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Apr 26, 2012 at 10:02am IST

What the Bofors scandal is all about

Aiming to replace the old field guns and artillery in the hands of the Army, the Indian government in the mid 1980s decided to go ahead with the induction of bigger calibre 155 mm howitzers. The Haubits FH-77 gun manufactured by AB Bofors of Sweden, a company which was once owned by Alfred Nobel, was selected. A deal was signed on March 24, 1986, between New Delhi and the Swedish metals and armaments major, which said AB Bofors would supply the Indian Army with 410 155-mm howitzers. An option to license-produce 1000 more guns was also included in the deal.The amount was a significant $285 million (about Rs 1500 crore) for a pre-liberalisation India.

The first whiff about the scandal came on April 16, 1987 when a Swedish Radio broadcast claimed that AB Bofors had paid kickbacks to key Indian policy makers and top defence officials to secure the deal. News about this broadcast was carried in the Indian media and the Rajiv Gandhi government issued a prompt denial.

Sitting in her Geneva office, The Hindu's correspondent Chitra Subramaniam was in an advanced stage of pregnancy when she heard about the broadcast and the newspaper's then Editor N Ram asked her to follow it up. What followed thereafter remains unrivalled in the annals of Indian investigative journalism.

What the Bofors scandal is all about

IBNLive takes you on a comprehensive walk through the 25 years since the arms purchase scandal first rocked India.

As Chitra started calling up the right people and asked them the right questions, hundreds and hundreds of damning documents piled up on her desk. The people of India were shocked to know that over Rs 64 crore was indeed paid to some very powerful people. At the centre of it all cropped up the name of Ottavio Quattrocchi, an Italian businessman who represented the Italian petrochemicals firm Snamprogetti and had reportedly rose to become a powerful broker between New Delhi and international businesses owing to his reported proximity to the Gandhi family.

Under immense pressure and as a face-saver, a Joint Parliamentary Committee (JPC) was set up to probe the allegations on August 6, 1987. It submitted its report two years later.

The Bofors kickbacks became the key poll issue in the November parliamentary polls in 1989. The Rajiv Gandhi-led Congress was voted out of power and on December 26 of the same year, Prime Minister VP Singh's government barred AB Bofors from entering into any further defence contract with the Government of India. Incidentally VP Singh was the defence minister when the deal was signed.

On January 22, 1990, the CBI registered the first formal complaint in the case. However, Rajiv Gandhi was assassinated by LTTE suicide bombers on May 21, 1991. This led to a general slackening of the investigative process which many observers say allowed Quattrocchi to leave India in the end of July, 1993.

After years of legal procedures and constant wrangling, on January 21, 1997, the Swiss authorities gave the Government of India secret documents which allegedly ran into over 500 pages. Barely a week later, a special investifative team was set up by the CBI to investigate the case. Later in the same year, the CBI filed formal charges against Rajiv Gandhi, Ottavio Quattrocchi, AB Bofors and its former chief Martin Ardbo, defence secretary SK Bhatnagar and AB Bofors agent Win Chadha. Letters were sent out to Malaysia and UAE seeking the arrest of Quattrocchi.

In the subsequent years, the name of the UK-based Hinduja brothers cropped up but in 2000, the Hindujas issued a statement saying the funds received by them from AB Bofors had nothing to do with the howitzer order.

Towards the end of 2000, the Malaysian authorities arrested Quattrocchi. But he secured bail but was asked to stay in the country.

In 2001, two of the accused, former defence secretary Bhatnagar and Win Chadha passed away. On February 4, 2004, Delhi High Court exonerated Rajiv Gandhi in the case and in 2005, the same court cleared the Hindujas of involvement.

The case lost steam thereafter though on February 6, 2007, Quattrocchi was detained in Argentina on an Interpol lookout notice. But the Indian Governbment seeking his extradition did not back up the extradition request with details of a key court order which was turned down by the Argentinian Supreme Court. Many observers feel that this was deliberately done.

On September 29, 2009, the Government of India informed Supreme Court about its decision to withdraw the case against Quattrocchi as he could not be extradited. Though in the beginning of 2011, an Income Tax tribunal ruled that a commission of over Rs 40 crore in violation of Indian laws was indeed paid to Quattrochi and Chadha in the gun deal. But on March 4, 2011, a Delhi court, realising the futility of the exercise, allowed the CBI to drop all charges against Quattrochhi and to close the case.

The Bofors case once again garnered top news spots on April 24, 2012 when Swedish police chief Sten Lindstrom revealed that he was the Deep Throat in the Bofors case and the key source that Chitra Subramaniam turned to. He added that the Swedish Police had no evidence of Rajiv Gandhi or Amitabh Bachchan receiving kickbacks in the Bofors scam.

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