On the Hinduja trail

The CBI is evidently set to take forward the investigation in a systematic manner.

AS a process that has cut through the dense thicket of political obfuscation and survived the minute scrutiny of the judicial systems in India and Switzerland, the investigation of the Bofors payoffs scandal has marshalled a voluminous body of evidence. That did not deter the three Hinduja brothers - Srichand, Gopichand and Prakash - from one final effort to throw the investigation off track through the tendentious interpretation of a Swiss court ruling, fed selectively to the media. But the political c lout that the brothers had assiduously built up over the years seemed abruptly to have evaporated. And the charge-sheet that was filed by the Central Bureau of Investigation (CBI) in the Delhi court of Special Judge Ajit Bharihoke on October 9, reflects a trail of alleged wrongdoing on the part of the Hinduja brothers.

The indictment of the brothers comes in the shape of a subsidiary charge-sheet, which is to be read in conjunction with the charge-sheet filed in October 1999. The individuals who were then specifically charged with corruption and criminal conspiracy inc lude the former Prime Minister the late Rajiv Gandhi, and his one-time Italian confidant and friend Ottavio Quattrocchi. Others who have been booked for complicity and worse in the sequence of wrongdoing include Martin Ardbo, former chief executive of AB Bofors, S.K. Bhatnagar, former Union Defence Secretary, and W.N. "Win" Chadha, the long-serving agent in India for the Swedish armaments manufacturer. Also featured in the charge-sheets are a host of companies, corporate entities, and shadowy "trusts" a ssociated with these individuals.

Media revelations between 1988 and 1989 had pointed to the Hinduja brothers as the possible beneficiaries of three tracks of remittances to branches in Geneva of the Manufacturers Hanover Trust Bank, the Swiss Bank Corporation, and Credit Suisse, under t he code names "Tulip", "Lotus" and "Mont Blanc". Documents transferred from Switzerland in December 1999 after the tortuous process of executing the CBI's letters rogatory of 1990 was completed, indicate quite definitively that all three coded accounts w ere controlled by a single corporate entity - Mc Intyre Corporation (alternatively spelt Mac Intire Corporation in the Credit Suisse account). But the interesting variation in the spelling does not obscure the fact of ownership. Documents received by the CBI last December show that the "Tulip" account was jointly opened by Srichand Hinduja and Gopichand Hinduja in May 1986, cancelled immediately afterwards and reopened within three days in the name of Mc Intyre Corporation.

The hand of Jurg W. Vogel, who held the power of attorney for Mc Intyre Corporation, has also been detected behind the "Tulip" account. In the account opening form, Vogel mentions Prakash Hinduja as a "client".

Even this residual element of ambiguity is absent in the case of "Mont Blanc". The CBI is in possession of a letter written by Prakash Hinduja dated May 15, 1986, requesting Credit Suisse to open an account in the name of "Mac Intire Corporation", which is described as a newly founded company based in Panama. After requesting the bank to accept an amount in excess of Swedish kroner (SEK) 11 million from a Stockholm account of AB Bofors, Prakash Hinduja confirms that he is the "beneficial owner of Mac In tire Corporation".

Although the media expose had unearthed a number of documents pointing to massive remittances into the Hinduja accounts, the full magnitude is only now apparent. Between May 1986 and December 1986, it is now clear, Bofors paid a total of SEK 80.797 milli on into the three identified accounts. This establishes, in the CBI's estimation, a clear correlation with the signing of the Bofors gun deal in March 1986.

In a desperate rearguard action, the Hinduja brothers have sought to put another spin on these payments. In the infamous "clarification" issued in September 2000 and reiterated even after the charge-sheet was filed, they admitted the receipt of large sum s of money from Bofors, but disavowed any link with the purchase of howitzer guns by the Indian government. This plea, investigators within the CBI assert, will simply not hold in a court of law. The weight of evidence directly linking these payments to the howitzer deal is so overwhelming that the onus to prove the absence of an association would now shift to the Hinduja brothers. This is a clear legal requirement under Section 106 of the Indian Evidence Act, they argue.

The latest Hinduja ploy is of a piece with earlier efforts to deflect the course of the investigation, which have earned them a specific indictment in the recent charge-sheet. Among the many red herrings that the brothers strewed around when the scandal erupted in April 1987 was a fictitious company called Moineao SA, supposedly with its headquarters in Geneva. The manner in which the top management of Bofors and officials within the Indian government played along with this piece of fiction points to a massive degree of collusion with the Hinduja brothers.

Bofors had, till the scandal erupted, steadfastly clung to the story that its only agent in India had been Win Chadha and his Anatronic General Corporation. Chadha, the company insisted, had been isolated from the negotiations process following the stipu lation made by the Indian government in 1985 that middlemen should be kept out of the howitzer deal.

In September 1987, the charge-sheet documents, two senior officials from Bofors arrived in Delhi to depose before the Joint Parliamentary Committee (JPC) inquiry into the scandal. Prior to their appearance before the JPC, they held consultations with off icials of the Indian government. An "agreed summary" of these discussions was prepared, in which Bofors identified three "consultants" engaged for the specific purpose of securing the Indian howitzer contract. Among the three was Moresco, which was earli er known as Pitco. The company, by its own admission, had an agreement with Moresco going back to 1979, but had terminated all links in January 1986. Following this, "winding up" payments amounting to SEK 81 million had supposedly been made to Moresco in three instalments.

