A late night conversation in a Swedish summer house between two old friends, one of whom was dying of cancer, could help solve one of the longest- burning questions in Indian politics: was the unassuming, modern and self proclaimedly honest Rajiv Gandhi, a man on the take?
Scandal of the century
The Bofors bribes affair was the Indian political scandal of the century. The scandal involved Bofors, a historic Swedish arms manufacturer, once owned by Alfred Nobel, the entrepreneur and scientist who invented dynamite and launched the prizes carrying his name. To generations of British schoolboys, the name Bofors means the 40mm AA gun that defended Britain’s skies during the War. But by the 80s, Bofors, based in western Sweden, in Karlskoga – for whose football team the young Sven-Göran Eriksson started his playing career – had fallen on hard times, and faced high unemployment.
A tender from India for 410 howitzers worth over a billion dollars could secure its future. However, a rival gun produced by the French firm Sofma was judged in Indian army gunnery competitions to be both technically superior – and it was cheaper.
But, in a surprise move in March 1987, it was announced that Bofors had won the order. A year later, after an internal enquiry by the Swedish National Bank into suspect Bofors accounting, it emerged that Bofors had paid out millions of dollars to middlemen in bank accounts in Switzerland.
Accused of being a liar
This was surprising. A few months earlier Rajiv Gandhi had publicly announced that there should be none of the customary commissions paid out in the arms industry on this deal. The youthful and idealistic prime Indian minister had been elected on a ticket as Mr Clean. When the scandal emerged, the opposition Hindu nationalists, amid angry scenes in the Indian parliament, accused Gandhi of being a liar.
The Bofors scandal became the big issue of the next election “It is shocking that politicians are, at the end of the day, all the same,” a leading commentator noted. As the cannons started to arrive, and the voting day approached, Bofors became the word even uneducated Indians could associate with Sweden, more so than Abba or Volvo. Stall holders used the word Bofors to mean rotten, as in “this is a Bofors mango”. Gandhi lost heavily in the election.
Could not be linked directly
But the bribes could never be linked to Gandhi directly. Until the day Rajiv was assassinated in 1991, by Tamil separatists, he always angrily denied any knowledge of them, and even today, his widow Sonia, today president of Congress, continues to declare his innocence. The closest link investigators could establish was that the bribes money eventually ended up in a Swiss account belonging to one Ottavio Quattrocchi, an Italian man-about-town and New Delhi based businessman who was a close friend of the Gandhis. Few believed that Quattrocchi, who was the representative of a fertiliser company, was a likely ultimate beneficiary of arms firm cash. But a financial trail from Quattrocchi himself, to Gandhi, could not be established – and when the Italian was wanted for questioning, he slipped abroad, to Malaysia and then Italy, from where the Indian FBI, the Central Bureau of Investigation (CBI), have been fighting a long battle to extradite him.
Congress tried to quash story once and for all
Until a few weeks ago, most Indians had put Bofors at the back of their minds, enough to have re-elected Congress into government after its long spell in the doldrums in 2004. But the scandal flared up again in mid January when a Congress party law official went to London to unfreeze bank accounts held by Quattrocchi that allegedly were key pieces of evidence in the extradition case the CBI were building against him. The CBI were caught by surprise; the Indian supreme court scrambled to “refreeze the accounts”, which allegedly contained the money actually received as Quattrocchi’s middle-man’s fee. But it was too late: within days, the accounts, containing several million dollars’ worth, had been emptied, presumably by Quattrocchi himself, and the CBI executed a neat U-turn, saying it had supported the unfreezing all along. Most observers thought it was an attempt by Congress to diminish the chances of Quattrocchi ever receiving enough evidence against him to justify extradition which would once again drag the party over the coals. Does this mean the Congress party is safe from the scandal that has haunted it for two decades? Not if a sensational allegation emerging from Sweden last week can be backed up.
