C O V E R STORY

BOFORS

THE politically explosive questionthat has dogged the country andcome perilously close to destabili-

sing the Raj iv G andhi government is, whomade the Rs 64 crore that Bofors paid incommissions for India's acquisition of its155 mm gun?

The recent report by the Comptrollerand Auditor General (CAG), while castingdoubts on the Government's version ofthe selection of the gun, did little tounravel the mystery of the pay-offs. Butparts of the second major mystery: whythe Government did not use the ultimateweapon—cancellation of the contract—have now cleared. Former Army Chief,General K. Sundarji, in a detailed inter-view to INDIA TOD AY (seefollo wing pages)—his first since he retired in April 1988—forcefully contradicts repeated assertionsby the prime minister that security con-siderations prevented the Governmentfrom exercising the cancellationoption."As Prime Minister I cannot com-promise the nation's security to clear mypersonal name...," Rajiv Gandhi told Blitzin July 1987. He repeated this in aninterview to Sunday in November, 1988.Rajiv said: "These questions had come upvery long ago. In fact this was one of thefirst things I asked. Can we do this? Andthe second question Iasked with that was: whatis the cost of doing it? Thecost is first in terms ofsecurity. Do we reduceour security? Second, interms of money. Do weactually lose money orgain..? So I asked the De-fence Ministry to evaluateall this. On the securityside they said an almostcategorical no."

But General Sundarjireveals that when he wasasked by the Ministry ofDefence in June 1987, about the securityimplications of cancelling the contract, hehad said it was "an acceptable risk". Hewrote this in an official note after pollingall his principal staff officers—the heads ofall departments in army headquarters.Sundarji, whose earlier recommendationhad tilted the competition in favour of theBofors gun, in fact, advised the Govern-ment to go ahead with cancelling the

contract 14 months after it had beensigned. Not because he had, changed hismind about the gun but because hebelieved that such financial pressure wasthe only way to force Bofors to come cleanon the pay-offs.

During a critical three-month periodstarting mid-April, 1987, evidenceshowed that Bofors had lied to the IndianGovernment about not having used mid-

3HAWAN SINGH

n 1987, Rajiv was urged by*Arun Singh and Sundarji tocompel Bofors to reveal thenames of the pay-off

a recipients. He chose not to.

dlemen to get the contract. Clearly, com-missions were paid for the deal. Thecountry was awash with rumours thatruling party leaders and army brass hadbeen bribed. For Sundarji, threatening tocancel the contract or even cancelling it,under the circumstances, was a matter ofrestoring the badly damaged credibility ofthe country's and the army's leader-ship—a matter of "national honour".

This was also Arun Singh's view. Soseriously was this step contemplated thatin late May 1987, prior to the Sundarjirecommendation, the Ministry of Defenceprepared a detailed brief—forwarded tothe prime minister through his secretary,Serla Grewal—outlining the financialand administrative implications of can-celling the contract along with interna-tional legal angles involved.

Now, based on several months ofinvestigations, INDIA TODAY hasbeen able to piece together detailssuggesting that in July 1987, theprime minister directly called off thishard-line strategy started withinthe Ministry of Defence which couldwell have led to the revelation of thenames of the recipients of the pay-ments. This led to the resignation ofArun Singh, minister of state fordefence and Rajiv's confidant, whohad ordered the hard line, but wasunable to persuade Rajiv to approvethat course of action.

Under Singh's instructions,N.N. Vohra, then additional secre-tary of defence, now secretary fordefence production, had apprisedBofors officials that if they did notreveal the names, the whole dealmay have to be called off. Even asMinistry of Defence officials werecontemplating this action, Rajivsummoned a meeting on July 4,1987, and berated the entirescheme. Singh stood by Vohra andtold Rajiv that Vohra had beenacting under his instructions. Noamount of pleading by Singh wasable to change Rajiv's mind.

Arun Singh resigned less than afortnight later. The prime ministerwas, at that time, a beleagueredman. V.P. Singh, after quitting asdefence minister on April 10, hadbeen expelled from the party on June

16. The stink caused by his ordering aninquiry into commissions for the HDWsubmarine deal had become a personalpolitical embarrassment for Rajiv.

The air was already thick with talk ofpay-offs when the story about Bofors pay-offs broke. Insiders say Rajiv did not wantArun Singh to quit at the time because ofadverse political ramifications, but Singhremained adamant, believing that the

22 I N D I A TODAY » SEPTHMBER 15, 1989

credibility of the army and the govern-ment had suffered and he could not ingood conscience continue to hold office.

Those urging cancellation of the con-tract were firmly convinced that the loss ofeven a few hundred crores in penaltiesand legal costs—one of the reasons citedby Rajiv for not playing the cancellationcard—would well be worth the risk interms of restoring Rajiv's political imagewhich had taken a battering. He would,with one bold, dramatic sweep, re-estab-lish himself as a decisive leader capable oftough decisions. And the Bofors scandalwould simply die and deprive the Opposi-tion of its only issue. They reasoned, also,that India, as one of a few avidly-courtedunattached arms buyers in the worldmarket would send a no-nonsense mes-sage to all future suppliers not to take itsgovernment for a ride. They argued thatthe nation was no banana republic andwas quite capable of withstanding anyfinancial shock caused by cancellation.

