The CBI is looking into the roles played by top government functionaries, apart from that played by the Cabinet Committee on Prices (CPP) and the Cabinet Secretariat. According to details available with The Financial Express, the second round of imports was done in a hurry and, possibly, without appropriate authorisation. A perusal of the files pertaining to the imports shows that there was no requisition for the import of the extra half-a-million tonnes from the Food Corporation of India (FCI) -- the official agency which monitors the movement and availability of foodgrains in the country. The FCI, in fact, had insisted thatthere were enough stocks and that godown facilities were inadequate to absorb the imported wheat.From a perusal of the files made available to The Financial Express, we have put together a sequential flow of decision-making at the highest levels of the government. The story begins on January 20, with the State Trading Corporation (STC) -- the canalising agency for wheat import--receiving a letter from the cabinet secretary authorising it to go ahead with the purchase of one million tonnes of wheat. The letter also said that the "quick procedure" for purchase should be followed as was done when contracts for wheat were entered into in 1996--and that the buying should be low-key and should be completed quickly. A committee of secretaries (COS) meeting subsequently finalised the details of the purchase -- in terms of sanitary and quality conditions which have to be met by the sellers.

Accordingly, on February 20, the STC quietly got in touch with 22 top suppliers of wheat in the world. The tender openedon February 21 and on February 26 a million tonnes of wheat was bought from the lowest bidder--the Australian Wheat Board (AWB).

It was only subsequently that things became a little complicated. On February 26 itself, the STC apparently received "verbal instructions" independently from the food secretary and the cabinet secretary, TSR Subramanium, to go ahead with the purchase of another million tonnes of wheat.

On the same day, the STC swung into action and incorporated an option to purchase more wheat into the contract entered into with AWB for the first million tonnes of wheat. STC received a written communication from the cabinet secretary on the morning of February 27 and sought to formalise the contract for another million tonnes with the Australians. The latter, however, said that they can only supply another half-a-million tonnes and STC accepted the offer.

A look at the files, now in the hands of the CBI, shows that the cabinet secretary's letter of February 27 was based on an approval given bythe then prime minister IK Gujral, finance minister P Chidambaram and minister-in-charge of food Balwant Singh Ramoowalia. Unusually, all the approvals were received on the same day, that is, February 27.

The note was initiated by the cabinet secretary and signed by the other three--all on the same day! Subramanium had merely mentioned, in his initiation letter, that the decision to import was taken because of adverse seasonal conditions and fall in the production of wheat. The food secretary was summoned on February 27 to help formalise the decision.Verbal orders were given to STC on February 26 without any formal approval. What is more, the files show that Chidambaram, Ramoowlia and Gujral should not have been the ones to approve the import of wheat. Authorisation has to come from the Cabinet Committee on Prices (CPP) and the three ministers, who signed the sanction, do not comprise the CCP.

The CPP is usually chaired by the finance minister. This is borne out by the fact that Pavan Chopra, additionalsecretary in the cabinet secretariat. Chopra sent a letter only as recently as June 1998 to the ministry of food saying that the wheat import deal be put up the CCP for "formal approval".The import proposal never formally came through the CCP. And an ex-facto nod is being sought now to complete all governmental procedures.

But that is not all. Only four days (March 15) before the Vajpayee government was to assume power, a task force comprising representatives of STC, FCI, the railways and the ministries of finance, food, textiles and surface transport, formed by the cabinet secretary to organise the logistics of the imports, made an important recommendation. It went out of its stated brief to recommend that the entire decision to import wheat be "endorsed" or "reviewed" by the new government. "The prime minister (designate) be kept informed," the minutes of the task-force meeting said.

This was in the light of observations made by the FCI that there were adequate quantities of wheat available around theareas where imported wheat would have arrived and observations made by others in the task force that the ports were not in a position to handle such large quantities of wheat.

The FCI, in fact, armed itself with legal opinion that the force majeure clause in the import contract could be used to terminate the wheat import deal without incurring damages. The clause absolves STC of responsibility as a buyer if the contract is annulled by an act of government. (Pertinently, STC also sought legal opinion on the clause and it was told that it was not clear whether invocation of such a clause will stand the test of law).

The task-force recommendation was duly seconded by KM Shani, joint secretary in the ministry of food, and the note was sent by NN Mookerjee, secretary (additional charge), department of food, to the cabinet secretary. Subramanium wrote back immediately (dated March 16) saying that there was no need to get the decision reviewed.

The cabinet secretary, who was unavailable for comments whenThe Financial Express tried to get in touch with him, quoted the president of India as saying that "there was no concept of a caretaker government in the Constitution" and the (then) government is entitled to take the decision. On March 19--even as a BJP-led coalition government was being sworn in on the lawns of Rashtrapati Bhavan--a letter went out from the ministry of food to the STC telling it to go ahead with the contracts and fix the arrival schedules for the wheat. The Rs 1,000-crore deal stood sealed.

The story takes another twist from here. On March 20 -- a day after the government was sworn in--Subramanium sent a letter to the new food minister, SS Barnala, informing him of the imports. The cabinet secretary further mentioned in the letter that he had informed Vajpayee about the imports.

Barnala held a meeting (on March 20) of his officials--including representatives of FCI -- to discuss Subramanium's letter. The FCI representative -- armed with a legal opinion and figures on wheatavailability--argued vehemently in favour of cancelling the contracts.

Faced with the fait d'accompli of a contract already signed, Barnala wrote to the prime minister on March 21 supporting the contract, but he did mention that he was, in principle, opposed to the purchases as fresh wheat arrivals were around the corner. He went on to state that since the deal was already sealed and there was nothing that could be done.

Well-placed sources said that that he met the prime minister and both concurred that, against this backgrounnd, it was indeed too late to stop the purchases. They had little choice but to go ahead and endorse the "decisions" of the previous government.

Prime minister Atal Behari Vajpayee seems to be concerned about the political fallout of the wheat import deal now that the CBI has begun its investigations in earnest. The prime minister had several rounds of discussions with food minister SS Barnala over the issue. Vajpayee apparently subscribes to Barnala's view that there is no primafacie evidence of misconduct by anyone involved in the deal.According to one section of opinion, even though all formalities were completed before the new government assumed power, Barnala and Vajpayee could have stopped the contracts had they wanted to. The task force had recommended a review of the decision. What is more, the FCI had told Barnala (on his very first day in office) that there was no need for the wheat and it was even armed with legal opinion to buttress the view that the contract can be cancelled without attracting damages.

But in fairness to Barnala and Vajpayee, both were too new to the game. Only a day or two into governance, they can be given the benefit of doubt for being swayed by opinions given by the highest levels of the bureaucracy. Since a final approval letter had indeed gone out to the STC on March 19, the prime minister and the food minister were merely informed of the decision to import, though there will be some who would say that the decision could have been reviewedagain.

The prime minister is now said to be concerned that the CBI investigations might turn into a witch-hunt. If the focus turns to the decision-making process itself, the investigating agency may be forced to call top functionaries of the previous government for questioning. And this will open up a Pandora's box. This was the reason why the government was apparently not too keen to conduct a full-scale investigation. But the furore raised in Parliament forced their hands.