The Q File

THE past, they say, always catches up with you. Even if you are Ottavio Quattrocchi. The Italian wheeler-dealer was in the thick of things in the late ’70s, but when the Bofors kickbacks scam broke culminating eventually in the downfall of Rajiv Gandhi a decade later, the needle of suspicion often pointed towards the ruling Gandhi family and insiders— rarely towards Quattrocchi, the man considered closest to the Gandhis, particularly Sonia.

But nine years and 10 months after the reports of payoffs to top Indian officials and politicians surfaced through a Swedish Radio broadcast, the wheel has come full circle. Last fortnight when the C B I announced two names as recipients of the Bofors-Howitzer kickbacks — Quattrocchi and former Bofors agent Win Chaddha— and their wives and family, it did not exactly take the nation by surprise.

While the Joint Parliamentary Committee (J P C) listed Chaddha as a recipient in its ‘winding up charges’ in 1987, Quattrocchi steered clear of an indictment until 1993 when his name was announced as one of the six appellants against the Indian Government plea in the Swiss federal court to transfer the Bofors papers to India. What was an Italian fertiliser expert’s interest in a defence deal and why The CBI nails Quattrocchi on Bofors. But he leaves behind more dirttracks. was he so keen to keep the papers away from India?

According to highly placed C B I sources, the involvement of Quattrocchi in the Bofors scam has been established. Bank documents that have just arrived from Switzerland indicate that of the monies paid to AE Services by Bofors, Quattrocchi received Rs 24 crore and this amount was channelled into his Swiss account, days before the Government reversed its earlier decision to allot the contract to the French gun system Sofma. Investigators say Quattrocchi played a ‘crucial’ role in securing the gun system contract to Bofors.

AE Services, according to investigators, appeared on the scene sometime in 1985. The period coincided with AB Bofors’ hectic negotiations with Indian defence officials for the sale of a 155-mm artillery field gun. The two frontrunners were Sofma and Bofors, in that order. Sources say that in an extraordinary twist in circumstances, AE Services assured Bofors that they would get the contract before April 1986, come what may. But what of the Army’s preliminary decision to hand the contract to Sofma?

"AE Services assured Bofors that not only would the decision be reversed, but the contract was as good as theirs if they were hired to represent the company. They told Bofors that they would have to pull ‘certain political strings’ in order to procure the contract, even after much resistance from the military establishment, and that they would have no dif ficulty in doing so," says a source.

AE Services proved true to their word and by March 1986, the letter of intent was issued to AB Bofors, despite Sofma submitting last-minute alterations cutting down on costs. The JPC, which supposedly ‘investigated’ the scam concluding that no payoffs were made to any Indian, did make a beginning— even if it were largely by accident. Its conclusions: winding up charges were paid to AE Services, then headed by two people now considered fronts of Quattrocchi— M.T. Scott and R. Zumbrunnen— after Bofors terminated its contract in 1986.

NOW it turns out that the Italian fixer was closely connected with AE Services, in whose account the money was paid. But despite the warrant of arrest issued by the CBI to interrogate Quattrocchi, who now lives in Malaysia, lawyers feel that the investigators must file a specific charge against him that he was a conduit for the bribes— a case which can be regarded as a crime both in India and Malaysia.

Quattrocchi’s meteoric rise began in 1980 when Indira Gandhi, freshly returned to power after a thumping victory, overturned the Janata Party government’s decision to award the Rs 900-crore Thai-Vaishet fertiliser project to state-owned Rashtriya Chemicals and Fertilisers. Her decision: to award the contract to Snamprogetti and its Danish subsidiary Haldor Topsoe. To the ensuing uproar, former minister K.P. Unnikrishnan added his own when he presented documents in the Lok Sabha which revealed grave irregularities in the deal. His charge: Snamprogetti got the contract because the Italian— Quattrocchi— was close to Sonia. Not surprisingly, the World Bank, which was supposed to fund the project, backed out and left the Indian Government to hold the baby. According to a World Bank estimate, Snam-Topsoe’s project would cost Rs 80 cro re more than the public sector charges. Two days after the World Bank decision, Indira Gandhi publicly attacked it for ‘interfering’ in the country ’s decision-making process.

Well-placed political sources point out that the deal was approved by then fertiliser minister P.C. Sethi, whose appointment had been fixed by Quattrocchi. Sethi, defending the Government, cited ‘security reasons’ for allotting the fertiliser contract to Snamprogetti. By 1981, the Indian Cabinet had by an executive order made Snamprogetti the sole foreign agent for all urea-based projects on the specious plea of standardisation.

