Law

No, Rafale is Not Bofors, and That’s Why Modi Should Be Worried

The Bofors investigation focused on the role of private players, with public servants being brought in as an afterthought. But the legal tale of Rafale begins with doubts about the official decision-making process itself.

To the uninitiated, the Rafale and Bofors scams (alleged, I might add) are – in a sense – mirror images of one another: both relate to multi-crore defence contracts; both encompass allegations against a prime minister; and both hinge on what a European arms supplier and an Indian business house did or did not do. But that is where the similarities end. What separates the two is not simply the 31 year-gap; the factual pattern in Rafale appears to vary a great extent.

With public interest in the contours of the Rafale deal growing, the time is perhaps ripe to disentangle the dissimilarities between the two scandals in independent India. Below, I present a brief history of how the Bofors case travelled through the courts, which indicates that Rafale’s legal journey could possibly be quite different.

Bofors, from radio reportage to courtroom catharsis

In 1977, the Indian Army forwarded a proposal for the purchase of medium range artillery to the Ministry of Defence. The choice for obtaining the artillery was shortlisted in 1982 from amongst French, Swedish, British, and Austrian arms companies. On March 24, 1986, an order was placed by the Government of India with M/s. A.B Bofors of Sweden for the supply of 410 155 mm field howitzer 77-B gun systems for a total amount of Rs 1437.72 crore. Before the contract was signed, Bofors gave a written undertaking on March 10, 1986, that they would not use any agents for the purpose of this contract; they also promised to reduce the price to the extent of commission they otherwise would have paid to such agents. The undertaking was necessitated by a government policy that prohibited any agents from being involved in the negotiation of defence contracts. It was this undertaking that became the focal point of controversy later on.

On April 16, 1987, over a year after the execution of the guns contract, Dagens Eko (‘Echo of the Day’), the news arm of the Swedish public radio broadcaster declared that Bofors had won this contract by paying bribes of around $5 million (out of the total $16 million pledged in bribes) to local agents, and that these agents had helped Bofors win support within the Indian Army, bureaucracy and the Congress party. The radio program created a massive storm, and a series of events unfolded quickly: the Swedish government ordered an inquiry; the Indian parliament set up a joint-committee to enquire into the Bofors contract; and the CBI set the legal process in motion.

The CBI registered a First Information Report (FIR) on January 22, 1990, to initiate the formal investigation process. This was when V.P. Singh was prime minister. On the basis of the evidence collected, a charge-sheet was filed in the trial court on October 22, 1999 (followed by a supplementary charge-sheet on October 9, 2000). This was when Atal Bihari Vajpayee was prime minister.

The prosecution’s case

The case presented by the CBI in the trial court was that the payment of commission by Bofors to its local agents was contrary to its 1986 undertaking that it would not use any agents for the contract. The prosecution alleged that Bofors dishonestly led the Indian government to believe that there were no agents and thereby induced it to part with a higher amount, which included the commission that was later passed on to the agents. It was argued that the government was cheated to the extent of the commission amount, resulting in a wrongful loss. Notably, the prosecution did not contend that the commission to the agents constituted a bribe to/for public servants.

Disregarding the prosecution’s case, the trial court, in its order of November 14, 2002, also framed charges against two public servants – former prime minister Rajiv Gandhi and former defence secretary S.K. Bhatnagar – both of whom had, by that time, passed away. The public servants were charged with abusing their official position in order to obtain a pecuniary advantage for others, an offence defined under Section 5(1)(d) of the erstwhile Prevention of Corruption Act 1947. It was alleged that these public servants deliberately took a hasty decision by awarding the contract to Bofors, even though the French arms supplier had quoted a lower rate.

Also Read: Can Narendra Modi Be Convicted of Corruption for the Renegotiated Rafale Deal?

On February 4, 2004, the Delhi high court (in Kartongen Kemi Och Forvaltning AB and Others. v. State through CBI) set aside the charges framed against the public servants; it held that there was no evidence to suggest that the public servants had misused their official position to award the contract to Bofors. The decision to purchase the guns from Bofors had been taken by the Indian Army’s committee of technical experts, who had based its decision on the gun system’s peculiar ‘shoot and scoot’ feature. None of the public servants had any say in selecting Bofors.

After scrutinising the decision-making process, the high court found that “there is no evidence on record to suggest that either Rajiv Gandhi or Bhatnagar used any direct or indirect influence on anybody including [the] technical committee of Army experts or [the] negotiating committee.” The CBI’s argument that the public servants created circumstances under which the Bofors contract was executed with undue haste, disregarding the renewed offer made by Sofma of France, did not appeal to the high court.

While the high court, in its judgment of February 4, 2004, quashed the charges against the public servants, it did not quash the charges against the alleged local agents and Bofors for entering into a criminal conspiracy to cheat the government of India.

