A verdict under scrutiny

Print edition : February 27, 2004

The latest Delhi High Court judgment in the Bofors case raises more questions than it answers.

in New Delhi

Rajiv Gandhi.-V. SUDERSHAN

JUST days after the Delhi High Court had ruled that there was no evidence of illegal gratification on the part of any public servant in the long-running saga of the Bofors payoffs scandal, a former Cabinet Secretary sought rather cautiously to qualify the judicial finding. Releasing his memoirs from the period, B.G. Deshmukh, who had headed the civil service during part of Rajiv Gandhi's prime ministerial tenure and later served as Principal Secretary in his office, suggested that even if Rajiv Gandhi had not directly received any of the payoffs from Bofors, he was clearly aware of the identity of the recipients. He was not interested in pursuing the truth in the matter because of the possibility of political embarrassment. It was most likely, said Deshmukh, that close political associates or friends may have been the guilty in the Bofors case.

This offered a striking retrospect on the High Court ruling, delivered on February 4 by Justice J.D. Kapoor. Deshmukh's remarks indeed virtually echo the finding of Special Judge Prem Kumar in November 2002 that Rajiv Gandhi's conduct after the whistle was blown on the Bofors payoffs suggested that he was engaged in a "massive cover-up operation". The Special Judge hearing cases brought by the Central Bureau of Investigation had then dismissed a plea by the Hinduja brothers - Gopichand, Srichand and Prakash - seeking discharge in the Bofors prosecution. He had held that the evidence offered strong prima facie grounds for proceeding with the prosecution. Most critically, he had found that the evidence of the involvement of senior public servants in the Rajiv Gandhi government, including the Prime Minister himself, was sufficient to warrant prosecution of the accused under the Prevention of Corruption Act (PCA).

Since the filing of the first information report (FIR) in the Bofors matter as far back as 1990, the Hindujas have been making frequent visits to the courtroom with a variety of petitions. It was no surprise then that they should have chosen to appeal against Judge Prem Kumar's ruling in the High Court. Justice Kapoor's ruling offers them the partial relief of discharge under the PCA, but leaves them liable to prosecution on a number of other charges like "cheating" and conspiracy to cause "wrongful loss" to the Indian government. Also indicted for forgery is the company at the centre of it all - Bofors AB of Sweden - which has gone through successive mutations and is now known under the appellation of the Kartongen Kemi Och Forvaltning AB. Since the case was only being heard by the Special Judge because it involved the PCA, the modification of the charges involves its transfer to the jurisdiction of the Chief Metropolitan Magistrate of Delhi.

Justice Kapoor has directed that charges be framed afresh in the case against the Hinduja brothers, as also other known recipients of Bofors payoffs - the Italian businessman Ottavio Quattrocchi and the one-time agent for the company, the late W.N. "Win" Chadha. These individuals are to be held liable for "fraudulently and dishonestly representing that there were no agents involved in the negotiations for the contract" and further, for claiming that "the price quoted was the reduced price proportionate to the amount of commission they would have otherwise paid to the agents".

IT does not take great percipience to see that this is a virtual judicial non sequitur. The undertaking that no middlemen would be involved in the Indian Army's purchase of howitzer guns was held out by Bofors AB as the bidder for the contract. There is no recognisable legal doctrine by which the individuals who were performing a variety of liaison functions for the company could be held accountable for it. In dealing with this question, Justice Kapoor utilises a device of informed conjecture that he otherwise deprecates: "To say that the Hindujas were not at all aware about the aforesaid representation or declaration or undertaking given by M/s A.B. Bofors (sic) is beyond comprehension as Hindujas had been working as agents (of Bofors) since 1979. Their defence that prior to April 1985 there was no policy or decision of the Government of India that there should not be any middlemen or agent in negotiation of the contract and, therefore, there was nothing illegal in execution of the arrangement between them and (Bofors) may be available to them till April, 1985; but subsequent thereto, to say that they had no knowledge about the declaration and undertaking... is difficult to accept at this stage and would be as if left hand did not know what the right hand was doing."

When dealing with the possibility that the choice of the Bofors gun over competition could have been influenced by extraneous and possibly corrupt considerations, Justice Kapoor shows a curious reluctance to use similar inferences. Thus, in dismissing the rival claims of a French manufacturer of artillery guns, he asserts quite bluntly and in rather colourful language that "the Expert Committee's opinion as to the preference of Bofors could not and ought not have been ignored even if it was little costlier (because) security of a nation cannot be jeopardised for a few bucks here or there".

