Posted by: John Elliott | May 8, 2016

Political rivalry is more important in India than defence procurement

Defence corruption scandals in India never blow up and dominate media coverage and political intrigue for their own sake. They do not develop because the customer, neither the defence ministry nor the armed forces, want to get a better deal or catch the real law-breakers. Nor is it because the bribes may affect the quality of the equipment, even though specifications might be fudged.

The real reason is always either that a defence company wants to stir up trouble for a rival or, as in the case of the AgustaWestland helicopter (below) scandal that is currently dominating Indian politics, because politically embarrassing information has become public that one party can use against the other.

This usually happens when a scandal is being driven by events in another country. Rarely are inquiries initiated and followed through in India without being spurred on by foreign activity – in the helicopter case by recent court action in Italy involving Finmeccanica, AgustaWestland’s parent company, and in a famous Swedish Bofors gun contract during the 1980s by revelations in Sweden.

The political furore that has suddenly built up over the helicopter order illustrates many of the problems that have led India’s defence forces to be grossly ill-equipped to fight wars because the country relies on foreign suppliers for approaching 70% of its supplies and because most orders are endlessly delayed by bureaucratic inertia and blockages.

AW101_IAF

Most orders, it is also reasonable to assert, are linked to bribes, so scandals can be raked up wherever vested interests like. India’s long-awaited Rafale jet fighter order with France is now, as the media likes to put it, “under the scanner”, which could lead to more delays.

Narendra Modi’s Bharatiya Janata Party-led government is trying, with a new defence procurement procedure, to speed up orders and to increase the proportion of equipment made in India. It also plans to penalise foreign companies found guilty of paying bribes without barring them from future work, and to regulate the controversial role of defence agents.

India’s premier political dynasty, the Gandhis, has been the focus of attention in both the Bofors and helicopter scandals. In the case of Bofors, among those named were friends of Rajiv Gandhi, then the prime minister, and of his wife Sonia, now the party leader. It was widely perceived that the Gandhis or their friends and relations had benefitted on the $1.4bn contract from some  Rs64 crore (then about $50m) bribes

In the helicopters’ case, Indian names of possible recipients of bribes have been widely gossiped for a few years in private conversations and in the media – and all of course deny involvement. They range from Sonia Gandhi (named in the Italian court’s papers), and her son and heir-apparent Rahul, to Ahmed Patel, her influential political secretary, and M.K.Narayanan, a former national security advisor.

52_08_39_27_THAVD_TYAGI_1393745f_H@@IGHT_460_W@@IDTH_616Shashindra Pal Tyagi (right), who was chief of air staff from 2004-2007, is also named in Italy as a recipient, partly because his cousins are alleged intermediaries for the bribes, though it is extremely unlikely that he was operating without the connivance of top political figures.

Hinting heavily that the government wants to link the bribes and Tyagi to the Gandhis, Manohar Parrikar (below), the current defence minister, said two days ago that the government would go after the “big fishes” who got the helicopter specifications “tweaked” during the previous Congress-led administration. “There are definitely some small fish, but there will also be some big fish. We will try and best to ensure we get to the money trail,” Parrikar told the CNN-News18 tv channel.

When asked how he was convinced there were “big fish”, he said: “Obviously there were, as rules were tweaked to favour Agusta, which Antony otherwise would not have done unless someone was overseeing this.” That was a reference to A.K.Antony, the Congress government’s ineffectual defence minister who protected his non-corrupt reputation so carefully that he rarely authorized contracts or tampered with tenders unless, as Parrikar said, “someone….was over-seeing” him.

The AgustaWestland contract was relatively small, and is one of the least significant of the numerous defence orders that haven been hit by corruption allegations over the decades – beginning with an order for army jeeps soon after India’s 1947 independence and moving on to guns, submarines, aircraft and other orders.

