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2010 is passé and 2011 is in and once again the Congress led UPA government is in the limelight for all the wrong reasons thanks to Bofors!

If 2010 was overshadowed by the mega 2G Spectrum scam of such a magnitude as never seen before, earlier the year 1987 was highlighted with the Bofors scandal that hit the country, its size as never seen before 1987. However, over the years, the Bofors scandal has seen some high volatile drama where the investigations by the Criminal Bureau of Investigation were concerned. In the last few years, the investigations and court cases were slowly fizzling out when yesterday, the Income Tax Appellate Tribunal reiterated in its ruling that kickbacks in the form of commissions for the Bofors gun deal were indeed paid in 1986 to two middlemen that is Win Chadha, an Indian and Ottavio Quottrocchi, an Italian who unfortunately shared good relationship with the then Prime Minister of India, Rajiv Gandhi and his family.

In the year 1986, India signed a mega deal with M/s AB Bofors, a Swedish arms company for the supply of 400 numbers of 155mm Howitzer field guns. This deal was worth Rs.1500 crore and much against the government’s decree that no commission is to be paid to any middlemen for any defense deal, Swedish Radio in a sizzling revelation claimed that Bofors had paid commissions to the above parties through their firms Svenska and AE Services respectively. A few prominent Indian politicians’ names too figured in the scandal including that of Rajiv Gandhi. It was a huge setback to the Congress led government and in the ensuing general elections in 1989, Congress lost heavily and subsequently its government collapsed.

If Congress loosing power wasn’t enough, couple of months later, CBI registered a case in the Bofors scandal and the Swiss bank accounts of the two firms involved in the kickback case were frozen by the Swiss authorities. Years later in 1999, CBI filed its first chargesheet against the two main accused along with former Indian defense secretary S K Bhatnagar and former Bofors chief Martin Ardbo and the Bofors company. Because of the untimely death of Rajiv Gandhi in 1991, his name in the chargesheet figured as ‘an accused not sent for trial’.

Over the course of investigation, the CBI stumbled upon the involvement of the UK based Hinduja brothers in the Bofors scandal and subsequently in late 2000, the CBI filed a supplementary chargesheet naming the Hinduja brothers as co-accused in the multi-crore Bofors gun deal kickbacks.

Yesterday, when the ITAT passed its rulings, none of the accused are alive except for Quottrocchi. Former defense secretary Bhatnagar died of cancer in August 2001 while Win Chadha died two months later of a heart attack. Martin Ardbo, former Bofors head too died later in 2004. In 2004, Delhi High Court cleared Rajiv Gandhi of any illegal involvement in the Bofors gun deal and a year later, the Hinduja brothers were acquitted of all charges against them.

What makes the kickback more interesting is the fact that Quottrocchi has absolutely no knowledge of the defense equipments or guns for that matter. He was a part of the Italian petrochemicals company Snamprogetti that neither dealt with guns or gun systems. But with his influential relationship with Rajiv Gandhi’s family, he became a powerful broker between big business houses and the Indian government in the 80s. However, with the ongoing criminal case against him in India related to the Bofors scandal, Quottrocchi later found himself detained by the Interpol in Argentina in 2007. India accordingly requested the Argentinean government to extradite him to India.  However, few months later, the Argentina court rejected India’s request for Quottrocchi’s extradition on technicalities. Unable to come to any conclusion over the Bofors kickback, in 2009, the Indian government then informed the Supreme Court its decision to withdraw its case against Quottrocchi. Last month, a Delhi court reserved its order for January 4, 2011, on a plea by the CBI to drop the criminal proceedings against Quottrocchi as there was no strong evidence against him.

However, the plea received a jolt with the ITAT re-confirming in its ruling on 3rd January 2011 that Win Chadha and Quottrocchi had indeed received kickbacks and had ample proof to substantiate its claim. ITAT however, claims that since the duo has received the commission illegally, still they are liable to pay Income Tax as they had been living in India at the time they received the payment. It further stated that because of the kickbacks, India had to pay an additional Rs.160 crore for the Bofors gun deal.

The big question that follows the ITAT’s ruling is if Quottrocchi had no expertise of the defense industry and more so nothing to do with India’s defense deal as per the investigation by CBI, why was he paid the money? It’s now to be seen what repercussion ITAT’s ruling will have on the CBI’s plea, the hearing which was heard today. As per ITAT, liability to pay income tax to the Indian government definitely rests on Quottrocchi for the Rs.9 crore he received from the total of Rs.64 crore paid to him and Win Chadha. Ironically, ITAT’s ruling was based on an appeal filed by the late Win Chadha’s son who had challenged the Income Tax decree that he as a legal heir to Chadha’s wealth, was not liable to pay tax on the kickbacks (Rs.52 crore) that the late Chadha received from Bofors for the gun deals.

Today, a Delhi high court heard the appeal by the CBI for the closure of the Bofors case. However, ITAT’s ruling has simply refueled the Bofors scandal issue. As per the CBI’s appeal in today’s hearing in the court, ITAT’s findings is nothing new and has already been tabulated in the court in the two decades old trial against Quottrocchi and the Bofors scam. The appeal further stated that with Quottrocchi’s extradition not materializing in spite of two attempts earlier, lack of evidence against him and the investigation running into a dead end, chasing any dream to convict Quottrocchi will be futile. However, with a Supreme Court advocate Ajay Agarwal challenging the appeal, the Delhi court after hearing both sides today, has decided to defer its judgment to January 6, 2011. Two more days to go before we know if the sound of Bofors will continue to echo in the days to come.