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Bofors Gun Deal

The elections of 1989 became a single issue election and the Party that had won 400 plus seats earlier lost because of the Bofors Gun Deal. It was a very heavy price India had to pay. Even more important is that it was on account of Bofors that from 1987 onwards, decision-making processes, particularly about obtaining of complex weapons system was virtually paralysed in the Ministry of Defence. Parliament itself, the Ministry of Defence, the Comptroller and Auditor General, the Central Bureau of Investigation, the then Prime Minister, the Prime Ministers Office, all these institutions were got dragged into the dragnet of Bofors.

Rajiv Gandhis governemnt, apart from many of its controversial and debatable political decisions, was discredited with the serious allegations of corruption in Bofors guns purchased from a Swedish Company for the Indian Army. Though the deal was unearthed by one of the senior ministers of his cabinet, Mr. V. P. Singh, the mass media, especially the print media, took very active part in exposing the deal and the alleged commission of Rs. 64 crores as commission for finalizing the deal that was involved in it, that ultimately led to the defeat of Rajivs Congress party in 1989s 9th Lok Sabha elections, after Rajiv Gandhis unprecedented victory in the 8th Lok Sabha elections.

India had not ordered any new 155mm artillery guns since March 1986 when 410 pieces of the Swedish company Bofors FH-77B 155mm/39 calibre howitzer were purchased for Rs 1,500 Crore. The Rajiv Gandhi government could not decide for a long time what gun to buy - the British, Austrian or Swedish. The 1,437-crore rupees deal between India and Swedish arms manufacturer AB Bofors for the supply of 400 units of 155-mm Howitzer guns for the Indian Army was entered into on the 24 March 1986.

Government had explicitly prohibited the appointment of agents and giving of any commission in respect of any defence deal. Right from 1984 December, it started and that kind of prohibition was issued. It was repeated again and again in 1985. On 16 April 1987 Swedish Redio first alleged that bribe had been paid and Kick-backs received by or on behalf of The Prime Minister Rajiv Gandhi and the Congress from Nobel Industries of Sweden in the purchase of 155 mm Howitzer gun. Ever since the news broke that large payments had been made as commissions by Bofors into secret Swiss bank accounts in connection with the 155 mm gun contract with the Government of India, the entire nation had been most anxious to know all the facts.

The Government of India immediately came out with the statement that the news item was false, baseless and mischievous. The then Government also said that during negotiations it had "made it clear that the company should not pay any money to any person in connection with the contract." Many felt assured that the Government would deal effectively with the culprits because the statement also promised that "any breach of this policy by anyone will be most severely dealt with".

A few days later in April, 1987, the then Minister of Defence stated in Parliament that Government did not approve of the appointment of Indian agents acting for foreign suppliers and that the Defence Secretary had told the companies bidding for the contract that the Government of India will disqualify a firm in case it comes to its notice that an agent had been appointed by a foreign firm.

An unprecedented high velocity attack was mounted against Rajiv Gandhi by the print media. Rajiv Gandhi became the victim of vicious press attacks and calumny when his name was dragged in the controversy over corruption in the Bofors gun deal by exposures made by N. Ram and Chitra Subramanyam of The Hindu who published in their paper secret documents which clearly proved that kickbacks had been paid to Indian agents or middleman and some names were mentioned. Two newspapers in the forefront of the exposure of alleged corrupt deals by the government were the Indian Express and The Hindu. The Statesman joined them later. Day after day, these papers unearthed new material relating to the deals and put the government and the prime minister in an embarrassing position.

Viswanath Pratap Singh`s single minded crusade against corruption had been carried on unremittingly since his expulsion from the Congress Party in 1987, had touched a sensitive chord. V.P.Singh, who had been the leader of the Janata Dal, alleged that under Rajiv Gandhi the government became party to all kinds of corrupt practices in negotiating government purchases of arms and other material from foreign suppliers.

The Report of the Swedish National Audit bureau was made available to Government in June, 1987. Even though a vital portion of this Report was withheld by the Swedish Government, it clearly established that very large payments had been made by Bofors to various persons in connection with the Indian contract. This demolished the then Government's case that the allegations earlier made in the media were false and baseless.

The records show that there was a flurry of activity on the receipt of the Swedish National Audit Bureau Report. The then Government immediately took the decision to go about setting up a Joint Parliamentary Committee to enquire into the whole matter. In sum, Sweden confirmed the payments of 100000 SAK per month to Anatronic General Corporation in India; payments of 31.5 million SAK to an account in Switzerland in November/December 1986. The payee is not stated but could be 'Lotus' (whoever that is?); and payments of something between 175250 million SAK as 'winding-up' charges to 'others'.

The Ministry of Defence wrote a strong letter on 18 June 1987 to Bofors charging them with violation of the contract and breach of a solemn assurance that no agent or middleman would be employed by then and demanding full and detailed information from the Company with regard to these payments. Towards the end of June 1987, the Ministry also sought the opinion of the Attorney General for India. In his opinion, received on 4th July, 1987, the AG expressed the view that "if AB Bofors have engaged an Indian agent, it is contrary to the condition precedent to the contract and Government of India has an option either to treat them as a breach and sue them for damages or to keep alive the contract and sue them for breach of warranty."

The first significant disclosures by Bofors were made in their discussions with the officers of the Government of India in September 1987. It then came out that an amount in excess of 319 million kroners, corresponding to Rs. 64 crores at the then prevailing rate of exchange, had been paid by Bofors to three companies, namely, Svenska, AE Services and Pitco-Moresco-Moineao. While giving details, Bofors admitted that in the case of the Moresco the payments were made into code-named accounts viz. that of Lotus. They have also admitted that except for Moresco, the payments were made through normal banking channels. It is interesting that payments to Moresco were not made through banking channels. Prima facie, this is strong evidence to indicate the clandestine nature of these irregular payments.

