India’s latest defense scandal
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India’s latest defense scandal

Scrapped chopper deal exposes murky underbelly of India’s defense acquisition process, writes Asia Sentinel’s Neeta Lal

Few eyebrows were raised when India was forced to scrap its US$770 million helicopter deal with Italian defense group Finmeccanica’s AgustaWestland earlier this month. It was only the latest in a long and depressing litany of defense procurement scandals stretching back at least to the mid-1980s.

The pact for the supply of 12 choppers, three which have already been delivered, came under the scanner following allegations of kickbacks worth US$60 million being paid to top Indian Air Force officers by Finmeccanica’s then chief executive Giuseppe Orsi who was later arrested by Indian authorities.

New Delhi has also frozen payments for three of the supplied AW101 helicopters even as it investigates the involvement of its former air force chief, SP Tyagi in the treaty. The episode is especially embarrassing for the ruling UPA government in the run-up to parliamentary elections due this May.

The defense ministry has struggled with the decision to terminate the contract for months. But following a Joint Parliamentary Committee enquiry into the matter, which established a “breach of integrity,” coupled with the ruling coalition’s rout in the recent five-state assembly elections largely due to corruption allegations, the decision seemed inevitable. Scrapping of the choppers means that the defense ministry will now have to start over to search for the VVIP helicopters even as obsolete 1975-era Russian Mi-17s remain in circulation.

Graft allegations in India’s big-ticket defense imports go back to the 1987 Bofors artillery guns scandal, which implicated the then Premier Rajiv Gandhi, along with top Indian politicians and key defense officials, for receiving kickbacks from Swedish company Bofors AB to the tune of US$ 9.8 million for winning a bid to supply India’s 155 mm field howitzers. The scam’s immediate fallout was the ignominious defeat of Gandhi’s ruling Congress party in the November 1989 general elections.

The corruption allegations in defense deals over the past two decades are surprising given the stringent rules governing defense procurements. The government can cancel a contract if an integrity pact in the rules is violated, with the seller having to forfeit any security money it had deposited as a bidder.

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