Bofors Scandal

7/26/2019 Bofors Scandal

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BOFORS

Bofors is a Swedish company. The name has been associated with the iron industry for more

than 350 years and the arms industry for 150 years. Located in Karlskoga, Sweden, the company

originates from the hammering trip hammer mill "Boofors" founded 1646. The modern corporate

structure was created in 1873 with the foundation of Aktiebolaget (AB) Bofors-Gullspng. Aleading Swedish steel producer by the early 1870s, Bofors expanded into weapons manufacture

when steel produced via the Siemens-Martin process began to be used for gun manufacture. The

company's first cannon workshop was opened in 1884. Bofors' most famous owner was Alfred

Nobel, who owned the company from 1894 until his death in December 1896. Nobel played the

key role in reshaping the former iron and steel producer to a modern cannon manufacturer and

chemical industry participant. The powder manufacturer AB Bofors Nobelkrut, later an

explosives and general organic-chemical producer, was created in 1898 as a wholly owned

subsidiary. By 1911 AB Bofors-Gullspng had outcompeted, bought and closed down its

Finspng Swedish competitor in cannon manufacture. The company's name was shortened to AB

Bofors in 1919.

Present ownership

In 1999 Saab AB purchased the Celsius Group, then the parent company for Bofors. In

September 2000 United Defense Industries (UDI) of the United States acquired Bofors Weapons

Systems (the heavy weapons division), while Saab retained the missile interests.

BAE Systems acquired United Defense and its Bofors subsidiary in 2005, and BAE Systems

Bofors is now a business unit of BAE Systems AB, Saab Bofors Dynamics is a unit of Saab AB.

Products

The name Bofors is strongly associated with the 40 mm anti-aircraft gun used by both sides

during World War II. This automatic cannon is often simply called the Bofors gun and saw

service on both land and sea. It became so widely known that anti-aircraft guns in general were

often referred to as Bofors guns. Another well-known gun made by the company was the Bofors

37 mm anti-tank gun, a standard anti-tank weapon used by a variety of armies early in the war. It

was built under license in Poland and the USA and was also used in a variety of tanks, including

the 7TP and M3A3 Stuart.

M/40 Automatic cannon

Bofors 25mm

Bofors 37mm

Bofors 40mm

Bofors 57mm


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Missiles

Bantam (missile)

BILL 1 Anti-tank guided weapon

BILL 2 Anti-tank guided weapon

RBS 23

RBS 70

Bofors gun scandal

In 1986, a $285 million contract between the Government of India and Swedish arms company

Bofors was signed for supply of 410 155mm Howitzer field guns. In 1987, Swedish Radio

alleged that Bofors paid illegal commissions to top Indian politicians and key defence officials to

seal the deal. The scandal contributed to the defeat of Rajiv Gandhi in elections three years later.

Field Howitzer guns

The Bofors scandal was a major corruption scandal in Sweden and India in the 1980s and 1990s,

initiated by Congress politicians and implicating the Indian prime minister, Rajiv Gandhi and

several other members of the Swedish and Indian governments who were accused of receiving

kickbacks from Bofors AB for winning a bid to supply India's 155 mm field howitzer.

The scandal relates to illegal kickbacks paid in a US$ 1.3 billion deal between the Swedish arms

manufacturer Bofors with the government of India for the sale of 410 field howitzer guns, and a

supply contract almost twice that amount. It was the biggest arms deal ever in Sweden, and

money marked for development projects was diverted to secure this contract at any cost. The

investigations revealed flouting of rules and bypassing of institutions.


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The scale of the corruption was far worse than any that Sweden and India had seen before and

directly led to the defeat of Gandhi's ruling Indian National Congress party in the November

1989 general elections. The Swedish company paid 640 million (US$11 million) in kickbacks to

top Indian politicians and key defence officials.

The case came into light during Vishwanath Pratap Singh's tenure as defence minister, and wasrevealed through investigative journalism tipped off by a Reuters news revelation on Swedish

radio, followed up by a team led by N. Ram of the newspaper The Hindu. The journalist who

secured the over 350 documents that detailed the payoffs was Chitra Subramaniam reporting for

The Hindu. Later the articles were published in The Indian Express and The Statesman when The

Hindu stopped publishing stories about the Bofors scandal under immense government pressure

and Chitra Subramaniam moved to the two newspapers. In an interview with her, published in

"The Hoot" in April 2012 on the 25th anniversary of the revelations.[5] Sten Lindstrom, former

chief of Swedish police discussed why he leaked the documents to her and the role of whistle-

blowers in a democracy.

Chronology of events and investigation

On 24 March 1986, a $285 million contract between the Government of India and

Swedish arms company Bofors was signed for supply of 410 155mm Howitzer field

guns.