A Joint Parliamentary Committee (JPC) consisting of thirty members twenty from the Lok Sabha and ten from the Rajya Sabha was constituted to enquire into Bofors contract (1987) in pursuance of a motion adopted by the Lok Sabha on 6 August 1987 and concurred in by the Rajya Sabha on 12 August 1987. The report of this Committee was discussed in the House on 11 and 12 May 1988 by way of a short duration discussion.

Investigations in the Bofors case were entrusted to the CBI which had registered a Preliminary Enquiry on 8th November 1988. The Rajiv Gandhi Government on 20 February 1989 signed an MOU between the Government of India and the Swiss Federal Government, to provide mutual assistance in criminal matters and which paved the way for Shri Vishwanath Pratap Singh, to get his information in four days time. The ninth Lok Sabha election result were a blow to Congress. The people of India rejected a corrupt and unjust government. Viswanath Pratap Singh was sworn in as the Prime Minister of the National Front Government on December 2, 1989. But this Government lasted only for a little more than eleven months. It was not unexpected. Singh`s government fell in November 1990 when the BJP withdrew its support.

The CBI took up the Boffors matter with the Swiss and Swedish authorities, seeking their assistance in the investigations. As a result of the CBI's efforts, the Swiss authorities froze certain Swiss bank accounts on 26th January, 1990. A Letter Rogatory was issued by the Special Judge, Delhi, on 7th February, 1990, which was presented to the Swiss authorities.

On July 22, 1993 seven names were publicly announced in Switzerland. They are Svenska; AE Services; Jubilee Finance; three Hinduja brothers; Shri Win Chaddha; an Italian tradesman or freebooter or whatever by the name of Ottavio Quattrocchi. Including the payoff of $36.5 million to Ottavio Quotrochi, the Bofors deal contemplated three streams of payoff totalling $250 million. Some $7.3 million from Bofors AB had found its way into Ottavio Quotrochis secret bank accounts, a fee to Ottavio Quotrochi for swinging the $1.2 billion gun deal for the Swedish gun maker.

A judge of the Delhi High Court, Justice JD Kapoor (since retired), had on February 4, 2004, exonerated late prime minister Rajiv Gandhi in the case and directed the framing of a charge of forgery under Section 465 of the IPC against the Bofors company. Then Delhi High Court judge RS Sodhi had on May 31, 2005, quashed all charges against the Hinduja brothers Srichand, Gopichand and Prakashchand and the Bofors company and castigated the CBI for its handling of the case, saying it had cost the exchequer about Rs 250 crore.

The ghost of Bofors returned to haunt the Congress party on 26 April 2012 with the Bharatiya Janata Party targeting it following fresh allegations that Rajiv Gandhi as Prime Minister may have soft-pedaled the probe into kickbacks in the gun deal to protect Italian businessman Ottavio Quattrocchi. In an interview, former Swedish police chief, Mr Sten Lindstorm, who owned up being the whistleblower in the illegal payoffs case, said that there was no evidence to suggest that Gandhi had taken a bribe in the Bofors deal but that he did nothing to prevent the cover-up that followed in both India and Sweden to protect Quattrocchi.

In a November 2017 letter to the Department of Personnel and Training (DoPT), the CBI said it wanted to file an SLP challenging the Delhi High Court order of May 31, 2005, quashing all charges against Europe-based Hinduja brothers in the Bofors case. The DoPT has sought the AGs opinion on this. A government official had earlier said the CBI was in favor of filing the SLP in 2005 but did not get a go-ahead from the then UPA government to do so. Legal experts felt the agency would have to explain why there was a gap of over 12 years before the filing of an SLP.

The Supreme Court on 02 November 2018 dismissed CBI's appeal against the Delhi High Court verdict discharging all the accused, including Hinduja brothers, in 64-crore rupees Bofors pay-off case. A bench headed by Chief Justice Ranjan Gogoi said it was not convinced with the grounds of the CBI on the delay in filing the appeal. The apex court, however, said that an appeal against the High Court verdict filed by an advocate is pending and the CBI can raise all grounds in it.

By July 2005 necessary steps had been taken by the concerned authorities to ensure maintenance of Bofors guns. These steps include strip inspection at the periodicity of 6 years and decision to overhaul guns after 18 years. Pilot Overhaul of 10 Guns has been completed during 2004-05. It is intended to complete overhaul of all Bofors guns within next ten years.

By 2012, while there were no technical problems reported in existing gun system of the Army. However, due to vintage and exploitation of the guns, mechanical problems of routine nature did come up from time to time. These are rectified by the repair/maintenance agencies either in situ or at the workshops established for this purpose. The government secured the right of transfer of technology during the purchase of Bofors guns. Though all the technological documents as per the ToT contract were received by OFB from M/s AB Bofors, the Transfer of Technology was not carried forward as the dealings with the technology provider, (M/s AB Bofors) were suspended. Further, no indent was placed by Army on OFB for manufacture and supply of complete gun system. Capital expenditure of Rs.376.55 crore has been sanctioned by the Government in March, 2012 for creation/augmentation of Large Calibre Weapon manufacturing capacity in Ordnance Factories.

The Indian Army finally inducted new artillery guns, 31 years after allegations over the 1986 Bofors gun deal with Sweden crippled the overall defence acquisition process for the armed forces. The ceremonial induction of the battle-proven M777 ultra-light howitzers from the US and the K9 Vajra tracked self-propelled guns from South Korea on 09 November 2018 at the School of Artillery in Western India were high as much in symbolism as in substance.




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Page last modified: 18-06-2019 17:08:52 ZULU