The Maruti company, in which Sanjay Gandhi had major stakes, actively sought, and was rumoured to have got, the role of agent for the British Aircraft Corporation in its sales efforts in India during the 1970s, according to Kissinger-era U.S. embassy dispatches obtained and released by WikiLeaks on Monday.
In a cable dated July 7, 1976 (1976NEWDE09954_b, Secret), the U.S. embassy in New Delhi said a “British Aircraft Corporation team that visited India to compete agains[t] Dutch and American aircraft suppliers was approached and offered the assistance of the Maruti company, a firm controlled by Sanjay Gandhi.” According to the Americans, “BAC replied that something could certainly be worked out.”
The cable was sent by the embassy in response to a State Department request for a comprehensive assessment of India’s anti-corruption laws to work on an “international agreement on illicit payments.”
In 1976, negotiations were going on in two major aircraft deals: Deep Penetration Strike Aircraft (DPSA) for the Indian Air Force and twin-jet commercial aircraft for Indian Airlines. BAC was in the running for both. The Jaguar — manufactured by SEPECAT, a joint venture of BAC and the French firm Breguet — was the eventual winner of the DPSA race with French firm Dassault’s Mirage and the Swedish Saab-Scania’s Viggen fighter. In the Indian Airlines negotiation, the competition was among BAC 111-474, U.S. firm Boeing’s 737-200, and the Dutch Fokker’s F-28 Mark 4000.
While no American firms were in the running for the DPSA due to the U.S. arms embargo on India and Pakistan at the time, the commercial aircraft sale was a different ball game. The U.S. embassy was desperately trying to swing the deal towards Boeing by prodding the Exim Bank of the U.S. to provide favourable financing to the Indian government, as is evident from a series of cables on talks among embassy, State Department, Boeing and Exim bank officials. The embassy was keeping a close eye on the offers from BAC and Fokker and Sanjay Gandhi’s apparent involvement with BAC made it nervous.
In a cable dated July 30, 1976 (1976NEWDE11152_b, Confidential), the embassy says it “understands Maruti (in which Sanjay Gandhi has interest) is negotiating for BAC agency in India.” By August 27, the Embassy has “heard unconfirmed rumors that Maruti also repsents [sic] BAC” (1976NEWDE12666_b, Confidential). It rues that “these and perhaps other political factors, none of which seem to favor US procurement, could have a bearing on the final outsome[sic].” The embassy implicates all other countries involved in the two deals by stating in its July 7 cable that “Dutch, Swiss and French firms are equally know[n] for their willingness to make contributions.”
Boeing ultimately won the Indian Airlines deal, based on the 737’s technical superiority and well-arranged financing — if separate cables on the negotiations are to be believed.
Maruti and Cessna
The Americans’ understanding that the involvement of Sanjay Gandhi, or anyone related to Prime Minister Indira Gandhi, could load the dice in any deal is further evident from a cable dated August 27, 1976 (1976NEWDE12666_b, Confidential) on K.L. Jalan, Managing Director, Maruti Heavy Vehicles (P) LTD., requesting “embassy assistance in arranging a meeting with the president or high level official of Cessna aircraft to discuss the sale of Cessna aircraft in India”.
Jalan claims that “his firm has an immediate [sic] sale for two aircraft with a very promising outlook for 20 more units by fiscal year-end”. Jalan also makes it a point to state that the company is “owned by Sanjay Gandhi (son of Prime Minister), Sonia Gandhi (Sanjay’s sister-in-law) and J.K. Jalan,” prompting the Embassy to suggest to the State Department that “Cessna be informed immediately on sales opportunity… but that company be [briefed] on background of Maruti and implications of any association with company”.
It should be noted that while Sanjay Gandhi’s Maruti was described as angling for the BAC agency, his older brother Rajiv was said in another U.S. embassy despatch to have emerged as an “entrepreneur” on behalf of Saab-Scania, as already reported by The Hindu on Monday. Saab-Scania had to drop out of the race due to U.S. pressure since the Viggen utilised American technology. The Janata Party government that took office in 1977 eventually decided to go the Jaguar way and on July 27 1979 the first two Jaguar aircraft landed in India.