Here is how the scenario unfolded:> By March 1986, following years of

technical evaluations by the army, thecompetition had been narrowed to theFrench and Swedish guns. What helpedclinch the decision in favour of Bofors wasthe financial package. Bofors had progres-sively reduced its price from Rs 1,620crore to Rs 1,42 7 crore. The lowest Frenchoffer was Rs 1,436 crore. An additionalinducement was the 3.1 billion kronercredit offered by the Swedes for a period of90 months from the date of signing theagreement—March 24, 1986.> The April 16, 1987, Swedish Radio

report that commissions had been paid toobtain the contract, andthe June 1 report ofSweden's National AuditBureau virtually confirm-ing this, knocked the bot-tom out of Bofors's re-peated declarations to theIndian Government—thefirst one was given onMarch 10,1986, two weeksbefore the contract wassigned—that the companyhad no middlemen or com-mission agents in the deal.This implied that the con-tract price could have beencut by at least an amount equal to what theSwedes paid in commissions.

The ball now was in the court of theIndian Government to persuade Bofors topart with the information. Between Juneand July Arun Singh gave the green lightto Vohra and Joint Secretary T.K. Ban-nerji to start putting the squeeze onBofors. Several letters from Secretary S.K.Bhatnagar to Bofors asking for the details

of "the precise amounts that have beenpaid by Bofors; the recipients of suchamounts; the services rendered by suchpersons or companies; copies of all cor-respondence between Bofors and suchrecipients" received the standard Boforsresponse which sheltered behind a plea ofcommercial secrecy. By now a consensushad developed that Bofors would yieldonly to arm-twisting as it was interested innegotiating another multi-crore projectfor the joint production of another gunsystem in India.

*• On July 3, 1987, Bertil Bredin, vicepresident of Bofors visited the Ministry ofDefence where Vohra hinted that BoforsManaging Director Per Ove Morberg andother top officials may have to be sum-moned to Delhi to discuss cancellation of

PRAMOD PUSHKARNA

the contract and blacklisting of Bofors.The tactic appeared to be producing

results. Bredin offered to put together a topdelegation of Bofors officials, includingthe company president, to visit Indiawithin the next several days to clarifyquestions repeatedly posed to the com-pany by the Ministry of Defence since June16. But this was becoming an issue onwhich the political leadership disagreed.

The Government appeared to be lackingthe political will to go through with whatwas perhaps the surest way of getting thenames of the pay-off recipients.^ On July 4, the day Rajiv Gandhi

returned from Moscow, this was con-firmed. He summoned a meeting of topofficials among whom were presentVohra and Arun Singh. He felt thatMinistry of Defence officials in pursuingthe arm-twisting line had exceeded theirbrief. The excuse to drop this tactic wasthat the Government had already com-mitted itself to appointing a Joint Par-liamentary Committee (JPC) on June 11and that it was up to the JPC to get to thebottom of the matter. Bofors was informednot to send the delegation.

*• On July 18, Arun Singh resigned. Hissudden resignation, without anyexplanations, sent shock wavesthrough the country. Singh becamea recluse in his hilltop retreat andhas not spoken since.

OME other startling revela-tions have been made by for-mer deputy chief of army staff

Lt. General Hriday Kaul in anotherexclusive interview (see box). Kaulhas disclosed that multi-crore bribeswere offered to army generals tochange the order of preference in thearmy's shortlist of guns. Gun manu-facturers and their representativeshad infiltrated security at the high-est levels of government and pro-cured information circulated onlyamong half a dozen top officials.

This raises the question that if amere change in ranking on the short-list was worth crores, how muchmore would the same manufacturersbe willing to pay to those who couldensure they landed the contract.

Coming to the present, there areindications that the Government andBofors may come to another agree-ment—that in return for the manu-facturing contract, Bofors will, as agesture of good faith, reimburse theRs 64 crore to India. This wouldthe Government hopes, clear the airjust before the elections—with themoney having been returned.

But the fact is, it is too late. TheGovernment's refusal to take decisive ac-tion at the right moment—and that mo-ment has now passed—has done untolddamage to the nation's vital institutions—the Government, the army, the bureau-cracy, and to a prime minister who enjoyedthe largest political mandate given to anyIndian politician. And institutions are easyto destroy, very hard to build.

INDERJIT BADHWAR and RAMINDAR SINGH

23

C O V E R S T O R Y

GENERAL KRISHNASWAMI SUNDARJI (RETD.)

