The Polyester Prince (27 page)

Brought to New Delhi, Gurumurthy was put through nearly 48 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 got 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, Jeffimalani repeated the rumour about the Bachchans being involved with well-connected Italians in the Swiss company ‘Macny Adol’-getting the rumour in 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. The Fairfax head, 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 was looking shaky, and Gurumurthy was released on ball 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. Hershrnan told reporters he had been engaged by Bhure Lai, and had a letter to show it.

Dutt also revealed what seemed to be new evidence of the conspiracy. A computer printout from the register of the Oberol 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 which 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 Aayed when Rajiv asked his colleagues to stop and proposed a commission of inquiry under two Supreme Court judges to look into A aspects of the Fairfax affair. (VP 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, where 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 Eypress 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. 7’he 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, Girlial 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 it will be remembered that 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 Howaidswerke Deutsche Werft (
HDW
). These were delivered in 1985, and negotiations were under way on 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 conduct a full investigation of the
HDW
case, and 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 Lutyens & Baker-designed Secretariat Building, annotating the names of the London-based Hinduja brothers (part of the Hindu diaspora from the province of Sindh included in Pakistan), whom Bhatnagar understood to be the agents-though 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 giant Swedish armaments firm Bofors had paid a large commission to agents in the US$1.2 billion purchase of Bofors 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 Paime, had confirmed that no middlemen had been used. His claque of Congress supporters stepped up their campaign against VP 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, Glani Zail Singh, was thinking of disniissing 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 he 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 Lai, 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 Rarnnath Goenka. The old press baron had realised that Rajiv’s replacement as Congress leader could just as easily be Arun Nehru-perceived as Dhiruhhal Arnbani’s man-as V P Singh.

The president then scouted for support 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 changes.

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 Fair - fax 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 the Bombay Dyeing chairman Nusli Wadia, Dhirubhai Ambani’s industry rival, 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.

Evidence and questions were swapped between the commission and the
CBI
. Wadia’s declared status before the commission gave him no protection against action by the
CBI
on evidence that was presented to the two judges. On 31 July, a senior
CBI
officer flew to Bombay and organised the arrest of Wadia for checking into a hotel as an Indian national.

In India, foreigners are required by law to pay their hotel bills in foreign exchange, often at a higher effective tariff than Indian guests. As a British citizen, Wadia would have been obliged to do this on his travels within India. He maintained he always did so but that a hotel clerk might have assumed he was Indian when completing a register. Wadia was detained seven hours before being granted bail, close to midnight.