January 18, 2020
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Fitting The Pieces Together

It may be difficult for the CBI to convince the courts but the agency is still pushing ahead

Fitting The Pieces Together
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Now that the CBI has filed its sensational chargesheet against top politicians, the question uppermost in the minds of everyone is whether the investigating agency’s charges will stand in a court of law. While CBI officials see it as a "test case" for the Prevention of Corruption Act, legal experts are of the view that it may be difficult for the CBI to convince the courts in at least some of the cases. Asks Rajinder Sachar, former chief justice of Delhi High Court: "Can a quid pro quo be established? Just payment of money may not be corruption." But despite such doubts being raised, the CBI seems to be pushing ahead with its investigations and is piecing together the finer details of the transactions.

According to information made available to Outlook, the investigating agency has details of secret bank accounts of the hawala dealers, the manner in which the money was actually handed over to the recipients and the way transnational companies used the hawala network to pay off bureaucrats and politicians. Says a top CBI official: "The quality of the evidence will make the case stand. We will prove that the money was used by the leaders to acquire private assets."

Officials associated with the hawala probe have a detailed account of the role of Madras-based Amir Bhai, one of the main hawala operators connected with the Jains. Amir had two secret bank accounts—one in Antwerp and the other in Geneva. Transnationals with business interests in India were depositing slush money in these accounts from where it was routed through Amir Bhai’s hawala channels to the Jains to be disbursed among Indian politicians and bureaucrats.

These channels were even used by corporations owned by governments abroad. Investigations have established that a major chunk of the Rs 10.5 cro re listed in the Jain diary against industrialist Lalit Suri’s name came from Tyaza Premo, a company owned by the Russian government. The firm was trying to bag the contract for the modernisation of the Durgapur steel plant. The Russian company deposited the money in one of Amir’s bank accounts which was finally sent to the Jains through the hawala conduit.

However, the money was not paid to Suri. S.K. Jain told the CBI that he met Captain Satish Sharma in Lalit Suri’s Holiday Inn Hotel (now known as the Hilton) in Delhi and handed over the money to the former in his car. According to Jain, the reason why Sharma’s name did not figure in diary was because he had instructed him not to record the transaction in his name. Since the amount involved was huge, Jain referred to it in his accounts as cash paid to Suri.

This gives credence to Lalit Suri’s claim that he was not in India when the alleged transaction was made. Officials say that Suri might have been in the know of the transaction but he did not actually receive the money. Perhaps this was the reason why even after conducting raids on Suri’s hotel last year, the CBI did not file a chargesheet against him. Sharma, incidentally, was neither investigated nor were the planned raids on him and godman Chandraswami carried out.

S.K. Jain’s statement to the CBI under Section 161 of the CrPC has allegations of pay-offs not entered in the Jain diaries. Among the allegations made was that at least three politicians were paid through Sharma—Rajiv Gandhi (Rs 10.5 crore), J. Jayalalitha (Rs 2 crore) and Narasimha Rao (Rs 3.55 crore). The statement was recorded by Amod Kanth, DIG, CBI, who was supervising the probe. But the moment the Prime Minister’s name came into the picture, he was pulled out and sent back to the Delhi Police in May 1995.

One school of thought feels that S.K. Jain used the Prime Minister’s name as a red herring on his counsel’s advice. But according to Jain’s statement, it was R.K. Dhawan who introduced him to Rao just after he took over as Congress president in May 1991. Going by the statement, Rao was looking for funds when Jain was introduced to him at his 9, Moti Lal Nehru Marg residence. Jain claims he "placed Rs 5 lakh in Rao’s almirah." A few days later when Rao went to Uttar Pradesh for the second phase of the election campaign, S.K. Jain gave Rao another instalment of Rs 50 lakh. The money was paid by him in Uttar Pradesh.

