Is the focus on Defence ‘kickbacks’ exaggerated? - YES

The furore over Rs 360 crore or so “kickbacks” paid to procure 12 Agusta Westland (AW) helicopters for Rs 3,600 crore is overblown. The company has signed an integrity pact, under which it can be prosecuted in Italy or India. The allegations of kickbacks having been paid to Indian intermediaries, including former Air Force chief S.P. Tyagi and his relatives, are based on a preliminary investigation by Italy’s attorney general’s office. We should allow the investigation to take its course.

Once the allegations are proved to be correct, we have the option to cancel the contract, blacklist the company for 10 years, and ask it to pay back Rs 360 crore with interest. Why the rush to cancel the contract and blacklist the company now?

Premature cancellation can have a cross-sectoral impact on other Defence acquisitions, even though the deal is not too large in money terms. It will put the fear of God and the three Cs — CBI, CAG and CVC — into bureaucrats’ and politicians’ minds and lead to a freeze in acquisitions. This will hamper our Defence preparedness, in the face of an increasingly assertive China and the growing counter-India military nexus between China and Pakistan. It seems that the Naresh Chandra Committee looking into Defence procurement, has taken a grim view of the excessive focus on blacklisting and cancellation under Defence Minister A. K. Antony’s tenure, in the face of growing security concerns.

There can be no question of discounting Antony’s concern over instituting a clean Defence procurement process. But it is also true that establishing corruption in Defence deals has never been an easy task.

The money trail is hard to establish and zeroing in on the culprit can take quite some time. Cancelling contracts and blacklisting companies prematurely can compromise our security interests. Under Antony’s stewardship, more contracts have been cancelled and companies blacklisted in the last six years than in the preceding 15 years.

With respect to the AW deal, it must be kept in mind that a premature cancellation could push us into acquiring helicopters of inferior standards. Should we decide to keep the machines (three out of the contracted 12) already delivered, we would be forced to source spares from third-parties at high prices.

A long-term solution to the problem of kickbacks is to achieve greater self-reliance in defence production.

Our indigenisation ratio is an adverse 30:70, whereas it should be the other way round, as envisaged by Dr A. P. J. Abdul Kalam (later President of India) back in 1995. Our well-developed globally successful automobile sector can be used as a template for the aerospace industry.

Our Defence procurement procedures are quite thorough and lead to optimal choices. The Bofors gun was a good choice, as the Kargil war established. The same holds true for the AW copters and the Rafael combat aircraft. The latter has been through an exacting process of multi-agency tests.

In sum, a concern for probity is welcome, but we should not lose sight of the larger picture.

(The author is a retired Air Vice Marshal.)