The Supreme Court’s recent judgement on a slew of petitions vis-à-vis the Rafale deal, envisaging the purchase of 36 of these aircraft from a French company, will hopefully alert the people about the reckless sloganeering that is currently on and the silly attempts being made in some quarters to equate Rafale with Bofors.

At the moment, there is nothing in common between the two, except that they both relate to defence procurement from foreign companies. There, the similarities end. In the case of Bofors, there were specific allegations that this Swedish company paid kickbacks to win the contract and the payments were fully established in respect of certain entities, including Ottavio Quattrocchi, a dear friend of UPA chairperson Sonia Gandhi and her late husband Rajiv Gandhi. In respect to Rafale, there are no such allegations of kickbacks or corruption; although the choice of the offset partner has been raised. In any case, the Supreme Court has categorically dismissed the petitions filed before it for several reasons, one of which is the vagueness of accusations.

On the other hand, just take a look at the kind of evidence of kickbacks that emerged in Bofors. Some part of these payments have been meticulously documented by the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) comprising RP Tolani and RC Sharma. The tribunal tracked the money trail with clinical precision and presented its findings in its order many years ago. Unlike the humming and hawing and the vagueness of the allegations that are being hurled against the Government vis-à-vis the Rafale deal, there was clinching evidence of payoffs by Bofors.  

The tribunal noted that Ottavio Quattrocchi, the Italian friend of Sonia Gandhi and Rajiv Gandhi, 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 equipment.” Further, although the Rajiv Gandhi Government declared that suppliers should not have agents, it entered into a consultancy agreement with a company called AE Services Limited in the UK on November 15, 1985.

This was done at the behest of Quattrocchi. The most intriguing aspect of this contract was that Bofors agreed to pay three per cent of the total value of the contract to this company if it won the India contract by March 31, 1986 (that is within 137 days of the signing of the contract on November 15, 1985). And, lo and behold, the Rajiv Gandhi Government signed the contract on March 24, 1986 — just a week before the deadline set by Bofors expired.

Once the contract was signed, the Indian Government released the first tranche of payments to Bofors on May 2, 1986, which was equivalent to 20 per cent of the contract.

Bofors promptly remitted $7.343 million on September 03, 1986, to A/c No: 18051-53 of AE Services Limited at Nordfinanz Bank, Zurich, which was three per cent of the advance paid. The tribunal found that this remittance to AE Services was transferred in September 29, 1986, to Account No: 254.561.60W of Colbar Investments Limited 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 money was further transferred to Account No: 123983 of International Investments Development Company in Guernsey (Channel Islands). The ITAT said: “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 AE Services unilaterally announced that it would forego the rest of the commission due to it from Bofors, after the bribery  scandal broke out in April 1987, and the then Prime Minister Rajiv Gandhi struggled to explain the dubious payoffs by Bofors.

In the final analysis, the ITAT said 243 million Swedish Kroners was pocketed by Quattrocchi and Win Chadha. But the most clinching link between Quattrocchi, who got the kickbacks, and the Nehru-Gandhis came when former Prime Minister Manmohan Singh got the UK Government to lift the freeze on Quattrocchi’s bank account which had been imposed at the behest of the Atal Bihari Vajpayee Government. This enabled Quattrocchi to run away with the loot.

As against this unimpeachable evidence of kickbacks received by a close family friend of the Nehru-Gandhis, when India bought field guns for its Army, the allegations regarding the Rafale deal do not seem to have any legs to stand on. The Supreme Court has found it necessary to comment on the inadequacy of the petitions and on the excessive reliance on Press reports.

The court has said, “We find no reason for any intervention by this Court on the sensitive issue of purchase of 36 defence aircraft. Perception of individuals cannot be the basis of a fishing and roving enquiry by this Court, especially in such matters.” Again, while discussing the allegations regarding choice of the offset partner, the court said, “mere Press interviews or suggestions cannot form the basis for judicial review by this Court…We do not find any substantial material on record to show that this is a case of commercial favouritism to any party by the Indian Government….”

A critical issue raised in the writ petitions related to the pricing of the aircraft. The Chief of Air Staff was opposed to disclosure of price. Yet, the court noted that “despite this reluctance, the material has still been placed before the Court to satisfy its conscience”. The court said it had “examined closely” the price details and said it would not carry out a comparison of price details “in matters like the present” and that there was need to maintain confidentiality in the matter.

Significantly, the court observed that “adequate military strength and capability to discourage and withstand external aggression and to protect the sovereignty and integrity of India, undoubtedly, is a matter of utmost concern for the nation. The empowerment of defence forces with adequate technology and material support is, therefore, a matter of vital importance”. Therefore, the court felt that the parameters of judicial scrutiny in such matters of defence procurement cannot be the same as in judicial scrutiny of tenders and contracts.

Those who are making reckless and unsubstantiated allegations about the Rafale deal need to absorb these lessons. This writer has elaborated on the Quattrocchi money trail just to emphasise the kind of investigation that is needed to make an allegation stick. Therefore, the attempt by some political parties to claim that the Rafale deal is Prime Minister Narendra Modi’s ‘Bofors moment’ is laughable. Sloganeering is no substitute for evidence.

