-By:- Kunal Kataria

Corporate Scam
-BMS 1B
-20111
-1st Semester

Assignment
-1st Year
-Shaheed Sukhdev
College Of Business
Studies
 ABOUT THE
SCAM
(BOFORS)
The Bofors scandal was a major political scandal
involving India and Sweden between the 1980s
and 1990s, started by Indian National Congress
politicians and involved Indian Prime Minister
Rajiv Gandhi, and many other members of the
Indian and Swedish governments accused of
receiving less money from Bofors AB. heavily
paid by the Wallenberg family Skandinaviska
Enskilda Banken, for winning a bid to give India
their 155 mm howitzer. The scandal involves an
illegal payment of US $ 1.4-billion in a deal
between Swedish arms manufacturer Bofors and
the Indian government for the sale of 410
firearms, and a contract to supply almost double
that amount. It was the largest arms deal ever in
Sweden, and the money written for development
projects was transferred to get this contract at
any cost. Investigations have revealed
negligence and institutional oversight.

Total Value of Scam: US$1.4-billion

On April 16, 1987, a Swedish radio station broke the
news to the Swedish police, claiming that the
famous Swedish arms manufacturer Bofors had
paid people in many countries, including Sweden
and India, for secure 15 billion (equivalent to ₹ 160
billion or US $ 2.3 billion). in 2019). This was done
last year with an agreement to provide Indian
soldiers with 410 155 mm rifles. However, no
newspaper in India was aware of this. In May 1987,
a Swedish radio station reported that ₹ 600 million
bribes (equivalent to ₹ 6.6 billion or US $ 92 million
in 2019) were paid by Bofors to Indian politicians,
members of the Congress Party and officials. This
was taken up by a young journalist from The Hindu,
Chitra Subramaniam, who was in Sweden at the
time, covering another story. The level of corruption
was worse than any other country in Sweden and
India had ever seen before and led to the defeat of
Gandhi's ruling Indian National Congress in the
November 1989 national elections. A Swedish
company paid 640 million politicians (US $ 9.0
million) for ousting top Indian politicians and security
officials .

…
… The case came about during Vishwanath Pratap
Singh's tenure as defense minister, and was featured
in investigative journalism determined by Reuters
news agency on Swedish radio, followed by a team
led by N. Ram of The Hindu newspaper. The journalist
who received more than 350 documents detailing his
payment was Chitra Subramaniam reporting to The
Hindu. Articles were later published in The Indian
Express and The Statesman when The Hindu stopped
publishing news about the Bofors scandal under
heavy government pressure and Chitra Subramaniam
moved to the two newspapers. In an interview with
him, published in The Hoot in April 2012 on the day of
the 25th anniversary of the revelations, Sten
Lindstrom, a former Swedish police chief, discussed
why he had released the documents and the role of
whistleblowers in a democracy.
 WHAT IS BOFORS?

Bofors AB is a Swedish and

British arms manufacturer.
The name has been
associated with the iron
industry and artillery manufa
cturing for more than 350
years.

A leading Swedish steel

producer by the early 1870s,
when steel began to be used for
gun manufacture in Sweden,
Bofors initially sold cast and
forged steel produced by
the Siemens-Martin
process to Finspång gun works,
but soon started to expand into
weapons manufacture.
 Reasons behind the
Scam and Chronology
On March 18, 1986, India signed a Rs 1,437-crore deal
with Swedish arms manufacturer AB Bofors for the
supply of 400 155 mm Howitzer guns for the Army. A
year later, on April 16, 1987, a Swedish radio channel
alleged that the company had bribed top Indian
politicians and defence personnel to secure the
contract. The scandal rocked the Rajiv Gandhi-led
government in the late 1980s. On January 22, 1990,
the Central Bureau of Investigation (CBI) lodged an
FIR against the then president of Bofors Martin Ardbo,
the alleged middleman Win Chadda and the Hinduja
brothers for criminal conspiracy, cheating and forgery.
It was alleged that certain public servants and private
persons in India and abroad had entered into a criminal
conspiracy between 1982 and 1987 in pursuance of
which the offences of bribery, corruption, cheating and
forgery were committed.
The first charge sheet in the case was filed on October
22, 1999, against Chadda, Ottavio Quattrocchi, the
then defence secretary S K Bhatnagar, Ardbo and the
Bofors company. A supplementary charge sheet was
filed against the Hinduja brothers on October 9, 2000.
1980s - The Bofors scandal became a major
corruption scandal in India. The then Prime
Minister Rajiv Gandhi and many others were
accused of receiving kickbacks from Bofors AB
for winning a bid to supply 155 mm field howitzer.
A middleman associated with the scandal was
Ottavio Quattrocchi, an Italian businessman who
represented the petrochemicals firm Snamprogetti
and was allegedly close to the Gandhi family.
November 1989 - The scandal became an
unprecedented case of corruption. It led to the
defeat of Rajiv Gandhi's ruling Indian National
Congress party in the general elections.
May 21, 1991 - While the case was being
investigated, Rajiv Gandhi was assassinated.
1997 - CBI filed a case against Quattrocchi, Win
Chadha, Rajiv Gandhi, the defence secretary S K
Bhatnagar and a number of others. The Swiss
banks released some 500 documents after years
of legal wrangling.
February 5, 2004 - The Delhi High Court
quashed the charges of bribery against Rajiv
Gandhi and others, The trial continued on
charges of cheating, causing wrongful loss to the
Government, etc.
May 31, 2005 - The High court of Delhi dismissed
the Bofors case allegations against the British
business brothers, Shrichand, Gopichand and
Prakash Hinduja.
December 2005 - B Datta, the additional
solicitor general of India, from the side of the
Indian Government and the CBI, requested the
British Government that two British bank
accounts of Ottavio Quattrocchi be de-frozen on
the grounds of insufficient evidence to link these
accounts to the Bofors payoff.
January 16, 2006 - CBI claimed in an affidavit
filed before the Supreme court that they were
still pursuing extradition orders for Ottavio
Quattrocchi.
The Interpol issued a long standing red corner
notice to arrest Quattrocchi.
February 6, 2007 - Quattrocchi was detained in
Argentina.
February 23, 2007 - The news of his detention
was released by CBI after seventeen days.
Quattrocchi was released by Argentinian police.
September 2009 - The central government
today informed the Supreme Court that it has
decided to stop all prosecution against Italian
businessman Ottavio Quattrocchi for his alleged
involvement in the two-decade old Bofors case.
The Supreme Court will hear the matter on
December 11.
Key People
Involved