Justice Kapoor has relied on various arguments to dismiss the charge of corruption and absolve the two public servants who feature on the CBI's bill of indictment - Rajiv Gandhi and former Defence Secretary S.K. Bhatnagar, since deceased. Among them is a notion of judicial fairness: since the accused are no longer alive to defend themselves, the evidence that is adduced against them would go "unrebutted, undefended and unchallenged".

This, Justice Kapoor holds, would go against the "cardinal principle of trial that any trial in the absence of the accused is no trial". Curiously though, Justice Kapoor fails to apply this principle in the case of Chadha, also since deceased.

The main thrust of Justice Kapoor's 115-page judgment though is on the lack of evidence of payoffs made to public servants. Thus, he pronounces that "16 years of investigation by a premier agency of the country (the CBI) could not unearth a scintilla of evidence against (Rajiv Gandhi and S.K. Bhatnagar) for having accepted bribe/illegal gratification in awarding the contract" to Bofors. This sweeping pronouncement ignores the vital fact that the CBI has never assumed or asserted in its charge-sheets that the public servants featuring on its bill of indictment had received any part of the illicit payoffs.

What has been affirmed rather is that both Rajiv Gandhi and Bhatnagar were complicit in the abuse of power and position in the grant of pecuniary favours to a number of Bofors middlemen. The inclusion of their names in the CBI charge-sheet was essential to preserving the integrity of the case. The illicit payoffs may or may not have been destined for the public servants concerned, but in a case involving conspiracy to cause wrongful loss to the government, all links in the chain need to be mentioned.

This was the judicial reasoning underlying Judge Prem Kumar's ruling permitting the CBI to frame charges against all accused in the Bofors case. "After Bofors had denied payment of commission/bribes," he noted, "Shri Rajiv Gandhi spoke to Swedish Prime Minister and told him that there was no need for any further investigation by Swedish government. No pressure of any kind was put on Bofors to come out with details of middlemen and the extent of amount (sic) paid to them. What to talk of cancellation, even threat to cancel was not extended. The CBI even failed to perform its statutory obligations of registering the FIR and conducting investigations... "

In dealing with Judge Prem Kumar's ruling, Justice Kapoor terms the circumstances that he relied upon in inferring that there was a "conspiracy" and "abetment to commit the offences" as "wholly presumptive and imaginative(sic)". The Chief of Staff of the Indian Army then, General K. Sundarji, had recommended the cancellation of the contract as a punitive action.

Bhatnagar had returned this recommendation to the General, with the suggestion that it be modified. This "difference of opinion", in the words of Justice Kapoor, "cannot form the basis of conspiracy".

A conspiracy between the public servants named and the proven recipients of the Bofors payoffs - Quattrocchi, Chadha and the Hindujas - is not established by the mere fact of "receipt of commission by them subsequent to the award" of the contract. The subsequent telephone conversation between Rajiv Gandhi and his Swedish counterpart and the formal letter that was sent seeking to deflect the official inquiry off course in that country, pertains in Justice Kapoor's view, to "post-contract conduct" which "cannot be used as evidence for a conspiracy prior to the contract".

In perhaps the most pithy statement of his grounds for dismissing the accusations against the public servants, Justice Kapoor observes that a "meeting of the mind (sic) is an essential ingredient of conspiracy". And "none of the circumstances relied upon by the CBI during the contract or after the contract, project or demonstrate any meeting of minds of all the participants in the conspiracy".

This effectively rules out of court all the evidence that was marshalled by the independent media investigation - and subsequently used by the CBI - in establishing the various kinds of connections between the main players in the Bofors saga.

The Rajiv Gandhi connection in fact is strongly indicated in a number of circumstances: the mysterious emergence of an interest group Svenska AG, since proven to be a front for the Rajiv Gandhi family intimate Quattrocchi, in the last stages of negotiations before the contract was signed; the seeming certainty with which the new entity established its entitlements to a share of the contract value on the understanding that the contract would be signed before a specific date; and the subsequent discovery of precisely defined payments as a proportion of contract value into accounts controlled by Quattrocchi.

SINCE the filing of the FIR in the Bofors case in 1990, the investigation and the prosecution have been deflected off course on two previous occasions by highly questionable rulings from the Delhi High Court. Justice Kapoor's judgment, in this sense, constitutes a dubious hat-trick. Having obtained due redress on both previous occasions on appeal to the Supreme Court, the CBI has indicated that it is inclined to move the apex court this time too.

That the affected parties would explore every available judicial avenue to delay and if possible defeat the Bofors prosecution was never in doubt. But the public interest in India's most high-profile case of political corruption ever still remains high, even if attention to some of its minute details is wavering. Clearly, in the interests of establishing an appropriate judicial framework for investigating and bringing to account offenders who operate with impunity across borders, utilising every option available in a secretive global banking industry, the CBI cannot afford to relent at this stage.

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