Dear Mr Gurumurthy
Dr Harris apprised me of his useful meeting in New Delhi last week with Mr R. Goenka, Mr N. Wadia, Mr V. Pande, Mr B. Lal and yourself. Now that the group has been retained to assist the Government of India we hope to expedite end result.
We received only US$300 000 arranged by Mr N. Wadia. As considerable efforts have already been made and expenditure incurred, it is advisable Mr Goenka arranges during his forthcoming visit to Geneva an additional US$200 000. We shall refund both amounts on receipt from the Government of India to E. Briner, Attorney, 31, Cheminchapeau-Rogue, 1231, Conches, Geneva.
We shall apprise Mr Goenka in Geneva about the progress made on source of funds for purchase of Swiss properties of Mr Bachchan. We shall contact Mr Goenka at Casa Trola, CH-6922 Morcote (Ticini), during his visit.
Yours sincerely
(sd) G.A. McKay
The second letter carried no date:
Dear Mr Gurumurthy
Please send me the following details to continue our investigations:
(i) The details of rice exports by the Government of India to the Soviet Union;
(ii) Documents relating to the non-resident status of Mr Ajitabh Bachchan from the records of the Reserve Bank of India.
When Mr Bhure Lal visits here next time, we will make his stay pleasant.
Yours sincerely
(sd) G.A. McKay
The treachery of V.P. Singh and other friends like Nusli Wadlia seemed confirmed. Financed by Wadia and his mother’s old foe Goenka, the conspiracy was aimed at striking down Rajiv through his old friend, Bachchan. The details seemed to corroborate the plot: the Swiss attorney Briner was an old friend of Goenka who had visited him in Bombay a year or so before. Casa Trola, the address where Goenka was to be contacted, was meant to be that of Nusli Wadia’s retired father. (But the composer of the letter had got it wrong: the name of the house, Casa Fiola, was actually misspelled, and it was not close to Geneva but on the Italian–Swiss border.)
A panic-seized Rajiv handed the letters to the Central Bureau of Investigation, who immediately assigned the case to the team already investigating the apparent leak of the DGTD report to Gurumurthy. According to the complaint filed by the DGTD, the relevant file on Reliance had indeed disappeared for two weeks in July 1986, reappearing on a certain desk on 25 July, and Gurumurthy had appeared to have drawn upon it for his August articles on the ‘smuggled’ plant.
But the CBI’s two investigating officers, Yashvant Malhotra and Radhakrishna Nair, were reluctant to prosecute under the Official Secrets Act, originally passed by the British in 1923 to protect the Raj against embarrassment by nationalists and only slightly modified in 1949. How could it be used against an Indian journalist who had exposed in a newspaper the activities of a commercial enterprise? It was hardly the kind of offence listed in the Act: ‘passing surreptitiously information or official code or pass-word or any sketch, plan, model, article, note or document which is likely to assist, directly or indirectly an enemy’. If Gurumurthy was to be penalised for his methods, they argued, Reliance should also be investigated for the apparent offences he had revealed.
The ‘Fairfax letters’ seemed to give the CBI’s director, Mohan Katre, the national security grounds that were so far lacking for a prosecution under the Official Secrets Act. The bureau’s full resources were thrown into the job. All files on the Reliance investigation were collected from the Enforcement Directorate. At 10.30pm on 11 March Bhure Lal was called at his home: he was being transferred to run the Finance Ministry section handling currency and coinage, one of the ministry’s most routine tasks, and was to hand over charge of the directorate the following morning. At the same time, the Enforcement Directorate itself was removed from the responsibility of the Revenue Secretary, Vinod Pande, and was placed under the Finance Ministry’s Department of Economic Affairs, which came directly under the Finance Secretary, S. Venkitaramanan.
On 12 March arrest and search warrants were sent by air to Madras and Bombay. At 1.30am that night, a team from the CBI arrived at Gurumurthy’s house, put him under arrest on charges of criminal conspiracy and breaches of the Official Secrets Act and seized carloads of documents. In Bombay the agency arrested a partner in Gurumurthy’s accountancy firm.
