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