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 it goes cold. Last week, the federal agency seemed to be experiencing similar pangs in the Rs 1,300-crore fertiliser import scam that is expected to assume larger proportions in the weeks to come.
The facts of the case remain depressingly simple, and yet highlight a classic example of how quickly files can move in a system notorious for being deadly flat-footed. On October 30 last year, the Union Ministry for Chemicals and Fertilisers opened up one of its largest tender bids f rom a total of 14 applicants wanting to import two lakh tonnes of urea into the country.
By October 31, the tenders were examined and the committee of technical experts was of the opinion that the Turkey -based Karsan exporting company was unfit for the kind of ure are 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 opened up 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 public sector National Fertiliser Limited (NFL) and Karsan. Even before the terms of the agreements could be worked out, the NFL seemed unusually keen to provide the advance money to the Turkish company. Without any guarantees or letter of credit or even any earnest money, 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 Delhi to the SBIs New York branch, which is the designated bank for foreign clearances. By November 14, the remaining 99 per cent ($36.62 million) was also transferred, the conduit being the same SBI Delhi to SBI New York and from then on to Ankaras Amuk Bank.
But by January, the scene began to get positively murky. Amuk Bank in Ankara wrote back to S B I New York saying they had no account in Karsans name and they would not be in a position to accept the money. When the S B I got in touch with the N F L, their Indian re presentative, M. Sambasiva Rao, said: no problem, move it into the Banqua Indo-Suez (a Geneva-based bank). But the Swiss were equally prompt. They too declined to accept 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 as far as the NFL and Rao were concerned, there was no undue cause for alarm. "If none is willing to take the money, move it into the Pictet bank at Geneva," a senior NFL official said, quoting one of his bosses. The money was finally accepted at the Pictet Bank and remained there for a solid one month.
Back home in India, the movement of urea was being closely monitored . Came March 1996 and it was clear that not a single drop of the two lakh tonnes of urea promised was going to materialise. The Union Ministry of Chemicals and Fertilisers and the N F L jointly got back to the Karsan representative, who said that due to some technical difficulties, the consignment had been withheld. What then were the technical difficulties? In a rare gesture to prove their bonafides, Karsan flashed back, saying that certain contractual obligations had not been ful filled and so the urea could not be sent to India.
Well-placed sources in the banking sector reveal that the main contractual obligation refers 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 the money 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 Singh tried 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 its whereabouts were unknown. "It is clear that the money paid has disappeared and there is little chances now of the urea seeing the light of the day," says an official close to the investigation. He is also not ruling out the fact that the Turkish company may 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, the CBI had picked up some officials who may be connected to the deal. Among them Sambasiva Rao, 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, could be crucial. Rao has told CBI interrogators about his proximity to P.V. Narasimha Raos family in Andhra Pradesh as well as in Delhi. But one key source told Outlook that Sambasiva Rao was introduced to the NFL bigwigs by the former prime ministers son, Prabhakar Rao, who reportedly insisted that the fertiliser deal be made available to this little-known Turkish company. Sources also say that Prabhakar Raos visit to the NFL was followed by a telephonic call from a leading light in Raos PMO, though CBI officials are not willing to go on record. CBI officials also disclaim any knowledge that Prabhakar Rao was on the board of directors of Sai Krishna Impex, but say that the "probe may go beyond Sambasiva Rao".
But in effort to control public outcry, some minor heads have rolled. A variety of deputy general managers dealing with finance, marketing and company law have been sacked on the orders of its Managing Director C.K. Ramkrishna, who himself is high on 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 officials admit that their interrogation so far has failed to throw any significant light, except on little procedural details. "The question of who the recipients are is untouched," they say.
Prima facie, investigators say, the deal points out to involvement of Congress bigwigs. For instance, Sai Krishna Impex does not exist in the address available with N F L records. But it now seems that the office operated out of the residence of a former Congress M L A, C. Narsi Reddy, in Hyderabad. Reddy himself denies any link with Sai Krishna Impex, but says they hire d his premises for a few months and then left.
The CBI role in the probe would again be dictated by "factors beyond its control". Already a letter sent to Interpol Turkey seeking information about Karsan has been met with a blanket reply asking them on the status of the case and whether a case had been registered in the connection. Letters rogatory or letters of request are going to be sent to Turkey and CIS countries, but officials say the whole process could take a minimum of six months. And then even a letter rogatory would need the approval of a Union Cabinet 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 been launched after the details became public. Apart from the C B I, a former agency joint director, 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 in the case. N F L Executive Director (Vigilance) Chattrasal Singh, who initially failed to take preventive action, has now submitted a report on the deal. Prabhakar, the deputy chief, has submitted his findings after a prolonged stay in Ankara. Executive Director N.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 been successful. In the next month or so, officials will be travelling abroad to get fresh inputs. But if the past record of investigating pay-offs on foreign lands is anything to go by, the fertiliser scam seems headed the way of Bofors, HDW and St Kitts.