I said for national honourwe should go to the extreme

of cancelling the contract'WOODSIDE' is a pretty house overlook-

ing the picturesque Coonoor valley in theNilgiri hills. But its occupant likens it toAlcatraz. The analogy is apt judging by thehigh-security perimeter of ten-foot-highbrick walls topped by barbed wire, andpunctuated with watchtowers manned byarmed sentries of the Madras regiment.Inside this forbidding fortress lives GeneralKrishnaswami Sundarji (retired), guardedover by a huge slobbering Dobermann namedMechy (after Mechanised Infantry, the regi-ment raised by Sundarji). It's a life of sadseclusion for the flamboyant former chief ofarmy staff, and afar cry from computerised

war games. He now spends much of his timein his kitchen garden growing strawberriesand exotic herbs like thyme, basil and marjo-ram. It's like being under house arrest, hesays. "I can move out but my jailors comewith me." Some distance away lives FieldMarshal Sam Maneckshaw. But unlikeSundarji, the Field Marshal is not tied downto Coonoor and travels around the country.

It is quickly evident to all visitors to'Woodside' that here is a man whose talentsare being wasted. He knows it too, and thefrustration of enforced hibernation, so soonafter an eventful term as chief of army staff,makes him sad. Breaking his self-imposed

silence, Sundarji spent five hours over twodays, talking to Associate Editor RAMINDARSINGH about his role in the Bofors gun sel-ection, the lobbies active in government onbehalf of the competing guns, the Govern-ment's attempt to make him change his adviceto cancel the contract, and the reasons behindthe resignation of Arun Singh as minister ofstate for defence. Some startling excerpts:

O. Why did the army change its pre-ference at the last minute from the Frenchto the Swedish gun. How did this happen?

A. When I was deputy chief of armystaff from about August 1981 till Decem-

24

her 1982, I had assessedthe contending guns andshortlisted the French,Swedish and British inthat order for purchaseand licence production.The first two guns weregood guns, close to eachother and I did not giveany special weightage tothe Swedish gun at thatpoint.

In November of 1985, after the Gov-ernment announced that I was to be thenext chief, the minister of state ArunSingh asked me, officially but orally,about my views on the relative merits ofthe two systems. I requested Major Gen-eral Ajay Singh and then Brigadier T.P.Singh, both from the Directorate of Weap-ons and Equipment (OWE), to do a thor-ough, objective analysis in the lightof the two factors which had undergone achange in 1985—the gun-locating radarwas becoming available to Pakistan andthe project of the French self-propelledsystem was out, so all hopes of commonal-ity were lost. This team suggested theywould give the Swedish gun an edge overthe French. I was convinced of this andfrom that point on it becamemy decision.

O. Did you tell anyone of the changein preference?

A. I briefed Arun Singh along theselines sometime in November of 1985.After that I heard nothing. I took over aschief on February 1, 1986. Around themiddle of February, I was told by my staffthat the Defence Ministry wanted us toput our final preference in writing.

My staff was suspicious about this, butI told them not to worry. If we had anyulterior motive in making this change, wewould not do it so blatantly but in a muchmore sophisticated manner. There will bepeople who believe that it should havebeen the French gun. I have no quarrelwith them. In my mind I apply certainvalues to certain qualities. Equally hon-estly and with equal professional compe-tence, you will perhaps apply differentvalues to different characteristics.

O. One perception, maybe of theSundarji-baiters or Sundarji-haters, isthat you virtually bought your job bythis decision. The timing suggests that itwas a price that you were asked to pay orfelt needed to be paid for the chiefs job.

A. Totally untrue. Because I was askedfor my view only after the announcementhad been made (about my being selectedthe next chief). Before that, neither ArunSingh nor anybody else sought my views.

O. There was no quid pro quo ?A. There was nothing, not even a

believed that if we threatened to cancel thecontract, there was a 99.9 per cent chance thatBofors would cough up the information aboutwho had received the money.

••••••••••

analysed the effects of cancellation. I said the ° ,acquisition process would be delayed by 18months to 2 years... Even though it was a risk,it was an acceptable risk.

suggestion that this should be my answer.If our analysis had shown the originalorder of preference should remain I wouldhave said so. It would have made nodifference.

Q. The reason why this question israised by some people is that from 1982to 19 8 6 the army listed the French gun asnumber one. In October 1985 there was ameeting in New York between RajivGandhi and Olof Palme. Bofors officialsand the then defence secretary S.K.Bhatnagar told the JPC that the matterwas discussed there. It was only then thatBofors started seriously feeling that theywere in the picture. In November 1985Arun Singh speaks to you andyou order a

fresh evaluation. In January 1986,Palme comes to Delhi and a note is put upto the prime minister by his secretariatequating the two guns. On February 17,your evaluation was handed in, listingthe Bofors gun on top, and the Negotiat-ing Committee which had for nearly twoyears, nitpicked the army's recommen-dation, accepted your recommendationwithin days. From all this it seems as ifeveryone was going out of his way to helpthe Swedes.

