'Found millions from Bofors in overseas accounts'

After the Central Bureau of Investigation (CBI) recently told the government, on record, that it could not file an appeal against the 2005 Delhi High Court order Bofors gun case in which the Hinduja brothers were acquitted because the investigating agency was not permitted to do so by the then UPA government, the Centre is all set to reopen the Bofors gun case. The historic Bofors 155 field howitzer deal has been in controversies after members of both Indian and Swedish governments were allegedly found involved in accepting bribes for facilitating the deal. The first investigator of the case Michael J. Hershman, the then president and CEO of The Fairfax Group and who was assigned primarily to probe violations of currency control laws in 1987, in interaction with Sumit Kumar Singh shares 30 years later his findings then that that huge money was transferred into accounts of influential people in defence deals, including in procurement of Bofors Guns. Hershman was in Delhi this week to attend three days International Conference of World Association of Detectives (WAD). This is the second time that WAD annual conference is being organised in India; first time it was held in 1984
 
 
When was your first trip to India?
 
This is going to look me very, very old and sound very old. My first trip to New Delhi was in 1976. I also was in Mumbai at that time. I was still working for the state department that time, the agency for International Development. Back at that time we still had eight programmes here in India. India was getting economic development assistance from variety of multilateral and bilateral agencies, including the agency for International Development. I had an office here, a regional office of audit and investigation. It was an office of Inspector General and that time I was the that Deputy Inspector general for the foreign assistance programme of US.
 
How long you stayed in India thereafter. 
 
Well, I came back forth many times.  

Back in 1986, did the government assign you to probe financial irregularities of influential people here and Bank of Credit and Commerce International (BCCI)?

So, this is way back around when I left the government in 1980.I had an office here. I had a regional audit and investigation office. I was known here. When I left the government, I formed a company called Fairfax group and our primary business was doing very complex investigations of misconduct. And so, I was indeed contacted in 1987 to help the Indian government to investigate some issues involving violations of currency control laws at that time.

Who hired you? 
 
The Finance Ministry headed by Mr VP Singh. Then, Bhure Lal was heading financial investigative unit and I reported to him. 
 
What task was given to you?
 
They had concerns that a number of wealthy Indians were violating currency control laws and they had difficulty in tracking them. They did not, at that time, the technical expertise to do these assets tracing investigations outside India. They had expertise within India, access within bank accounts and financial records but needed assistance from entities for overseas records. They need expertise to investigate overseas, I was tasked specifically to look into large transfer of assets outside India
 
Did government share any names? 

I was given a list of about a dozen of very wealthy Indian businessmen. They were primarily businessmen. But again, please forgive me I can't specifically remember the details.
 
 What did you find?
 
The allegation was that they were transferring wealth out of India in violation of the laws back then of currency control and of course the finance ministry was very interested in this because they had the authority to investigate these violations.

Very early on in the investigation, I came across information that led me to believe that I had found evidence of bribery which was not in my mandate so when I advised Bhure Lal and VP Singh that I have discovered transfers, very large transfers to the tune of millions of dollars, that may not have been in violation of currency control laws, but might have been bribes in exchange for defence contracts.

Then VP Singh said, “Well I have interest in that and want you to continue". In particular, I was focused on money going in and out of BCCI banks, particularly in London and Bombay. 
 
At that time a defence contract happened. Procurement of Bofors guns. Do you by any chance found anything related to Bofors?
 
I had a source at that time who worked for BCCI and indicated to me that the money was in lieu of bribes paid by the Swedish arms manufacturer AB Bofors. This money, I had been tracking were bribes paid by Bofors.

.. To get the deal in India?
 
In India. Yes. So, when I reported to the Finance Ministry, they took action to raid the BCCI branch in Bombay and Bhure Lal arrested the managers of the bank and closed it. Unfortunately, the president of BCCI, at that time, flew to Delhi, met Rajiv Gandhi and somehow convinced him to release his managers and reopen the bank immediately. The president or chairman of BCCI was from Pakistan.
 
What happened thereafter?
 
So that incident, I believe led to Rajiv Gandhi’s knowledge that VP Singh had hired the Fairfax group. Let me go back. VP Singh told me that he had authority from Rajiv Gandhi to investigate allegations of currency control violations but of course my investigation -- when you do your investigation and look under rocks you never know what you are going to find -- and my investigation early on took this turn of events.

I believe that when Rajiv Gandhi found out that we were now looking at bribery issues, he immediately intervened and took several actions. One his actions was to go before parliament and accuse my company and me of being a front for the CIA, and acting to destabilize, his government which was not true.

And then secondly, he formed a commission to look into the circumstances surrounding us being hired by VP Singh. And then thirdly, he could not fire VP Singh, who was a very prominent member of the party, but he could certainly transfer him and so VP Singh was shifted from the Finance Ministry to Defence. So, all these three things combined, were done to try to stop the investigation. 
 
Finally, what happened? Did the truth came out? 

The investigation was stopped. We had also discovered information about a Swiss Bank account by the name of Mont Blanc. That was the code name of the account. We had recommended to Bhure Lal that we can seek the cooperation of the Swiss authority to get access to that account. But my understanding was that when VP Singh was transferred, Bure Lal was told not to proceed any further in this matter. 
 
Did you ever probe the matter further? Did you give your reports or findings to the Indian government?
 
Well, I gave continuous updates and reports to Bhure Lal over that time. I mean we were in frequent contact. 
 
When were you asked to leave the probe?
 
Can't remember the exact date.
 
Was that probe ever completed?  
 
No, no it was essentially stopped. 
 
Was there any political pressure?
 
Oh! Yes. My personal belief is that there must have been. And the fact that investigation to this day -- 30 years later -- still has not been resolved suggest to me that there are people who are still afraid that if the truth came out it might be averse to their best interest. 
 
Were you offered bribes to stop the investigation?
 
There was. Yes. Three times. Actually, twice to stop the investigation and once to damage the reputation of VP Singh. 
 
Can you recall people who approached you with bribe money? 
 
Well, the first time it was a non-resident Indian living in the Midwest, I think in Chicago, who came to my office and wanted to hire me but the terms of his hiring would have required me to stop this investigation, so I immediately understood that to be a bribery attempt, which I turned down. Then, when I was doing my investigation in London related to BCCI, I was approached at my hotel, very late at one night, by an Indian national -- whose name I never came to know -- who offered me 1 million dollars to stop the investigation and when I asked him if I did not accept his offer then what, he said, ‘I would be killed’. So, I switched hotels.

Third was not an attempt to get me to stop the investigation but a ploy to use me to damage the reputation of VP Singh. It was an attempt by Adnan Khashoggi, who at that time one of the richest men in the world and a Saudi Arabian billionaire, and a colleague of his from India, Chandraswami, who I met for the first time through Khashoggi in his home in Spain. Khashoggi asked me to come and speak with him about an issue and when I showed up, Chandraswami was there. Before, I came I didn’t not know what was the issue that he wanted to talk to me about.

When the wealthiest man in world wants to have chat with you, it probably makes sense to do that.

So, I went. He flew me over in his private plane from New York to Spain. On the second day, I was there, both he and Chandraswami showed me some documents that were alleged banks record reflecting accounts in the name of VP Singh’s son. I think it was of the Cayman Islands. They wanted me to take the documents and go public. I looked at the documents. At face value, they looked like forgeries to me. And I refused to do that and I left. My understanding was if they had been successful in convincing me to release the documents thereby damaging the reputation of VP Singh then Khashoggi would have been awarded a lucrative defence contract in India. He was an arms dealer.