Bofors: The Quattrochi and Hinduja connection

Published: July 18, 2017 - 23:19 Updated: July 31, 2017 - 13:24

Acting on a directive of the Lok Sabha’s Public Accounts Committee, the CBI will now be writing to the government seeking its permission to restart the investigations into the alleged Bofors pay-offs. Given this government’s special animosity towards the Nehru-Gandhi family, is there room for any doubt about what its decision will be?


By today’s standards the Bofors deal was really small and the quantum of the alleged kickbacks laughably minuscule. But a quarter of a century ago it was huge. It caused a regime change and possibly set India off in a new direction. In March 1986 a contract worth $285 million or about Rs.1600 crores then was entered into between the Government of India and Swedish arms company Bofors for the supply of 410 155mm Howitzer field guns.  By contrast, in September 2016 India signed a deal of about Rs. 58,000 crore or Euros 7.8 billion for 36 off-the-shelf Dassault Rafale twin-engine fighters. Each Rafale will cost about Rs.680 crores and it’s a little over Rs.1600 per aircraft for the whole deal. The kickbacks alleged in the Bofors deal were supposed to total Rs.64 crores in all. One can only speculate as to how many Bofors there are in the Rafale deal?

In the late 1970’s Voest Alpine, then an Austrian government owned company, purchased the design for a relatively light and rugged 155 mm howitzer from Gerald Bull, a well regarded Canadian weapons designer. Iraq’s Saddam Hussein, then fighting a war with Iran, liked the planned 155 mm howitzer and a deal was struck for Voest Alpine to make them. The conservative party led by Kurt Waldheim, which was quite sympathetic to Iraq also, then governed Austria. (Waldheim was soon uncovered by the Jewish Documentation Center of Simon Wiesenthal to be a former Nazi and driven out of office.) But before the conservatives went, 160 numbers of the Gerald Bull designed howitzers, the Noricum GHN45 were manufactured and assembled for shipment to Iraq. (Gerald Bull was killed by Israel’s Mossad in Brussels in March 1990 as he had begun redesigning Scud missiles for Iraq to make them more accurate and nuclear capable).

The Iraqi plan came to nought when Bruno Kreisky became the Austrian Chancellor. Kreisky came from a prominent Vienna Jewish family and promptly scrapped the deal as it violated Austria’s neutrality laws. Kreisky was also a personal friend of Prime Minister Indira Gandhi and was instrumental in making the Congress party a member of the Socialist International, much to the chagrin of George Fernandes’ German SDP friends. Chancellor Kreisky persuaded Indira Gandhi to take those 160 guns readied for the Iraqis and help him out. Indira Gandhi was very obliged to Kreisky for saving her from socialist opprobrium after she had imposed the Emergency. And what are a few guns between friends?

The GHN45 howitzers were indeed very good and with base, bleed shells had the longest reach of all howitzers available then. They were accurate, rugged and easy to maintain. They came out best in the Indian Army trials supervised by the highly regarded DG Weapons Evaluation, the late Lt.Gen. Misbah Mayadass. India would have benefitted greatly by entering into this deal as the Austrian government had also agreed to transfer the manufacturing technology and plant to India. Like in all such deals a small something was also to be made to the Congress Party’s war chest. In 1983 this money was also made over in advance, in anticipation of the formal order and the forthcoming Lok Sabha elections. (Mrs. Indira Gandhi often made leader-to-leader deals of this kind. In 1970 she bought the Sukhoi7 fighter-bomber on Leonid Brezhnev’s say so. The Su-7 proved a great success in 1971.)

Bruno Kreisky left office in 1983. In 1984 Indira Gandhi was assassinated and a new chapter began.

Olaf Palme, the Prime Minister of Sweden, soon befriended Rajiv Gandhi. Olaf Palme had an Indian connection. His aunt Anna Palme was the mother of Rajni Palme Dutt, at one time General Secretary of the Communist Party of Great Britain, and a good friend of Indira Gandhi and Jyothi Basu during their UK days. Olaf Palme was a big and respected name in world affairs and had strenuously opposed the US war in Vietnam. He inspired Rajiv Gandhi to take the initiative on nuclear disarmament.  The implicit quid pro quo for facilitating Rajiv Gandhi’s easy entry to the global high table was the purchase of the Bofors FH45 howitzer. Palme was also facing a re-election and his party’s coffers needed topping up. The Indian howitzer order would do the trick. The donation by the Bofors Foundation at Karlskrona to the Swedish SDP is proof of this.

The Austrian government then advised the Indian government to have this money returned and close the matter. This was the first time the new Indian Prime Minister heard about it. He was furious. A very powerful minister in his government was summarily sacked. Now a way was sought to set this account right. Bofors was required to close this hole. This was being arranged via a Swiss banker Francis Laffont. The route went like this. Bofors pays Laffont. Laffont pays Voest Alpine and the money already paid in India stays where it is. In all probability, it was used up in the 1984 elections.

Voest Alpine’s representative in Delhi, a man called Unterweger, was Ottavio Quattrocchi's neighbour in New Delhi. Being expatriate businessmen they became good friends. It was also well known that he had easy access to the Prime Minister’s house, because of the well-known connection. The Italian businessman was the India representative for Snamprogetti ENI, the Italian government owned engineering conglomerate and was no stranger to controversy.

As was the well-established practice then Unterweger also cut a deal with Quattrocchi. When the Voest Alpine deal collapsed, Quattrocchi was required to close that account, as did the Congress Party. So one more pay-off stream was organised by Bofors to him to close this hole.  The Quattrocchi method of cutting deals with all competing suppliers is a common practice in India now. Usual, y the best-suited item is chosen and it still keeps the system smooth and palms greased. Bribes to be paid in India is also a way of getting money out by foreign executives for themselves. The Hinduja brothers with their Swiss banking expertise take this to the next level. 

People like the Hinduja’s have friends in all parties and many countries. Lest we forget, it was Atal Behari Vajpayee who wrote to Prime Minister PV Narasimha Rao seeking closure of the Bofors case against the Hinduja brothers. And it was Srichand Hinduja who accompanied Brijesh Mishra to his meetings with British PM Tony Blair, and French PM Jacques Chirac after the nuclear tests in 1998. The Hinduja’s also midwived the Sukhoi deal during PV Narasimha Rao’s days.

After the Goenka-Gurumurthy conspiracy with Zail Singh to dismiss Rajiv Gandhi lapsed, Bofors became the stick to beat him with. And Arun Shourie was his ever-willing henchman. He had replaced his brother-in-law Suman Dubey as the Editor of the Indian Express. Several of the so-called Per Wendell stories in the Swedish newspaper, Expressn, actually emanated from his room in Bahadur Shah Zafar Marg.

The subsequent behavior of the successive governments did indicate that while there is something to hide, they were not in agreement on what to hide. The Congress kept sheltering Quattrocchi, and the BJP was more intent on shielding the Hinduja brothers. The fact is that the two roads crisscrossed, and neither the truth prevailed nor did the law take its course. So will the caged parrot shred now the veils?