One year later i.e. on May 31, 2005, the high court (in Srichand P. Hinduja & Ors v. State through CBI) also quashed the charges against Bofors and some of the alleged agents, for lack of admissible evidence. In the meantime, proceedings against the former managing director of Bofors and an alleged agent were abated, following their death. The last surviving prosecution in the Bofors case – against one of the alleged agents – was withdrawn in 2011.

Present status

An appeal (filed by a private person) against the May 31, 2005, judgment of the high court, concerning the quashing of charges against some of the alleged agents and Bofors, is still pending in the Supreme Court. There is no pending appeal against the February 4, 2004, judgment of the high court, where the charges against the public servants were dropped. Recently, on November 2, 2018, the Supreme Court refused to entertain the CBI’s special leave petition against the May 31, 2005, judgment. The CBI had filed this petition in February 2018 – after an inordinate delay of 4522 days. The Supreme Court observed, however, that since the CBI is a party to the private person’s appeal, it would be heard in that matter. Whether that matter itself will proceed or not is unclear at this stage; on January 16, 2018, the Supreme Court directed the private person to explain his locus standi in filing the appeal.

Takeaway from the Bofors legal saga

First, the trial in the Bofors case did not proceed beyond the stage of framing of charges for want of relevant and admissible evidence. This is how the Bofors legal tale seems to end (unless, of course, the Supreme Court writes an epilogue, which seems doubtful).

Second, it was not the prosecution’s case in the trial court (based on the evidence collected and relied upon in the charge sheets) that the public servants had accepted a bribe, or that the local agents had accepted a bribe on behalf of the public servants. But the trial judge framed charges against the public servants anyway. Once the order framing the charges reached the high court, the CBI candidly admitted that they had no evidence to support these charges.

If we had a Lokpal in place, complaints of corruption relating to the Rafale deal would have been filed before the Lokpal; the present petitions filed before the Supreme Court would have been unnecessary.

Third, the CBI’s legal stance in the high court against the public servants, centring around intentional misuse of official position, was probably not part of its initial plan. As per the high court, the CBI adopted this legal stance because it had found no evidence of bribe taking by, or on behalf of, the public servants. It noted that the CBI “like a drowning person clutched a flimsy straw by introducing the doctrine of ‘misusing an official position’…purely on the conjectural and inferential premise that by hastening the decision in favour of Bofors and without considering the offer of a rival…the public persons had misused their official position.”

Fourth, the principal allegation, indeed the heart of the prosecution’s case, focused on the role of private parties (Bofors and its alleged agents), not public servants. To be clear, the allegation related to the fraudulent deception and consequent inducement into executing the contract, causing wrongful loss.

Rafale, from introduction to chapter 1

The Rafale legal tale has just begun, but it might unfold faster than Bofors. This is a different age ­– the age of 2G and coal and Supreme Court monitored investigation and Supreme Court appointed special public prosecutors/special courts. This is also a different case, focusing more on the decision-making of the public servants, and less on the role of private parties. Remember, even the 2G and coal trial judgments focused on the prescribed guidelines, the avowed rules and procedures, and whether the public servants had followed or flouted the same – intentionally or otherwise – in reaching their decision.

For now, the pen, as it were, is in the Supreme Court’s hands. The Supreme Court’s observations in the pending writ petitions could either pave the way for a CBI investigation (possibly, court-monitored, considering the recent CBI imbroglio), or bring this legal tale to an abrupt end.

Also Read: Rafale Twist: Why Did France Refuse to Give India a Sovereign Guarantee?

And since we are contemplating on what the Supreme Court’s next step will be, it is, most certainly, worthwhile to ask: Why is the Supreme Court deciding the issue of whether or not these corruption allegations merit an inquiry or investigation? Did we not pass a legislation four years ago to create an institution to do precisely this? As Bob Dylan famously sang, “the answer, my friend, is blowin’ in the wind.” Whilst I bemoan the unjustified delay on the part of the government in appointing the Lokpal, Prime Minister Modi has far more reasons to regret it – at least at this stage.

Section 14 of the Lokpal and Lokayuktas Act 2013 prohibits the Lokpal from inquiring into any matter “involved in, or arising from, or connected with,” an allegation of corruption against the prime minister, insofar as it relates to international relations, external and internal security. This prohibition, however, will not operate, if a full bench of the Lokpal considers the initiation of inquiry and at least two-thirds of the members of the Lokpal approve of such inquiry (which is then to be held in camera).

If we had a Lokpal in place, complaints of corruption relating to the Rafale deal would have been filed before the Lokpal; the present petitions filed before the Supreme Court would have been unnecessary. Whether the Lokpal would have proceeded to inquire into the Rafale deal, considering that the corruption allegations against the prime minister possibly relate to external security, is an open question; besides, the answer is no more relevant.

Ajitesh Kir is a lawyer. He tweets at @AjiteshKir