The third meeting was fixed at Rao’s insistence in August 1991 when he became Prime Minister. Jain told the CBI that on that occasion Rao demanded Rs 3 cro re from Jain to engineer a split in the Janata Dal. S.K. Jain had a couple of meetings with Sharma and Chandraswami. It was decided that Jain would give Rs 2.5 crore to Chandraswami and Rs 50 lakh to Sharma. The reason why Rao’s name did not figure in the Jain diary, say officials, was that it had already been seized in March 1991 by the CBI. However, the flow of money from the Jains had not stopped.

The trail that led to the Jain diaries started rather innocuously when the Delhi Police picked up Ashfaq Hussain Lone, a deputy chief of intelligence of the Hizbul Mujahideen, a Kashmiri militant group, at the Jamaat office in the capital’s walled city on March 25, 1991. When Lone was arrested he had Rs 16 lakh in bank drafts and cash meant for Kashmiri militant groups. Subsequent interrogation by the CBI led to the arrest of Shahabuddin Ghauri, a student of the Jawaharlal Nehru University, Delhi. He too was found with money to be distributed to militant groups in the Valley. Questioning revealed that he was distributing money on behalf of five hawala operators— Shambhu Dayal Sharma, Mool-chand Sampatraj Shah, Mohammed Shahid, Rais Anwar and Nandkishore. The five were booked under TADA.

The hawala operators came up with the names of Surendra Kumar Jain and Jainendra Kumar Jain, identifying them as the ‘kingpins’ behind the operation. This led to a raid on the Jains on May 3, 1991 and the seizure of Rs 58 lakh in hard cash, Rs  10 lakh worth of Indira Vikas Patras and $20,000. But more significant than the money were the two diaries, two note-books and two files recovered from S.K. Jain. It contained a list of  115 names to whom the Jains had made payments. At this point, the CBI was headed by Vijay Karan.

By March 1992, the investigators seemed too keen to get rid of the case and sent the diaries and notebooks to the ‘malkhana’, the dumping ground of all inconvenient or intractable cases. The case was officially closed and Lone and Ghauri were chargesheeted. The hawala operators were interestingly shown as ‘absconders’. In the first chargesheet filed there was no mention of the raids on the Jains. But even the investigators were not prepared for the spirited public response that the case evoked. The Hindi daily Jansatta front-paged the story on August 24, 1993, carrying most of the names found in the diary.

Of the chargesheets already filed, the one against former minister Arif Mohammad Khan appears conclusive. It details the manner in which S.K. Jain paid Khan on behalf of the French company, Alsthom, after he cleared the Kawas power project in Madhya Pradesh. The minister was paid a total sum of Rs 7.5 crore. Subsequently the CBI found a change "in the pattern of spending" of former minister Kalpnath Rai after the Ministry of Power cleared six projects of the NHPC and five of the NTPC between 1987 and 1991. Interestingly, Rai was minister of state for power between 1988 and 1989. The discovery of documents with the Jains as well as the questioning of Rai corroborates the linkage between the dealer and the politician.

In May 1991, S.K. Jain visited Norway to attend the funeral of the Norwegian king with former deputy prime minister Devi Lal. Jain, who wanted to further his association with Devi Lal, arranged a Honda Accord car for the latter’s grandson, Pradeep Kumar. According to the charge-sheet, Devi Lal also received a sum of Rs 50 lakh.

However, in the case of Yashwant Sinha and L.K. Advani, the CBI does not seem to have adequate evidence of a linkage except that their names have been found in the diary. According to senior advocate Arun Jaitley, there is next to no evidence against Advani.

The hawala case will move into second gear once the CBI formally files its chargesheet against the three cabinet ministers —V.C. Shukla, Balram Jakhar and Madhavrao Scindia. Since they have already resigned, no formal sanction from the cabinet is now required. The SC has set January 30 as the date when the CBI has to report to it on the progress of the case.


Ranjit Bhushan and Rajesh Joshi With Soma Wadhwa and Amit Prakash

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