Next, The Captain May Sink

Safaya, a long-time Sharma loyalist, was kept for long hours at the CBI headquarters for what was to be just a cut-and-dried interrogation. Then, suddenly, he began spilling the beans on the former Union minister’s various petroleum and even telecom deals, and the routine affair seemed to be developing into something bigger. Perhaps, a full-blown case of financial misappropriation and criminal misconduct by people in charge of the Union Petroleum Ministry during the Rao years. Or even earlier, which could then bring into its ambit some of Sharma’s predecessors.

Responsible for the upkeep of Amethi in Sharma’s absence, Safaya told his interrogators that money in huge sums had come for several undercover operations—JMM being one of them—from the likes of Abhey Oswal of Oswal industries, V.N. Dhoot of Videocon, Shashi Ruia of Essar, Dhirubhai Ambani and other industry heavyweights. So what was the quid pro quo? Ruia’s Essar, for one, owes a large part of its growth to contracts for development of proven oil wells and the fact that its oil tanker was booked on a cost-plus basis for the import of crude and petroleum.

Safaya’s revelations jolted the sleuths into action. In no time, they took possession of a bunch of crucial files from the Petroleum Ministry and the Planning Commission’s Energy division. These are said to be "highly incriminating", detailing the manner in which Sharma and his clutch of bureaucrats flouted several rules. Particularly revealing are those on the privatisation of discovered oil fields and spot purchases of petroleum from the international market. In the words of an ONGC official, the evidence is "enough to hang several people together".

Well-placed sources say it’s an ‘open secret’ that spot purchases of oil have traditionally provided a major occasion for politicians to rake in kickbacks. To buttress this in the case on hand, the CBI will also get in touch with former Indian Oil Corporation (IOC) chairman S. Venka-tachalaiya, who was suspended by Sharma for not toeing his line. The spat occured after Venkatachalaiya raised several objections about spot purchases.

The CBI has already lodged a preliminary investigation into the Mukta-Panna oil deal at Bombay High, which has been awarded to Reliance and Enron. Safaya has confessed that public sector officials, at the instance of Sharma, deliberately classified the oil-bearing blocks of Panna and Mukta as low in yield and presented it on a platter to the private companies.

There were more scandalous revelations from Safaya. The then ONGC boss S.C. Kho-sla, reportedly on Sharma’s prompting, floated the idea that oil mines developed by the ONGC be handed over to private companies. The pretext: ONGC has no money. The ONGC’s then member, finance, put up a written objection, pointing out that there was no shortage of money. First, he was overruled. Then Khosla, with the backing of Sharma, pushed through the new arrangement. And, within a mere two days, Khosla quit the ONGC to join Reliance. No one was surprised when Reliance bagged the Mukta-Panna oil fields, developed by the ONGC at several hundred million dollars.

THE benefits provided to private companies, sources say, clearly show where the Petroleum Ministry’s allegiance lay. "Global prices were paid for oil produced by pºrivate companies. This, when the national oil companies have always been saddled with administered prices, leading to losses that 1992 onwards add up to several thousand crores,’’ says a source.

Also under CBI scrutiny is Videocon whiz Dhoot. Alleged manipulations by Sharma saw Videocon, along with the Australian outfit Command Petroleum and the Japanese firm Marubeni, bagging the equally lucrative Ravva oil wells in the Godavari offshore. Abhey Oswal’s connection with Sharma goes to Shahjehanpur, Uttar Pradesh, where he has a fertiliser plant. The HBJ gas pipeline is also not far away from Sharma’s Amethi and Oswal has reportedly shown great interest in the HBJ pipeline at Jagdishpur, next to Amethi.

Investigators are also looking into charges that the many concessions made to Enron and other American companies could be linked to the problems faced by Sharma and his brother Gary on charges of money laundering in the US. The charges have been successfully pursued by federal authorities there.

But the most damaging deal that may blow up in Satish Sharma’s face is the Indo-Oman gas pipeline which, according to a Rashtrapati Bhawan official, came up for discussion during the President’s recent trip to that country. The deal, signed at breakneck pace, binds India to an agreement that condemns it to a whopping Rs 1,000-crore loss. The deal for long-term supply of gas through a $5 billion underwater pipeline was no act of nation-building. Now the Petroleum Ministry is seriously toying with the idea of reviewing the deal. Reason: if India pulls out of its contract, it may have to pay hefty penalties. But in the long term, if the pipeline materialises, the country may end up bankrolling the development of Oman.

 The CBI also has in its possession a letter from Finance Secretary Montek Singh Ahluwalia to former petroleum secretary T.N.R. Rao, expressing reservations about the advice tendered by the Law Ministry. The letter says the "agreement creates binding obligations to both the parties and provides for third party arbitration without recourse to sovereign immunity". Montek has raised severe objections about the Government of India being made the guarantor for the purchase of gas.

There may be other blowbacks as well. The CBI and the Petroleum Ministry are also looking at the proposed 1,143-km Kandla-Bhatinda oil pipeline and Sharma’s all-out efforts to award the Rs 1,200-crore contract to Czech firm Skorda. Investigators say the firm has delayed the project by 12 months, costing the exchequer over Rs 100 crore already. The terms of the deal are no less daring. The Petroleum Ministry under Sharma’s dubious captaincy had accepted the deal on a single tender basis, and of the two companies which had responded, Skorda was the highest bidder. Officials in the CBI say Safaya’s confessional statement has spelt it all out. They are waiting for Sharma to return from Slovenia before turning the heat on him. His plush farmhouse on the Mehrauli-Mandi road and his Rs 30-crore estate off Mussoorie have already been raided and some documents recovered from there. But there is now talk that he may have been tipped off before the raids. In the end, it would depend purely on what the investigators can lay their hands on and Sharma’s own proximity to 10, Janpath.