A. If it looks like that circumstantially,I cannot help it. All I can say is that therewas no question of my being told byanybody that this was the requiredchoice. If I carry on from there, I will

25

C O V E R STORY

LT. GENERAL HRIDAYA KAUL

"They were willing to pay Rs 2,5crore to move their gun up the list"

AS deputy chief of army staff betweenJanuary 1983 and February 1985, It-General Hridaya Kaul was the third rank-ing officer in Army Headquarters (AHQ),and was directly in-charge of the selectionof the 155 mm medium gun for the army.Most of the directorates concerned with thegun's selection reported to him. Kaul wasalso a member of the Negotiating Commit-tee, but was transferred to Shimla asGeneral Officer Commanding in Chief,Western Command, shortly before theNegotiating Committee okayed the Rs1,427-crore contract with A,B. Bofors.Kaul who has till now steered clear of theswirling Bofors controversy, finally spokeout in an exclusive interview with Asso-ciate Editor RAMINDAR SINGH, about theastronomical bribes offered by the gundealers, their amazing ability to procuretop secret information and the DefenceMinistry's failure to blacklist the firm evenafter he brought the bribe offer to its notice.Excerpts:

Q, Wasn't it you who signed theassessment which placed the Frenchgun ahead of the Swedish gun?

A. Yes. When I took over as deputychief in 1983 the army badly needed amedium artillery gun. My predecessorLt-General K. Sundarji had listed theFrench gun as number one and Boforssecond, but his third and fourthchoices—the British and Austrianguns-—were totally unacceptable tome. In view of this, I made a presenta-tion to the army chief, General K.V.Krishna Rao. He agreed that only theFrench and Swedish guns should beconsidered, but we listed all four toinduce competition. Through 1983, wepursued the matter but we got nosatisfactory reply from the Defence Min-istry why there was no decision.

Q. What happened when GeneralVaidya took over as army chief?

A. He wanted to be put in thepicture, so, around February 1984, wemade another presentation for him. Heapproved the Krishna Rao decision. Isent a note to the Defence Ministry andthe six other members of the Negotiat-ing Committee, spelling out the AHQchoice of gun and the reasons for thechoice. Soon after that I got a strangeinvitation. A foreigner representing

one of the gun manufacturers invitedme for dinner at a private suite in a five-star hotel.

Q. Did you go?A. I declined since I didn't accept

invitations from companies. But thecompany had done its homework. Theysent an intermediary whom I hadknown in the past. He made the offer. Hetold me the company would pay Rs 2.5crore in any currency or bunch ofcurrencies anywhere in the world, inreturn for a favourable recommenda-tion for their gun. They only wanted meto move their gun up in the list, notnecessarily to the top. And for this theywere willing to pay Rs 2.5 crore. I had afeeling they could go up to Rs 5 crore.

Q. What did you do?A. Wait. That's not all. The interme-

diary also told me that the companyknew the recommendation I had made(to the Defence Ministry). I went

Q. So one of the gun companies hadaccess to the top secret note containingthe army's recommendations.

A. Yes. I know for certain that twocompetitors had the information.,Maybe all four had it. It worried me likehell. This note was addressed by nameto the defence secretary and five othermembers of the Negotiating Commit-tee. It was delivered by hand and couldbe opened only by the addressee. I don'tknow whether these civilian bureau-crats keep such notes with themselvesor with their private secretaries. But theinformation leaked. In AHQ only thechief and I knew what was in the note.And I did not even let my privatesecretary see it.

Q. What did you do about theleakage?

A. I told the chief and the defencesecretary. I also insisted that the firmwhich had tried to bribe me must beblacklisted.

Q. Did the Government take anyaction against the company whichoffered the bribe ?

A. Not that I know of. There was noprogress till I left AHQ in February 1985.As far as I know, the matter of the bribe

YASBANT NEGt

straight to the chief (General Vaidya)and told him we must take some action.The defence minister was out of town,so I requested the Defence SecretaryS.K. Bhatnagar, to inform the defenceminister. Vaidya is dead, but you cancheck with Bhatnagar. When we met atDelhi airport in early 1987, Bhatnagarremembered how worked up I had beenabout this bribe offer.

Q. Which company was it?A. I don't want to take any names.Q. Where is the intermediary now?A. Don't ask me that. I gave him my

word that I would not reveal hisidentity.

offer never went beyond Bhatnagar. Icannot say whether Bhatnagar orVaidya put it down on paper.

Q. What a&owt the defence minis-ter? Did you check with him?

A. I don't even know whether hewas informed.

Q. Did this come up when you gaveevidence before the Joint Parliamen-tary Committee probing the Boforspay-offs?

A. No. The JPC only wanted answersto the questions they asked. I was putcertain questions to which I gave an-swers. The only thing I talked about wasthe procedure for selecting the gun.

26

perhaps be able to giveyou some other cir-cumstantial evidence toshow that this was not so.

Q. Such as what ?A. In April '87 the

news about kickbacksbroke. In May we had anumber of informal dis-cussions with the Minis-try of Defence about whatline to follow. I urged all along that weshould threaten to cancel the contractwith Bofors to extract the details of thepay-offs and recipients. Sometime in mid-May ('87) I was asked by S.K. Bhatnagar,one to one, orally, for my consideredopinion on the pros and cons of cancellingthe Bofors contract. Having given consid-erable thought to it, I told him I believedthat if we threatened to cancel the con-tract there was a 99.9 per cent chance thatBofors would cough up the informationabout who had received the money.