About a year later, on 16 April 1987, Swedish Radio alleged that Bofors paid kickbacks

to people from a number of countries including top Swedish and Indian politicians and

key defence officials to seal the deal.

The middleman associated with the scandal was Ottavio Quattrocchi, an Italian

businessman who represented the petrochemicals firm Snamprogetti. Quattrocchi wasreportedly close to the family of Rajiv Gandhi and emerged as a powerful broker in the

1980s between big businesses and the Indian government.

While the case was being investigated, Rajiv Gandhi was assassinated on 21 May 1991

for an unrelated cause by the LTTE.

In 1997, the Swiss banks released some 500 documents after years of legal battle. On 22

October 1999 (when National Democratic Alliance government led by the Bharatiya

Janata Party was in power) the Central Bureau of Investigation (CBI) filed the first

chargesheet against Quattrocchi, Win Chadha, Rajiv Gandhi, the defence secretary S. K.

Bhatnagar and a number of others. In second half of 2001, Win Chadha and S. K. Bhatnagar died.

On 10 June 2002, Delhi High Court quashed all proceedings in the case so far. However,

this was reversed by Supreme Court of India on 7 July 2003.

Meanwhile the central government changed and Indian National Congress came to power

after 2004 Lok Sabha elections. On 5 February 2004, the Delhi High Court quashed the

charges of bribery against Rajiv Gandhi and others, On 31 May 2005, the Delhi High


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Court dismissed the allegations against the British business brothers, Shrichand,

Gopichand and Prakash Hinduja, but charges against others remain.

In December 2005, Mr B. Daat, the Additional Solicitor General of India, acting on

behalf of the Indian Government and the CBI, requested the British Government that two

British bank accounts of Ottavio Quattrocchi be unfrozen on the grounds of insufficient

evidence to link these accounts to the Bofors payoff. The two accounts, containing 3

million and $1 million, had been frozen. On 16 January, the Indian Supreme Court

directed the Indian government to ensure that Ottavio Quattrocchi did not withdraw

money from the two bank accounts in London. The CBI, the Indian federal law

enforcement agency, on 23 January 2006 admitted that roughly Rs 210 million, about US

$4.6 million, in the two accounts have already been withdrawn by the accused. The

British government released the funds later. However, on 16 January 2006, CBI claimed

in an affidavit filed before the Supreme Court that they were still pursuing extradition

orders for Quattrocchi.

The Interpol, at the request of the CBI, has a long-standing red corner notice to arrestQuattrocchi. Quattrocchi was detained in Argentina on 6 February 2007, but the news of

his detention was released by the CBI only on 23 February. Quattrocchi was released by

Argentinian police. However, his passport was impounded and he was not allowed to

leave the country.

As there was no extradition treaty between India and Argentina, the case was presented in

the Argentine Supreme Court. The government of India lost the extradition case as the

government of India did not provide a key court order which was the basis of

Quattrocchi's arrest. In the aftermath, the government did not appeal this decision

because of delays in securing an official English translation of the court's decision.

A Delhi court provided temporary relief for Quattrocchi from the case, for lack of

sufficient evidence against him, on 4 March 2011. However the case is still going on.

On 12 July 2013, Quattrochi died of a heart attack in Milan.

Despite the controversy the Bofors gun was used extensively as the primary field artillery during

the Kargil War with Pakistan and gave India 'an edge' against Pakistan according to battlefield

commanders.

In his book, Unknown Facets of Rajiv Gandhi, Jyoti Basu and Indrajit Gupta, released on

November 2013, former CBI director Dr A P Mukherjee wrote that Rajiv Gandhi wanted

commission paid by defence suppliers to be used exclusively for the purpose of meetingexpenses of running the Congress party. Mukherjee said Gandhi explained his position in a

meeting on 19 June 1989, during a meeting between the two at the Prime Minister's residence.

However, as per Sten Lindstrom, the former head of Swedish police, who led the investigations,

they did not find anything to suggest that payments had been received by Rajiv Gandhi. He was,

however, guilty of knowing about the kickbacks and not taking action on them.


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Allegations against CBI

CBI has been criticised by experts, social workers, political parties and people at large for the

manner in which it has handled this case. Some points to note are:

Delay in lodging an FIR

Delay in sending letter rogatories

Not appealing against the judgement of the Delhi High Court in 2004

De-freezing of Quattrocchi's bank account in London by saying to the Crown Prosecutor

that there is no case against Quattrocchi

Putting up a very weak case for Quattrocchi's extradition from Argentina. Subsequently,

no appeal against lower court's verdict

The withdrawal of the Interpol Red Corner notice

Finally, withdrawal of its case against Quattrocchi. Reacting to this, Chief Metropolitan

Magistrate Vinod Yadav said that, "I agree that there are certain malafide intentions in the case

and there is no doubt in that".

-Binsu Benny,

S2 MBA, Roll No-17

Documents

Bofors Scandal