Corruption scandal

A shocking revelation by India's army chief General VK Singh last month that he was offered a hefty bribe by a lobbyist to approve a procurement deal has again raised the thorny issue of arms agents and their contacts to senior military and defense ministry officials.

The bombshell forced the government to institute a high-level inquiry and the Central Bureau of Investigation (CBI) is currently conducting a probe into whether a serving general was indeed offered a bribe to clear the purchase of substandard vehicles.

With the dust barely settled on this controversy, Defense Minister A. K. Antony ordered a fresh inquiry into allegations of misappropriation in the procurement of 12 helicopters for the VVIP Communication Squadrons of the Indian Air Force (IAF) from Italian firm Agusta Westland worth 788 million dollars (606 million euros).

“I can assure you, I will seriously pursue the inquiry,” Antony told parliament Wednesday, adding that his ministry had asked the Indian Embassy in Rome to provide a report on an investigation carried out by Italy on the issue.

Middlemen in defense procurements

The dilemma over the presence of procurement agents has troubled several governments, particularly after the Bofors howitzer bribery scandal surfaced over a quarter of a century ago. Since then, authorities have tried to fine-tune the country's cumbersome procurement system, which causes huge time delays. However, the agents refuse to go away.

“There is no way one can get rid of them. In India, such characters will exist. One has to evolve a system where they can operate legitimately and we have not done that. Has anyone been blacklisted to date,” Lt. General Ravi Sawhney, a former deputy chief of army staff told DW?

Even Lt General Shankar Prasad, a retired director-general of the infantry, said that, despite the numerous defense scams, no method had been found to make the procurement process legitimate.

“With such big-ticket defense deals in the offing, murky characters will be prowling, and trying to bribe vulnerable sections. Why has the defense ministry not been able to register them as official agents for companies? This is a huge failing and we must revisit this soon,” Prasad told DW.

Other defense analysts argue that from preparation of the tender document to evaluation and final selection, arms dealers try at every stage to manipulate the process to suit the firms they represent.

“What has made India such a flourishing market for arms dealers is its over-dependence on imports. India buys more than 70 per cent of its arms requirements from the international bazaar, generating just 30 cent indigenously. This excessive reliance on foreign firms is the key reason why arms dealers are flourishing in India,” defense analyst Josy Joseph told DW.

India – a profitable market

A recent report titled ‘The Indian Defense Market 2012-2022' finds that India's strong and dynamic growth in military spending will continue through the next decade as the government seeks to fulfill its ambitious defense modernization plans.

It reckons that the government plans to spend about 50 billion dollars over the next five years to upgrade its military.

That India is being eyed for its lucrative defense market was evident at the Defense Expo event in late March where more than 550 global defense firms from 32 countries displayed weapons systems for the army, navy and internal security forces.

“The market here is definitely going to be a big market. Certainly, in the long-term, and probably in the mid-term and the short-term, it is important to be here on the ground to make the connections, network, and know the procedures,” said US embassy charge d' affaires, Peter Burleigh.

In fact, this year, Prime Minister Manmohan Singh raised defense expenditures to 40.44 billion US dollars, representing a rise of nearly 18 per cent over the previous year's outlays – one of the highest increases in recent years. For some, this could be interpreted as an open invitation to back room deals.

Author: Murali Krishnan
Editor: Gregg Benzow