Q. And if they didn't?A. I analysed the effects of cancella-

tion. I said the acquisition process wouldbe delayed by 18 months to 2 years. I basedthis on the fact that though the Frenchhad a tried and tested gun and they hadquoted a price in 1986, they could take usfor a ride if we entered into negotiationsonly with them. The British gun, earlierdropped, had by 1986 made certain im-provements. So I said we could introducecompetition whether we used the Britishgun for negotiating or as a real contender.The delay would occur because we wouldhave to try out the (modified) British gun. Isaid in the ultimate analysis, for nationalhonour and everything else we should goto the extreme of cancelling the contract,if necessary.

Q. In spite of the two year delay?A. Two years delay was acceptable.

Even though it was a risk, it was anacceptable risk from the point of view ofthe totality (of circumstances). Aroundthe same time (mid-May) the same ques-tion was addressed to me separately by asenior member of the prime minister'soffice and I gave the same answer.

Q. Was it Gopi Arora ?A. It was Gopi Arora, and I gave him

the same view. I also told him that I hadgiven a similar answer to Bhatnagar.The next thing that happened was, thaton Friday, June 12,1 remember the dateclearly, I was asked by the Defence Sec-retary, Bhatnagar in writing, to putdown on paper my views about cancella-tion of the contract. That day I put downon paper all that I had said earlier. It wasdelivered to Bhatnagar on the morning ofJune 13. I was convinced that if youthreatened to screw that contract, every-

he PM was angry. This is hearsay, but Vohratold me the PM lit into him for adopting athreatening approach towards Bofors to forcethem to come out with the information.

the Defence Ministry had not sent him theassessmeiof cancellation of the contract.

thing would come out, pit-a-pat, sabniklega. Initially my feeling was that MODwas indeed proceeding along those lines.

Q. You were given to understand thatthe Ministry would act along these lines?

A. I had the feeling that the Ministrywas inclined to follow this course.

Q. What happened after that?A. For three weeks or so I heard

nothing. But the day the prime ministerreturned from Moscow, it was a Saturday,(July 4), he called a meeting at his house,at which Arun Singh, Bhatnagar andN.N. Vohra (then additional secretary,defence) were present, among others. ThePM was angry. This is hearsay, but Vohratold me that the PM lit into him for

adopting a threatening approach towardsBofors to force them to come out with theinformation. Vohra came back from themeeting somewhat disgusted and I be-lieve he booked calls to Bofors to tell itsofficials not to come. They were alreadycoming.

Q. Is this authoritative?A. Vohra told me himself, almost

immediately thereafter. Then sometimein July, maybe the first week, the defencesecretary returned my note to me. Hetentatively felt me out, asking if there wasa possibility of a change in this.

Q. He wanted you to change yourviews?

A. Modify them, shall we say.

SEPTEMBER 15. 19H9 » I N D I A TODAY 27

C O V E R S T O R Y

28

Q. In those words?A. It was very tenta-

tively put. He said 'gov-ernment has taken a deci-sion and this (note) isawkward and is it possiblefor you to modify yourviews.'

Q. What did you do?A. I asked tentatively

what exactly he meant bymodification. I then said 'No, this is myconsidered view and it is going to stay thatway. If you don't want it (the note) youneed not take it'. So that piece of paper washanded back to me. I took it back, gave it tomy military assistant (MA) saying it hadbeen returned and as far as I was con-cerned he could shred it. But as I learntlater on, he had not.

Q. He kept it on file? Are you sure?A. Let me finish. This was around the

first week of July. On the 14th of July, Iremember the date clearly, Bhatnagarrushed into my office waving a piece ofpaper. It was a letter from Serla Grewal(then PM's secretary) saying the PM wasupset that the Defence Ministry had notsent him the assessment he had asked for,of the implications of cancellation of theBofors contract. Bhatnagar seemed quiteagitated about it. I read the letter and saidlet's go see Arun Singh. We walked intoArun Singh's office. He read it. I said I didnot know what the Defence Ministry hadsent to the PM, but as far as I wasconcerned I could give my views again onthe strategic impact (of cancellation), onsecurity. I told Bhatnagar I was goingback and putting down exactly what I hadsaid in my earlier note.

Q. You did not tell Arun Singh thatyou had given an earlier note?

A. It was implied in what I stated.Q. You were indirectly informing

Arun Singh you had given your views onthis?

A. That's right. That is what wasimplied. At that moment it did not strikeme to enquire from Arun whether he hadseen the original note or not. However, Iwent back to my office, called my MA andasked him if he remembered the pointsmade in the earlier note. That's when hetold me that he had not obeyed my ordersto shred that note. He produced theoriginal note along with the office copy.

Q. Does that note show it was receivedin the Defence Ministry and had comeback from the defence secretary?

A. Yes, yes. It was dated as received on13th of June. The receipt given by hisprivate secretary was also on the file. I hadthe note retyped, dated it 14th of July,1987 and had it delivered. That's the last Iknow about it. That (file) stayed with me

I N D I A TODAY * SEPTEMBER 15. 1989

e went and had a very big dust-up with thePM. He was torn bet wen loyalty to the manand what was right,.. Till then I had assumedthere was nothing wrong with the contract.

