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State of UPA Government : Bofors ghost haunts Manmohan Singh

	January 16, 2006

Hardly had the dust over the Volcker scandal settled, when the ghost of the decades old Bofors payoff case is again looming large over the Congress-led UPA Government. The crisis appears to have been triggered by an overzealous Law Minister H.R. Bhardwaj, obviously trying to be more loyal than the King, in this case, Congress president and UPA chairperson Sonia Gandhi.



A Law Ministry official had conveyed last month to Britain’s Crown Prosecution Service (CPS) that the Indian Government had no objection to the defreezing of Italian businessman and Bofors scam accused Ottavio Quattrocchi’s bank accounts in London. Kickbacks from the Bofors deal are alleged to have been paid into these accounts.



Quattrocchi was a family friend of the Gandhis when the controversy broke out though Sonia Gandhi now appears to have distanced herself from the tainted wheeler-dealer.



Prime Minister Manmohan Singh and Sonia Gandhi held a meeting in New Delhi on Saturday, Jan. 14, night, reportedly to work out a damage-control strategy to tackle the raging controversy. The meeting was held at the Prime Minister’s residence and lasted nearly 90 minutes. It was attended among others, by Defence Minister Pranab Mukherjee, Home Minister Shivraj Patil and Congress president’s political secretary Ahmed Patel.



Shivraj Patil later claimed that the meeting had been a routine one, but observers believe that it deliberated on the options for containing the adverse political fallout of the Law Ministry’s move. As the Opposition condemned the alleged bid to scuttle a probe into the allegations against Quattrocchi for his proximity to the Gandhi family, the Congress has now sought to distance Sonia Gandhi and the party from the Law Minister’s move by passing the buck to the Government. The party said that the “law should take its own course and the guilty should be punished.” Congress sources say that both the Prime Minister and Sonia Gandhi were kept in the dark about the Law Minister’s move.



The Prime minister on Friday, Jan. 13, summoned Bhardwaj and Suresh Pachouri, who is the Minister of State for Personnel, which cleared the Law Ministry official, Addl. Solicitor General B.Dutta’s trip to London and sought clarifications from them. The Government is reportedly considering asking the British authorities to continue the freeze on Quattrocchi’s account and ignore Dutta’s communication.





There are unconfirmed reports that Bhardwaj and Suresh Pachouri may quit in an effort to save the Government from further embarrassment. Asked if Bhardwaj would be the fall guy, a source said, “wait for the Cabinet reshuffle”, which is expected after the Congress plenary to be held in Hyderabad later this month.



The problems faced by the Government have increased with the Supreme Court advancing the hearing of a petition challenging the Law Ministry’s statement to the British authorities that there was no evidence linking Ottavio Quattrocchi’s two London bank accounts with the Bofors payoffs. The matter is to come up in the court today, Jan. 16.



In tandem with the court move, the government’s legal experts have told it that the Law Ministry stand - conveyed to the British by Additional Solicitor General B. Dutta - was “unacceptable and untenable”.



The Ministry’s move was a response to the Crown Prosecution Service’s query on the status of the Bofors investigation.



“It’s the CBI that must explain if the situation has changed since July 2003 (when Quattrocchi’s accounts were frozen) and why,” a government source said. “There is no further evidence to suggest it has, so why should the Ministry have asked the accounts to be de-frozen now?”



Government sources argued that the Ministry’s justification of its stand by citing Delhi High Court judgments was “untenable”. The two judgments - one in 2004 and the other in 2005 - had given clean chits to Rajiv Gandhi and the Hinduja brothers but had left Quattrocchi out because he was “absconding”.



The sources said if the Government took the line that the original request to freeze Quattrocchi’s accounts was “wrong”, the question would arise why the decision wasn’t revoked immediately instead of two years later.



Also, Dutta was sent to London after a new director, Vijay Shankar Tiwari, took charge of the CBI. This may be “purely coincidental”, but might yet strengthen the allegation of “political interference”, legal experts felt.



The Centre’s embarrassment has been compounded by the CBI’s intention to carry on probing whether the money in Quattrocchi’s London accounts is linked to the Bofors payoffs. A CBI spokesman, quoted by agencies, said the sleuths till now have no “conclusive” evidence on this.





Accounts defreezed on Jan. 11



The London accounts of Quattrocchi were unfrozen on January 11, the day the controversy broke in India.



Possibly unaware of the development, a Delhi lawyer on Jan. 14 approached the Supreme Court registrar with the plea that his petition against the Law Ministry’s report delinking Quattrocchi’s accounts and the Bofors kickbacks should be heard as early as possible.



The court, which had earlier refused to grant an early hearing, has listed the case for today after the lawyer said the accounts would be defrozen in a day or two.



However, a spokeswoman for Britain’s Crown Prosecution Service (CPS), the official agency that decides whether there is sufficient evidence to bring criminal charges against an individual or individuals, said in London : “The restraining order was removed on January 11.”



