BOFORS SCANDAL MIDDLEMAN CAUSING TROUBLE FOR

C O N F I D E N T I A L SECTION 01 OF 02 NEW DELHI 001010 SIPDIS SIPDIS E.O. 12958: DECL: 02/28/2017 TAGS: PGOV PREL IN SUBJECT: BOFORS SCANDAL MIDDLEMAN CAUSING TROUBLE FOR CONGRESS REF: A. NEW DELHI 000973 ¶B. NEW DELHI 000975 ¶C. NEW DELHI 000870 Classified By: Political Counselor Ted Osius for reasons 1.4 (B,D) ¶1. (SBU) Summary: On February 27, Bharatiya Janata Party (BJP) MPs disrupted both houses of Parliament, demanding Prime Minister Manmohan Singh's resignation over alleged UPA mishandling of Ottavio Quattrocchi's extradition from Argentina. Quattrocchi is the main accused in the Bofors gun payoff scandal that led to a Congress defeat in the 1989 election. The BJP is again hoping to make political capital from an affair with connections to the Gandhi family. The demand is purely political theatrics, however, as the BJP knows it does not have enough votes to force the PM to resign. In any case, the public's attention span for such an old scandal is likely to be short. End Summary. ¶2. (U) Background: The Bofors Scandal was a major corruption case that broke in the 1980s. Bofors AB, a Swedish weapons manufacturer, was accused of paying millions of dollars in kickbacks to many members of then Prime Minister Rajiv Gandhi's government to procure a multi-billion dollar contract for artillery pieces. The opposition accused the Prime Minister of taking a cut of the money and the scandal contributed to the Congress party's 1989 electoral defeat. Italian businessman Ottavio Quattrocchi, linked in media reports to Rajiv and Sonia Gandhi, was the alleged middleman in the deal. In 2004, the Delhi High Court downgraded the charges against the defendants from bribery to cheating and causing wrongful loss to the government. Past GOI attempts to extradite Quattrocchi have failed. Over the past week, the BJP has repeatedly accused the UPA of deliberately delaying release of information about Quattrocchi's capture in Argentina (Interpol captured Quattrocchi on February 6, but the news didn't break until February 23) for political reasons. Short Term Nuisance For Congress -------------- ¶3. (C) This has been a good week for the BJP. After its election victories in Punjab and Uttarakhand (reftels A and B),the party hoped to use the Quattrocchi arrest to put Congress on the defensive. However, the party leadership is well aware that the issue will have a short shelf-life. In a February 28 meeting, BJP Lok Sabha member Dharmendra Pradhan told PolOff and Pol FSN that the party planned to allow presentation of the budget to proceed that day, but would then use the Quattrocchi extradition to disrupt Parliament for a week or two. After that, however, the BJP recognizes that the issue will no longer resonate and the public will grow impatient with further disruption--much as it did last year. The public largely sees the Bofors Scandal as a dead case, and will want Parliament to focus on more meaningful issues, such as inflation. In addition, MP's attention will soon be focused on the upcoming elections in Uttar Pradesh, with many leaving Delhi to campaign there. ¶4. (C) Comment: Congress leaders have been reluctant to give reasons for the party's previous silence about NEW DELHI 00001010 002 OF 002 Quattrocchi's capture, claiming that the GOI was not legally obligated to inform the public. In our estimation, the UPA probably did not want to muddy the waters just before the February 10-15 visit of Italian Prime Minister Prodi to India (reftel C). (In a February 28 conversation with Poloff, the Italian political counselor denied rumors that Quattrocchi's son Massimo was part of that delegation, stating that he is a private businessman with his own India connections and the Embassy is not in contact with him.) Congress probably also withheld release of Quattrocchio's capture until after the hotly contested state assembly races in Uttarakhand and Punjab. Now that the elections are over, Congress has probably determined that the issue will quickly die, and that Quattrocchio's extradition is highly unlikely since there is no extradition treaty between India and Argentina. In a February 27 meeting, Hindustan Times columnist Pankaj Vohra reminded PolOff that no issue has been successfully used in Indian elections more than once. ¶5. (U) Visit New Delhi's Classified Website: (http://www.state.sgov.gov/p/sa/newdelhi/) MULFORD