CENTRAL Bureau of Investigation (CBI) probes run to a type. A case is lodged.Investigations begin. The trail invariably leads to Switzerland or Europe. And then itgoes cold. Last week, the federal agency seemed to be experiencing similar pangs in the Rs1,300-crore fertiliser import scam that is expected to assume larger proportions in theweeks to come.
The facts of the case remain depressingly simple, and yet highlight a classic exampleof how quickly files can move in a system notorious for being deadly flat-footed. OnOctober 30 last year, the Union Ministry for Chemicals and Fertilisers opened up one ofits largest tender bids f rom a total of 14 applicants wanting to import two lakh tonnesof urea into the country.
By October 31, the tenders were examined and the committee of technical experts was ofthe opinion that the Turkey -based Karsan exporting company was unfit for the kind of ureare quired. Then came the catch. Well-placed sources confirm that despite the verdict,Karsan made certain amendments in its tender; and when it was finally openedup on November 1 for a decision, the amendments had come handy. Karsan had been selected"for quoting the lowest rates possible".
By November 9, a high-voltage ure a import deal had been signed between the publicsector National Fertiliser Limited (NFL) and Karsan. Even before the terms of theagreements could be worked out, the NFL seemed unusually keen to provide the advance moneyto the Turkish company. Without any guarantees or letter of credit or even any earnestmoney, which is generally the rule, the money was forwarded in two instalments.
On November 2, within 24 hours of the final decision, 1 per cent of the total money($380,000) was moved from the State Bank of India (SBI) branch at South Extension in Delhito the SBIs New York branch, which is the designated bank for foreign clearances. ByNovember 14, the remaining 99 per cent ($36.62 million) was also transferred, the conduitbeing the same SBI Delhi to SBI New York and from then on to Ankaras AmukBank.
But by January, the scene began to get positively murky. Amuk Bank in Ankara wrote backto S B I New York saying they had no account in Karsans name and they would not bein a position to accept the money. When the S B I got in touch with the N F L, theirIndian re presentative, M. Sambasiva Rao, said: no problem, move it into the BanquaIndo-Suez (a Geneva-based bank). But the Swiss were equally prompt. They too declined toaccept the money because they had not heard of Karsan.
By February, it was becoming clear that no one was willing to touch the money. But asfar as the NFL and Rao were concerned, there was no undue cause for alarm. "If noneis willing to take the money, move it into the Pictet bank at Geneva," a senior NFLofficial said, quoting one of his bosses. The money was finally accepted at the PictetBank and remained there for a solid one month.
Back home in India, the movement of urea was being closely monitored . Came March 1996and it was clear that not a single drop of the two lakh tonnes of urea promised was goingto materialise. The Union Ministry of Chemicals and Fertilisers and the N F L jointly gotback to the Karsan representative, who said that due to some technicaldifficulties, the consignment had been withheld. What then were the technicaldifficulties? In a rare gesture to prove their bonafides, Karsan flashed back, saying thatcertain contractual obligations had not been ful filled and so the urea couldnot be sent to India.
Well-placed sources in the banking sector reveal that the main contractual obligationrefers to the non-payment of the 1 per cent advance that was actually paid on November 2,but had to be turned down because no bank was willing to accept it. They say that themoney is now back lying unclaimed at the S B Is headquarters in New Delhi.
WORSE was to follow. When key Indian officials led by Cabinet Secretary Surinder Singhtried to retrieve the money, the Pictet Bank informed them that the $36.62 million,deposited under account number 91923, had been taken out from its numbered account and itswhereabouts were unknown. "It is clear that the money paid has disappeared and thereis little chances now of the urea seeing the light of the day," says an officialclose to the investigation. He is also not ruling out the fact that the Turkish companymay also disappear, leaving the trail very cold and dead for Indian officials.
But if there is hope for investigators, it lies in India. In a spate of arrests, theCBI had picked up some officials who may be connected to the deal. Among them SambasivaRao, described as an Andhra-based broker, who re p resents Turkish interests(among others) in the name of the Hyderabad-based Sai Krishna Impex trading company, couldbe crucial. Rao has told CBI interrogators about his proximity to P.V. NarasimhaRaos family in Andhra Pradesh as well as in Delhi. But one key source told Outlookthat Sambasiva Rao was introduced to the NFL bigwigs by the former primeministers son, Prabhakar Rao, who reportedly insisted that the fertiliser deal bemade available to this little-known Turkish company. Sources also say that PrabhakarRaos visit to the NFL was followed by a telephonic call from a leading light inRaos PMO, though CBI officials are not willing to go on record. CBI officials alsodisclaim any knowledge that Prabhakar Rao was on the board of directors of Sai KrishnaImpex, but say that the "probe may go beyond Sambasiva Rao".
But in effort to control public outcry, some minor heads have rolled. A variety ofdeputy general managers dealing with finance, marketing and company law have beensacked on the orders of its Managing Director C.K. Ramkrishna, who himself is highon the list of accused and arrested by the CBI. Another important accused, D.S.Kanwar, who was executive director (marketing), has also been picked up. But CBI officialsadmit that their interrogation so far has failed to throw any significant light, except onlittle procedural details. "The question of who the recipients are isuntouched," they say.
Prima facie, investigators say, the deal points out to involvement of Congressbigwigs. For instance, Sai Krishna Impex does not exist in the address available with N FL records. But it now seems that the office operated out of the residence of a formerCongress M L A, C. Narsi Reddy, in Hyderabad. Reddy himself denies any link with SaiKrishna Impex, but says they hire d his premises for a few months and thenleft.
The CBI role in the probe would again be dictated by "factors beyond itscontrol". Already a letter sent to Interpol Turkey seeking information about Karsanhas been met with a blanket reply asking them on the status of the case and whether a casehad been registered in the connection. Letters rogatory or letters of request are going tobe sent to Turkey and CIS countries, but officials say the whole process could take aminimum of six months. And then even a letter rogatory would need the approval of a UnionCabinet that is dependent on P.V. Narasimha Rao for survival.
The uniqueness of the fraud can only be matched by the number of probes that have beenlaunched after the details became public. Apart from the C B I, a former agency jointdirector, Shantanu Sen, has been hired by Surinder Singh to head a parallel investigation,though it will have no legal validity. Sens brief: to examine the criminal intent inthe case. N F L Executive Director (Vigilance) Chattrasal Singh, who initially failed totake preventive action, has now submitted a report on the deal. Prabhakar, the deputychief, has submitted his findings after a prolonged stay in Ankara. Executive DirectorN.K. Gupta has given his inputs after a 20-day sojourn abroad while another official, S.K.Ray, has given his report to the N F L board .
Clearly, if the idea has been to stall invesigations, then its backers have beensuccessful. In the next month or so, officials will be travelling abroad to get freshinputs. But if the past record of investigating pay-offs on foreign lands is anything togo by, the fertiliser scam seems headed the way of Bofors, HDW and St Kitts.
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