A simple question that needs an answer is whether
India’s MOD
and Armed Forces may do clean defence business without legal
Agents like their civilian counterparts do in India? The
civilian firms’ agents are permitted by GOI to receive up to
3.5% of a deal in every contract, which would amount to Rs 100
crores in a deal like the Scorpene submarines acquisition, for
example. Even when Mazagon Dock Ltd (MDL) delivers a new ship
to the Navy, it is not uncommon for the yard to make a small
gift to the ship, on completion of the contract. The profits
in arms deals are massive though the road to success is
difficult and may even be barren. But that is the gamble arms
dealers with big pockets risk and HDW, Bofors, Tehelka and now
maybe the Scorpene deal may confirm this. Yet in
India it seldom gets proved in a court of law. The Supreme
Court has however banned illegal sting exposes for the time
being and that is unfortunate. Responsible media reporting
should never be muzzled and
USA has the
First Amendment to guard it.
India is
globalising and hence in the openness now engulfing the
country the subject of defence deals, agents and defence
consulting was high on the agenda in the recently concluded
DEFEXPO. The same theme was alive and kicking for Indians at
the well attended Asian Aerospace Show held in Singapore from
21st Feb. Today defence consulting before the
Request For Proposals RFPs (Tenders) are issued is legal,
heralded by CII which made it legal. CII’s website offers its
services at handsome rates, which defence companies can
afford, as India is one of the largest importer of defence
wares in the world.
Indian aviation business was the flavour of the
Singapore
exhibition and Indians signed $7b worth of aviation deals
whilst the IAF delegation led by the Air Chief were being
greeted and wooed for the impending mouth watering $6b MRCA
126 fighters deal. We witnessed how an Indian mining company
made its down payment for its second Bell helicopter, which
have proved the most versatile and economical helicopters
operating in India. 17 Bell helos were purchased in 2005–2006
by civilian firms.
Bell after service sales is also known to be excellent.
Many helicopters are now available on hire as witnessed by our
leaders flying around during elections. As these helicopter
sales were civilian purchases, agency commissions were paid
legally. We reiterate no one buys a Maruti or a Ford car from
the parent company. Purchasers have to go to the Agent who
even offers a rebate. The Indian Navy and Army delegates too
were being wooed for the large Helicopter deals held up due to
inter-service disagreements. Indian defence dealers too were
spotted at the show.
At
Singapore delegates recalled the two excellent sessions held
at DEFEXPO devoted to the newly issued voluminous Defence
Procurement Procedure called DPP 2005. The Defence Procurement
Board honchos were in the chair and admitted, in the presence
of Indian and foreign arms delegates, that they had a long way
to go before all the new rules were implemented with clarity,
especially the complicated one on 30% offsets. The Defence
Minister Pranab Mukherjee confirmed there are 30% offsets
inked into the $3.5b Scorpene deal and we will watch and track
how the French invest $1.1b back into the Indian Defence
Industry, as that is the only route available at present to
ARMARIS, THALES and MBDA, the main beneficiaries.
The French had offered to swiftly build two of the six
Scorpene boats in
France,
whilst the Indian technicians prepared MDL and the Indian Navy
for building the next four. However for reasons yet to emerge
that option was not exercised. As of now all six will be built
at MDL. Larsen and Tubro (L&T) have courageously offered to
form a JV with MDL and build three, as there is time –– the
steel to be imported will arrive only next year. The first
payment has however been made. Time is money in today’s world
but in this case it is paramount, as Indian yards have not
delivered any large ship without a 20–100% overrun in time,
though their record is improving. Even the three Talwar class
Krivacks supplied by Russia are cheaper and were faster in
build than Indian equivalents, and three more are on offer and
the MOD must clinch the deal. The ships are world class.
The private ABG Shipyard has promised to deliver the first
Pollution Control Ship this October to the Coast Guard ahead
of time. It is on these grounds that we advocate the L&T offer
and the Navy knows the track record of L&T is superior to that
of MDL. It is confidence in L&T which has made the Navy put
all its missile eggs in the BrahMos basket and President APJ
Abdul Kalam recommended the Navy put the BrahMos in the Amur
submarines offered by L&T some day. The model was on show in
Singapore at the Asian Aerospace and BrahMos CEO Dr Sivathanu
Pillai and his team, including the Russian joint head were
swamped with visitors.
