Abundant caution, but not abundant enough

The Defence Secretary also told me in clear terms that the French were not coming down any further8230; He gave me a definite impression that Bofors was the cheapest and therefore I approved of going ahead8230; As a matter of abundant caution, which apparently was not abundant enough, I had also instructed him much earlier to inform the Swedish that they would have to certify that no payment could be made to any agent8230; Martin Ardbo, President of Bofors, had confirmed through a letter to the Secretary, PMO, that they did not have any representative or agent especially employed in India for this purpose.

In this context, I would like to make it very clear that the decision conveyed by the PM to me and that conveyed by me to the Defence Secretary was that there should not be any middlemen. I wonder how the Defence Secretary had restricted the scope of middlemen8217; to Indian agents. The term Indian agents8217; which is reflected in the correspondence is definitely not my creation and appears to be that of the Defence Secretary. At that time, I did not appreciate the complication of using the word Indian8217; in this context.

I take responsibility for the word Indian agent8217; in the letter of Bofors. It was for me to see this and get this word deleted. However, I did not take cognizance of the element of mischief in this word. Now, I feel cheated that instead of putting the precise term of middlemen8217;, the word used was only Indian agents8217;. Now I realise the fundamental blunder8230; The Defence Secretary did not have the final word. Whosoever was knowingly using this word is liable as it is virtually condoning a criminal act. At that point of time, I was not aware that I was being taken for a ride.

However, I would like to make it clear that Bofors have violated the contract even if they had mentioned the word Indian agents8217; in their reply to us, saying that they did not have any Indian agents. They have paid Win Chadda, an Indian, as your records and documents now show. Therefore, this amounts to violating the contract with India, and Bofors is liable.

The contract was then concluded with AB Bofors and I was of the view that it was successful because the closing price at which it was concluded was Rs 300 crore less than the starting offer.

The Defence Secretary has quoted me on March 22, 1986, that I had given my blessings to the Bofors contract. He misquoted me in the sense that8230; I did not give blessings8217;, I gave instructions.

I remember that on April 16 1987 I was called to 7, Race Course Road and informed by the PM that Swedish Radio had made a broadcast indicating that kickbacks had been paid to senior public functionaries in relation to the Bofors contract. I must confess that I was absolutely amazed8230; The PM indicated that the MoD should prepare itself to deal with all queries related to this allegation, including queries arising in Parliament.

Some days later a Cabinet meeting was held at 7, Race Course Road and I was asked to attend. The Cabinet was informed that I would brief the meeting. P. Shiv Shankar, Law Minister, who was sitting beside me, informed me that K.C. Pant had been appointed Defence Minister and on his arrival from North Korea, he would be sworn in.

Between that date and June 1987, various meetings were held in the MoD, PMO and 7, Race Course Road connected with this subject. I was not present in all the meetings, but I did attend one or two with the PM. In my last meeting with the PM on June 4, I had informed him that it was my intention to make every effort possible to obtain the names of the recipients, if any, from AB Bofors.

To the best of my recollection, he neither approved nor disapproved this course of action. I then instructed the Defence Secretary to take three specific steps: First, to contact Bofors at once and inform them that we wish to know the names of all the recipients. Second, to obtain legal advice from senior law officer Attorney General in relation to the cancellation of the contract. Third, to contact the Army Chief and get his comments on the security implications with respect to the cancellation of the contract.

He informed me that he would be using two officers of the Ministry, N.N. Vohra, the then Additional Secretary, and Shri Banerjee JSO for this task.On July 3, 1987 the Defence Secretary informed me that he would like to have a meeting wherein N.N. Vohra would brief me on what had been happening. By that time the Attorney General, K. Parasaran, had opined that the contract could be cancelled with no serious adverse financial implications. N.N. Vohra had met the Vice President of AB Bofors in Delhi, who informed him that given the seriousness with which the GOI viewed the matter, the President of Bofors was prepared to come to India to continue discussions with the MoD and give the names of the recipients.

At that point of time, the PM was away on tour to Moscow. I instructed the Defence Secretary to contact the then Cabinet Secretary, B.G. Deshmukh, and request a meeting of the Cabinet Committee of Political Affairs CCPA to discuss this issue when the PM arrived.

In the meantime, the Defence Secretary had also informed me that General Sundarji had furnished his opinion8230; that there was no serious implication to the country in cancelling the contract, as informed by Sundarji.

I was informed that the CCPA8217;s meeting had been fixed for July 4, 1987, and that I should be present along with the Defence Secretary and any other official, if required. I instructed the Defence Secretary to ensure that Vohra was present at the meeting.

The CCPA meeting was held on July 4 at 7, Race Course Road. I requested the PM8217;s approval for N.N. Vohra to brief the CCPA. Vohra did brief the CCPA and distributed copies of Parasaran8217;s comments. The meetings were attended by Buta Singh, N.D. Tiwari, P. Shiv Shankar and probably P.V. Narasimha Rao.

Some of the members present, like Buta Singh, were very vocal and questioned the propriety of taking a decision to summon the Bofors chief. It is possible they were acting in such a fashion based on the mood of the PM. Immediately, the PM also expressed his anger and displeasure at Vohra and demanded to know on what basis and whose authority he had initiated this discussion with AB Bofors. To the best of my recollection, I told the PM that Vohra was acting under my instructions.

Some of the members of CCPA present felt that this action was unwarranted because a JPC had already been decided upon. However, I had a strong view and continue to have the same view that in matters like this, the Executive should get the information and then submit it to the Parliamentary Committee. Apparently, there was a difference of view between me and these members of the CCPA. The PM apparently agreed with his fellow members of the CCPA. The meeting concluded with the instructions that a future investigation in this matter would be under the JPC and the MoD should co-operate fully with it. Instructions were issued to inform the President of Bofors not to come until summoned by the JPC and the MoD was not to act on the recommendation of Parasaran. Vohra was asked to ensure that the Bofors team, which was to start on July 4, should be stopped forthwith from coming to India8230;

Eight to ten days after this meeting the Defence Secretary informed that he had received a long and detailed communication from the Principal Secretary to the Prime Minister, Serla Grewal, asking why the MoD had not complied with the PM8217;s earlier directions to furnish its views in relation to the implications for security and financial matters in the event of the cancellation of the contract. I was outraged at this note from the PPS to the PM because to the best of my knowledge I had complied with this instruction. I do not know- whether the PPS did not know or whether she was misinformed. In such circumstances, she should have got in touch with the Defence Secretary and enquired first before sending the note. Therefore, I submitted my resignation.