Corruption case returns to haunt India's Congress Party

One of India's biggest corruption cases that tarnished late prime minister Rajiv Gandhi in the 1980s returned to trouble the ruling party on today amid new charges of kickbacks and graft.

One of India's biggest corruption cases that tarnished late prime minister Rajiv Gandhi in the 1980s returned to haunt the ruling party today amid new charges of kickbacks and graft.

India's Income Tax department concluded yesterday that illegal commissions of 410 million rupees (Dh33.5 million) were paid to Italian businessman Ottavio Quattrocchi and an Indian arms dealer, Win Chadha, in the 1986 Bofors gun deal.

Last year, Indian police dropped long-standing charges against Quattrocchi, which led to claims from the opposition that the ruling Congress party was trying to bury the embarrassing episode.

Quattrocchi, thought to still live in Milan, was a close friend of Rajiv Gandhi and his Italian wife Sonia. She today heads the Congress, which is again embroiled in a host of corruption scandals.

Her husband was voted out of office in 1989 largely over the Bofors deal, which saw Swedish firm AB Bofors sell 400 howitzer guns to India. He was later assassinated in 1991 by ethnic Tamil extremists.

The Swedish group was accused of paying bribes of $1.3 bn to secure the sale of the 400 field guns, though the company and all those accused - particularly the Gandhis - have always maintained their innocence.

In light of the income tax department conclusions, opposition Bharatiya Janata Party (BJP) leader Arun Jaitley again questioned the police and prosecutor's decision to drop the case against the suspected bribe takers.

"This is the power of truth. We have always believed that truth has a very uncanny and inconvenient habit of coming out," Mr Jaitley said yesterday.

The income tax department concluded in a 98-page report on the case that Quattrocchi and Chadha had received payments in the Bofors case and should pay tax in India on the income.

"Inaction in this regard may lead to a non-existent undesirable and detrimental notion that India is a soft state and one can meddle with its tax laws with impunity," it said.

It also cited a Swedish investigation into Quattrocchi which concluded that he had no experience in guns or defence equipment and was a chartered accountant by profession.

Attempts to extradite Quattrocchi to India in 2007 after he was arrested in Argentina failed.

The new focus on Bofors is an unwelcome development for the government and ruling Congress party.

The national parliament has been deadlocked because of the government's refusal to allow a cross-party probe into the sale of telecom licences at knock-down rates that cost the country billions.

The impact of the telecom scandal has been likened by political commentators to the Bofors affair.

The weekly current affairs magazine India Today said in its New Year issue that "the size and frequency of corruption in 2010 made it the theme of the year."