For nearly a week, special director S.K. Panda and his team from the Enforcement Directorate (ED) has been tracking a slippery trail. It has taken them through a maze of companies that apparently link Andaleeb Sehgal and his Hamdan Exports to Jagat Singh, son of Natwar Singh, now minister without portfolio. Key to the investigation is the search for details of payments made by Zurich-based Masefield AG to Hamdan and its directors for services rendered in picking up 1.9 million barrels of oil out of the four million allegedly allotted to Natwar.

Bank statements and financial statements seized from several offices and residences of Andaleeb have revealed discrepancies in the handling of foreign exchange.

ED suspects much of the money has been stashed away in tax havens abroad.

However, the clinching evidence—records that show $748,504 paid in four instalments in 2001—have continued to elude ED officials. But sources linked to the investigation say they have definite leads that could finally end in cases being slapped on Andaleeb under the Foreign Exchange Management Act (FEMA). For an export house, Hamdan's licence "was not in order," says an official. Now, another oil company, Rotterdam-based Vitol, has also been linked to Natwar and the Congress. Apparently, Vitol issued letters of credit in the oil deal at the UN-approved Banque Nationale Paribas, Paris. One of these letters of credit is worth $16.8 million against the contract for the Congress while the other is worth almost $5.7 million.

Officials investigating the allegations are getting ready for a long haul. In fact, comparisons to the Bofors case are already doing the rounds within the corridors of Lok Nayak Bhawan. Matters have been complicated by the fact that Saddam Hussein's regime is long gone and it would be difficult to trace key documents. France and Russia's protest that several documents sourced by the Volcker committee are forged has further confused investigators. The fact that many officials of Iraq's State Oil Marketing Organisation (SOMO) who might have dealt with the allotments are either dead or missing will also be a major impediment. All that officials can possibly hope to achieve is to try and trace illegalities committed, if any, by Andaleeb or his handful of companies including Hamdan Exports. Even if they are able to prove that, it would be a difficult task to establish linkages with Natwar or his son which can stand up in court.

Surprisingly, till Thursday, officials were yet to investigate the financial records of Natwar or Jagat. So far, they've merely been able to establish that Andaleeb and Jagat did travel to Jordan on several occasions in 2001. According to the Volcker report, there were four instances when large sums were deposited in an account belonging to SOMO with the Jordan National Bank, as "illegal surcharge". However, in the absence of documents from the Volcker committee, the ED has not been able to establish details of these transactions. All they have is a report from intelligence agencies which confirms the Jordan trip around the time the money was deposited.

Investigators are also looking at another company—Koyela Energy Resources Private Limited (KERPL) where Andaleeb served as a director till November 2004. In fact, the firm's owner, Karamjit Singh, is reportedly close to Punjab chief minister Captain Amarinder Singh, whose sister is Natwar's wife. KERPL's name cropped up during an investigation conducted by the Punjab State Electricity Board (PSEB) into the supply of lower-grade coal. Although on paper the coal was supplied by MMTC, PSEB officials were exploring whether the coal had actually been supplied by KERPL.

In 2003, a Pune-based NGO, Prayas, challenged KERPL's bid for a contract from the Maharashtra State Electricity Board. In its objection, it cited an order of the Central Electricity Regulatory Commission, which stated that KERPL lacked a licence for inter-state trading and if mseb chose the firm, it would be "at its own risk".

But investigators still have little evidence on Hamdan's Iraq oil deal. They will closely examine the payments arising out of the export proceeds made by Hamdan in the last three years. This will, officials feel, provide further details on transactions between Hamdan Exports and Masefield AG. For now, Masefield has denied any links with either Natwar or Jagat. However, one report claimed that Masefield's chief financial officer Hemant Thanawala had confirmed business dealings with Hamdan Exports.

ED and the income tax department face an uphill task as they dig deeper into the allegations made by the Volcker report. While they have successfully accessed the financial records of Andaleeb and his company, they feel any real evidence of the alleged kickbacks would only be available with Masefield. With Volcker agreeable to sharing documents and information with governments within "legal constraints," officials are hopeful of finding further details of Hamdan's dealings. Volcker apparently told Nirupam Sen, India's permanent representative at the UN, that the report was prepared after collating documents from "multiple sources". In other words, it is in possession of SOMO and bank records as well as details of transactions by intermediaries such as Masefield.

For now, the Volcker report has already claimed its first victim in Natwar Singh. As the ED pursues its investigations, it could throw up names of other politicians in a deal that is proving to be too slippery to handle.