Who : The Prime Minister

of India when the
deal was signed

Role : He was accused if

receiving kickbacks
from Bofors AB

Status : He was posthumously

cleared from this
Rajiv Gandhi allegation in 2004/
Win Chadha
Who : Arms Agent

Role : He was accused if

receiving a part of
the ₹64 crore kick-
back and named in
the CBI’s charge
sheet in 1999
Status : Died in October 2001

S.K. Bhatnagar
Who : The then defence
secretary
Role :He was accused of
abusing his official
authority to favour
Bofors and named
in CBI’s charge
sheet in 1999
Status : Died of cancer in
2001
Martin Ardbo
Who : Former Bofors Chief

Role : Ardbo, who headed

the firm when the
deal was signed
was accused of
paying a kickback
to push through the
deal
Status : He was chargesheeted,
as was the firm. Died
in 2004.

Ottavio Quattrocchi
Who : Power broker considered
close to Rajiv and Sonia
Gandhi
Role : The alleged middle man
who is considered and
lone surviving suspect in
the multi-crore Bofors
Scandal.
Status : The CBI gave him a
clean chit in 2009 and
the case was
closed in 2011
Hinduja Brothers

Who : Proprietors of a UK- based industrial group

Role : The brothers were probed for their role in

the Bofors Scandal

Status : Prosecution failed to prove that Gopichand ,

Prakashchand and Srichand Hinduja were
linked to the kickbacks.
What are Business
Ethics ?

Business ethics are the rules and principles that

determine what is morally right and wrong in a
business atmosphere. It's the unspoken
agreement that a business will conduct itself fairly
and within the established rules. Many businesses
operate within the proper ethical guidelines,
without the need for an outside agency to step in.
However, there are also many instances in which
the government has entered into the situation and
has forced a company to adhere to more ethical
standards. Most of the government regulatory
agencies that exist do so, because a company or
an entire industry has ranked profits over their
workers or the environment.

But apparently in the above scam Government

itself is the one engaging in the following
activities .
Unethical Issues

• Taking or giving bribe

The Prime Minister Rajiv Gandhi and several others
were accused of receiving kickbacks from BOFORS AB (
Bofors Aktiebolaget) for winning a bid to supply India’s
155mm field howitzer.
• Using political power
The HC ruled the prosecution has failed to prove that the
Hinduja Brothers- Gopichand, Prakashchandan &
Srichand – were linked to the Kickback in the BOFORS
Deal, which led to the late Indian Prime Minister Rajiv
Gandhi from power. The court later gave Rajiv Gandhi a
clean chit.
• Covering up incidents
No case can proceeded against the Hinduja or the
BOFORS Company in the absence of original
documents and several people or entities were let go
because of this.
• Taking Advantage og Official Position
Former defense Secretary has taken advantage of his
position. He was accused of abusing his official authority
as the then Defense Secretary to tilt the scales in favor
of the Swedish firm for the ₹1437 Cr. Contract to supply
155mm howitzer guns to the Indian Army.
• Wasting Public Money & time
As the case went on for the period of 18 years it took a
lot of resources to carry on the investigation which was
only public’s money and the kickbacks were sighted to
be the turn of ₹64 crore whereas the total cost of
BIBLIOGRAPHY

• https://www.hindustantimes.com/india/bofor
s-case-timeline-of-events/story-wFipcfeUMy1j
rD1Z9cExnK.html
• https://indianexpress.com/article/india/what
-is-the-bofors-scandal-case-why-is-it-being-op
ened-now-4823576/
• https://www.business-standard.com/article/c
urrent-affairs/rs-1-437-cr-india-sweden-bofors
-guns-deal-timeline-of-the-31-year-old-case-1
17102100190_1.html
• https://www.dailymail.co.uk/indiahome/indi
anews/article-2135143/CBI-fends-Bachchan-sl
ur-Bofors-scam-Swedish-police-chief.html
• http://www.legalservicesindia.com/article/1
912/Business-Ethics-and-Corporate-Frauds.ht
ml