “is mein thoda Bofors hi (bofors in this case/ is present! The Indian Express asked the nation to send letters to Olaf and we did it and he was honored by name a road in New Delhi!!!

    Famous poet Percy Bysshe Shelley said…….. “The trumpet of a prophecy! O Wind, If Winter comes, can Spring be far behind? PC is everywhere along with Nehru Gandhi’s as far as the shell companies/corruption is concerned and Arun Jaitley/Congress-I and BJP jugalbandi even under PM Modi continues to be honored!!!

  3. Olaf Palme had indian connections. His full name was Olaf Palme Dutt
    Connected to Rajendra Singh Dutt, a communist exiled from India by the British but who continued to operate from Britain.
    There was also a connection to the supply/ diversion of Heavy water to India for starting up the Kalpakam Nuclear plant.
    Mr Sree Iyer would do well to tap Swamy for the full the info.

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