KARNATAKA

Hegde eased of a big burden

Bangalore April 9. The CBI's clean chit to Ramakrishna Hegde in the case of alleged kickbacks in the German firm, AEG's torpedo deal with the Indian Navy brings to an end a 15-year-old case which had tormented the Karnataka leader, who is currently convalescing in a British hospital following a brain surgery.

It was one of the allegations against Mr. Hegde who had preached "value based politics'' pertaining to his chief ministership during 1983-88. He had the reputation of ordering a judicial inquiry against himself (headed by Justice Parameshwar Dayal, a former Judge of the Allahabad High Court) with regard to the MD seat scandal involving his son, Bharat Hegde. Mr. Hegde had no doubt faced adverse verdicts from the Justice Kuldip Singh Commission of inquiry ordered by a Congress Government into two land deals — the Revajeethu and the land development order given to one Lokhandawala construction company of Mumbai, and also the Karnataka High Court in the liquor bottling case.

It is of interest that the allegation against Mr. Hegde regarding the torpedo deal was levelled by K.N. Nage Gowda, former minister, who is today the General Secretary of the All-India Janata Dal and a close associate of Mr. Hegde. In January 1988, Mr. Nage Gowda, who was then a Congress MLC, issued a statement to the press maintaining that the State public sector NGEF was entitled to a commission from AEG of Germany (with which it had a agency contract since December 1973) for the sale of torpedoes to the Indian Navy.

The NGEF should have received 2.5 per cent commission on the sale of torpedoes, he had contended. The commission involved had been quantified to be over Rs. 2 crore, and it had been diverted by Mr. Hegde, he had alleged. But the then Industries Minister of the State, J.H. Patel, had maintained in the Legislature that NGEF was not involved in the torpedo deal, and a Delhi-based firm, Roger Enterprises, belonging to one Jajodia, was.

The question had been raised in Parliament by Mr. Hegde's arch political rival, Subramanian Swamy, during 1988-89. The Defence Minister in the Rajiv Gandhi Government, K.C. Pant, and the Minister of State, Santosh Mohan Dev, too had maintained that NGEF was not involved in the deal. Mr. Nage Gowda had levelled the allegation against Mr. Hegde at a time of intense infighting in the Janata Dal Government involving Mr. Hegde and the former Prime Minister, H.D. Deve Gowda, and their supporters. The torpedo sale commission had followed the allegation of payoffs in what was called the HDW submarine deal scandal.

Different stands

As regards the NGEF, it adopted different stands at different times. At first the company, a once prestigious State public sector industry which is today facing liquidation, said that it was not entitled to a commission from AEG. However, at another time, the NGEF board had considered invoking arbitration proceedings to get its due from AEG. Later, it considered entering into a compromise with AEG, noting that arbitration proceedings with a foreign firm would be expensive. But once the torpedo business became an issue of public and political debate, the company adopted the stand that it was entitled to a commission. It was also under pressure from its auditors, who maintained that the commission was "legitimately due to the NGEF''. The company claimed commission of 2.5 per cent even with regard to the supply of antennas by AEG to the Indian Navy submarines routed through HDW. It also said that the Union Government's decision on keeping agents out of Defence deals was taken long after the torpedo deal.

The chairmen and managing directors of NGEF at the relevant periods were the former Chief Secretary, late N.K. Prabhakara Rao and S.K. Das, who is today a senior IAS officer of the State. The AEG, which at that time was undergoing reorganisation, had also rejected all claims for commission, stating that its "activities connected with the Defence sector were totally outside NGEF's purview.'' It was under no obligation to pay a commission to NGEF, and that "the torpedo business is not covered by the agency contract.'' It had relied on the fact that the Union Government was against the appointment of agents in defence deals.

Panel report

But the Karnataka Legislature Committee on Public Undertakings, in its 53rd report, referred to the commission due to the NGEF. A Congress Government also ordered a Corps of Detectives investigation into the matter (allegation against Mr. Hegde), and it continued even after Mr. Deve Gowda became the Chief Minister heading a Janata Dal Government (Mr. Hegde was a respected leader of the party at that time). Mr. Nage Gowda too had made statements before the CoD as in March 1995, and by then he was a minister. The CBI probe followed the report of the CoD.

If Mr. Ramakrishna Hegde is today ailing and might not even react to the CBI's finding that he did nothing wrong, the NGEF has become comatose, and is awaiting formal dissolution.