T h a i - Vaishet was followed up by another controversial deal. When the Fertiliser Ministry announced its intent to appoint Kelogg as consultant for the Guna National Fertiliser plant along with Snamprogetti, Quattrocchi threw his weight around and armtwisted then fertiliser minister Vasant Sathe to favour Haldor- Topsoe instead.

By this time, the Snam-Topsoe combine was allowed to colonise the Indian ammonia-urea fertiliser industry. "No company, including private ones, were allowed to compete," says a former fertiliser secretary. Not surprisingly, of the 11 ammonia-urea plants conceived since 1980, all except one, went to the Snam-Topsoe combine. At that point, sources say, the Government was acting practically as a ‘broker’ for the two companies.

Industry sources say the practice of helping out the companies reached ridiculous levels. The Rajiv Gandhi government put pressure on the National Fertiliser Limited (N F L) not to give a contract to KTI of France to set up an ultra-pure hydrogen unit despite the fact that it had beaten Topsoe in three successive rounds of competitive bidding. When N F L found Topsoe could not even make a competitive bid, despite concessions, it decided to make the public sector Projects Development India the prime contractor in the project.

In 1986, the Union Government openly favoured Snam’s bid to take the contract for the BPB process complex of the South Bassein gas field development project near Mumbai. The irregularity was discovered by an audit board, which was examining the ONGC project. According to it, the global tender taken out by the ONGC had been awarded to Hyundai Heavy Industries, as per rules. But suddenly in July 1986, the project was handed over to Snam— leading to a loss of Rs 15 crore. When questioned about it, an ONGC officer said that " ONGC had no details of the basis of the Government’s evaluation and financial packages. "

AND then came the Hazira- Bijapur- Jagdishpur ( HBJ ) pipeline project— which had a significant impact on the political scenario. In 1986, India was the arena for a full- scale market war between Snamprogetti and Spie- Capag, the French giant which had collaborated with Toyo engineering and Nippan Kokkan for the project, over the multi- billion dollar contract to build the 1,730 km pipeline. According to sources, the awarding of the contract marked the beginning of the split in the Congress. While V. P. Singh and Arun Nehru favoured the French consortium because of  its lower bid and improved technology, Rajiv Gandhi would have none of it. He could not believe that his own ministers were opposing Snamprogetti’s contract— and that too when he had personally thrown his weight behind the Italian transnational.

Later V. P. Singh said in an interview: "The prime minister (Rajiv Gandhi) sent me a set of points and asked me to assess the Snam bid for HBJ on that basis. Curiously, the points suggested by Rajiv turned out to be those earlier sent to the Finance Ministry by Quattrocchi." Once the H B J pipeline project had been handed over to Spie-Capag, V. P. Singh’s days were numbered. The then minister of state for petroleum Nawal Kishore Sharma had to make an exit for opposing the H B J project. Sharma now declines to talk except to say that "the whole world knew about Quattrocchi’s connections".

BU T investigators now say that there is enough circumstantial evidence to nail Quattrocchi sans the political connections. In 1987, he, along with S.K. Jain of the hawala fame, was lobbying for Swedish Scanska— a consortium of companies including ABB. Jain’s interest in ABB stemmed from his association with Arun Nehru who knew the vice-president of the company, Benbourne. But getting the plum project was not an easy job until Jain introduced Benbourne to Quattrocchi who in turn took him to Rajiv Gandhi. The projects, worth Rs 2,000 cro re, were okayed— Jain allegedly getting three per cent of the cut and Quattrocchi seven.

The inflow of tainted money re q u i red good money management and this could have been done only by evading Indian laws. Mumbai-based hawala operator Amir Bhai was one such conduit. So when S.K. Jain was interrogated by the C B I, he admitted that Amir Bhai was introduced to him by Quattrocchi. "He had brought Amir Bhai to my office and introduced him to me saying that he would make payments to me in Indian curre n c y. The Italian managed to carry out all these transactions without leaving a trace behind. No Indian intelligence agency had any inkling that the well-connected executive of the reputed company was also a power- broker. "

Which is not surprising, considering that he was never put under surveillance. The relations between Amir Bhai and Quattrocchi have other dimensions as well. According to S.K. Jain’s account, both had an account in the ABN bank in the port city of Antwerp, Belgium and probably in Switzerland as well. R AW officials, for instance, have been working on the theory that the LT T E has been using Antwerp to buy arms and as hawala channels to flow money.

So when even after decades of staying here, Quattrocchi was not interrogated by the CBI, it more than raised eyebrows. Before he finally left India, former CBI joint director K. Madhavan informed the CBI about Quattrocchi’s designs to flee the country— as soon as it became known that he was one of the appellants in the Bofors case. He was still not touched. Nearly four years later, the CBI is taking another shot at him in Malaysia. Given the fact that he is now far out of the reach of Indian law, Indian investigators seem to have missed the bus.