India's Foreign Minister Fired in Oil-for-Food Scandal

By John Lancaster
Washington Post Foreign Service
Monday, November 7, 2005; 1:09 PM

NEW DELHI, Nov. 8 -- India's foreign minister, Natwar Singh, was fired Monday amid charges that he reaped illegal profits from the United Nations oil-for-food program in Iraq, as the ruling Congress Party sought to contain a burgeoning political crisis over the scandal.

Singh, 74, and the Congress Party were named as beneficiaries of illegal oil deals in a report last month by a U.N. panel investigating abuses in the program, which permitted the government of former Iraqi leader Saddam Hussein to sell oil and use the proceeds for food and other humanitarian goods

The panel, headed by former U.S. Federal Reserve chairman Paul A. Volcker, accused more than 2,400 businesses and individuals around the world of paying nearly $1.8 billion in kickbacks to secure deals under the program.

Singh and the Congress Party are accused of benefiting from murky transactions involving the purchase of Iraqi oil by a Swiss-based company that allegedly made illegal "surcharge" payments to Hussein's government. The Swiss firm, Masefield AG, is alleged to have made the payments through an intermediary who is a close friend of Singh's son.

Singh has denied the charges, telling the private NDTV network last week that he has never heard of the Swiss company and that "I don't even know how to go and buy oil. And what a barrel looks like." He said he had no intention of stepping down.

But the charges have mushroomed into a political crisis for the party and Prime Minister Manmohan Singh, who on Monday summoned the foreign minister to his official residence and demoted him to the post of minister without portfolio, according to a statement issued by the prime minister's office.

The prime minister's move came after days of equivocation by the government, which first seemed inclined to support the foreign minister, but then retreated after the main opposition Bharatiya Janata Party began campaigning for his removal.

Another factor in the decision to remove Natwar Singh, analysts said, was the government's eagerness to avoid a fight with the U.N. at a time when it is campaigning for a permanent seat on the U.N. Security Council.

On Monday, the government appointed a former chief justice to head an inquiry into the affair, the second it has launched in as many days.

The Congress Party has a history of corruption scandals, and political analysts described the latest one as a serious blow to the ruling coalition, which took power in May 2004 after winning an upset victory over the Bharatiya Janata Party in national elections. Volcker's report lists Singh as a "non-contractual beneficiary" of a deal allotting 4 million barrels of oil to the Swiss company. The Congress Party is listed the same way in connection with another allotment of oil.

The report has touched off a frenzy of reports in Indian media detailing alleged connections between the Swiss firm and another company run by a close friend of Singh's son, Jagat. A report last week in the Indian Express revealed that Jagat Singh had traveled to Jordan in 2001 within weeks of his friend depositing the illegal payments in a Jordanian bank. Natwar Singh has described the trip as a coincidence and a Masefield executive has denied any connection with the foreign minister or his son.

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