Writer: A Surya Prakash

Source: The Pioneer

The Supreme Court’s recent judgement on a slew of petitions vis-à-vis the Rafale deal, envisaging the purchase of 36 of these aircraft from a French company, will hopefully alert the people about the reckless sloganeering that is currently on and the silly attempts being made in some quarters to equate Rafale with Bofors.

At the moment, there is nothing in common between the two, except that they both relate to defence procurement from foreign companies. There, the similarities end. In the case of Bofors, there were specific allegations that this Swedish company paid kickbacks to win the contract and the payments were fully established in respect of certain entities, including Ottavio Quattrocchi, a dear friend of UPA chairperson Sonia Gandhi and her late husband Rajiv Gandhi. In respect to Rafale, there are no such allegations of kickbacks or corruption; although the choice of the offset partner has been raised. In any case, the Supreme Court has categorically dismissed the petitions filed before it for several reasons, one of which is the vagueness of accusations.

On the other hand, just take a look at the kind of evidence of kickbacks that emerged in Bofors. Some part of these payments have been meticulously documented by the Delhi Bench of the Income Tax Appellate Tribunal (ITAT) comprising RP Tolani and RC Sharma. The tribunal tracked the money trail with clinical precision and presented its findings in its order many years ago. Unlike the humming and hawing and the vagueness of the allegations that are being hurled against the Government vis-à-vis the Rafale deal, there was clinching evidence of payoffs by Bofors.  

The tribunal noted that Ottavio Quattrocchi, the Italian friend of Sonia Gandhi and Rajiv Gandhi, 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 equipment.” Further, although the Rajiv Gandhi Government declared that suppliers should not have agents, it entered into a consultancy agreement with a company called AE Services Limited in the UK on November 15, 1985.

This was done at the behest of Quattrocchi. The most intriguing aspect of this contract was that Bofors agreed to pay three per cent of the total value of the contract to this company if it won the India contract by March 31, 1986 (that is within 137 days of the signing of the contract on November 15, 1985). And, lo and behold, the Rajiv Gandhi Government signed the contract on March 24, 1986 — just a week before the deadline set by Bofors expired.

Once the contract was signed, the Indian Government released the first tranche of payments to Bofors on May 2, 1986, which was equivalent to 20 per cent of the contract.

Bofors promptly remitted $7.343 million on September 03, 1986, to A/c No: 18051-53 of AE Services Limited at Nordfinanz Bank, Zurich, which was three per cent of the advance paid. The tribunal found that this remittance to AE Services was transferred in September 29, 1986, to Account No: 254.561.60W of Colbar Investments Limited 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 money was further transferred to Account No: 123983 of International Investments Development Company in Guernsey (Channel Islands). The ITAT said: “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 AE Services unilaterally announced that it would forego the rest of the commission due to it from Bofors, after the bribery  scandal broke out in April 1987, and the then Prime Minister Rajiv Gandhi struggled to explain the dubious payoffs by Bofors.

In the final analysis, the ITAT said 243 million Swedish Kroners was pocketed by Quattrocchi and Win Chadha. But the most clinching link between Quattrocchi, who got the kickbacks, and the Nehru-Gandhis came when former Prime Minister Manmohan Singh got the UK Government to lift the freeze on Quattrocchi’s bank account which had been imposed at the behest of the Atal Bihari Vajpayee Government. This enabled Quattrocchi to run away with the loot.

As against this unimpeachable evidence of kickbacks received by a close family friend of the Nehru-Gandhis, when India bought field guns for its Army, the allegations regarding the Rafale deal do not seem to have any legs to stand on. The Supreme Court has found it necessary to comment on the inadequacy of the petitions and on the excessive reliance on Press reports.

The court has said, “We find no reason for any intervention by this Court on the sensitive issue of purchase of 36 defence aircraft. Perception of individuals cannot be the basis of a fishing and roving enquiry by this Court, especially in such matters.” Again, while discussing the allegations regarding choice of the offset partner, the court said, “mere Press interviews or suggestions cannot form the basis for judicial review by this Court…We do not find any substantial material on record to show that this is a case of commercial favouritism to any party by the Indian Government….”

A critical issue raised in the writ petitions related to the pricing of the aircraft. The Chief of Air Staff was opposed to disclosure of price. Yet, the court noted that “despite this reluctance, the material has still been placed before the Court to satisfy its conscience”. The court said it had “examined closely” the price details and said it would not carry out a comparison of price details “in matters like the present” and that there was need to maintain confidentiality in the matter.

Significantly, the court observed that “adequate military strength and capability to discourage and withstand external aggression and to protect the sovereignty and integrity of India, undoubtedly, is a matter of utmost concern for the nation. The empowerment of defence forces with adequate technology and material support is, therefore, a matter of vital importance”. Therefore, the court felt that the parameters of judicial scrutiny in such matters of defence procurement cannot be the same as in judicial scrutiny of tenders and contracts.

Those who are making reckless and unsubstantiated allegations about the Rafale deal need to absorb these lessons. This writer has elaborated on the Quattrocchi money trail just to emphasise the kind of investigation that is needed to make an allegation stick. Therefore, the attempt by some political parties to claim that the Rafale deal is Prime Minister Narendra Modi’s ‘Bofors moment’ is laughable. Sloganeering is no substitute for evidence.

Writer: A Surya Prakash

Source: The Pioneer