BOFORS SCANDAL by Poonam Langer

What is the Bofors Scandal?

India signed a Rs 1,437-crore deal with Swedish arms producer AB Bofors for the supply of 400 155 mm Howitzer guns for its Army on March 24, 1986. This was the largest arms deal ever in Sweden, and therefore, the money that had been retained for development projects was rerouted to secure this contract at any cost. A Swedish radio channel, on April 16, 1987, accused the corporate of bribing top Indian politicians and several defense persons to obtain the contract. Considering the revelations, the Indian government decided to blacklist Bofors in 1987, thereby preventing it from carrying business in India. However, the Indian news agencies were not familiar with this breaking news. When the news was again broadcasted in May 1987 by a Swedish Radio Channel, it was then that a young journalist of the Hindu picked up the news. This was the beginning of the scandal which rocked the Rajiv Gandhi-led government in the late 1980s. The degree of corruption was far worse than any that Sweden and India had ever experienced before and it directly led to the defeat of Gandhi's ruling Indian National Congress party in the November 1989 general elections.

However, the Indian government had lifted the blacklist on Bofors in 1999, during the Kargil War, when the Bofors guns proved to be efficient but were crippled by a shortage of spare parts.

Impact on Rajiv Gandhi-led Government

When the issue had been in the limelight and was taken up during the parliamentary sessions, thereby questioning the credibility of the INC, Rajiv Gandhi, on April 20, 1987, cleared the air by stating in the Lok Sabha that no kickbacks were paid and no middlemen were involved. Owing to the consistent allegations being imposed, a Joint Parliamentary Committee (JPC) had been set up under former union minister B Shankaranand to investigate the kickbacks allegations on August 6, 1987. The Indian investigators, in February 1988, visited Sweden to probe the issue in its entirety. After investigating the matter and based on findings, a report of the Committee was submitted to the Parliament on July 18, 1989.

The impact of these allegations and the alleged scam was so grave that it directly affected the upcoming general elections in November 1989 when Congress was defeated and as a result, Mr. Rajiv Gandhi lost his position. The newly elected government, led by V P Singh, on December 26, 1989, had imposed a bar on Bofors from signing any contract with India.

FIR by the Central Bureau of Investigation

Paying heed to these allegations, the Central Bureau of Investigation (CBI), on January 22, 1990, lodged an FIR against the then president of Bofors Martin Ardbo, the alleged middleman Win Chadda and the Hinduja brothers charging them for criminal conspiracy, cheating, and forgery. The FIR relied on the relevant provisions of the Indian Penal Code and other sections of the Prevention of Corruption Act.

It was alleged that the offenses of bribery, corruption, cheating, and forgery were committed pursuing the fact that certain public servants and private persons in India and abroad had entered into a criminal conspiracy between 1982 and 1987.

Timeline of Events

Continuing the thread of events, in February 1990, the First Letter Rogatory was sent to the Swiss Government. Then, after two years, in February 1992, a colossal debate had emerged due to the publication of a report on the Bofors Scandal that was written by Journalist Bo Anderson.

A major turnover took place in December 1992 when the Supreme Court rejected the complaint in the case reversing Delhi High Court’s decision. The Swiss Supreme Court, in July 1993, had dismissed the appeal of Ottavio Quattrocchi and other accused persons in the case. Quattrocchi, also the intermediary, was an Italian businessman being sought in India for criminal charges as he acted as an agent for bribes in the scandal. Quattrocchi left India in the same month and has not returned since. In February 1997, a Non-bailable warrant (NBW) and Red Corner notice were issued against Quattrocchi.

During the time frame of March-August, 1998, the events include a plea filed by Quattrocchi which was rejected in Supreme Court as he refused to appear in the Indian court. Later, in December 1998, the Second Rogatory Letter was sent to the Swiss government to probe into the transfer of money from Guernsey and Austria to Switzerland.

The charge sheets of the case

It was on October 22, 1999, when the first blotter was filed against the accused persons which were Chadda, Ottavio Quattrocchi, the then defense secretary S K Bhatnagar, Ardbo, and the Bofors company. To ensure his appearance, Chadha came to India to face trial and sought permission to go to Dubai for medical treatment but the plea was rejected. Also, an open NBC was issued in July against Ardbo.

Meanwhile, the Hinduja brothers issued a press release in London stating that the funds allocated by them had no connection to the Bofors deal. However, a supplementary blotter was filed against the Hinduja brothers on October 9, 2000.

Quattrocchi had asked the Supreme Court to reverse the order of his arrest but when he was asked by the court to make an appearance before CBI for a probe, he rejected to oblige, and thereafter, a charge sheet was filed against him. Quattrocchi was arrested in Malaysia in December 2000 but he was granted bail on the condition of him not leaving the country. One of the accused, Mr. Bhatnagar, died of cancer in August 2001.