The contract was for 12 VVIP helicopters to replace ageing Russian craft that transport the prime minister and other top leaders. It was initiated in 1999 by the then Atal Bihari Vajpayee-led BJP government and was concluded by the Manmohan Singh-led and Sonia Gandhi-influenced Congress government in 2010. Augusta-Westland’s Italian headquarters won the $450m order for its AW-101 aircraft produced at Yeovil in the UK. The alleged bribe was about $40m.

manohar-parrikar1The Italian courts have said that Tyagi lowered the Indian Air Force’s height requirement for the helicopters to operate up to altitudes of 6,000 metres so that the AgustaWestlands, which could not go so high, could be bought.

But, as Ajai Shukla, a leading defence analyst has recently pointed out, the Ministry of Defence said (two years ago) that the order to lower the service ceiling was issued by Brajesh Mishra, Vajpayee’s highly influential principal secretary and national security adviser before Tyagi became chief of air staff. (That has led to a theory that Tyagi’s cousins knew the decision had been made and extracted bribes from AgustaWestland claiming they would make sure it was implemented)

The contract was terminated from January 2014 by the then Singh-Gandhi government, by which time three helicopters had been delivered. Antony, burnishing his ultra-clean reputation, mothballed the three aircraft and banned Finmeccanica companies from Indian contracts after Italian investigators arrested Giuseppe Orsi, who headed the group, in February 2013  on charges of bribing Indian officials.

Antony did this to numerous foreign companies accused of bribery, thus outlawing leading suppliers and seriously slowing down the ordering and delivery of new defence equipment.

This was widely regarded as an untenable policy, and the current government started tentative moves soon after it was elected two years ago to levy financial penalties on companies accused of corruption instead of debarring them.

Shukla points out that Parrikar has even cited Finmeccanica as an example of the need for this change, saying that many of its 39 group companies were involved in crucial contracts with India. “Should we rule ourselves out of dealing with all of those 39 subsidiaries?”, Parrikar asked 17  months ago.

In the current political frenzy, that looks an unwise question because Congress Party leaders have asked what persuaded the current government to soften the anti-bribery stance. They are also even citing a theory (originating from one of the middle-men involved) that Modi offered to withdraw cases against two Italian marines accused of murdering two Kerala fishermen in 2012 in return for AgustaWestland evidence against the Gandhi family.

RafaleThat has led the government on April 29 to issue an almost embarrassingly long (1,350 words) statement trying to explain and justify itself.

This row will gradually fade from the headlines when another issue emerges for politicians’ and the media’s attention, though it will trundle on with Indian authorities’ investigations and can easily be ratcheted up again when political or other interests wish.

Neither the government nor the Congress however really wants to see the helicopter scandal get through to any real conclusion because of what might be revealed and because of other allegations that either side might rake up.

There are always more defence deals to be explored. The next big contract is for 36 Rafale fighter jets (above) that Modi personally ordered in a government-to-government deal (bypassing competitive tenders) for delivery “in fly-away condition as quickly as possible” when he was in Paris on an official visit in April last year.

That quick deal was supposed to cut through red tape that had virtually scuppered three years of $18-20bn negotiations for 126 of the planes after a long international tendering process. But, 13 months later, negotiations for the 36 have not been concluded, partly because of India’s demands for price cuts and for France’s “fly away condition” to include 50% of the price being offset by work done in India.

And now that too has become controversial because the Indian government has ordered an inquiry into arms deals started under the Congress government, and that includes the original 126-aircraft as well as others including Swiss-made Pilatus helicopters.

All of which shows that India’s politicians are more interested in scoring political points and embarrassing their opponents than they are with equipping the country’s defence forces with the aircraft and other equipment they need.


Responses

  1. John This is the great Indian Circus at the cost of tax Payers Money. They are all the same, indulging in witch hunting. Whither development agenda or removal of corruption? God save us and our country. We are becoming vulnerable by the hour. Everyone knows of the chinks in our Armour.

  2. Certainly true about the ongoing shenanigans re politics and alleged corruption in the current helicopter procurement row .But India is by no means unique . Corruption , in defence contracts , has always been a worldwide epidemic . Worth remembering how Tony Blair stopped the SFO investigation into the alleged massive corruption on the BAE Saudi Al Yamamah contract , on grounds of Britain’s ” national security ” !

  3. You’re really intelligent, must be someone from intelligence department


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