The heart of the matter

The guru and the PM

Rao's downfall has a Canadian connection

MARCI MCDONALD October 7 1996
The heart of the matter

The guru and the PM

Rao's downfall has a Canadian connection

MARCI MCDONALD October 7 1996

The guru and the PM

Rao's downfall has a Canadian connection

INDIA

For nearly a quarter of a century, their names have been inextricably linked. From Delhi’s opulent salons to the bazaars of Madras, Indians of every political stripe have puzzled over the unswerving devotion of former prime minister P. V. Narasimha Rao to his controversial jet-setting guru, Sri Chandra Swamiji Maharaj—better known as Chandra Swami. So great has been the portly 47-year-old holy man’s sway that he picked the precise, astrologically auspicious moment for Rao’s swearing-in five years ago, and routinely breezed through the formidable security of the prime ministerial residence without a search. Throughout his follower’s tenure, he was hailed as the second most powerful man in India. But last week, four months after Rao’s humiliating electoral rout, both their fortunes appeared distinctly illstarred. While the guru languished in Delhi’s Tihar prison without bail, his 75-year-

old political patron was forced to step down as president of the scandalridden Congress party after he was formally charged with conspiracy and “cheating” in two separate criminal cases tying him to Chandra Swami.

As the country reeled at the prospect of its former leader being called to a public court date this week, Rao dismissed the accusations as “false, frivolous and baseless,” and his provisional successor, Sitaram Kesri, pledged business as usual, with continued support for the fractious United Front coalition government. But the sheer audacity of the charges signalled a dramatic new determination by the judiciary to crack down on the rampant cor-

ruption that now seems to have a stranglehold on every level of the country’s unwieldy body politic. Meanwhile, Maclean’s has learned that the process of tracking Rao’s ties to the swami led Indian investigators to a luxury mansion north of Toronto— which the guru uses as his headquarters on periodic visits—owned by a mysterious former motel owner named Walter Ernest (Ernie) Miller.

Miller first surfaced as the swami’s business adviser in the 1986 Iran-Contra arms scandal. But the gruff Calgary-born wheeler-dealer has spent nearly two decades as a fixture in his entourage. Last week, he did not return Maclean’s calls, but two of his former business associates confirmed that he had played a role in Rao’s downfall.

One instance dates back to early January, 1984, when a British-based spice merchant named Lakhubai Pathak— Britain’s self-proclaimed “pickle king”— claimed he gave Chandra Swami two cheques totalling $100,000 (U.S.) on the understanding they would grease the political wheels to win him a multimillion-dollar pulp and newsprint contract from the state trading corporation. Months later, when that

contract failed to materialize, Pathak began badgering the swami for his money back and repeatedly called Miller’s Toronto residence with long-distance pleas for reimbursement. Last week, recovering from a recent stroke in his Bombay apartment, the 71-year-old Pathak explained that the swami had originally instructed him to deposit the cheques into a Canadian Imperial Bank of Commerce account. And he said that at least one of the cancelled cheques still in his possession bears Miller’s endorsement. However, there is no evidence that Miller was aware of the alleged purpose of the cheque.

Although Miller had once dismissed Pathak as “a goof,” the pickle king has become the swami’s most relentless opponent, impervious to repeated threats and even circulating a flyer warning other Indian expatriates against the “con man in saffron robes.” At least 11 angry investors with similar stories have responded, but so far only three have come forward to offer statements to the police. As for Pathak himself, he refused to give up. In 1988, he filed a formal complaint with India’s Central Bureau of Investigation, but no further action materialized for another eight years. Then last summer, two months after Rao lost the general election, the CBI flew Pathak to Delhi to testify against Chandra Swami. The guru had been arrested after a mobster linked him to a gangland chief reputed to have or-

chestrated a series of Bombay bombings.

There, on July 5, from his wheelchair, the pickle king recounted his 13-year pursuit of the swami to a sweltering courtroom. But in the middle of his saga, even the CBI appeared caught off guard. For the first time,

he claimed that he had only handed over the money after Chandra Swami introduced him to then-Foreign Minister Rao in New York City in late December, 1983. According to Pathak, Rao had emerged from a hotel room with the guru to indicate that he was apparently aware of their scheme, reassuring him: ‘Your work will be done.” With that, what had begun as a case against a headline-grabbing holy man suddenly turned into a political bombshell—complete with suggestions of a ministerial payoff. But in India, where so-called political commissions have increasingly become the norm in snaring state business, even the most cynical pundits were astounded when Delhi’s Chief Metropolitan Magistrate Prem Kumar promptly notified Rao that he would be charged, declaring: “Be you ever so high, the law is above you.”

