New Delhi, 14 April 2001

The Problem

With the wide showing of the Tehelka tapes, investigative journalism via electronic devices has come to India, to haunt and entertain Indians all over the world in the comfort of their drawing rooms. Suddenly bureaucrats, businessmen, uniformed personnel and politicians have become alive to the fact that their wrong doings which were conducted in the open, and which over time had become acceptable, are now susceptible to pictorial exposure. The power, range and speed of the TV, internet freedom and radio (which is still government controlled in India) is capable of immediate impact. Denials have become more difficult. In the recent past no major case of corruption registered by the CBI or brought to light by the CVC has resulted in convictions because of our dilatory legal processes and difficulties to bring to light hard evidence. This has made people in power brazen.

The hawala route for pay offs in big deals is also employed which is called (OGL). It has become convenient in a sense, acceptable, especially for political parties and leaders whose accounts and assets are never made public. Political parties make travel arrangements in private planes and helicopters for election rallies and meetings without a thought about the extravagant and casual display of money! No questions ever get asked. Yet in almost every walk of public life the ways of corruption are known, aided and abetted by the public at large to get their work done or to make a quick buck. Grease money has become acceptable.

Media discussion on Tehelka tapes in which so many have talked with abandon, has brought to light the involvement of power brokers in defence deals. The canaries are now singing and journalists are exposing them to an angered and disillusioned nation. Prem Shankar Jha writes of cuts in sugar import deals and names an STC Chairman and NRI Swaraj Pal. He also names a company called Globetech, which was to receive 6% commission in a submarine deal. Rear Admiral Raja Menon who was closely associated in HDW writes "The HDW pay off money was removed by a dissenting family member who went to start her own political party".

K Subrahmanyam writes of the Morarji Desai era when a friend of Morarji was the Bofors agent and adds, "Sanjay Gandhi functioned as a middleman in arms deals" and additionally claims that all this information was available with the Intelligence Bureau. Mohan Guruswamy has stated that Hindujas are involved in the BAe 66 AJT deal and quoted the commission figures. Media reported that Hindujas sat at a dinner table with Mr George Fernandes and BAe officials in London when the deal was nearing consummation. In the 10 Mirage deal from Dassault cleared last year by George Fernandes, the name of Keyser Corp has cropped up as Agents. The role of the PMO has been hinted at and it is common knowledge that the PMO's czar Brajesh Mishra handles defence deals with Russia, as these have political ramifications and money dealings too.

Role of Middlemen

The role of middle men like the Chaudhary brothers, Khannas and Nandas is now in the open and former CNS Admiral Vishnu Bhagwat had gone ballistic on this, before he was sacked by Fernandes. He is now firing his guns back from his hot selling book " Betrayal of The Armed forces" and the media interviews, with relish. Bhagwat has joined the Vigilance Commissioner Vittal who is an IAS colleague of Yashwant Sinha, the Finance Minister and keeps repeating, "I told you so". Bhagwat joined the Congress, just when Air Chief Marshal N C Suri resigned. George Fernandes keeps screeching from perches that there is no truth in all this and it is a conspiracy to destabilise India.

The truth lies between the two statements. The matter of large secret commissions in defence deals in India and abroad became more rampant ever since Rajiv Gandhi banned professional defence agents. Touts and middlemen then entered the scene. The after effects of Kargil led the defence purse strings wide open for lobbying and buck making. Fourteen years have elapsed since the Stockholm Radio blew the whistle on the Bofors pay off in April 1987. This one innocuous broadcast of investigative journalism set the political road map of the Congress then in power with two third majority in Parliament, on a topsy turvy course which still haunts India, and that too for a mere take of Rs 63 crores. Close confidants and friends of Rajiv Gandhi, who were also ministers in his cabinet, Arun Singh and Arun Nehru assisted to seal the Bofors deal. Arun Singh who vehemently defended the Bofors deal in a high powered Armed Forces Chief's brain storming seminar at Pune earlier that year was to fall out with Rajiv and Sonia ostensibly on the Bofors issue. Both the Aruns surely know more than what they are willing to disclose. Arun Singh a dapper Cambridge tripos and royalty and ex Major Jaswant Singh are today mustering their skills, and knowledge to clean the rot. Arun Singh is employed at Secretary level (Rs.30, 000/0pm) on a contract basis, as the powerful Adviser to both the External Affairs and Defence Ministries to repair the damage done by the Tehelka tapes and implement the recommendations of the Group of Ministers for overhauling the higher organization of Defence and Intelligence. (We wish him luck and pray he does not repeat a Bofors or Operation Pawan, The Sri Lanka type of foray. He handled both these in good faith for Rajiv though both proved to be unmitigated disasters. Bofors derailed the country and in Op Pawan 1400 brave souls lost their lives. Today the CDS issue is being handled by him and if not steered well could spell more harm than good).

