The end of pretence

Marking a logical advance in one of India's longest-running corruption scandals, the Central Bureau of Investigation files a formal charge-sheet against the Hinduja brothers in the Bofors case.

DESPITE their suspected involvement in one of India's most damaging corruption scandals, the Hinduja brothers, a trio of London-based financiers and businessmen, managed to retain a prominent public profile for more than a decade. All that came to an end on October 9, when the Central Bureau of Investigation, acting on the authority of material received after a long and arduous judicial process in Switzerland, filed a formal charge-sheet against the three brothers - Srichand, Gopichand and Prakash Hindu ja - in the court of Special Judge Ajit Bharihoke in Delhi. The charges include abetment of corruption, criminal conspiracy and defrauding the public exchequer in the Bofors howitzer gun deal concluded in 1986. It may be said, to the dubious credit of th e Hinduja brothers, that they went down fighting to the last. The sheer strength of evidence against them, though, was simply overwhelming.

The charge-sheet against the Hindujas is modest in its dimensions, running to a mere 11 pages. It makes out a case that the Swedish armaments manufacturer Bofors AB, whose identity has since been effaced through a sequence of corporate mergers, paid out large sums of money in Swedish kroner (SEK) into coded accounts maintained by the Hindujas in the Suisse Bank, Manufacturers' Hanover Trust, and Swiss Banking Corporation. This trail of payoffs begins soon after the contract for the Indian Army's purchas e of 155 mm howitzer guns is awarded to Bofors. The first known remittance to the accounts controlled by the Hindujas occurs on May 20, 1986, soon after the Indian government makes out the first of its scheduled payments, of 21 per cent of the total cont ract value, to the Swedish company.

The filing of a charge-sheet against the Hinduja brothers in the Bofors case provides much needed logical advance in one of India's longest-running corruption scandals. In conjunction with the charge-sheet filed last year, it covers all the known tracks of payment involved in the Bofors deal as also its principal dramatis personae.

Ottavio Quattrocchi, a long-time intimate of the family of the late Rajiv Gandhi, has already been indicted as a recipient of one stream of Bofors' illicit payoffs. Also featured is W.N. "Win" Chadha, an agent for the Swedish company, who continued to re ceive his supposed commissions despite an explicit government directive that middlemen would have no role in the elaborate transactions that culminated in the howitzer contract. Martin Ardbo, chief executive of Bofors all through the critical years, and S.K. Bhatnagar, Secretary in the Defence Ministry for much of that period, also figure as accused - the former for his obvious role as a supplier of illicit funds and the latter for complicity in a criminal conspiracy. Most significantly, Rajiv Gandhi, t hough not identified as a direct beneficiary of the funds, also figures as an accused. He has not been sent up for trial for the obvious reason that he has long since passed away.

THE charge-sheet filed against the Hindujas mentions the supportive testimony received from eight witnesses. But the main burden of the case for the prosecution presumably is already made out in the October 1999 charge-sheet. That document comprises 213 annexures and a list of witnesses whose number exceeds 200. Having done its background work with such diligence, the CBI undoubtedly can afford to be relatively economical with its documentation in the supplementary charge-sheet. When trial proceedings a re resumed on November 20, Judge Bharihoke is expected to issue appropriate orders to the prosecution and the defendants. The case could then move onto the fast track, raising the prospect of an early and dramatic denouement to a saga of corruption.

Among the information that the CBI can rely upon in its case against the Hindujas is the authoritative disclosure made in September 1987 to the government of India as also to the Joint Parliamentary Committee inquiring into the Bofors scandal, that certa in supposedly legitimate "winding up costs" had been paid out to a number of individuals and entities that had represented the interests of the Swedish armaments maker until the directive banning middlemen was issued. This disclosure was made on the auth ority of the top management of Bofors and was a rather thin effort at camouflaging a totally illegitimate set of transactions. The pretence was blown by the subsequent publication in the media of a number of agreements between Bofors and the entities inv olved in the so-called "winding-up" exercise, which showed that the payments were premised upon the award of the contract to the Swedish firm and were clearly in the nature of illicit gratification.

A variety of such signed agreements testify to the Hindujas' own involvement. Indeed, according to documents published in The Hindu as far back as 1988-89, the Hindujas begin to insinuate themselves into the howitzer negotiations as early as 1979, when the Indian Army is just beginning its evaluation processes. In October 1979, the Ordnance Division of Bofors AB sends a communication to the British Bank of the Middle East, Geneva, committing itself "irrevocably to remit to the Pitco account" a su m equivalent to 8 per cent of the contract "to be signed within 12 months" for the procurement of FH77B howitzers and other equipment by India.