Still, that precedent-setting case rests on less-than-solid foundations. Rao’s lawyers protest that he was not in New York on the day Pathak claims to have met him, prompting the pickle king to waver on the exact date. But last week, it appeared to embolden India’s new breed of anti-corruption crusaders. They charged Rao in another longstanding, and potentially far more explosive, scandal.

According to CBI reports, in 1989, the man who had come to prominence 14 years earlier as Indira Gandhi’s party fixer was in-

volved in a disastrous attempt to rescue the faltering political fortunes of her son, Rajiv, who was then prime minister. At the time, Gandhi’s chief rival in the general elections was his former finance minister, V. P. Singh, who had deserted the Congress party to lead the Janata Dal coalition on an anti-corruption platform. But shortly before the vote, newspapers seized on leaked allegations that Singh’s son, Ajeya, had opened an illegal offshore account in the Caribbean tax haven of St. Kitts. Showing deposits of $28 million, it named his father as beneficiary. The exposé unleashed a parliamentary furor until Ajeya Singh pointed out that the account bore a signature he had not used for years—one that had been taken from an outdated passport application.

No sooner had his father won the election than CBI investigators discovered that the documents had been forged. As it turned out, the account had been set up on the stationery of the defunct First Trust Corporation Ltd., a short-lived St. Kitts operation that had been co-founded by a Canadian public relations consultant named George McLean, who also served as its managing director. During a meeting in a suburban Toronto restaurant requested by the swami’s closest confidant, Kailish Nath Agarwal—who was then staying at Miller’s

house—the Hamilton-based McLean, a long-standing friend of the guru’s, had drafted the phoney paperwork for the account, backdating it to 1986 when V. P. Singh was still Rajiv Gandhi’s finance minister. Miller himself was not present at the meeting. But later, when Indian legislators ques-

tioned First Trust’s existence, one of his employees flew to St. Kitts to retrieve proof of its operations, which was handed over to the swami and, subsequently, to Gandhi’s top officials. McLean died two years ago.

Like Pathak’s original complaint against Chandra Swami, the initial CBI report on what has been dubbed “the St. Kitts affair” omitted any reference to Rao. But last week,

the charges against him centred on allegations that, as Rajiv Gandhi’s foreign minister at the time, he had summoned the Indian consul general in New York to his hotel room and instructed him to authenticate the St. Kitts’ account documents.

Still, both cases may yet prove to be far less damaging than the half-dozen other scandals currently being investigated in connection with Rao’s five-year regime. Among them: a $52-million fertilizer kickback scheme involving his son Prabhakar, and claims by a multimillionaire energy contractor named Surendra Jain that he paid Rao $1.3 million through Chandra Swami. In fact, the chief target of India’s anti-corruption squad appears to be not the man who set the country on a radical new free-market course, but the flamboyant guru he first met in the early 1970s back in their home town of Hyderabad.

Rao's swami set up the foreign meetings

At the time, Rao was the governor of the southern state of Andhra Pradesh and the swami was still known as Nemi Chand Gandhi, the son of a Congress party activist. But by 1975, when Rao arrived in Delhi to take over the party for a beleaguered Indira Gandhi, he brought along the burly selfstyled holy man, introducing him to the cream of the country’s Establishment. Over the next two decades, as Rao shuttled between the foreign affairs and defence portfolios, he periodically enlisted his brash, globe-trotting guru to arrange discreet international introductions—including to top officials in Jimmy Carter’s administration. In fact, it was during one of the swami’s first U.S. visits that he stopped in Toronto, where he met Miller. Since then, Miller’s adventures with the swami have allowed him to hobnob with Elizabeth Taylor, Richard Nixon, former U.S. house speaker Jim Wright and the sultan of Brunei.

For years, Rao has rebuffed inquiries about his relationship with the guru in enigmatic pronouncements. But the swami has shown no such reluctance, boasting of the influence at his disposal through his highpowered chela, or disciple. Recently, however, he has made no secret of the fact that he feels abandoned by his political patron, who has not visited him once during his fourmonth jail stay, and has muttered darkly about a “full confession.” Should the swami make good upon that threat, the leaders of India’s already-beleaguered political and business elite may discover that even their canniest astrologers are unable to save them from the wrath of aTantric wizard long privy to the nation’s backroom secrets.

MARCI MCDONALD