An undertaking was then given by Bofors that further information on the corporate structure and personnel of Moresco would be provided. However, in a communication dated October 6, 1987, the company claimed that Moresco was only a "reference" for Moineao SA. The names of three directors in this company were proffered, but further information was declined.

The CBI has now found that the supposed agreement between Moineao SA and Bofors was a fabrication, designed to lead the Indian investigation into the dead-end of a non-existent company. The individuals named as directors of this fictitious company were, in fact, associated in a similar capacity with Mc Intyre Corporation. And all the payments that had been made out to Moineao SA had actually been received by Mc Intyre.

Significant corroboration has been found in the report of the Swedish National Audit Bureau. An excised version had been presented by the crisis management team within the Indian government in self-exculpation in 1988. But the full version, which was pub lished by the media expose and is now in the possession of the CBI, states unequivocally that "proven commission payments" were made to companies and accounts in Switzerland in relation to the howitzer deal. The auditors were able to infer, from a statem ent made by Bofors to the Bank of Sweden, that these payments related "unquestionably" to the gun deal.

This trail of payoffs may point to a case for prosecution for breach of contract, though not yet for corruption and criminal conspiracy. That essential link is provided by Section 5(1)(d) of the Prevention of Corruption Act, which reads as follows: "A pu blic servant is said to commit the offence of criminal misconduct if he, by corrupt of illegal means or otherwise abusing his position... obtains for himself or for any other person any valuable thing or pecuniary advantage..."

By this token, the Hinduja brothers are guilty not merely of receiving payoffs in violation of an explicit contractual undertaking given by Bofors, but also of collusion in an effort to cover up the truth, in active collaboration with various public serv ants. In this reckoning, it is not necessary to prove that any of the indicted public servants received a direct pecuniary gain. Their active participation in an effort to enrich the Hinduja brothers, not to mention Chadha and Quattrocchi, makes out an a dequate case for corruption and criminal conspiracy.

FOR this reason, CBI investigators are dismissive of the last-gasp effort by the Hinduja brothers to make a case for their exculpation. It is true, the investigators admit, that in the case of the payments made to the Hinduja accounts, details of further transactions are not available. In contrast, the papers received from the Swiss authorities detail a trail of money transfers out of the Chadha and Quattrocchi accounts, to banks in locations as widely dispersed as Panama, the Channel Islands, Jordan an d back to Switzerland. The Hinduja brothers have sought to capitalise on the CBI's inquiry, recently lodged with the Swiss authorities, asking for "end use" information on the funds lodged in their accounts. But CBI sources are emphatic in their insisten ce that this information is in no way essential to the case for the prosecution.

The CBI charge-sheet documents the persistence with which the Hinduja brothers sought to block the execution of its letters rogatory issued in 1990. Even after the highest court in Switzerland had dismissed all their appeals, they took the extreme step o f petitioning the Swiss Federal Councillor in a bid to block the transmission of evidence to India on the grounds that it would "injure the sovereignty, the public order or other essential interests of Switzerland".

As their legal stratagem crumbled, the Hinduja brothers sought pre-emptive protection against the Indian system of justice by changing their nationality. On June 15, 1998, the Examining Magistrate in Geneva issued an order for closing the appeals procedu re. Eight days later, Gopichand Hinduja obtained a British passport. Similarly, family elder Srichand Hinduja renounced his Indian nationality and acquired a British passport shortly before the Swiss Cantonal Court dismissed his appeal on May 17, 1999. T his, according to the CBI charge-sheet, points to their involvement in the criminal conspiracy surrounding the Bofors deal.

Decisive action taken by the CBI in the pursuit of Quattrocchi and Ardbo is also yielding dividends, according to sources in the agency. From his safe haven in Malaysia, Quattrocchi has managed to fight off repeated efforts to obtain his repatriation to India. But after the CBI secured from Interpol a "red corner alert" for his arrest, the authorities in Malaysia have reportedly been looking at the agency's case with more sympathy.

The "red corner alert" issued for Ardbo has similarly caused a shift in legal and political opinion in Sweden, say sources. Where once the Swedish authorities were insistent that Ardbo's prosecution was precluded by the statute of limitations, they are t oday inclined to believe that he should be brought to account in some manner, whether through the Swedish or the Indian judicial process. Alternatively, he could be granted a measure of immunity, they feel, if he were to offer his cooperation to the Indi an investigation.

Madhavsinh Solanki, External Affairs Minister in the P.V. Narasimha Rao Cabinet, could also soon be under scrutiny for his maladroit effort to obstruct the course of justice by delivering an unsigned note to his Swiss counterpart in 1992. Sanction for hi s prosecution has been received from the appropriate quarters, though the CBI is yet to build its case against him. And in an interesting twist, the CBI has received information that H.R. Bharadwaj, Minister for Law under Narasimha Rao, had also sought t o exert his influence to stop the Swiss hearings on the case. He underwent one intensive session of interrogation at CBI headquarters, but stuck to the strategy of stout denial.

Despite their avowals of cooperation, the Hinduja brothers have only once submitted themselves for questioning by the CBI. And that was as far back as 1992, when K. Madhavan, former Joint Director in the agency, was in charge of the case. Madhavan recall s that the British lawyer representing the brothers had then obstreperously rebuffed all his inquiries.

Nobody believes today that the wealthy and influential brothers will deliver on their promises of cooperation with the Indian investigation. That would seemingly leave the CBI with no option but to press for warrants of arrest and subsequently for extrad ition.