Later on 13 March the CBI turned up and ransacked the Indian Express guesthouse, where Goenka happened to be staying. Wadia and the controversial Hindu ‘god man’ Chandraswami were calling, separately, on Goenka. Both were allowed to leave after being searched. As the CBI detectives went through his papers, Goenka had a telephone call. It was Dhirubhai, offering to help out in any way he could. Goenka slammed down the receiver.
At this point, the letters and their existence were not public knowledge. The waters were muddied even further by the splash in the Indian Express on the morning of 13 March of a highly critical letter written to the Prime Minister by the President of India, Giani Zail Singh. The elderly Sikh president, who regarded himself as India’s senior statesman, had been trying to assert himself over the young Gandhi heir. Zail Singh had refused his assent to one government bill on postal services earlier in 1987; he accused Rajiv of not consulting him on the Punjab, where insurgency was getting worse. He now rebuked Rajiv for undermining the President’s high office and warned he would not just be a ‘spectator’ to this process. That the Express should get hold of his letter was not surprising: Gurumurthy had drafted it and Goenka’s close adviser, S. Mulgoakar, had improved the English. In their search of the newspaper’s New Delhi guesthouse, the CBI found a copy of the draft, with the corrections.
Brought to New Delhi, Gurumurthy was put through nearly forty-eight hours of straight questioning, most of it about the supposed targeting of the Bachchans. Meanwhile, the CBI issued a press notice that ‘reliable information’ had been received on 11 March that Gurumurthy and others had been in contact with certain foreign detective agencies and had passed on sensitive information from government files. Incriminating evidence had been seized during the searches. Through friends who brought in food and clothes, Gurumurthy was able to pass out the word to Goenka that the government had possession of certain letters. The bureau produced Gurumurthy before Delhi’s chief magistrate on 17 March, listed four charges under the Official Secrets Act and sought an extension of custody. The CBI mentioned for the first time that it possessed a letter stating that Gurumurthy had made payments to Fairfax.
Represented by advocates Ram Jethmalani and Arun Jaitley, Gurumurthy admitted contact with Fairfax but pointed out that the investigators had been hired by Bhure Lal. In his bail application, the Express writer said that as a journalist he was not bound to disclose how he gained access to the contents of government files and that a lot of relevant information had been obtained by persons working for Reliance itself: ‘a company powerful enough to have in its possession extracts from government files relevant to its pending demands and conduct of industry’. For its part, the CBI was ‘not carrying on either an intelligent or an honest investigation’ and was allowing itself to be used as an instrument of blackmail and harassment. In the course of his address, Jethmalani repeated the rumour about the Bachchans being involved with well-connected Italians in the Swiss company ‘Macny Adol’, thus getting the rumour into print under court privilege for the first time.
When, on 20 March, the Calcutta newspaper the Statesman published the first of the controversial ‘Fairfax letters’, Gurumurthy’s allies and the public were able to see what was happening. Goenka was able to point out that he was out of the country at an international press meeting when the alleged meeting of conspirators took place in New Delhi. Nuances of the English used in the letter – in particular the erratic use of the definite article – showed an Indian rather than American hand. Michael Hershman, and his deputy McKay said the letter was a forgery using a transferred letterhead from his company. It would have been stupid and unprofessional to put such material on paper, they said.
The evidence backing the CBI case wa
s looking shaky, and Gurumurthy was released on bail on 23 March after ten days confinement. Somewhat prematurely as it turned out, he declared that the press could trust the judiciary to help when the executive arm of government ran amok.
On 31 March a parliamentary debate broke out on the affair. The junior minister helping Rajiv run the Finance Ministry since V.P. Singh’s exit, Brahm Dutt, had returned from a mysterious week-long trip to Italy in February, denying speculation that he had crossed by land into Switzerland. Dutt told parliament that Fairfax had merely been ‘informers’ for the Indian Government, provoking Singh to stand up and ‘share responsibility’ for hiring the agency. Hershman told reporters that he had been engaged by Bhure Lal and had a letter to show it. Dutt also revealed what seemed to be new evidence of the conspiracy. A computer print-out from the register of the Oberoi Hotel in New Delhi showed that Hershman had been booked into the hotel under the name Harris in November 1986 by Bombay Dyeing and that Nusli Wadia had been staying in the same hotel during his visit.