Pitco is an identified front company of the Hinduja brothers. In the event, though, the negotiations for the Indian Army's purchase of howitzers dragged on for well over 12 months and witnessed some curious and as yet unexplained reversals of priority, b efore Bofors won through in March 1986. In this intervening period, a number of revisions and amendments are introduced into the agreements between Bofors and the Hindujas. Featuring prominently in the frenetic bargaining is a procession of coded entitie s and interest groups - such as Sangam, Pitco and Moresco - which are definitively known to be associated with the Hindujas.

Subsequent to the conclusion of the howitzer deal, Bofors' remittance documents to three banks - Manufacturers Hanover Trust, Credit Suisse and Swiss Banking Corporation - conform closely to the scheme of payment detailed in various agreements that have been unearthed by the journalistic investigation, down to the amounts involved and the time of their remittance. These documents, which were brought to public notice by The Hindu as far back as 1988, have subsequently been authenticated by the Swi ss and Swedish authorities. They are in the possession of the CBI and will undoubtedly be deployed during the trial proceedings.

Another piece of evidence in the possession of the CBI points to a rather clumsy effort by the Hindujas to throw the official investigation off track through a crude method. When the political heat generated by the scandal began rising intolerably, the H indujas managed to obtain an antedated agreement with Bofors that pointed to the cancellation of an "earlier agreement between the parties". This agreement created a red herring in the shape of a wholly fictitious corporate entity called Moineao S.A., wh ich was supposedly entitled to a cancellation fee of SEK 80 million from Bofors. Evidence from the diaries maintained by Martin Ardbo suggests that he initially baulked at this, but then played along. The CBI, which was then governed by a rather differen t set of priorities, also went along with this pretence. And the trail of Moineau S.A. led, predictably enough, to a dead-end, enabling the official investigation to call off its efforts on the plea that nothing of substance had emerged.

Ever since the documents pertaining to the Pitco-Moresco track of payments in the Bofors scandal were received by the CBI, it was considered just a matter of time before a second set of charge-sheets was filed in the criminal prosecution of the case. It was public knowledge, again, that the charge-sheets would implicate the Hinduja brothers. The only element of uncertainty arose from the obvious political connections of the three brothers. Despite public suspicions, they have waxed fabulously influentia l over the last decade. In the liberalised industrial environment of the 1990s, they have promised much and often won the conspicuous endorsement of authorities within the government for their proposals. How much they have delivered on their promises tho ugh, is yet unclear.

Around mid-September, the CBI discreetly let it be known that the expected charge-sheets would soon be filed. Specific details were not given, though it did not take great astuteness to guess that the Hindujas were soon going to face their moment of tru th.

THAT was the signal for the Hinduja brothers to dust up their repertoire of diversionary stratagems and make one final gamble with the proverbial brevity of public memory. In a statement issued from London, family elder Srichand P. Hinduja sought to put an altogether new construction on the state of the CBI's inquiries. Disingenuously, the investigating agency's effort to obtain vital links in the evidence already in its possession was interpreted as an admission that the evidence was somehow lacking.

It must be recalled that while a large mass of Bofors related documents was transferred to the CBI as early as February 1997, the Hindujas managed for almost three years to stonewall the Indian investigators' effort to get at the documents directly impli cating them. They reportedly spent months negotiating with the Swiss investigating Judge Paul Perraudin, to decide which documents among the voluminous mass that was before him were strictly appropriate for the purpose of criminal prosecution. Finally, i t is learnt, no agreement was reached and Judge Perraudin was compelled to decide the matter on his own discretion.

After due scrutiny of these documents, the CBI recently wrote to Judge Perraudin seeking "complete execution" of the letters rogatory issued in 1990. The CBI, for instance, pointedly asked whether records existed directly linking the payments made to the Hindujas' coded accounts to the Bofors howitzer gun deal. In other words, the CBI made an inquiry whether the nine payments made to the Lotus, Mont Blanc and Tulip accounts - all three known to be fronts for the Hindujas, operations - "were in respect o f the 155 mm gun contract dated 24.3.86 between Government of India and M/s A.B. Bofors, as was the case in respect of the payments made to M/s Svenska Inc. and M/s A.E. Services".