Ottavio Quattrochi is dodging the Indian law whilst hibernating in Malaysia. How he got Rs.43 crores from AE Services into his Swiss account and then to Luxemburg and Liechtenstein and Panama still remains an unanswered question! The Hindujas are stuck in India and take walks in Lodhi gardens with other VIPs as a CBI court hears their appeal to travel abroad. Rajiv's loyal and obedient Defence Secretary of the time Shri S K Bhatnagar who penned an order banning Defence Agents is still on trial and so is the legal Agent of Bofors Win Chaddha, who became the illegal Agent in 1986. He is very ill and claims he received winding down charges and not commission. He should tell that to the marines.

This time round in a fictitious defence deal, the Tehelka tapes have re-opened a Pandora's Box on defence purchases. The Tehelka exposures have caused another twist in Indian politics that is shaking the NDA coalition. Two enterprising journalists pretending to be Defence Agents captured most people in seats of power and Czarina Jaya Jaitly, operating from the Defence Minister's house, by the remote electronic cameras and digital tape recorders. Their interviewees sang like canaries whilst some took money like touts. Now we come to the genesis of the problem.

The Tehelka Sucker Punch

The tehelka tapes have unleashed data on the modus operandi of defence deals in India by a live example of the pursuit of a deal for infra red binoculars. The fingers are now pointed at all defence deals. The Army and the Navy rushed to explain their side of the story to the media in the cases that were blurted out by Gupta and Jain. The Flag rank officers Lt Gen S S Mehta and Vice Admiral Arun Prakash both professionals in their own right, had their arm held valiantly by the respected journalist B G Varghese to ostensibly guide them through.

The media tried to grill them but the brass vehemently held their ground and stated they are unaware of any defence middlemen or agents and that they are honourable men. Yet Maj Gen Murgai, Col Berry and Maj Sarabjeet Singh all now retired and into the arms business explain clearly their employers, who pays their keep and how they operate. Even for a non-existent product, Rs 11 lakh changed hands and the names of the Chaudharys, Khannas and Nandas were revealed with aplomb. The treasurer of the Samata party S K Jain boasts he went to Russia with Mrs. Jaya Jaitly and George Fernandes's blessings to sign some deal connected with MiGs. The visit has still not been denied. The whole situation smacks of the tragi-comic! Boastful Army Officers like Maj Gen Manjit Ahluwalia stand exposed and Maj Gen K S K Chaudhary and others who took money stand disgraced.

Defence Agents

It needs to be noted that before 1986 Defence Agents were perfectly legal in India and the world over. They are seen as an essential cog in the wheels of defence or for that matter any business. On retirement service officers world over are encouraged to represent professional defence companies, as they, better than the layman, understand the wares, expected to healthily compete and be honourable suppliers to the Armed Forces. Defence budgets are large and needs are inescapable. In India Bofors had Cdr Rao, Austria's Noricum, media reported, had their agent in Mr. Bhupender Singh son-in- law of Maj Gen Bhakri. The list could go on and the Ministry of Defence has all their names on files, officially recorded.

In the arms bazaar some modern pay offs to political parties were also seen to be accepted world over but these need not be exhorbitant and rampant. These animals called defence agents attended meetings in the MOD and dialogued on behalf of their principals. Fax machines were unheard of in Service Headquarters till 1986 and communication to foreign suppliers was through these Agents.

The clause for Agency commission which is common to all Government contracts in existence is tabled below for information:

"Agency Comission Clause

Total FOB Contract Price (To Be Mentioned):

The above prices are inclusive for the Agency Commission payable to Contractor's Indian Agents. The Agency commission is 5% of the FOB value of the shipped goods payable to the purchaser to contractor's agent in non-convertible Indian Rupees at the TT buying rate of exchange ruling on the date of order.

Agent will submit the bill together with certificate issued by receiver regarding receipt of material in good condition in accordance with the contract. Commission amount is as tabulated below.

ITEM Agency Commission (IN U.S DOLLARS)


(b) ….. etc etc "

With the above preamble it is amply clear that the no "Defence Agent" clause introduced by Rajiv Gandhi only in Defence contracts was a farce because the principals including Russians always cater for commissions as an International practice. There is so much equipment that is common to the other ministries and departments like Home, Intelligence and civilian users of vehicles, power generation and communication equipment.

George Fernandes went on TV soon after resigning and told the nation that the vendors had certified in writing that they had not paid any commissions, as if they were going to admit even if they had done so. The Defence Contracts are large and it is no wonder that the pay offs too are large and now take place via offshore accounts or the hawala route, because Rajiv banned it.

To control corruption in arms and other big deals the quality of government is important. Today managing a resource-laden country like India is easy if you have good leaders and an effective government. The people are talented and capable. But it is because of the likes of Georges, Sukh Rams, Vermas and Joshis who have personal agendas and causes, that the government will remain sick, as Tehelka has revealed.

The Solution

In his book "Indians Why We are What We are ", the author has taken pains to explain that money taking for political parties cannot be completely eradicated but needs to be curbed. In Indonesia and Malaysia my defence friends explained, "Do not mistake a little grease money to execute a job well, as corruption. It is speed money to oil the wheels, but if money is taken because of influence to cheat the public that is corruption". The conclusion is that middlemen have blossomed in India's defence deals, because legal defence agents are banned and Tehelka amply exposes this.

For better governance and less corruption, professionals and retired officers must be permitted to legally work and represent Defence hardware companies.

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