JANATA Party president Subramanian Swamy's attack on Cabinet minister Ram Jethmalani may not be a mere publicity stunt after all. According to information available with Outlook, the Directorate of Enforcement (DOE) is currently "investigating the case" against Jethmalani and has prima facie concluded that "there does appear to be a violation of foreign exchange rules". The Union minister for urban development is under scrutiny for spending $200,000 obtained from various sources abroad way back in 1987 without declaring this expenditure to the Indian government.
While Jethmalani has asserted that the case, which was investigated after Swamy publicly repeated these allegations in 1995, is closed, the DOE emphatically disagrees. Agency insiders say that what has made matters worse for the minister is an earlier defamation proceeding filed by him against godman Chandraswami in which he had himself admitted to using the funds abroad to finance an investigation into the Bofors case. The DOE has already moved the Bombay high court to access the original documents in the defamation case. The agency is also planning to send a team to the US to authenticate the bank transactions.
Meanwhile, it is reliably learnt that attorney general Soli Sorabjee has decided to inform prime minister A.B. Vajpayee that he would prefer not to offer an opinion on the case due to a number of reasons, among which is his friendship with Jethmalani. The allegations against both Jethmalani and his cabinet colleague Ramakrishna Hegde were referred to Sorabjee for legal opinion soon after Swamy wrote to the prime minister, seeking their resignation on the grounds that they were being investigated by different agencies. Insiders in the law ministry feel that solicitor general Santosh Hegde's opinion may now be solicited.
While legal experts in the CBI feel that the charges against Hegde—which involve a land deal and siphoning off of commissions due to a state-owned company—are not strong enough, Jethmalani appears to be on a weaker wicket. The DOE is currently examining the allegation that while he was a member of Parliament in 1987, he travelled to the US, Switzerland, Panama, Sweden and various other countries for nine months, apparently to investigate the Bofors gun deal and spent $200,000.
Ironically, the DOE case rests on two crucial documents which Jethmalani himself provided to the agency when they began the inquiry in 1995. An affidavit was provided by Jethmalani's counsel to the Bombay court which gives a break-up of funds received from various sources to help out in the 'cause' of the investigation. Among the main contributors were Ramnath Goenka and Chandraswami aide Ernie Miller besides Jethmalani's son Janak and daughter Geeta, who are both US citizens. Statements of bank accounts in possession with Outlook show that on July 28, 1987, $50,000 was transferred from Miller's Euro Bank Corporation account in Grand Cayman to Janak Jethmalani's account in Citibank, New York.
The second is a detailed cross-examination by Chandraswami's counsel during the defamation suit in 1993, in which Jethmalani, while categorically asserting that he "did not receive any money from anybody abroad", admitted that money was deposited in his son's US account "as a contribution towards the expenses for the Bofors investigation". Therein he also asserted that Chandraswami tried to persuade his son to open a secret account for the investigation, and though both he and his son declined to do so, his son "received a phone call from Ernie Miller, who introduced himself as Chandraswami's disciple and sent a contribution towards the Bofors investigation".
Jethmalani, on his part, is dismissive of the entire case. He told Outlook: "There is no charge. As long as they (the DOE) don't come to me, they can go on with the investigation. They will find nothing." DOE insiders, however, are categorical that though Jethmalani won the courtroom battle in his earlier defamation suit and obtained an unconditional apology from the godman, the foreign exchange violation case stands. Experts argue that a legal apology is entirely unrelated to the issue and will not hold in the face of the charges. "We will go by the facts of the case. The fact is that he did utilise certain foreign exchange abroad without obtaining prior permission from the government. The cause is irrelevant," says an insider.
But for now the agency is undecided on the gravity of the offence—the case can result in either adjudication proceedings, in which case Jethmalani will merely have to pay a minor penalty, or could result in the filing of a chargesheet and subsequent prosecution.
As for commerce minister Hegde, the ghost of an unpleasant past seems to haunt him. But reports on the two cases quoted by Jayalalitha—the allotment of 110 acres of land to an NRI housing association and siphoning off of the Rs 2.5-crore commission due to the state-owned NGEF Ltd—have been in a limbo. A final word is yet to be pronounced on them by the Central and state governments.
In the housing case, the governments have been asked by the high court to reply to notices on a writ petition filed three years ago by a Bangalore advocate, S. Vasudeva. Hegde supporters have been quick to cry foul. In the land case, Hegde was accused of allotting the land for an NRI housing scheme which is said to be a front set up by Mumbai-based builder Siraj Lokhandwala to grab land and rake in crores of rupees as profit. Lokhandwala, according to Hegde's detractors, was a friend of the leader's son-in-law, Manohar Lal Nichani.
A report on the land case is turning yellow with age though Supreme Court judge Kuldip Singh completed his inquiry in 1990. The judge concluded:
- Hegde was aware of the decision of the Bangalore Development Authority to allot the land.
- He knew that the housing association was a false front set up by Lokhandwala.
- He did not take any action to stop the fraud from being perpetrated. By deliberate inaction on his part, Hegde abetted the commission of the fraud.
AT the last sitting, Singh remarked: "I have never met this man (Hegde), but from what I hear, he is brilliant and gets to know everything. It is difficult to believe that he did not smell the fraud." The judge was unmoved by the then additional solicitor general P.K. Goswami's attempts to have Hegde exonerated.
The about-turn in the stand of the counsel for the Central government was obviously prompted by a change of guard in New Delhi when Rajiv Gandhi made way for V.P. Singh. Since then successive governments did not pursue the case. All that the present government has done is to reply to a letter from the Union law ministry on action taken by the administration. Hegde had scoffed at the probe by Singh, arguing that the inquiry had political overtones as it was ordered by the Rajiv Gandhi administration.Besides, Hegde wrote to the judge, saying he was going into a "nonexistent issue" as only a proposal was made to give land to NRIs.
But in his report Singh maintained that Lokhandwala had deposited 25 per cent of the land value, had fenced the area and even put up structures on the site. Hegde was also informed on steps being taken to hand over the land to this association, and Lokhandwala had met him (when he was the chief minister) to expedite the process of allotment. Hegde's successor, S.R. Bommai, later cancelled allotment of the land.
Hegde and his supporters also dismiss the second allegation that a sum of Rs 2.5 crore due to NGEF Ltd as commission for torpedos sold by AEG of West Germany was pocketed by Hegde. Their contention is that the CBI, which probed the torpedos deal, has not made any mention of the commission to NGEF from its German collaborator.
As for Jethmalani, even though the DOE claims it has strong evidence against him, his seemingly candid explanations may just work in his favour. But will his political opponents call a ceasefire?