Bofors scam returns to haunt the Congress

NEW DELHI - The Bofors ghost is out again to haunt the Congress-led government as an Income Tax tribunal has ruled that Italian businessman Ottavio Quattrocchi and his partner Win Chadha received a commission of over Rs.412 million in the Rs.15 billion Howitzer gun deal in 1987. The opposition BJP has demanded that the “fraud” and “cover up” be probed by a special investigation team.

The tribunal, confirming that kickbacks were indeed paid in the gun deal, ruled that the accused were liable to pay taxes on such income.

“The investigations revealed that an amount of 242.62 million Swedish kroners (Rs.412.5 million) was paid by Bofors as commission to Quattrocchi and Chadha,” the tribunal said in its 98-page order delivered Saturday.

The ruling by Judicial Member R.P. Tolani and Accountant Member R.C. Sharma of the tribunal comes on a matter pertaining to a taxation case slapped on Win Chadha’s son Hersh, named as legal heir of the co-accused. The tribunal dismissed the appeal by the son.

The order said the commission was paid to the agents in contravention of the policy of the government of India not to allow middlemen or agents in defence deals.

It said no commission was to be paid by Bofors in connection with the contract and if any such stipulation in this regard did exist, the commission amount should have been reduced from the contract price.

“Thus the government of India had to pay excess amount of about 242.62 million Swedish kroners, which was passed on by Bofors to its agents W. Chadha and Quattrocchi against the express terms of contract” related to the Rs.1,500 crore deal for over 400 Bofors guns.

“Bofors acted in violation of the Indian defence policies and rules and harmed the public exchequer, besides committing breach of propriety,” the tribunal order said.

The tribunal said the money received by Chadha, who died in 2001, and Quattrocchi as kickback is taxable.

“In our view, to enforce the rule of law, these steps were desirable to bring all the relevant income tax violations to a logical end by the Income Tax Department. Inaction in this regard may lead to a non-existent undesirable and detrimental notion that India is a soft state and one can meddle with its tax laws with impunity.”

With the tribunal order, the opposition Bharatiya Janata Party (BJP) got fresh ammunition to train its guns on the government that is already battling charges of financial irregularities in the 2G spectrum allocation and the conduct of the Commonwealth Games.

“This was not a mere case of bribery. Bribery was accompanied by a huge cover-up operation. Nobody has answered the questions which this order raises. Why was Quattrocchi paid the money?” BJP’s Arun Jaitley said, soon after the order was out.

“It was a fraud. After this order, you need to reopen the criminal matter and the CBI surely can’t be trusted with it. There is no better case to have a SIT (special investigation team) to reinvestigate this matter, which was closed because of fraud,” Jaitley added.

Already on the backfoot, the Congress said it would study the tribunal order before commenting on it.

“We will have to see the order, the context and the details, the Congress will certainly react, but we are not going to be hurried,” Congress spokesperson Abhishek Manu Singhvi told reporters.

The tribunal order come a day ahead of a likely decision by a Delhi court in connection with the Central Bureau of Investigation (CBI) plea seeking to drop criminal proceedings against Quattrocchi on the grounds that there is no evidence against him and that persisting with the case will serve no purpose.

The CBI in 1999 charged former defence secretary S.K. Bhatnagar, Quattrocchi, Chadha, former Bofors chief Martin Ardbo and the company itself in connection with the case. Bhatnagar, Ardbo and Chadha are already dead and Quattrocchi is the only surviving accused.

Quattrocchi has never appeared before any court in the country. The CBI had failed on two occasions to get Quattrocchi extradited — first from Malaysia in 2003 and then from Argentina in 2007.