The writer, a policy analyst studying economic and security issues, held senior positions in government and industry. He also specialises in the Chinese economy

Bofors: Will the caged parrot sing?

Published Jul 18, 2017, 12:38 am IST
Updated Jul 18, 2017, 12:39 am IST
The Congress kept sheltering Quattrocchi, and the BJP was more intent on shielding the Hinduja brothers.
Dassault Rafale fighter aircraft (Photo: Youtube screengrab)
 Dassault Rafale fighter aircraft (Photo: Youtube screengrab)

Acting on a directive of the Lok Sabha’s Public Accounts Committee, the CBI will now be writing to the government seeking its permission to restart the investigations into the alleged Bofors payoffs. Given this government’s special animosity towards the Nehru-Gandhi family, is there room for any doubt about what its decision will be? By today’s standards, the Bofors deal was really small and the quantum of the alleged kickbacks laughably miniscule. But a quarter of a century ago it was huge. It caused a change of government and possibly set India off in a new direction. In March 1986, a contract worth $285 million, or about Rs 1,600 crores, was entered into between the government of India and Swedish arms company Bofors for the supply of 410 155mm howitzer field guns. By contrast, in September 2016 India signed a deal of about Rs 58,000 crores, or 7.8 billion euros, for 36 off-the-shelf Dassault Rafale twin-engine fighters. Each Rafale will cost about Rs 680 crores and it’s a little over Rs 1600 crores per aircraft for the whole deal. The kickbacks alleged in the Bofors deal were supposed to total `64 crores in all. One can only speculate as to how many Bofors there are in the Rafale deal.

In the late 1970s, Voest Alpine purchased the design for a relatively light and rugged 155 mm howitzer from Gerald Bull, a well-regarded Canadian weapons designer. Iraq’s Saddam Hussein, then fighting a war with Iran, liked the planned 155 mm howitzer and a deal was struck for Voest Alpine to make them. The conservative party led by Kurt Waldheim, which was quite sympathetic to Iraq, then governed Austria. (Waldheim was soon uncovered by the Jewish Documentation Centre of Simon Wiesenthal to be a former Nazi and driven out of office.) But before the conservatives went, 160 Gerald Bull-designed howitzers, the Noricum GHN45 were manufactured and assembled for shipment to Iraq. (Gerald Bull was killed by the Mossad in Brussels in March 1990 as he had begun redesigning Scud missiles for Iraq to make them more accurate and nuclear-capable).

The Iraqi plan came to naught when Bruno Kreisky became Austrian Chancellor. Kreisky came from a prominent Vienna Jewish family and promptly scrapped the deal as it violated Austria’s neutrality laws. Kreisky was also a personal friend of Prime Minister Indira Gandhi and was instrumental in making the Congress Party a member of the Socialist International, much to the chagrin of George Fernandes’ German SDP friends. Kreisky persuaded Mrs Gandhi to take those 160 guns readied for the Iraqis and help him out. Mrs Gandhi was very obliged to Kreisky for saving her from socialist opprobrium after she had imposed the Emergency. And what are a few guns between friends? The GHN45 howitzers were indeed very good and with base bleed shells had the longest reach of all howitzers available then. They were accurate, rugged and easy to maintain. They came out best in the Indian Army trials supervised by the highly regarded DG Weapons Evaluation, the late Lt Gen. Misbah Mayadass. India would have benefitted greatly by entering into this deal as the Austrian government had also agreed to transfer the manufacturing technology and plant to India. Like in all such deals a small something was also to be made to the Congress Party’s war chest. In 1983, this money was also made over in advance, in anticipation of the formal order and the forthcoming Lok Sabha elections.

(Mrs Gandhi often made leader-to-leader deals of this kind. In 1970, she bought the Sukhoi-7 fighter-bomber on Leonid Brezhnev’s say, so. The Su-7 proved a great success in 1971.) Kreisky left office in 1983. In 1984, Mrs Gandhi was assassinated and a new chapter began. Olof Palme, Prime Minister of Sweden, soon befriended Rajiv Gandhi. Palme had an Indian connection. His aunt Anna Palme was the mother of Rajni Palme Dutt, at one time general secretary of the Communist Party of Great Britain, and a good friend of Mrs Gandhi and Jyoti Basu during their UK days. Palme was a big and respected name in world affairs and had strenuously opposed the US war on Vietnam. He inspired Rajiv Gandhi to take the initiative on nuclear disarmament. The implicit quid pro quo for facilitating Rajiv Gandhi’s easy entry to the global high table was the purchase of the Bofors FH45 howitzer. Palme was also facing a re-election and his party’s coffers needed topping up. The Indian howitzer order would do the trick. The donation by the Bofors Foundation at Karlskrona to the Swedish SDP is proof of this.

The Austrian government then advised the Indian government to have this money returned and close the matter. This was the first time the new Indian Prime Minister heard about it. He was furious. A very powerful minister in his government was summarily sacked. Now a way was sought to set this account right. Bofors was required to close this hole. This was being arranged via a Swiss banker Francis Laffont. The route went like this. Bofors pays Laffont. Laffont pays Voest Alpine, and the money already paid in India stays where it is. In all probability, it was used up in the 1984 elections. Voest Alpine’s representative in New Delhi, a man called Unterweger, was Ottavio Quattrocchi’s neighbour in Delhi. Being expatriate businessmen, they became good friends. It was also well-known that Quattrocchi had easy access to the Prime Minister’s house because of the well-known connection. Quattrocchi was the India representative for Snamprogetti ENI, the Italian government-owned engineering conglomerate, and was no stranger to controversy.

As was the well-established practice then, Unterweger also cut a deal with Quattrocchi. When the Voest Alpine deal collapsed, Quattrocchi was required to close that account, as did the Congress Party. So one more payoff stream was organised by Bofors to Quattrocchi to close this hole. The Quattrocchi method of cutting deals with all competing suppliers is a common practice in India now. Usually the best-suited item is chosen, and it still keeps the system smooth and palms greased. Bribes to be paid in India are also a way of getting money out by foreign executives for themselves. The Hinduja brothers with their Swiss banking expertise take this to the next level.

People like the Hindujas have friends in all parties and many countries. Lest we forget, it was Atal Bihari Vajpayee who wrote to Prime Minister P.V. Narasimha Rao seeking closure of the Bofors case against the Hinduja brothers. And it was Srichand Hinduja who accompanied Brajesh Mishra to his meetings with British Prime Minister Tony Blair, and French President Jacques Chirac after the nuclear tests in 1998. The Hindujas also midwifed the Sukhoi deal during P.V. Narasimha Rao’s days. After the Goenka-Gurumurthy conspiracy with President Zail Singh to dismiss Prime Minister Rajiv Gandhi lapsed, Bofors became the stick to beat him with. The subsequent behaviour of the successive governments did indicate that while there is something to hide, they were not in agreement on what to hide. The Congress kept sheltering Quattrocchi, and the BJP was more intent on shielding the Hinduja brothers. The fact is that the two roads crisscrossed, and neither the truth prevailed, nor did the law take its course. So will the caged parrot now shred the veils?





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