By Sumon K. Chakrabarti / New Delhi and Omar Waraich / Islamabad
http://www.time.com/time/world/article/0,8599,1985339,00.html

"At 53, she was bored, alone and attractive. Single, but definitely one step ahead to mingle." That's how the man who led the operation to bust Madhuri Gupta, the first Indian diplomat to be found spying for Pakistan, described her. For most of her two years in espionage, Gupta was a lone wolf, conducting a classic spy operation from her base in Islamabad. Old-school "dead drops," in which she passed off information without even meeting her Pakistani handlers, were her signature style. Yet it was a silly indiscretion — sending e-mails to her spy bosses from her office computer — that finally led to her arrest.

Gupta had not exactly been near the center of Indian decisionmaking, posted as a second secretary in the media section of India's high commission in Pakistan's capital, where her job was to provide English and Hindi summaries of Pakistan's Urdu-language newspapers. On April 22, the 53-year-old was summoned back to New Delhi ostensibly to help colleagues prepare for the ongoing South Asian Association for Regional Co-operation (SAARC) summit in Bhutan. After landing at Indira Gandhi International Airport, she was whisked away by officials of the Subsidiary Intelligence Bureau (IB), India's internal intelligence agency, to an interrogation chamber in an undisclosed location. Twenty-four hours later, she was handed over to Delhi police and charged with treason and accessing confidential documents under India's Official Secrets Act.

"Her spy game was up the moment a joint secretary — an IB officer — inside the Islamabad mission suspected her around October 2009 and reported back," a high-level IB case officer in New Delhi told TIME. The IB launched a massive counterintelligence operation, in which even its counterparts in the Research and Analysis Wing (R&AW), the country's external intelligence agency, were kept out of the loop.

Over the next six months, Gupta's every step was monitored. She was found to be taking undue interest in informal discussions among the senior embassy officials regarding important policy matters, including India's strategic plans in Afghanistan and resuming a dialogue with Pakistan. She was even fed with incorrect information to be passed on to her Pakistani handlers, suspected to be from the Inter-Services Intelligence agency.

Pakistani authorities refused to comment on the case, but analysts in Islamabad saw her arrest as an attempt to scupper upcoming planned talks between India's and Pakistan's Prime Ministers. "The timing was supposed to send a signal that India is not ready to talk to Pakistan yet," says Cyril Almeida, an editor and analyst at Pakistan's Dawn newspaper. "India has not moved beyond its post-Mumbai phase," she continued, referring to the 2008 terrorism attacks that Indian and Western authorities say originated in Pakistan. "It is not looking for talks with Pakistan anytime soon."

India's Prime Minister, Manmohan Singh, was scheduled to meet his Pakistani counterpart, Yousuf Raza Gilani, this week, though the purpose of the talks has been contested. After breaking off all dialogue with Pakistan after the Mumbai attacks, Indian officials suggested a bilateral meeting on the sidelines of the SAARC summit to discuss a long-running water dispute, but Pakistan has made clear that it wants formal, open-ended peace talks. As Pakistani Foreign Minister Shah Mahmood Qureshi told India's CNN-IBN network on Tuesday, "We need to go beyond a handshake."

Asked whether the two Prime Ministers would still hold talks in Bhutan this week, Pakistan's Deputy Foreign Minister, Malik Amad Khan, told TIME, "Maybe, maybe not, but that's totally independent of [the spying] allegations."

Almeida notes that espionage efforts to "turn" the other country's diplomats are par for the course between the longtime rivals, but "given [Gupta's] relatively junior position, it is unlikely that she would have had access to sensitive documents, unless there was a real breakdown internally."

Indian government sources say Gupta had been spying for Pakistan since September 2008. "We have reasons to believe that she was not recruited inside Pakistan," says a senior officer in R&AW. "Possibly she was picked up and nurtured either in Baghdad or Kuala Lumpur, where she was posted earlier." The agency says this could have been a reason why she was keen for a Pakistan posting — usually a last choice among Indian diplomats and intelligence officials.

Vishnu Prakash, a spokesman for India's Ministry of External Affairs, says Gupta is "co-operating with the investigations and inquiries." Sources tell TIME that she has told interrogators that she spied for Pakistan to settle scores with senior Indian diplomats who mistreated her early in her career. She has also reportedly confessed that a prominent Pakistani journalist put her in touch with Pakistani intelligence officers.

Her bank-account records are being scanned, her official computer and personal laptop have been brought back to Delhi for analysis, and her personal relationship with a Pakistani intelligence officer, identified thus far only as "Rana," is being investigated. Gupta claims she was romantically involved with Rana, but she was also being blackmailed by him into sharing information. Gupta now faces dismissal from service, an in-camera trial and a maximum of 10 years of rigorous imprisonment.

The IB investigator who spoke to TIME says the only sensitive material that Gupta managed to pass on to Pakistan concerned "partial information on [India's] strategic plans in Afghanistan." That has come as a relief to Delhi, though investigators are still checking as to whether Gupta was used to plant bugs in the Indian mission in Islamabad.