Then, in December 2002, India had requested Quattrocchi’s extradition but the Malaysia High Court turned down the request. Due to this, in July 2003, a Letter of Rogatory had been sent by India to the United Kingdom seeking the freezing of Quattrocchi's bank accounts.

Exoneration by the High Court & Directions by the Supreme Court

On February 4, 2004, retired Justice J D Kapoor had exonerated late prime minister Rajiv Gandhi in the case and directed the framing of a charge of forgery under Section 465 of IPC against the Bofors company. Justice R S Sodhi (since retired) of the Delhi High Court had rescinded the CBI case in the Bofors scam on May 31, 2005, . The court quashed all charges against the Hinduja brother and A B Bofors. Ajay Agarwal, a Supreme Court lawyer, had been allowed by the court to file an appeal against the high court verdict, in case CBI does not appeal within the mandatory 90 days.

In January 2006, the apex court directed the Centre and CBI to ensure the status quo of freezing Quattrocchi's accounts. However, money was withdrawn on the same day.

Leading to the turn of events, Interpol, in 2007, arrested Quattrochi at Iguazu Airport in Argentine but three months later, the Federal court of the first instance declined India’s request for extradition.

Further, in 2009, CBI withdrew it’s Red Corner Notice against Quattrocchi and sought SC’s permission to withdraw the case as continuous efforts of extradition had failed. Afterward, Ajay Agarwal filed an RTI Application for seeking the documents of de-freezing Quattrocchi’s account in London but the CBI chose not to reply. In December 2010, the Court reversed the order on the CBI plea to discharge Quattrocchi. Further, the Income-tax tribunal asked the income tax department to get the tax dues from Quattrochhi and Chaddha’s son.

In 2011, CBI was accused by the Chief Information Commission of withholding information. A special CBI Court in Delhi, after a month, had discharged Quattrocchi from the case by stating that country’s hard-earned money cannot further be spent on his extradition which has already costed Rs 250 crore.

The Revelation

After a long-debated scam, in April 2012, Swedish police chief Sten Lindstrom revealed that he was the Deep Throat in the Bofors case and the key source that Chitra Subramaniam, the young journalist from the Hindu turned to. It was further stated by him that there was no evidence of Rajiv Gandhi or Amitabh Bachchan with the Swedish Police. Amitabh Bachchan was first accused in this scandal through a newspaper that printed his name and thereafter, a case was filed against him but he was declared innocent later on.

In July 2013, Quattrocchi had passed away. Amongst other accused persons, Bhatnagar, Chadda, and Ardbo have died so far.

Hearing of Agarwal’s Appeal

After a gap of almost six years, on December 1, 2016, the hearing of Agarwal’s appeal had taken place. The CBI, on July 14, 2017, stated that if the Supreme Court and Centre orders, it would open the investigation on the Bofors case.

It was asserted by the CBI on October 19, 2017, that they will probe the details and situations disclosed relating to the Bofors scam, including the data provided by Michael Hershman in an interview, where several revelations were made by him and some powerful politicians in India linked with the deal were named. Michael Hershman, who first found Bofors papers, was a secret investigator the Indian government had deployed and could, therefore, prove to be of enormous credibility.

Conclusion

Thus, the proactive step taken by the CBI to file a petition in the Supreme Court challenging a 2005 order of the Delhi High Court which quashed all charges against accused persons in the Bofors pay-off case becomes relevant and important as it is a politically sensitive case. The filing of the appeal further receives connotation with the Attorney General K K Venugopal advising the agency against moving a petition against the high court verdict after a delay of 12 years.

References:

1. PGURUS, How Bofors scam probe and trial was sabotaged in a systematic way Still the case is pending before Supreme Court. Will CBI be ordered to act?, https://www.pgurus.com/how-bofors-scam-probe-and-trial-was-sabotaged-in-a-systematic-way-still-the-case-is-pending-before-supreme-court-will-cbi-be-ordered-to-act/ (last visited Nov. 30, 2020, 5 PM)

2. The Print, Guns, Swedes and the Gandhis — how the Bofors scam tested the limits of the CBI’s power, https://theprint.in/pageturner/excerpt/guns-swedes-and-the-gandhis-how-the-bofors-scam-tested-the-limits-of-the-cbis-power/531144/ (last visited Nov. 30, 2020, 5.15 PM)

3. The Indian Express, What is the Bofors Scam Case?, https://indianexpress.com/article/india/what-is-the-bofors-scandal-case-why-is-it-being-opened-now-4823576/ (last visited Dec. 1, 2020, 11 AM)

4. Business Standard, Bofors scam: A timeline of the 31-year-old, Rs 1,437-cr India-Sweden deal, https://www.business-standard.com/article/current-affairs/rs-1-437-cr-india-sweden-bofors-guns-deal-timeline-of-the-31-year-old-case-117102100190_1.htm l (last visited Dec. 1, 2020, 12 PM)