The history of modern Indian corruption
The Court of Appeals in Milan has sent two senior officials of Finmeccanica, the Italian aerospace company, to jail for false accounting and corruption in the `3,600-crore AgustaWestland helicopter deal. It now transpires that the company had set apart 30 million Euros towards bribes to Indians to win this contract. This article was originally published in the New Indian Express
Corruption in defence deals is nothing new in India, but the AgustaWestland bribery case stands out for a very special reason, namely, that bribe-givers have been packed off to jail by an Italian court even as Indian investigators are groping in the dark as they search for the bribe-takers. This has happened in the past too.
But, while we are seized of the case at hand, we need to look at the larger issue, namely, the modern Indian history of corruption, and get to the genesis of bribes and commissions. There are many prominent witnesses to this history of corruption, who provide us valuable evidence of how and where it all began. These witnesses include, former President R Venkataraman, former Cabinet Secretary BG Deshmukh, former CBI Director Mr AP Mukherjee, former Ambassador and a member of the Nehru family Mr BK Nehru and Mr JRD Tata. The most important witness to this history is Mr R Venkataraman. In his autobiography, My Presidential Years, he provides us a nugget of information that holds the clue to corruption and bribery in big international deals. He refers to a conversation he had with JRD Tata, when the latter called on him at Rashtrapati Bhavan.
Commenting on Prime Minister Rajiv Gandhi’s statement on Bofors, Mr Tata told the President “it would be difficult” for the Congress Party to deny the receipt of commission, because, since 1980, industrialists were not approached for political contributions. Consequently, the general feeling among industrialists was that the party was financed by commission on deals. Although Mr Venkataraman held key portfolios, including Defence, in the Indira Cabinet, he does not challenge or repudiate the comments of Mr Tata. He just slips it in and allows his readers to digest the information! The testimony of Mr BG Deshmukh, who was Cabinet Secretary from 1986 to 1989, is even more damning. In his autobiography titled, A Cabinet Secretary Looks Back, Mr Deshmukh deals with the Bofors scandal involving corruption in the purchase of field guns from this Swedish company in 1986 and links it to Indira Gandhi’s policy of not collecting party funds within the country, preferring instead to take cuts on global deals.
According to him, the genesis of the Bofors affair lay “in the practice initiated by Indira Gandhi for collecting funds for the Congress Party.” According to him, collection of party funds was more transparent in Jawaharlal Nehru’s time. In his view, at the beginning of her tenure as PM, Indira Gandhi realised that she needed funds to fight elections “to establish herself as the undisputed leader of the Congress Party.” Once she established herself, Deshmukh says, Indira Gandhi “decided that a far better way to collect funds for the party was through claiming cuts from foreign deals.” This system, according to him, “earned notoriety” in foreign countries. “In the HDW Submarine case, I was told the West German defence ministry had intimated to the defence supplier the amount of corruption that would be required to be paid in selling defence equipment. Commission on such deals was 10 per cent or more in Latin America and Africa, whereas India was placed in the 5-10 per cent bracket,” he says.
Mr Deshmukh’s reference to HDW is significant because like Bofors, this deal too became controversial following a telex message which indicated HDW would have to give a commission of seven per cent in order to clinch the contract. In his autobiography, BK Nehru too refers to collection of party funds by the Congress and quotes Rajiv Gandhi as having told him that in the 1980s, “crores and unaccounted crores” had been collected for party purposes.
Much of this gets further corroboration in former CBI Director Mr AP Mukherjee’s book, Unknown facets of Rajiv Gandhi, Jyoti Basu and Indrajit Gupta. He says Rajiv Gandhi told him at the height of the Bofors controversy in 1989 that a big all-India party needed “substantial amounts of money. When he discussed it with colleagues, they said commissions to middlemen should be banned but commissions to be given as a matter of routine practice by the suppliers of major defence materials could be pooled under the care of some non-government entity which could be utilised solely for the purpose of meeting the inescapable expenses of the party.” Mr Mukherjee says Rajiv told him that endorsed this idea.
Later, after the fall of the Rajiv government, the VP Singh Government secured the help of the Swiss and British governments and got evidence of the Bofors’ payments trail. One trail established that Bofors had remitted US $ 7.3 million to the Swiss Bank account of Maria and Ottavio Quattrocchi, close friends of Sonia and Rajiv. So, there is sufficient evidence to establish that commissions on international deals have been ‘de rigueur’ since the 1980s.
There are some who, for domestic political reasons, despise everything that is Italian. That would not be the right approach. The recent AgustaWestland judgement shows we have much to learn from Italy. We must hope that the investigators will follow the leads and complete the process initiated by the court in Milan. On reading the judgement, one thing is for sure, if the investigators track down the final beneficiary, the Italians will not mind it!
Asurya prakash is the chairperson of Prasar Bharati
Originally published in the New Indian Express