Friday, July 19, 2013

Quattrocchi is Dead But Ghost of Bofors is Still Around

Dr. A Surya Prakash, 
Distinguished Fellow, VIF

The news of the demise of Ottavio Quattrocchi, the Italian businessman and close friend of UPA Chairperson Sonia Gandhi and her late husband and former Prime Minister Rajiv Gandhi, last week has prompted some people to say that with his passing, the Bofors kickbacks scandal is laid to rest. To put it mildly, this is wishful thinking.

So many in the dramatis personae of the Bofors Saga are no more. Rajiv Gandhi;Martin Ardbo (President of Bofors when the deal was signed and whose diary entries gave vital clues to the Swedish police); former Defence Secretary, S.K.Bhatnagar; Win Chadha, the company’s agent; and now Quattrocchi. With the passing of each of these individuals, commentators have speculated that the Rs 64 crore kickback scandal will die a natural death. But, no such thing has happened. The reason for this is simple: The people of India know that certain persons in power knocked off commissions and bribes while finalizing the contract with the Swedish arms manufacturing company for supply of 155 mm Howitzer field guns. They also know that a vigorous media investigation led to the unearthing of crucial facts regarding the payoffs and that clinching evidence was obtained by the Central Bureau of Investigation (CBI) about the payments made by AB Bofors from Swiss banks in 1997.

They also know that despite this evidence, not a single individual was jailed for accepting bribes and illegal commissions from the Swedish company when we purchased guns for our army. They also know that in recent years the United Progressive Alliance (UPA) government asked the U.K. Government to unfreeze the account in which Quattrocchi had stashed away his ill-gotten wealth from India’s defence contract and that it got “the caged parrot” - the CBI – to withdraw the case against the Italian businessman. A people who know so much cannot possibly forget the scandal, especially when there is no incentive to forget it.

Although the Rajiv Gandhi Government and the subsequent Congress governments at the Centre did everything possible to hush up the scandal, they never succeeded, because the people knew a lot about the payments. Also, while the government tried to bury the scam, there were independent investigators and institutions in the country which felt duty-bound to put the facts in the public domain. One such institution was a Delhi Bench of the Income Tax Appellate Tribunal (ITAT) comprising Mr.R.P.Tolani and Mr. R.C.Sharma. Disposing of a slew of appeals filed by Mr.Hersh W. Chadha, legal heir of W.N.Chadha, who was the pointman for Bofors in India, the ITAT tracked all the payments made by Bofors to its agents and others.

Even as the CBI responded to its master’s voice, this tribunal did the most detailed examination of the involvement of Ottavio Quattrocchi as a middleman in the Bofors Payoffs Scandal. Some key points made by the ITAT are worth mentioning here:

Quattrocchi remained in India from February 28, 1965 to July 29, 1993, except for a brief interval from March 4, 1966 to June 12, 1968. He was a certified Chartered Accountant by profession, working with Snamprogetti, an Italian multinational company, but “neither Snamprogetti nor Quattrocchi had any experience of guns, gun-systems or any related defence equipments”.

The tribunal noted that despite the Indian government’s policy against suppliers hiring agents, Bofors entered into a fresh consultancy agreement with a company called AE Services Limited, U.K on November 15, 1985 at the behest of Ottavio Quattrocchi. An extraordinary aspect of this deal was that Bofors committed itself to pay this company three per cent of the total value of the contract only if the Indian government awarded it the contract by March 31, 1986 (that is within 137 days of the signing of the contract on November 15, 1985). This was indeed an extraordinary stipulation and a tough deadline to meet especially when it concerned a major international weapons deal. But what was even more extraordinary was that Quattrocchi met that deadline! The Rajiv Gandhi Government signed the deal with Bofors on March 24, 1986 – just a week before the deadline set by Bofors was to expire.

After signing the contract with Bofors, the Indian Government released the first tranche of payments to Bofors which was equivalent to 20 per cent of the contract value on May 2, 1986. Once it received the first tranche, Bofors remitted US $ 7.343 million on September 03, 1986 to A/c No. 18051-53 of A.E. Services Limited at Nordfinanz Bank, Zurich. This worked out to exactly three per cent of the advance payment made by India. Thereafter, the Tribunal recorded the money trail, as tracked by the investigators, in detail.

From here the money was transferred in September, 1986 to Account No.254.561.60W of Colbar Investments Limited ( a company registered in Panama) in the Union Bank of Switzerland, Geneva. On July 25, 1988, again these funds were moved to Account No.488.320.60 X of a company called Wetelsen Overseas, SA in the same bank. Thereafter, On May 21, 1990, the funds were once again moved to Account 123983 of International Investments Development Company in Guernsey (Channel Islands). The Income Tax Tribunal said on the basis of records before it that “these accounts of Colbar Investments as well as Wetelsen Overseas were being controlled by Ottavio Quattrocchi and his wife Maria Quattrocchi”.

But the most extraordinary development was that A.E.Services unilaterally announced that it would forego the rest of the commission due to it from Bofors, after the kickbacks scandal broke out in April, 1987 and fingers were pointed at the then Prime Minister Rajiv Gandhi.

In the final analysis, the Income Tax Tribunal noted that Win Chadha and Quattrocchi had been transferring the funds received from Bofors frequently from one account to another and from one jurisdiction to another to avoid detection and to obliterate the trail of money. It said Bofors paid out the equivalent of243 million Swedish Kroners as commission to Quattrocchi and Win Chadha.

Strangely, despite this clinching evidence of Quattrocchi knocking off commissions from Bofors, Sonia Gandhi protested angrily at a press conference at the Congress Headquarters and asked “where is the proof?, show me the proof” when a correspondent asked her how Quattrocchi got paid when we bought guns from Bofors. Maria Quattrocchi has been saying much the same thing.

But these loud protestations will not help.

No financial or bribery scandal will fade out of public memory unless there is adequate reparation for the losses suffered by the exchequer and the public conscience is appeased via punishment meted out to the wrong-doers. Unless this happens, a scandal is deathless. It will linger on in the public mind and will be passed on, possibly with some embellishments from one generation to another. The taking of bribes or commissions when we buy guns for our soldiers is deemed an act of treachery (Desh Droh) and is never forgotten. Meanwhile, the statements of Maria Quattrocchi are doing little to bury the ghost of Bofors. There are no takers for her claims that her husband was “hounded for over 20 years” over the Bofors kickbacks issue, because enough people in India know the details of Bofors’ payments to their Swiss bank accounts.


The key figures in this scandal are all dead and they have gone unpunished. In this scenario, there is only one situation in which the Indian public conscience can be appeased. That is when the Quattrocchis accept the truth that we all know from the records of their Swiss bank accounts - that they got payments from Bofors when we bought guns for our army. Secondly, after acknowledging the truth, they return the money to the people of India. Until they do that, the ghost of Bofors will continue to haunt them and those for whom they batted all these years.  

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