This fairly routine inquiry, which was conceived by the CBI as a supplementary source of evidence in the powerful case it was assembling against the Hindujas, was the narrow window of opportunity that the beleaguered brothers were looking for. Srichand H induja's statement, issued in his capacity as chairman of the Hinduja Group of companies, imputes a failure by the CBI to make a connection between the howitzer gun deal and the payments made by Bofors.

In the Hindujas' rather tendentious construction of events, it took only the faintest signal from the CBI for them to heed its call and render their full cooperation to the Swiss Judge. And Srichand Hinduja concluded his statement by recording his belief that following the conclusion of fresh inquiries, the "Swiss authorities (were) in process of transmitting the documents clarifying the matters referred (to them) by the CBI". Not to put too fine a point on matters, the final upshot was that "the funds received" by the Hindujas "had no relation to the gun contract". In addition to this alleged finding of fact, the Swiss authorities, Srichand Hinduja went on, were also conveying to India the statements made before them by himself and his two brothers. F urther information on the utilisation and end-uses of funds by the Hinduja Group was also being made available.

Certain sections of the media were evidently misled by the tone of the Hindujas' statement, by confusing their patently self-serving interpretation of the Swiss Judge's finding with the actual content of the ruling, which in fact is yet to be rendered. C BI Director R.K. Raghavan soon clarified that there was next to nothing of note in the Hinduja statement. A request for additional information had indeed been sent, he said. But neither had a reply been received nor was further prosecution of the case co ntingent on the nature of the reply received. In fact, he went on, the charge-sheet would be filed against the Hindujas even without the benefit of the reply from the Swiss authorities.

Seasoned investigators who have been involved with the Bofors investigation dismissed the latest attempt at dissimulation by the London-based businessmen.

K. Madhavan, a former Joint Director of the CBI, believes that the Hindujas have undoubtedly entered a plea before the Swiss Judge about their non-involvement in the Bofors deal. This attempt at self-exculpation would, as a matter of course, be conveyed to the CBI by the Swiss judicial authorities. But the CBI would have the autonomous knowhow and resources to make its own judgment. And the nature of the evidence here is overwhelming. It would have been totally out of character, says Madhavan, for the H indujas to say anything other than what they have. Madhavan also recalls that in the initial stages of the unravelling of the scandal, the Hindujas were insistent that they had had no dealings at all with Bofors. Their admission now that they had indeed transacted vast sums of money with Bofors must count as a partial breakthrough for the criminal investigation, he infers.

It is another matter, though, that the recipients of the Bofors payoffs have successfully managed to camouflage the trail of the monies involved. For instance, the two tracks of payment involved with the names of Svenska and A.E. Services - the latter a shadowy interest group believed to be close to the ruling establishment of the time - were lodged for no more than a few days in the accounts they were first remitted into. The subsequent transfers have been fast and furious, involving banking entities a nd geographical locations in various European and Central American countries. Since uncovering the second stage in the transfer of these monies, the CBI has sought further information on the accounts involved. But it is now finding out that there has bee n still a third phase of transfer, dispersing the monies involved in the Bofors deal to still more widely disparate locations. Indications are that the payments made into the Hindujas track, under the three known coded accounts, could also have been quic kly dispersed to remote locations, making the identification of the final beneficiaries an enormously complicated affair.

All this marks a rather more complex situation than the CBI confronted recently in its successful prosecution of the case involving illicit payments to a group of parliamentarians belonging to the Jharkhand Mukti Morcha. The operatives involved in the Bo fors payoffs are unlikely to share the kind of naivete that was displayed by the JMM members of Parliament, who first deposited the monies received in a local bank branch and then sought a veneer of legitimacy by printing receipts indicating that they we re political donations.

For the Hindujas to say that they have finally been exonerated from culpability in the Bofors scandal is undoubtedly an act of extreme audacity. But earlier such manoeuvres have brought them momentary dividends. They have delayed, obfuscated and mystifie d with the kind of persistence and success that has eluded the other accused in the scandal. Ottavio Quattrocchi is now a fugitive from the law. Win Chadha is stricken and debilitated by various ailments in his advanced years and it is increasingly clear that he perhaps knew little about the furtive inner channels of the payoffs. If anything, he was played for a dupe and done out of what might have been his fair expectation. But the Hindujas still managed till recently, with the active assistance of the ir numerous sympathisers in the media and the government, to portray themselves as the much wronged party in the entire saga. The apparent desperation of their most recent gambit showed that the pretence was wearing perilously thin. The charge-sheet file d on October 9 finally demolishes the cover.