INDIAN ACTIONS IN RESPONSE TO INDEPENDENT INQUIRY

UNCLAS NEW DELHI 002138 SIPDIS C O R R E C T E D C O P Y - PARAGRAPH NUMBERING (PARA 5) SIPDIS DEPT FOR IO/PSC LIZ PARKER E.O. 12958: N/A TAGS: PREL KFIN PGOV IN IZ SUBJECT: INDIAN ACTIONS IN RESPONSE TO INDEPENDENT INQUIRY COMMISSION REF: STATE 40595 ¶1. Summary: The Volcker Committee probing allegations of illegalities in the oil-for-food program had identified Indian entities including former Foreign Minister Natwar Singh and the Congress Party among the non-contractual beneficiaries of illegal oil allotments. In India, a special inquiry and the GOI Enforcement Directorate have been investigating the case since it came to light. The law enforcement investigation is ongoing. This cable provides a response to the questions in reftel. End Summary NOTICES ISSUED -------------- ¶2. The Government of India in November 2005 appointed Supreme Court Justice R.S. Pathak to investigate (with subpoena powers) the allegations contained in the Volcker Committee Report against then FM Natwar Singh and others. Natwar Singh quit his post on December 6, 2005 in the aftermath of the revelation of the scam. Media reports on March 17 indicated that the Pathak Committee had served notices to Natwar Singh and 17 others to file affidavits regarding their knowledge of the alleged misdeeds. Other prominent subjects of Pathak's subpoenas include Andaleeb Sehgal, director of Hamdaan Exports and family friend of Natwar Singh, Natwar Singh's son Jagat Singh, and former Ambassador to Croatia and Congress Party "fixer" Aniel Matherani. The notices sought information on whether any of the individuals had knowledge of the contracts bearing numbers M/9/54 (Natwar Singh) and M/10/57 (Congress Party). The committee has also issued legal notices to Jamil Zaidi, former Rajasthan youth Congress president, Asad Khan, former Union Minister Shiv Shankar and Minority Affairs Minister A.R. Antulay requesting information. CRIMINAL INVESTIGATION -------------- ¶3. Following establishment of the Pathak inquiry, the Enforcement Directorate (ED) began a parallel criminal investigation of Natwar Singh, Jagat Singh and Sehgal. The ED has reportedly obtained documents from Jordan and Iraq in connection with the suspected involvement of Indian Members of Parliament in the scam. The ED is trying to ascertain whether any violation had been committed under the Foreign Currency Exchange rules. The ED is also questioning Aditya Khanna, a London-based businessman and cousin of Jagat Singh. ¶4. The ED reportedly interrogated Natwar Singh on February 17 and 18 this year but he refused to answer the ED's specific queries related to his Iraq trip when the deal was allegedly struck. The former Minister reportedly claimed partial amnesia owing to old age and told the investigators that he remembered nothing about the trip. The ED has also reportedly sent Letters Rogatory (LRs) to courts in Jordan and London to request the banks concerned to part with documents related to the transactions of Aditya Khanna and Andaleeb Sehgal. ED and Income Tax authorities have questioned Andaleeb Sehgal and other associates of Jagat Singh. On March 25, the ED asked Aditya Khanna to produce the Foreign Inward Remittances Certificate (FIRC) related to suspect banking transactions. Jagat Singh and Andaleeb Singh's father Suman have handed over their passports to the Enforcement Directorate as of February 16 as part of the ongoing investigation and questioning. ¶5. Visit New Delhi's Classified Website: (http://www.state.sgov.gov/p/sa/newdelhi/) MULFORD