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Should corruption stop defence deals?

Source : BUSINESS_STANDARD
Last Updated: Fri, Feb 15, 2013 20:24 hrs
Chopper

Has anything changed since April 1987, when the first news of the Bofors pay-off scandal broke? Actually, plenty. For a start, the government's response is dramatically different in the AgustaWestland case. It has ordered immediate action in terms of stopping payment, putting the deal on hold, handing the matter over to the Central Bureau of Investigation, and issuing a comprehensive account of the deal's history. This is whole worlds apart from the silly first response to the Bofors revelation (the Cabinet said the disclosures on Swedish radio were a conspiracy to weaken India, or something to that effect). Subsequent responses gave every impression of a cover-up, whether true or unintended. The result is that attention today is focused on the supplier's agents and those whom they dealt with, rather than the government as a whole (the prime minister and defence minister are specially seen as being above board). This will limit the political fallout, unlike Bofors which sucked Rajiv Gandhi into a vortex from which he never emerged until he lost the elections.

The country has also learnt that corruption in defence deals is a fact of life, and has to be dealt with maturely. In the last three decades, we have had corruption charges levelled in the context of submarines from HDW (Germany) and Scorpene (France). The scandal-prone search for a successor to Bofors guns has already resulted in companies being blacklisted in South Africa (Denel) and Singapore (Singapore Technologies), as well as Russia, Switzerland and Israel. Barak missiles from Israel also came under suspicion, but the deal eventually got cleared. The banned companies have been privately and publicly owned, or partially publicly owned (as in the latest helicopter case). As a way of escaping corruption charges, India has done deals with US arms suppliers at terms negotiated by the US defence department, while single-vendor deals have also been negotiated with Russian companies for MiGs and Sukhois, not to mention the troubled Gorshkov.

It is entirely likely that what has emerged in the public eye is only a fraction of the total pay-offs. India is the world's largest arms importer, and the stakes therefore are huge; some production lines in supplier-countries have avoided a shutdown (including at Bofors, and perhaps at Dassault) only because of Indian orders. Given the complexity of the equipment and therefore the scope for fiddling with specifications, the innate secrecy as well as the size of the ticket, it would be almost unnatural if there were no corruption involved.

The key decision, once a pay-off surfaces, should be whether to cancel the deal or let it go through. Indian naval as well as ship-building capabilities have suffered because the domestic manufacture of HDW submarines was called off following pay-off allegations, though no one was prosecuted. Successors to the Bofors guns are desperately needed, and if the Barak missiles had been blacklisted that too would have been an important setback. The helicopters for VVIPs are less indispensable (indeed, one wonders why 12 such choppers were needed in the first place). But defence hardware is a field where there are only a few specialised manufacturers, so a long black list of banned suppliers would come in the way of competitive bidding and in some cases even availability. It would make sense, therefore, to build in clauses for financial penalties if wrongdoing surfaces, but allow the deals themselves to go through in cases where the pay-offs have not vitiated the selection process (as was correctly argued in the Bofors case). 

The Kargil war of 1999 might have had a different outcome if the Bofors order had been cancelled 12 years earlier, as the then army chief had recommended.



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