• ••• • A ••••

ne of the major reasons Arun Singh resignedwas he felt nothing should be done to harm thearmy which is untouched by the crumblingprocesses affecting some other institutions.

and when I handed over charge, my MAtold me he had handed over the file to mysuccessor's MA.

Q. The whole correspondence?A. This particular one. At that time it

had a lot of security value and was beingrated as top secret because it dealt withour assessment, and the security implica-tions of the delay and our vulnerability inthe time gap. Today after thinking it over Ithink the security value no longer atta-ches to it. It has more historical thansecurity value. For all I know, technically,it is perhaps still top secret. Therefore, Imight be accused of discussing with thepress a classified matter.

Q. Did you subsequently ask any-body why your views were not accepted?

A. This happened on the 14th andsoon after that (July 18) Arun Singh put inhis resignation. That was that.

Q. Was his resignation connected

with the stand you had taken?A. I think so.Q. Arun Singh would probably have

taken it up with the prime ministersaying this is the army chiefs view.

A. Perhaps he would have. That is mybelief.

Q. It's surprising that Arun Singh,aware of what the prime minister's atti-tude was, from the July 4 meeting, stillwent and took it up with the PM after hegot your letter.

A. I think he went and had a. very bigdust-up with the PM. He was torn be-tween his loyalty to the man and what hefeltwas right. It'sagreatpity.That'swhenmy first misgivings started. When youhave a very firm perception of somebody itdoesn't change suddenly, overnight. Ittakes time. Even your subconsciousrefuses to believe certain things whichyour senses tell you, you ought to believe.

This was the beginning .Till then I had assumedthere was nothing to hide.Turn the screws and getthe information.

Q. Till then you hadassumed there was noth-ing wrong with thecontract?

A. Absolutely.Q. If your misgivings

started after July 4, then the subsequentletter from the PM's office, saying thatthe PM had not been informed of theimplications of the cancellation, musthave appeared to be a deliberate cover-up.

A. To be thoroughly honest, I hadgiven my letter to the Ministry of Defenceand I didn't know whether they sent it up.

Q. But since you had also told GopiArora, it's fair to assume that either he orthe defence secretary, if not both, wouldhave conveyed your views to the PM.

A. Correct. Agreed.Q. That'sprobably why Serla Grewal

wrote back, rather than Gopi Arora?A. That was the cause of disgust as far

as Arun Singh was concerned. One of themajor reasons why Arun Singh resignedwas he felt nothing should be done toharm the army, which is one of theinstitutions left relatively untouched bythe crumbling processes affecting someother institutions.

Q. Did he tell you as much?A: Not perhaps in so many words, but

the sense of it was that he would ratherresign and take it upon himself than let thearmy be harmed by the Bofors contro-versy. He is a totally honest and honour-able man and he should come out andhelp the truth emerge in the interest of theservice and the country.

Q. The truth about who took thepayment?

A. Whatever. To my way of thinking,in the JPC and subsequently, too much hasbeen made of the nuance-change in j udg-ing the qualities of the guns. This has led toan over-emphasis on the rationale, pro-priety and possible motives behind thenuance-change rather than on the majorissue, which is—who has made themoney. The real question is: who took themoney?

Q. Would you like to say who madethe money?Do you have a reasonedguessas to where the money could have gone?

A. I have no proof, so I can only go bythe general belief of what has happened inthe past. Generally many governmentshave been getting a percentage of many ofthese large deals, whether defence deals orotherwise, perhaps for party funds. I don'tthink this is a new phenomenon. It's beengoing on for some time. The fact is that

ohs by PRAM.OD PUSHKARN^

efence Secretary Bhatnagar tentatively felt meout... He said the Government had taken adecision and my note was awkward. And wasit possible for me to modify my views?

ohra came back from the (prime minister's)meeting somewhat disgusted and I believe hebooked calls to Bofors to tell its officials not tocome. They were already coming.

irrespective of which weapon is chosen, ifthe intention is to cream a certain amountoff the top for party purposes or whatever,it could be creamed off whichever weaponis chosen.

Q. Any manufacturer would be will-ing to pay?

A. Of course. It's well known. As amatter of fact if the French weapon hadbeen finally chosen, perhaps they wouldhave got a similar percentage. Most politi-cians realise this and yet they act as if theyare totally innocent. This being so, frommy point of view where is the compulsionto push one weapon or the other. This isexactly why, as far as the army is con-cerned, we make sure that what goes intothe shortlist is fundamentally acceptable.Thereafter from our point of view it isimmaterial which one is chosen.

Q. But for the person, or the Govern-ment looking for a cut, the bigger the cut,

the better the gun. If money is the crite-rion, then more money should be the bestcriterion?

A. Maybe. I don't know how thesethings work.

Q. Is this government different fromothers in that respect?

• A. It does not appear to be so. I have nodefinite knowledge either in this deal or inearlier deals, but the general belief wasthat money was being made.

Q. Have you heard about army gener-als being approached with offers ofmoney?

A. I have not heard of any suchinstances, but it does not appear unlikelygiven the ethos etc.

Q. We have a statement by Lt. Gen.H.Kaul that he was approached with anoffer ofRs 2.5 crore if he agreed to changethe order of preference on the shortlist.