New development:
According to Stockholm publisher Stig Edling, speaking last week, his best friend, diplomat Gunnar Hökby, a deputy ambassador in India, told him one evening,14 years ago, when he was dying of cancer, about what had been troubling him for years, but which he had kept quiet about because of his professional pledge of silence. He had been present in a hotel room when Bofors officials handed over $10m in bribes directly, in cash, in a suitcase, to Gandhi.
Would prove beyond doubt
This allegation, if proven true, would make any testimony from Quattrocchi superfluous in proving beyond doubt that Gandhi was a corrupt man. In 1986, as deputy ambassador at Sweden’s New Delhi embassy, Hökby told Edling he had facilitated the meeting, and he was disgusted, by his boss the Swedish foreign minister’s denials that the Swedish government knew of bribes. The two plotted how to present this revelation, which would harm Congress and embarrass the Swedish government, with its squeaky clean reputation. In fact, behind its honest façade, there was a ruthless determination by the Swedish government to help its surprisingly large arms export industry. It had long looked the other way, on other arms deals, such as when Bofors issued false end user certificates to disguise illegal weapons exports to Iran and Iraq during their 1980s war. .
And now, despite Gandhi’s public disavowal of bribes, it was complicit in facilitating Bofors’s payoffs to the Indian prime minister.
Witness died before he could go public
Back in the summer house. the two friends decided to put off the revelation until another day. Sadly, a week later Hökby had a sudden fall and died. “He didn’t tell me the time or date, or name of the hotel, but I trusted my friend completely. He was an honourable man. He was my successor as the publisher of Sweden’s largest bookfirm, Prisma. He was of completely clear mind, and I rang later to reconfirm the details. He was very upset with the Swedish government.”
Lacking many details, Edling tried unsuccessfully to find confirmation elsewhere. Hökby’s wife and children didn’t know. He was worried. As a documentary maker, writer and TV channel owner, he had a reputation to protect. “The Swedish government would have slaughtered me.” To calm his mind, he put his findings into a novel; and, a few years later, wrote one article, but there was no follow-up. “I find that amazing,” he said. Then he did find the Bofors official, one Sigvard Ando, who witnessed the handover. “I asked: Were you there when Bofors handed over the money to Gandhi? He nodded.” He left it at that, sitting on his secret, until approached last week. Another source close to the Swedish foreign ministry contacted by me backed up Edling’s account that Hökby had a story to tell: the ageing ex-diplomat had told one or two close colleagues that he had “been there when Gandhi was paid” though the source says this was never followed up.
Gandhi Wanted to reduce dependence on domestic funding
Why would he do it? Investigators and observers of politics that I spoke to suggested that Gandhi wanted this one off foreign cash injection to use for his Congress party’s re-election campaign money to free his party’s humiliating financial dependence on Indian businessmen’s donations, who would then often lobby for legislation or favours. Of course, they said, they could not rule out the possibility that the money would be used for Gandhi’s own personal purposes.
Gandhi might have assuaged his conscience by arguing that, since the usual money Bofors or any other arms firm would have paid to middlemen, to be dispensed to army generals and civil servants had instead been channelled to Quattrocchi and to himself directly, he was after all true to his pledge to reduce the aggregate level of corruption in Indian society.
Congress in trouble
What would be the consequences if Gandhi’s personal receipt of bribes were proven true? While revelation about the bribes I no doubt embarrassing for the Swedish social democrats’ reputation in the world today, in Sweden itself the revelations would have had a greater impact 15 years ago: since then a number of books have been written about Bofors scandal, and the fact that Swedish government officials knew of the bribes is not exactly shocking news. “It is a long time ago, and no one in Sweden cares,” said one. The effects in India may be greater, since Rajiv’s direct involvement would come down as a bombshell. The Bofors scandal still hurts, as January’s storm over the Quattrocchi accounts shows. One source said it would implicate Sonia Gandhi as a liar and lose Congress the next election. Having been out of power so long, Bofors could put them out of power gain.
