Blacklisting is not the answer
In cases of alleged corruption in defence deals, as a matter of policy, the Ministry of Defence must separate offence from the contract and deal with the former rather than cancel the contract itself and jeopardise national security.
The Attorney General has advised the government that a ban on the Italian conglomerate Finmeccanica, whose UK-based subsidiary AgustaWestland is enmeshed in the VVIP helicopter scam, would jeopardise the battle-readiness of the armed forces and impinge on national security. Blacklisting Finmeccanica along with its several subsidiaries that supply weapon systems, radars and ammunition to the Indian armed forces, is not advisable since the ongoing CBI investigation and the subsequent trial in the VVIP helicopter scam could take over a decade to be completed. The government has also decided against blacklisting Rolls-Royce currently under the CBI scanner for allegedly paying hefty commissions to Indian agents to secure contracts. The defence ministry will clear those projects with Rolls-Royce that are crucial for operational urgency and national security.
A.K. Antony can pat himself on the back for being the “longest serving Minister of Defence”. But as far as the Indian Armed Forces and the nation at large are concerned, Antony’s tenure as the Minister of Defence will be known more for scams in deals pertaining to procurement of military hardware, blacklisting of several leading aerospace and defence firms from South Africa, Singapore and even Israel with whom the nation had for long enjoyed a robust relationship, even during the cold war era. Antony’s somewhat misplaced obsession for honesty, personal integrity, transparency and his penchant for ordering investigations at the slightest hint of misdemeanour in the processing of tenders, slowed down the procurement process that is already subject to intense scrutiny by a multi-layered bureaucracy.
Antony was also somewhat trigger-happy in ordering cancellation of contracts not only in the last minute but even half way through its execution. The tender for artillery guns for the Indian Army was cancelled five times leaving the Indian Army even today without a replacement of the obsolete Bofors guns. The most recent case was that of the contract for 12 AW-101 helicopters for VVIP travel. Cancellation of this contract after the delivery of three platforms to the Indian Air Force (IAF) and payment of 45 per cent of the contract value made in advance to the original equipment manufacturer (OEM), has been a source of considerable embarrassment for the IAF that is left with no rotary wing aircraft for VVIP travel. The IAF is left literally holding the baby with three AgustaWestland AW-101 helicopters on its inventory that it cannot use as the OEM is discredited and no product support would be available for the machines. The IAF has no option but to retrofit for VVIP travel, the newly inducted Mi-17 V5 drawn from the operational fleet.
The advice by the Attorney General to the NDA government not to impose a complete ban on the Italian conglomerate Finmeccanica, reflects a good understanding of ground realities. Finmeccanica and its subsidiaries are already involved in several ongoing defence projects in India including the $20 billion tender for 126 medium multi-role combat aircraft (MMRCA) the Rafale aircraft from Dassault. Finmeccanica holds a 25 per cent share in MBDA, a joint venture with Airbus and BAE Systems, which is in the race to supply the Meteor air-to-air missile for the MMRCA fleet. Also, Finmeccanica is in the race for Indian military contracts worth over $6 billion, ranging from helicopters and aircraft to missiles and guns. Projects that are currently on hold include the ` 1,800 crore deal for 98 “Black Shark” heavy-weight torpedoes for the Scorpene submarines being built in India. These torpedoes are manufactured by Whitehead Alenia Sistemi Subacquel (WASS), a Finmeccanica subsidiary. Finmeccanica also has a stake in the European NH-90 helicopter that is in the race for the multi-role helicopters contract for the Indian Navy. Imposing a complete ban on the company in question at this stage would undoubtedly be unwise as it would prove counterproductive.
In the case of the proposed blacklisting of RollsRoyce, the Attorney General has maintained consistency in his assessment of the situation. The Indian Navy and the IAF are all heavily dependent on RollsRoyce for the maintenance of aero-engines installed on fixed wing aircraft, helicopters and fast-patrol vessels. For the IAF, Rolls-Royce engines power the Jaguar, Avro, Embraer Legacy jets, C-130J Super Hercules, Hawk Advanced Jet Trainers and Kiran Mk II jet trainers. In the Indian Navy, Rolls-Royce engines are fitted on the Sea Harriers.
In cases of alleged corruption in defence deals, as a matter of policy, the Ministry of Defence must separate offence from the contract and deal with the former rather than cancel the contract itself and jeopardise national security. It is indeed fortunate that the NDA government has begun to shed the legacy of the past and the interest of national security, has adopted a far more pragmatic approach to dealing with allegations of corruption in defence deals.