A claque of ministers and MPs from the Congress Party then began a concerted attack on V.P. Singh in parliament. The former Finance minister had endangered the national security of India by encouraging a foreign agency, one probably linked to the US Central Intelligence Agency, to obtain damaging material on prominent Indians. Sensitive material had been passed to Fairfax that could be used by CIA operatives to blackmail and embarrass India.
The clamour, which went on for five days, was led by the former Foreign minister and reputed beau of Indira Gandhi, Dinesh Singh, who went to sit by Amitabh Bachchan when he finished his own speech. The choice of Dinesh Singh, another member of India’s minor royalty, seemed designed to counter any backlash from V.P. Singh’s own Thakur caste. The beleaguered Defence minister walked up to Dinesh Singh. ‘You’ve thrust a knife into my body,’ he said to him in Hindi.
‘What else could I have done?’ replied Dinesh Singh, with a shrug.6
That Rajiv Gandhi had countenanced, possibly encouraged, the attack was obvious to V.P. Singh – a suspicion not allayed when Rajiv asked his colleagues to stop a proposed commission of inquiry under two Supreme Court judges to look into all aspects of the Fairfax affair. (V.P. Singh was correct: Dinesh Singh later confirmed that he had been instructed by Rajiv.)7
The terms of the commission given to the panel – Justices M.P. Thakkar and S. Natarajan – on 6 April also confirmed that Rajiv was interested in only one side of the case. The two judges were ordered to report within three months on the circumstances under which Fairfax had been engaged, for what purpose, under whose authority, on what terms and conditions, whether the agency was competent for the task, whether any payment had been authorised or made, what information had been received by the government from Fairfax, what information the government had made available to Fairfax and whether the security of India had been prejudiced.
The appointment came under strong attack as a diversion from a parliamentary inquiry in which all political aspects could have been investigated and from the CBI’s failing attempt to prosecute Gurumurthy under the Official Secrets Act. ‘The decision is as muddled as the original fiasco which the probe intends to resolve,’ wrote the advocate Ram Jethmalani in the Indian Express the next day. ‘The decision is lacking in political honesty, is clearly calculated to subvert the due process of justice and intended only to make the judiciary a sharer in the government’s amazing follies.’ In an observation that was later to get him into trouble, Ram Jethmalani also wrote that the CBI’s counsel had admitted in Gurumurthy’s bail hearing that the two Fairfax letters had been shown to Gurumurthy during his interrogation.
But Rajiv’s move was given credence from a weighty analyst. The Times of India editorialised that the commission’s appointment was an ‘impeccable move’. In several signed articles over April and May the grand old newspaper’s editor, Girilal Jain, urged readers to keep an open mind about the possibility of the CIA or other sinister interests being involved in the Fairfax affair, possibly to collect material for later use against India, and he asked whether the Fairfax Group was not ‘semi-political in character’. Jain had not been an admirer of Rajiv before, but he had invested heavily in Reliance debentures in 1985, with the help of a BCCI loan.
V.P. Singh decided to test Rajiv’s support. The material employed was a coded telegram to the Defence Ministry from the Indian Ambassador in West Germany sent around the beginning of March. In 1983 the Indian Navy had ordered two submarines from the German builder Howaldswerke Deutsche Werft (HDW). These were delivered in 1985, and negotiations were under way for a second pair to be built under licence in Bombay’s naval dockyard. The Germans had agreed to a 10 per cent price cut, but the ambassador informed New Delhi they were unwilling to give a further cut because they were still bound by contract to pay a 7.5 per cent commission to the Indian agent who had originally clinched the order.
Rajiv’s government had loudly banned use of agents in all defence deals in October 1985, so it was a good test case. Singh had already asked the Finance Ministry’s two economic intelligence arms to report on the involvement of agents in the arms trade. On 9 April Singh asked his ministry’s Secretary, S.K. Bhatnagar, to investigate the HDW case, then issued a press release about it. He sent the case file through normal channels around to Rajiv’s office at the other end of the North Block of the Secretariat Building, annotating the names of the London-based Hinduja brothers, whom Bhatnagar understood to be the agents – although they later denied involvement. The file arrived on Rajiv’s desk after newspapers published Singh’s disclosure on 10 April.
