SUKH RAM'S nemesis crept up on him in rather mundane fashion. Happening as it did in late April, when election fever was at its peak, it made no splash. It was probably a middle-level official in the Department of Telecommunications (DOT) who called up a key CBI official with some hot information. He said Advanced Radio Masts (ARM), a Hyderabad-based company, had been paid an excess of Rs 1.68 crore by the Telecom Ministry and DOT for supplying equipment. The money was paid when Sukh Ram was Union minister for telecommunications. The unidentified source was willing to back up his claim with relevant files and documents.
The CBI was interested. Keeping a low profile, it chose not to issue an official memo but K. Vijaya Rama Rao, the then CBI chief, directed his sleuths to get cracking. The first to go under their microscope was the man who owned ARM.
Patalu Rama Rao was no industrialist in the conventional sense. He started off as an employee in the public sector Electronic Corporation of India. In February 1989, he branched out on his own and set up ARM. The firm's growth graph just zoomed. In 1990-91, ARM sold telecom equipment worth Rs 7 crore. The next year, sales multiplied more than 12-fold to touch Rs 90 crore. In 1993, Rao announced his plans to set up the Rs 2,500-crore Vijaynagar integrated steel plant, with a public issue to net funds.
Patalu Rao's success story did not end there, as the investigators were to discover in a painstaking process. Joint directors from the CBI's north and south zones spent May and June poring over piles of documents—most of them of a highly technical nature—with the assistance of telecom experts. Once the jigsaw pieces started falling into place, the picture that finally emerged was that of a series of phantom deals in which telecom equipment worth several thousand crores of rupees were palmed off to DOT and the tele-com ministry with shocking audacity.
By early July, the Bureau filed its secret source verification information, instead of the usual preliminary enquiry (PE) report, and formally began work on the telecom purchase scam. Then began another tedious spell of perusing documents—a task that remains unfinished. CBI officials admit the sheer volume of the technical details bogged them down and several facts are yet to be verified.
And by August, for reasons best known to senior CBI officials, things suddenly began to move. On August 8, the CBI filed its FIR naming Sukh Ram, Patalu Rama Rao and Runu Ghosh, who was director, finance, DOT. The charge against them related to sale of the MARR shared radio equipment at "exorbitant" prices. That brought Sukh Ram into the picture. Mysteriously, the former telecom minister had by then gone for his fourth trip abroad since he demitted office.
On August 16, CBI sleuths descended on Sukh Ram's official residence at 12, Safdarjung Lane, Delhi. Raids were also carried out at his house in Mandi, Himachal Pradesh. In Delhi, detectives discovered high-denomination currency notes to the tune of Rs 2.45 crore. Much of the money was packed into suitcases and stashed away in the puja room, sharing space with bottles of scotch. Sukh Ram's daughter, who was at home, could offer no coherent explanation. At Mandi, sleuths counted another Rs 1.16 crore.
THE CBI also recovered note pads and diaries from the Delhi house. Investigators say there's no Jain-type diary but add that a note pad, where Sukh Ram has jotted down his engagements, may provide significant leads. Half-burnt documents recovered from the Mandi house led to suspicion that Sukh Ram's family was trying to conceal evidence.
The same day, a raid at Runu Ghosh's house yielded Rs 1.32 lakh in cash, Rs 1 lakh in foreign currency and 1 kg of gold. While all this was happening, a special CBI team from Delhi had seized documents and cash at ARM's premises in Hyderabad.
Runu Ghosh was promptly taken into custody at the CBI's makeshift lockup at Lok Nayak Bhawan, Delhi. The K.P.S. Gill incident being fresh in memory, and fearing that the hard-nut Ghosh could level charges of harassment, CBI officials didn't interrogate her alone. Her husband was called in. But interrogators couldn't crack her—she coolly refused to cooperate, beyond talking about official files. Even after a week in custody, she is reportedly relaxed—she frequently dips into her Agatha Christie when she is not being questioned. When she is, she apparently remains jovial, cracking jokes. The CBI hopes Patalu Rao, taken into custody on August 22, will prove more cooperative.
Sukh Ram lent drama to the proceedings by simply exiting from the stage. His whereabouts were the subject of much media speculation. Reports spoke of the former minister being in London, then Houston, till his son-in-law informed all that he was in England and would be returning home "within a week".