A. Did he inform the Government?

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C O V E R S T O R Y

30

Q. He says he in-formed the Government.He told Bhatnagar. Hesays he went to see theminister, who was out oftown. So he went and metVaidya and Bhatnagar.

A. Why didn't theytake action against thechap who offered thebribe. I had not heardabout it but I think it is preposterous thatno action was taken. If they know whooffered the money and it was based oninformation the company should nothave had, some action should have beentaken. At least the leak had to be investi-gated, The person may deny he offered themoney but it has to be investigated.

Q. Bhatnagar told the JPC he informedall four manufacturers in May 1985 thatthey would not tolerate middlemen. Bo-fors officials told the JPC that they weretold seriously to remove middlemen onlyin November of 1985, that is followingthe New York meeting. What has alsocome out now is that in November of1985, instead of terminating contracts,Bofors signed an agreement with one ofthe three agents promising to pay 3 percent commission on the Indian contract.It conveys the impression that by Novem-ber of 1985 Bofors was pretty sure itwould get the gun order.

A. I get what you are suggesting but Ihave no idea at all...

Q. If people say General Sundarji waspart of that scenario? That you weredrawn in?

A. It's totally untrue. Nobody in theMinistry of Defence, or Arun Singh or thedefence minister in any way suggested,hinted or indicated to me what my viewshould be.

Q. Did you ever wonder that yourview was accepted too quickly, almostwithout question by the negotiatincfcom-mittee which had till then questionedevery opinion and action of the army?

A. I cannot comment on that. I mademy judgement totally on objective factors.The committee had raised questions in thepast, and could continue to question, butsometime they had to take a decision. Icannot see the logic of the argument thatunless they dragged their feet on it, it wasnot a genuine decision. As far as the armyis concerned, we don't question whensomeone takes a decision. We just sayshukar hai.

But I do want to mention one otherthing about the guns. In December of1982, when I assessed the guns I hadtaken it that all four guns were capable of30 km range. That was a basic assump-tion. It was a reasonable extrapolation, in

I N D I A TODAY » SEPTEMBER 15, 1989

n the JPC and subsequently, too much has beenmade of the nuance-change in judging thequalities of the guns, rather than the majorissue. The real question is: who took the money:

«•••••••••

•enerally many governments have been gettinga percentage of these large deals, perhaps forparty funds. I don't think this is a newphenomenon. It's been going on for some time.

the view of our artillery experts. Subse-quently during 1983 and 1984, some-where along the line in my view, theassessment got skewed to the extent ofwanting to make the French gun the onlygun. That skewing had been done,whether deliberately or not. I am notmaking allegations, by saying that theywould take the range of the Swedish gunto be 21 km.

Q. So you felt that the range ofthe Swedish gun was being held down,almost intentionally, to devalue thegun?

A. Yes. There was no fair compe-tition. It was being tailored to become aone-horse race. The Austrians were out,

the British were dropped from theshortlist, and if the Swedish gun wasbeing assessed as having only a 21.4kmrange then it had no goddamn business tobe on the shortlist. The whole thing wasbeing so oriented: all the matrices drawnup, the values given were in my viewtotally bogus.

Q. And you corrected what youthought was an injected bias?

A. I believe the OWE had been giveninstructions which would have biasedthem against the Bofors gun. One was onthe question of range. I told them to forgetany instructions which would tilt thecompetition unfairly and crank in what-ever factors had come up in the recent past

C O V E R STORY

Q. He says he in-formed the Government.He told Bhatnagar. Hesays he went to see theminister, who was out oftown. So he went and metVaidya and Bhatnagar.

A. Why didn't theytake action against thechap who offered thebribe. I had not heardabout it but I think it is preposterous thatno action was taken. If they know whooffered the money and it was based oninformation the company should nothave had, some action should have beentaken. At least the leak had to be investi-gated. The person may deny he offered themoney but it has to be investigated.

Q. Bhatnagar told the JPC he informedall four manufacturers in May 1985 thatthey would not tolerate middlemen. Bo-fors officials told the JPC that they weretold seriously to remove middlemen onlyin November of 1985, that is followingthe New York meeting. What has alsocome out now is that in November of1985, instead of terminating contracts,Bofors signed an agreement with one ofthe three agents promising to pay 3 percent commission on the Indian contract.It conveys the impression that by Novem-ber of 1985 Bofors was pretty sure itwould get the gun order.

A. I get what you are suggesting but Ihave no idea at all...

Q. If people say General Sundarji waspart of that scenario? That you weredrawn in?

A. It's totally untrue. Nobody in theMinistry of Defence, or Arun Singh or thedefence minister in any way suggested,hinted or indicated to me what my viewshould be.

Q. Did you ever wonder that yourview was accepted too quickly, almostwithout question by the negotiating^com-mittee which had till then questionedevery opinion and action of the army?

A. I cannot comment on that. I mademy judgement totally on objective factors.The committee had raised questions in thepast, and could continue to question, butsometime they had to take a decision. Icannot see the logic of the argument thatunless they dragged their feet on it, it wasnot a genuine decision. As far as the armyis concerned, we don't question whensomeone takes a decision. We just sayshukar hai.