Predictably enough, his move created a renewed furore against Singh within Congress, where the vested interests saw him as letting the side down, betraying his own team. To those in the know it was also an embarrassment to the Gandhi family: negotiations had begun with HDW in 1980 when Sanjay Gandhi was ascendant. The reaction from Rajiv’s office was cool. Singh went to see the Prime Minister on 12 April and did not get the support he was angling to draw out. Later that day he resigned from the cabinet.
Events pushed Rajiv and Singh further apart. Four days after Singh resigned, a reporter named Magnus Nilsson reported on Swedish Radio that the Swedish armaments firm Bofors had paid a large commission to agents in a US$1.2 billion purchase of artillery by the Indian Army. The Bofors deal had been signed in March 1986, six months after the ban on the use of middlemen.
Rajiv fumbled his response, giving contradictory statements in parliament. He issued a scornful denial on 17 April and on 20 April said the Swedish Prime Minister, Olaf Palme, had confirmed that no middlemen had been used. His claque of Congress supporters stepped up their campaign against V.P. Singh, who spoke out in his own defence. Within a couple of weeks, Singh was touring the country explaining that his efforts to attack the black economy had been subverted by the very people he was targeting. Rajiv refused his suggestion to call a Congress parliamentary meeting to discuss the Fairfax, HDW and Bofors issues. On 2 June the Swedish Government’s Audit Bureau confirmed that an even bigger amount of money than that reported by Swedish Radio had been paid to agents.
The atmosphere became even more feverish. Since March, there had been speculation that the disgruntled president, Giani Zail Singh, was thinking of dismissing Rajiv and appointing another prime minister, under hitherto untested reserve powers of his office. The Swedish audit report, contradicting Rajiv’s assurances to parliament, could be a ground for his dismissal. On 17 June a state election in Haryana, adjacent to New Delhi, saw Congress almost wiped out there by a farmer-caste politician, Devi Lal, who had derided the Bofors deal in his campaign speeches.
Zail Singh backed down when he was bluntly informed by Arun Shourie, recently restored as editor of the Indian Express, that he would get no support from Ranmath Goenka. The old press baron had realised that Rajiv’s replacement as Congress leader could just as easily be Arun Nehru – perceived as Dhirubhai Ambani’s man – as V.P. Singh. The President then scouted for supp
ort from Congress dissidents and opposition parties for him to nominate for a second term as President, running against the official Congress candidate, when his term ended in July. The President is elected by MPs from the central parliament and state assemblies by secret ballot, so this provided a risk-free path for Congress to ditch Rajiv, who would have been obliged to resign if his candidate were defeated.
But the support promised was patchy and equivocal: the old Sikh backed down and retired quietly in July. Rajiv was beleaguered by further evidence of the trail of payments from Bofors pointing closer to his own circle, but he was firmly in charge of Congress. The party would sink or survive with him. In July it expelled V.P. Singh. The dumped politician was wryly stoic in a verse penned around this time: ‘I have been cut into pieces/But my value remains the same;/I was a solid coin/Now I have become small change.’8 Singh’s wan mood did not last long. In September, he launched the Jan Morcha (People’s Movement) against the government, in which group, ironically enough, he was joined by Arun Nehru.
• • •
The Thakkar–Natarajan inquiry into the engagement of Fairfax meanwhile ground on, showing a wooden adherence to its narrow terms of reference and firmly closing off avenues that might allow the erstwhile investigators of Reliance to open up the substance of their charges. The original three-month term was extended twice, first to October and then to December. The first four months of hearings were held in secret, and it was only when open hearings began on 14 August that some of the evidence produced by the government began to emerge and the bent of the CBI as the commission’s investigating agency became apparent.
Only Nusli Wadia was declared, under the law governing commissions of inquiry, a person likely to be ‘prejudicially affected by the inquiry’. In theory this protected him against self-incrimination and enabled him to call and cross-examine witnesses; in practice the right was refused by the judges. Throughout the inquiry the two judges came under attack in the press for refusing to state what the rules of evidence were: whether ‘beyond all reasonable doubt’, as in criminal cases, or ‘weight of probability’, as in civil suits. Wadia was refused access to all papers put before the commission. In one instance, a judge took evidence without notice at his own residence.
Mahabharata in Polyester Page 17
