INDIA DEFENCE CONSULTANTS

WHAT'S HOT? ANALYSIS OF RECENT HAPPENINGS

NO DEFENCE AGENTS PLEASE, ONLY MIDDLEMEN

 WE'RE INDIANS

 

New Delhi, 07 August 2001

This piece was provoked by George Fernandes's TV interview with Vir Sanghvi on Sunday 5th August in defence of himself, his Samata party President Jaya Jetley and others who accepted gifts as revealed by the turbulent screenings of the Tehelka expose. George Fernandes reiterated that Tehelka was a conspiracy and he claimed he resigned to uphold the morale of the Armed Forces. That was no doubt a very laudable act.

However Tehelka did unfold the presence of information seeking peddlers and middle men and pointed to corruption in defence purchases. We now venture to highlight the cause and offer a remedy for the malaise which armed forces retired officers get involved in, while trying to peddle arms on behalf of bigger players.

This opinion also lends voice to what many ex-servicemen wish to express. The majority feeling that needs to be redressed, is the no rules defence purchase system which has aggravated matters. Recently the case of a retired Air Vice Marshal J S Kumar, who got trapped offering money for information regarding the IAF VIP Squadron aircraft purchases made headlines. The officer was allegedly tempting uniformed personnel with monetary gifts, to ferret out market intelligence for his principals.

It is well known that some commission money invariably changes hands discreetly in the Arms Bazaar for the coffers of political parties the world over. If caught, the punishment is swift and the laws and contracts are made more stringent. In Japan PM Tanaka went to jail for the Lockheed scandal and USA changed its laws. In UK John Aitken, a former Defence Minister served a jail sentence and Roland Dumas the Foreign Minister of France stands convicted for his role in the Frigate sale deal to Taiwan where the money was siphoned through ELF, a major oil company. Dumas claims it was with the knowledge of his Prime Minister. In the Tehelka case the Army has taken action against Major General P S K Choudhary and four serving officers. However, in most cases the money peddling middlemen, politicians and bureaucrats involved get away Scot free because evidence is wanting, as was the case in the HDW and Bofors deals.

Unfortunately, in our country, there has been no debate on why there are rampant allegations of corruption in defence deals and why retired defence officers get involved for a pittance. There is a one line answer. It is because there is no set procedure, rules or transparency in defence deals.

Since 1986 the Ministry of Defence has been aimlessly following the "No Agent Clause" for Defence purchases. On this subject Admiral R H Tahiliani, in the latest June issue of the USI journal in an article titled "Corruption in Arms Trade" has commented, "However the agent did not disappear but merely went underground, so to speak". He was the Chairman Chiefs of Staff Committee, when the edict was announced by Rajiv Gandhi for the Bofors deal, and he should know.

It is well known that sleeping Agents like those in the Intelligence trade still flourish and some don the NRI garb. Singling out defence purchases when all other Ministries permit Agents, who receive legal commissions, defies reason. No business in the world is conducted with out Agents and as an example one does not buy refrigerators or cars from OEMs but from Agencies who compete openly and offer professional service and life cycle product support.

In Defence procurement world over, legally appointed Defence Agents are appointed to encourage transparency and professional interaction with the services, which reduces, but cannot eliminate the chances of political touts as middle men. In fact George Fernandes in the TV interview categorically admitted there were middlemen in India but refrained from naming any.

In India because no agents are permitted, middlemen who know nothing of the equipment, use retired service officers because of their expertise and contacts, to lubricate the deal and they take the commission most times under the plea it is for the party. This is what has happened in India, as the Tehelka tapes so vividly exposed.

K Subrahmanyam has written of the Morarji Desai era when he states a friend of Morarji was the Bofors agent and adds, "Sanjay Gandhi functioned as a middleman in arms deals". He also writes that all this information is available with the Intelligence Bureau. In fact it is common knowledge that Messrs Win Chaddha and Jajodia had sat in on the negotiations on the HDW SUT B torpedoes and Bofors deals, before defence Agents were banned.

Mohan Guruswamy has written that the Hindujas are involved in the BAe 66 AJT deal. Media reported the Hindujas sat on a dinner table with Mr George Fernandes and BAe officials in London, when the deal was nearing consummation. In the 10 Mirage 2000H deal from Dassault cleared and paid for last year during George Fernandes' tenure, the name of Keyser Corp had cropped up as the Agents. Maj Gen Murgai who took money from Tehelka operatives had stated that he had not transgressed the Offcial Secrets Act or any law, but used his professional knowledge and contacts to further business, which is what business and competition in capitalism is all about.

It is also surprising that the Government has announced an investment policy for private and foreign participation in the Defence Sector, without permitting the vehicle of Agents to operate. This defies logic as those who wish to enter will surely have to survey the market via Agents and their Indian partners will act as Agents in the first instance. 

The conclusion one can draw is that middlemen have blossomed in India, because legal defence agents are banned, and Tehelka exposed this lacuna. The policy needs a relook. Then professionals and service officers can legally use their expertise and seek employment in the glare of transparency and public knowledge, and not do so secretly as is the case at present. Perhaps there are strong vested interests that wish to keep this activity reserved for themselves through shady middlemen, rather than allow the lowly retired defence officers to earn an honest living!

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