The Tehelka tapes are now old hat but thanks to investigative
journalism the CBI took a civilian Jain -- a money collector
for a political party into custody, though Jaya Jaitley and
others seem to have been let off the hook. We are sure nothing
will come of it, but at least years after indulging in illegal
money taking seen by Indians and foreigners on TV to push
through a supposed defence deal, the first civilian is being
questioned by a law enforcement agency and not a committee.
The Indian Army took the courageous step to court martial the
officers who indulged in petty money taking in Tehelka and
still wonders why the Navy and the Air Force let off the four
officers in what has come to be known as the Navy’s “War Room
Leak” case. Article 311 of the Constitution by which an Armed
Forces Officer can be dismissed by the President without
pension and with no questions asked, is a British legacy meant
to be used rarely and explained in a book by Brig R P Singh
and Cmde Ranjit B Rai titled “Admiral Vishnu Bhagwat Sacked Or
Sunk”. The authors pleaded the procedure for the use of that
draconian article be spelt out as this time it was used
freely. In the Vishnu Bhagwat case it became a ‘fait accompli’
but the Government fell and did not learn a lesson. In the war
room case too media appears to have carried out investigations
and may have received intelligence and insider inputs. Outlook
has named a flamboyant NRI (the normal route commonly known to
all defence dealers for payments) Abhishek Verma, who is
supposed to have paid for naval information and has been
promised a hefty commission, but the veracity seems doubtful
if the French company Thales and their Ambassador are to be
believed.
We have heard the barb that Ambassadors are paid to lie but
that is in a lighter vein. Yet the unnecessary slur and slant
and connection of the present very capable Vir Chakra awardee
and Chief of Naval Staff’s name has been sullied and bandied
without an iota of proof by the same media. This seems to be
the most insensitive step taken by a renowned, but known to be
a sensationalist Editor and a young peppy journalist joining
together leaks, with the use of ink. Emails and shreds from
here and there to make their story.
In the case of defence officials media should avoid
sensationalism in the case of senior officials in the interest
of morale of the Armed Forces and stick to the substantive
issue of leaks and commissions. In that vein we ask who will
“Defend the Defender” in this case the CNS, the head of our
guardians of the seas? Nobody seems to be answering that. It
is a pity service officers even in high office cannot issue
statements or defend themselves in public. We admire the
courage of the CNS who had offered to resign and informed the
Defence Minister of his wife’s connection as a relation. He
did this to avoid harm to the Navy’s image and it was in the
highest traditions of the motto of the NDA “Service Before
Self”, that our young Army officers displayed on the heights
of Kargil, but his action has been misinterpreted and taken
advantage of.
In all defence deals world over money is spent to consummate
the deal and Agents are employed just as they are for civilian
deals. In India Rajiv Gandhi had banned them maybe to
facilitate the Bofors deal it seems, and the Congress and he
suffered the Bofors kickback. Four years ago the policy was
reversed but the procedure outlined for appointing Agents was
so draconian that not a single Defence Agent has been
appointed so far and it is business as usual? The rules for
appointing Agents must be made similar to those for civilian
companies.Foreign firms do that on professional basis, so that
reputations are not tarnished, and unfortunate officers like
those who got trapped in Tehelka and the war room leak, do not
suffer because of faulty Government policies. One officer in
the war room leak strongly feels he gave out commercial
information to help the Navy get the right equipment -- as he
was in no position to influence a deal, but if Agents were
legalised he would have passed the same information legally.
We have had personal experience of a major shipping company
carrying thousands of tons of project cargoes from USA
including power plants and refineries like Panipat and even
Bharat Forge to India and it was Agents who day in and day out
facilitated smooth deliveries, payments and readily answered
queries for Bills Of Ladings to get cleared by our complicated
Customs department. In the case of the cargo carried for the
MOD and
DRDO in
volumes, it was the Embarkation Headquarters who play a quasi
civilian role to take delivery of cargoes, and do an excellent
job of it as funds are put at their disposal. In a case to
make the point, no commission was paid for the LM 2500
turbines brought for the Navy from GE’s Agents in USA, Stewart
and Stevenson, but it was paid to the Mumbai agent who handled
similar cargo for three Industrial houses.
The lesson is
that Defence Agents are a must, which may not cleanse the
system, but will plug the loop holes and those who are in the
trade can hold their head high and we need not whisper their
names as we do now. |