In the much-anticipated Lok Sabha elections of 2014, the ruling Indian National Congress suffered an agonizingly crushing defeat at the hands of the Narendra Modi-led Bhartiya Janata Party. The results, though not wholly unexpected, sent shockwaves in policy circles throughout the world. Eminent scholars and political scientists, both Indians and foreigners, scrambled to arrive at an explanation for the humiliating defeat of India’s Grand Old Party. After careful analysis, they echoed a unanimous opinion, one which is hard to disagree with i.e., the biggest factor in INC’s defeat was its disastrous and age-old romance with corruption. UPA-II had been rocked with one major corruption scandal after the other. Caught up between the CWG and 2G scams, senior party leaders could only watch helplessly as the credibility of their beloved party crumbled by the day. However, this wasn’t the first time Congress had tasted defeat in a General Election on the issue of corruption. In 1989, only one scandal had been enough to drive Congress out of power. Hence, this article will attempt to trace the origin of INC’s preoccupation with corruption by breaking down the first high-profile political scandal in Independent India’s history: The Bofors Scandal.
The story began on March 24th, 1986. On this day, a multi-million-dollar deal was signed between the Government of India and Bofors AB, a Swedish arms company which was one of the oldest and most reliable in the world. The deal included the sale of 410 155 mm Howitzer field guns. These guns were invaluable additions to the inventory of Indian army as they gave the country an edge in cross-border firing along the India-Pakistan border. It was one of the biggest military deals in India’s history as a result of which PM Rajiv Gandhi’s ever-increasing popularity received a further boost.
Sweden also had cause for celebration as it was the biggest arms deal in its history. Observers had been sceptical about Rajiv Gandhi, who had taken over the reins of the country in an almost monarchical dynastic succession after the untimely death of his mother, Indira Gandhi, in 1984. However, less than two years after his mother’s death, his handling of the INC had drawn plaudits from around the country and this deal was labelled as one of the biggest successes of his administration.
However, it all came crashing down a year later. On 16th April 1987, Dagens Eko, a Swedish news agency, made sensational allegations claiming that Bofors AB had paid bribes to various politicians of the Indian National Congress in order to secure the contract. These bribes hadn’t been dispatched to India but instead to certain Swiss Bank accounts held by these politicians. Even though this report escaped the notice of most Indian news agencies, Chitra Subramaniam, a correspondent of The Hindu, managed to hear about it in a radio broadcast while she was working on another story in Sweden.
What followed was a brave tale of investigative journalism which was riddled with all sorts of political pressures and threats. Chitra Subramaniam established contact with Sten Lindstorm, former chief of Swedish Police, who had originally leaked information regarding the scandal. She obtained around 350 documents from Lindstorm that outlined how Bofors AB had paid around 640 million rupees in kickbacks to Indian politicians in order to secure the contract. The story was published in The Hindu and caused an instant uproar among India’s political elite. Although not many observers believed this at that point, but this news story was the beginning of the end of Rajiv Gandhi’s administration.
As the vociferous rhetoric of the opposition parties gathered steam, all eyes were on the Indian Prime Minister. In the first parliamentary session following the revelations, he denied all allegations against his government in a staunch and unrelenting tone. But no one was convinced, least of all his own Defence Minister and close confidante, VP Singh. Being a seasoned politician with respect across the aisle, he sensed an opportunity and decided to resign from his post as well as the party.
He quickly formed his own party, Janata Party, which aimed to rally around the Bofors scandal in the hopes of toppling INC in the 1989 Lok Sabha elections. Meanwhile, the pressure from the opposition parties and eminent newspapers led to the establishment of a Joint Parliamentary Committee in 1987 to probe into these allegations. It was supposed to submit its report before the 1989 elections but due to intense pressure, it could not proceed with the investigations in an impartial manner. However, the mere speculation that his party may have unduly gained from the deal led to a sharp downfall in his popularity. As a result of this, Congress was thrown out of power in an emphatic fashion as VP Singh, heading a coalition of opposition parties and being supported by the BJP from the outside, emerged as the Prime Minister of India.
Since Congress was out of power, the stage was finally set for a credible investigation into the allegations. In January 1990, the Central Bureau of Investigation (CBI) filed an FIR against Martin Ardbo (then president of Bofors AB) and alleged middlemen Win Chadda as well as the Hinduja brothers. It was claimed that these middlemen had acted as pivots while facilitating the informal contact between Congress politicians and Bofors.
However, the main middleman was alleged to be Ottavio Quattrocchi. He was an influential Italian businessman and was quite close to the Gandhi family. It was his alleged involvement in the case that led many to believe that Rajiv Gandhi had either benefitted or at least had possessed knowledge of what was going on. Less than 3 months after CBI began its enquiry, Rajiv Gandhi was assassinated by an LTTE operative.
This horrific incident led to an outpouring of sympathy for the Gandhi family and as a result, the case was put on the back-burner. In addition to this, Congress came back into power under PV Narsimha Rao. However, more evidence was uncovered in 1997 when Swiss Bank agreed to declassify information about 500 accounts allegedly held under phony names by Congress politicians. This breakthrough gave a new impetus to the case and in 1999, when the BJP-led NDA was in power, CBI filed a charge-sheet against Rajiv Gandhi, Quattrocchi, SK Bhatnagar (former defence secretary), Hinduja brothers and Win Chadda.
While all of this was happening on the political front, the Bofor field guns had come in handy while subduing Pakistan in the Kargil War. But complications had arisen owing to a severe lack of spare parts. Due to this situation, the Indian government had decided to lift the ban that it had imposed on Bofors in the aftermath of the scandal. Let’s get back to the investigation. It seemed like the perpetrators would finally be penalised. However, that was not to be the case. Win Chadda and SK Bhatnagar passed away in the second half of 2001 while the case was still on in the Delhi High Court.
Then in 2002, Delhi HC decided to stop the proceedings in the case but this was overruled by the Supreme Court in 2003. However, bowhile the case resumed, Rajiv Gandhi was exonerated by Delhi HC in 2004 on the grounds of lack of evidence. In 2005, even the Hinduja Brothers were given a clean chit by the HC. The only potential perpetrator now left was Quattrocchi.
The Indian government tried really hard to have him extradited from Argentina in 2006 but the Argentine judge ruled against it. One of the major reasons why the extradition had not actualized was because Argentina and India did not have an extradition treaty so there was no established mechanism to facilitate the extradition. After this failed attempt, it was decided that pursuing Quattrocchi was proving to be quite costly for India (250 crore rupees had been spent on it) and hence this pursuit was dropped. While the case dragged on, Quattrocchi passed away in Milan in 2013. He was not the only one to die that day because with him died the possibility that a person would face jailtime for one of the biggest scandals in Indian history. The fact that the Bofors scandal was systematically buried by the system is one of the biggest blots on the legacy of independent India.
The other article in this series:
Corporate Accounting fraud: Satyam Computers Ltd.