The spokeswoman said: “We met the (Indian) additional solicitor-general in December. After the meeting, we corresponded with the court and the restraining order on Quattrocchi’s accounts has been removed.”



She added: “We act on behalf of governments, for example, in extradition cases. We acted on behalf of the Indian government when the restraining order was issued.”



The spokeswoman would not divulge what was discussed between the CPS and Dutta or whether the request to unfreeze Quattrocchi’s accounts came from the Indian side.



“The request to have the restraining order removed came from us,” the spokeswoman clarified. “We corresponded with the high court.”



It has already been reported that two of Quattrocchi’s accounts, worth $1 million and Euro 3 million, in a Swiss bank, BSI AG, have remained frozen since July 2003. Quattrocchi had applied to the High Court in London to have the accounts unfrozen.



Strictly speaking, the CPS cannot get involved if there is a difference of opinion in India over whether Quattrocchi should be given a clean chit or not. As far as the CPS is concerned, Dutta was the authorised representative of the Government of India.





CBI to make another bid for Quattrocchi’s extradition



In an effort to undo the damage caused by the Law Ministry’s bungling, the CBI is now making another bid for Quattrocchi’s extradition to India. It has begun extradition proceedings to get Quattrocchi from Italy where he is now residing.

“As with Malaysia (where Quattrocchi once was), India does not have any extradition treaty with Italy, but the success of an extradition request depends upon the bilateral relations with a country. That process is also on and the Ministry of External Affairs is already in the loop,” a key CBI official said.



As has been frequently done for accused persons residing abroad, the CBI proposes to move diplomatic channels and reiterate that a Red Corner Notice (RCN) is pending against Quattrocchi so that Interpol is alerted whenever Quattrocchi leaves Italian territory.



It has also reportedly drafted a fresh Letter Rogatory (LR) to be sent to Berne, Switzerland, because this is where the Rs. 21 crore in the two London accounts came from.



“Our request for sending the LR is already with the Government and the document has been drafted”, a top CBI official said. “Once the approval comes, we will move the court for dispatch of the LR to Switzerland. If the London accounts are defrozen and fresh evidence comes, we will again move for getting restraint order on the funds.”





Opposition up in arms



With the Opposition parties and even the Left parties, which are supporting the UPA Government from outside, demanding the Law Minister’s resignation, H.R. Bhardwaj has started meeting leaders of various parties to explain his position. He had a meeting with CPI(M) general secretary Prakash Karat, on Jan. 12, to explain his side of the story.



Sources said Bhardwaj, aware of the CPI(M) politburo disapproving his move, painstakingly explained how his department found nothing legally credible to demand continued freezing of Quattrocchi’s accounts. He is understood to have explained to the CPI(M) boss the same technical and legal arguments which he dished out to the media. The messy development comes at a time when Bhardwaj is finding himself overtaken by other legal eagles like P. Chidambaram and Kapil Sibal in legal discussions within the Government.



The BJP and the Janata Dal (United), apart from demanding the Law Minister’s resignation, have brought the Prime Minister into the line of fire. BJP general secretary Arun Jaitley, who is spearheading the NDA’s attack on the latest twist in the Bofors kickbacks case, made light of the attempts made by the PMO to shield the Prime Minister on the issue.



JD(U) president George Fernandes, at a separate news conference, echoed the alliance partner BJP’s sentiments on the issue. Taking the Prime Minister to task over the issue, the NDA convener said : “He (Manmohan Singh) must answer to the nation as to whether he was aware that a law officer in his Government was undermining the proceedings of courts and the autonomy of the CBI, or whether he is party to this misuse of his government functionaries and bodies by the chairperson of UPA, Sonia Gandhi.”



The BJP said that the Prime Minister cannot wriggle himself out of the embarrassing situation that the Government finds itself in by repeating the “I-was-kept-in-the-dark” line. The effort, quite clearly, was to hit out at the PM’s “morality cloak”, as the party sought to link him with the decision to rush the ASG to the UK to plead Quattrocchi’s case before the Crown Prosecution Service. “Documents prove that the CBI believed that it had a fool-proof case against Quattrocchi, and that the Government should not bail him out. The investigating agency also wanted to send an official with the Additional Solicitor General to London, but the request was turned down by the Department of Personnel and Training,” Jaitley said citing newspaper reports.



“If the Prime Minister was in full knowledge of the developments, he is equally culpable. If he was unaware, then it is for him to introspect what kind of a Government is he heading,” Jaitley contended. The BJP spokesman then quoted the prestigious British journal, “The Economist”, to reiterate his case that “the Prime Minister appears to be in office, but not in power.” The latest development in the Bofors scandal, he maintained, was a typical illustration of the charge. “He deserves to be pitied, not admired,” he said.