But I do want to mention one otherthing about the guns. In December of1982, when I assessed the guns I hadtaken it that all four guns were capable of30 km range. That was a basic assump-tion. It was a reasonable extrapolation, in

n the JPC and subsequently, too much has beenmade of the nuance-change in judging thequalities of the guns, rather than the majorissue. The real question is: who took the money?

a percentage of these large deals, perhaps forparty funds. I don't think this is a newphenomenon. It's been going on for some time.

the view of our artillery experts. Subse-quently during 1983 and 1984, some-where along the line in my view, theassessment got skewed to the extent ofwanting to make the French gun the onlygun. That skewing had been done,whether deliberately or not. I am notmaking allegations, by saying that theywould take the range of the Swedish gunto be 21 km.

Q. So you felt that the range ofthe Swedish gun was being held down,almost intentionally, to devalue thegun?

A. Yes. There was no fair compe-tition. It was being tailored to become aone-horse race. The Austrians were out,

the British were dropped from theshortlist, and if the Swedish gun wasbeing assessed as having only a 21.4kmrange then it had no goddamn business tobe on the shortlist. The whole thing wasbeing so oriented: all the matrices drawnup, the values given were in my viewtotally bogus.

Q. And you corrected what youthought was an injected bias?

A. I believe the OWE had been giveninstructions which would have biasedthem against the Bofors gun. One was onthe question of range. I told them to forgetany instructions which would tilt thecompetition unfairly and crank in what-ever factors had come up in the recent past

30 I N D I A TODAY » SEPTEMBER 15, 1989

and make an objectiveassesment.

O. How does Lt Gen.Mayadas' choice of theAustrian gun fit into allthis?

A. Mayadas himself ishonest, but his wholetechnical evaluationcommittee was, I believe,set up with the sole inten-tion of pushing the Austrian gun. Therewas a whole set of people in the DefenceMinistry who were dissatisfied with theway the army was pushing the Frenchgun, almost as the only choice. So theystarted a parallel technical evaluationcommittee, which had never been donebefore. The Indian representative of theAustrian manufacturer, Noricum, wasthe son-in-law of a retired artillery major-general. I have a suspicion, I hope I amwrong, that they got at someone in OWEwho more or less stage-managed thiswhole exercise.

General Vaidya, the deputy chief GenKaul and the Director General of ArtilleryJaggi Malhotra did not like this one bit. SoMayadas was transferred out as well as hisjunior who had put him up to it. I think theGovernment of India also has files on thelobby operating in government on behalfof the French gun. I had the feeling thatthis lobby was firing their gun from myshoulder (using my 1982 evaluation).From 1983 to 1985 this went on,

O. So maybe your final decision (infavour of the Swedish gun) was influ-enced by this realisation?

A. Regretfully it was. I keep askingmyself, how much of this ultimate deci-sion was really because I felt so, and howmuch because I felt so much wrong wasgoing on. I cannot answer it but I keepasking myself every day. You don't knowhow much better I feel, having told youeverything.

Q. About the French lobby being inaction. Was it told to you? It could bedisinformation, to spur you into acting ina particular manner.

A. Not at all. I was told there was a fileand the French gun was being pushed. Itwas quite blatant.

O. There appears to be a new willing-ness on the part of people to talk aboutthings, to cleanse the system of the stigmaof this deal. Do you think a lot of peoplenow feel that the truth should be out?

A. I was always convinced that thetruth will be out. The truth has to comeout. It will be a very sad world if the truthdoes not come out.

Q. Maybe you will have played a partin that.

A. A minor part.

oo many of us are prepared to go along. Youtake a joker like me living in Alcatraz. If theGovernment decides tomorrow that I need noAlcatraz, Alcatraz will be withdrawn.

am quite prepared to take the consequences forspeaking out. They can harass me, they arewelcome to. What the hell can they take apartfrom life and bloody liberty.

Q. Chaturvedi (the CAG) had played amajor part.

A. The CAG has had a big role to play.He has done what he had to do, and I haveno reservations about the CAG'S role. Ithink he is perfectly justified in comment-ing on the systems. But I honestly don'tknow how effectively the Ministry ofDefence put forward its defence. Quiteoften the ministry itself does not under-stand the finer points of professional deci-sion-making. When somebody who is nota professional, tries to explain to some-body else who is also not a professionalthere is a vast scope for (misunderstand-ing). The ministry is not able to carrycredibility.

Q. After the CAG report, a lot of peopleare willing to stand up and be counted.That's a plus point.

A. Absolutely, but I am still cynicalenough to believe that too many of us areprepared to go along. You take a joker likeme, who is already living in Alcatraz. If theGovernment of India decides tomorrowthat I need no Alcatraz, Alcatraz will beremoved.

Q. Does that really worry you?A. It does not. If it worried me, do you

think I would talk to you. I am quiteprepared to take the consequences forspeaking out. They can harass me, theyare welcome to. What the hell can theytake apart from life and bloody liberty.

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