But what was the extent of business conducted by the Communications Ministry and DOT during Sukh Ram's three-year tenure? The CBI has in its possession a list of companies that did business during Sukh Ram's tenure—they are all being scrutinised. Investigations have till now centred around equipment purchases. By current CBI estimates, Sukh Ram and his handpicked officials purchased equipment worth Rs 20,000 crore during the period. Investigators predict a much larger volume of transactions once the basic telephones tender issue is investigated.
The ARM scam has been traced back to May 13, 1994, when the Narasimha Rao government unveiled its controversial telecom policy. In a day or two Narasimha Rao was headed for the US, and the government desperately wanted to push through the Telecom Bill in Parliament before that. It did so, despite Opposition protests. The bill effectively blocked out the participation of Indian companies in the basic telephones tender by declaring that only firms which had the experience of laying down one lakh lines could apply. Says CPI(M) MP Nilotpal Basu, who spearheaded the campaign against the telecom policy: "The plan lacked Cabinet approval. It was cleared by the PMO." Not surprising, for that same week Narasimha Rao was talking to telecom corporations in the US about opening up the Indian market.
Crucially, not all Indian companies were kept out by the bill. Those which had foreign partners with a 49 per cent equity were deemed eligible. Even subsidiaries of foreign companies with 10 per cent equity could bid, a further rider added. Significantly, no Indian public sector company was allowed to bid. This led to much criticism and the government had to declare on May 27, 1995, that PSUs could apply with an equity participation from the private sector.
EVENTUALLY, 16 companies submitted their tenders for 21 telecom circles. The highest bidders: the controversial Himachal Futuristic Communications Ltd (HFCL), along with Israeli company Bezeq and a Thai one called Shinawatra. They bid Rs 85,000 crore for the licence to operate in nine circles. This was about five times higher than what the Tatas, Ambanis, the RPG group and other players had to offer. The government had put no cap on the number of circles one company could bid for, and the mindboggling amount offered by HFCL took the entire business community by surprise. Soon, there was talk of a deal between the company and the telecom minister.
The controversy was set to rest when Chief Justice A.M. Ahmadi of the Supreme Court ruled out 'mala fides' in the allotment of the contract to HFCL. The case is not quite over and the CBI is keeping a close watch on Mahinder Nahata, the HFCL boss, whose name fig-ures as NATA in Sukh Ram's engagement diary. DOT officials describe Nahata as one of Sukh Ram's key 'advisers'—the two used to be closeted for hours in the minister's official chamber. The fortnight also saw raids on Nahata's residence at Sarvapriya Vihar, south Delhi, and the HFCL office at Masjid Moth.
Other links were soon to emerge. Narasimha Rao's son Prabhakar Rao, who owns Sinclair Electronics, was doing business with DOT during Sukh Ram's tenure. Investigators say Sinclair was given an "educational order" for the supply of MARR equipment. CBI sources say Patalu Rao is also close to Prabhakar Rao. Also under scrutiny are the antecedents of another equipment supplier, Natelco, whose promoters are reportedly close to one of the Jains of hawala fame. The agency is also hot on the trail of Ashok Vij, financial adviser to Sukh Ram who is also currently in London. R.S. Khemka of the Hindustan Glass Company is also suspected to be a key player in the deals.
What still baffles CBI officials is the huge amount of money seized during the raids on Sukh Ram and Runu Ghosh. Says a Bureau official: "In the ARM deal, Sukh Ram could not have made more than Rs 60-70 lakh. Where did the rest of the money come from?" According to a source, the initial tip-off came from the Directorate of Revenue Intelligence and the money found could be linked to hawala transactions. Some leads will be right there on the note-bundles found in Sukh Ram's puja room—they bear different bank markings, and it won't be difficult to get the name of the people who withdrew the cash. However, the official says it may be difficult to establish it as slush money.
Last year, when Sukh Ram was trying to wriggle out of the telecom tender controversy, he had written to MPs saying he was "pained that some grave charges have been levelled against me on the floor of the House". The former minister will get his chance to defend himself when he returns home. But as the CBI has proved time and again, it is one thing to investigate, quite another to prosecute.