India's Gandhi besieged by critics in wake of aide's resignation. Move seen as lending strength to accusations of ruling party graft

The political community here is still reeling from the dramatic resignation of one of India's top officials over the weekend. The resignation of Defense Minister Vishwanath Pratap Singh late Saturday has raised serious doubts about Prime Minister Rajiv Gandhi's credibility and has lent strength to speculation of corruption and misconduct within his government and political party, Congress (I), say analysts and opinion makers here. Strong accusations of corruption are being leveled at Mr. Gandhi.

Analysts also say that the resignation is the strongest evidence yet of Congress (I) infighting and of Gandhi's inability to hold his party together.

While the reasons are still not clear, Mr. Singh resigned just two days after his disclosure that he ordered an investigation into a multi-million dollar foreign arms contract involving a 300-million rupee ($23 million) commision to an Indian agent. It appears that the decision to investigate was made without Gandhi's prior knowledge or approval.

Opposition leaders said in a statement that the resignation ``confirmed the suspicion that the government and the Congress (I) Party leadership would go to any length to hide truth and conceal corruption in high places.''

Before his revelations on the defense contract, Singh had played a key role in other controversies involving the hiring of an American detective agency to investigate illegal overseas foreign exchange dealings by Indians; a purported investigation into similar actions by India's leading film star; and investigation of financial dealings by a giant textile company. All these issues have been politically embarrasing for Gandhi. Singh came under severe criticism from senior Congress (I) leaders.

Singh reportely said that he resigned ``to nail the lie of those who have been carrying on a ... campaign that I am overambitious.''

Singh had the cleanest reputation among Gandhi's Cabinet ministers. He was formerly finance minister, but was abruptly shifted by Gandhi to defense in January, ostensibly to deal with tensions with Pakistan at the time. His campaign against tax evasion by local businesses made him unpopular in government and industry circles, and in the Congress (I).

It was during Singh's tenure as finance minister that he reportedly hired an American detective firm, the Fairfax Group based in Annandale, Virginia, to investigate alleged illegal financial activities by Indians overseas. The probe evidently focused on Dhirubhai Ambani, head of a large Bombay-based textile firm, Reliance Industries Ltd.

Singh's critics say that hiring foreign agencies could compromise Indian government officials and the country's interests. Singh maintains that there was nothing illegal about a government buying intelligence or engaging a foreign firm.

The circumstances in which Fairfax had been hired are now under investigation by an inquiry commission.

Some analysts and newspaper columnists say Singh's directive to probe defense contracts was aimed at embarrassing Gandhi. ``The manner in which the defense minister released the report regarding an alleged payoff ... does not leave the slightest scope for doubt that Mr. V.P. Singh has deliberately tried to outflank and embarass the prime minister,'' says a report in the Times of India.

Although Singh has not disclosed details of the defense contract in question, it appears there may have been violations of the Defense Ministry's policy, introduced last year, of banning defense transactions through middlemen.

While there is no evidence so far, widespread speculation holds that Gandhi and his trusted officials tried to stop the investigations into Reliance. Mr. Ambani is said to be a Congress (I) supporter and many party officials in government are thought to be Reliance shareholders. Gandhi's officials, speculators say, may have been concerned that investigations might reveal illegal political contributions.

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