Le­gal­is­ing rep­re­sen­ta­tives of arms com­pa­nies

SP's MAI - - FRONT PAGE - [ By Lt Gen­eral P.C. Ka­toch (Retd) ]

The me­dia had re­ported in early Oc­to­ber this year that the Min­istry of De­fence (MoD) is soon go­ing to en­cour­age reg­is­tra­tion of le­galised agents with the new pol­icy start­ing in De­cem­ber this year and that the Modi Gov­ern­ment was work­ing al­ready to over­haul the pol­icy on hir­ing of de­fence agents by for­eign ar­ma­ment com­pa­nies after im­ple­ment­ing nu­anced black­list­ing norms to re­place the ear­lier in­dis­crim­i­nate ones. The Oc­to­ber re­port men­tioned that MoD had al­ready held one round of top-level dis­cus­sions on the pol­icy for “au­tho­rised In­dian rep­re­sen­ta­tives or agents” and the role they can play in fa­cil­i­tat­ing and smoothen­ing arms deals in le­git­i­mate man­ner.

This move is ob­vi­ously be­cause of poor re­sponse to the reg­u­la­tory role on agents that MoD had ac­quired for it­self in con­junc­tion with strin­gent guide­lines is­sued in year 2001 – that had proved coun­ter­pro­duc­tive. In­ter­est­ingly, the gov­ern­ment in 2001 had lifted the blan­ket ban on agents, which had been in force since 1987 after the in­fa­mous Bo­fors guns and HDW sub­ma­rine scan­dals. But this bid to in­ject some trans­parency did not re­ally work since the strin­gent norms laid down for agents were con­sid­ered un­re­al­is­tic, with the gov­ern­ment even declar­ing it would de­ter­mine the scale of com­mis­sion to be paid to them. Con­se­quently, almost no one came for­ward to be regis­tered as an agent.

De­fence Min­is­ter Manohar Par­rikar through his re­cent state­ment has now con­firmed that the gov­ern­ment is plan­ning to le­galise rep­re­sen­ta­tives of var­i­ous for­eign arms com­pa­nies in the coun­try, for speedy pur­chase of mil­i­tary hard­ware. He said, “We will al­low company rep­re­sen­ta­tives. They will be mid­dle­men. When I say mid­dle­men it doesn’t mean com­mis­sion agents or dalals. He will be a company rep­re­sen­ta­tive in In­dia. The company rep­re­sen­ta­tive can work on a fee ba­sis. He will be the in­for­ma­tion provider. Sev­eral times we re­quire feed­back and also some­one who can get us in­for­ma­tion. There are some for­eign com­pa­nies which want to come to In­dia... they can’t go on send­ing their peo­ple here.”

He how­ever added that the con­cept of le­gal­is­ing mid­dle­men has not been given a fi­nal thought, adding, “I am throw­ing this idea open, it is not a decision. This is loud think­ing. Re­ac­tions and feed­back are in­vited from pub­lic.” The Min­is­ter said mid­dle­men can be per­mit­ted to charge ex­penses from par­ent com­pa­nies for rep­re­sent­ing them in the coun­try. The Min­is­ter opined that the gov­ern­ment should be in a po­si­tion to have a very clear-cut pol­icy by Jan­uary next on rep­re­sen­ta­tives and on black­list­ing in­clud­ing a raft of mea­sures to en­sure trans­parency and at the same time speed­ing up such pur­chases to mod­ernise the armed forces. This is not a new idea and has come up time and again, with many ex­perts rec­om­mend­ing its in­sti­tu­tion­al­i­sa­tion. The fact is that the ab­sence of this led to high lev­els of cor­rup­tion in arms pur­chases in­clud­ing in the MoD since agents still ap­proached of­fi­cials any­way. A dis­pas­sion­ate anal­y­sis would per­haps bring out that not one sin­gle arms deal has taken place with­out in­volve­ment of an agent di­rectly or in­di­rectly. In fact, hordes of shady mid­dle­men in­clud­ing in garb of con­sul­tants lurked in the cor­ri­dors of power to grease the of­fi­cial ma­chin­ery and swing deals with hefty kick­backs to politi­cians, bu­reau­crats and mil­i­tary of­fi­cers de­spite all the anti­graft pro­vi­sions and in­tegrity pacts in place – some shady agree­ments made in en­vi­ron­ment of five-star ho­tels.

For ex­am­ple take, the re­cent case of a re­tired Lt Gen­eral of­fer­ing a serv­ing Army Chief a bribe of some ` 17 crore in lat­ter’s of­fice. Take the men­tion of bribes given to politi­cians and bu­reau­crats in Haschke’s di­ary in con­nec­tion with the West­land VVIP he­li­copter deal. Take the case of hefty bribes given to In­di­ans in the Euro­copter deal, de­tails of which are known to the In­tel­li­gence Bureau (IB). But then th­ese are a drop in the ocean and the ten­ta­cles of the arms mafia has man­aged to put the lid on. As to cor­rup­tion in the De­fence Re­search and De­vel­op­ment Or­gan­i­sa­tion (DRDO) re­lated to de­fence deals, in­clud­ing JVs with for­eign com­pa­nies, you just need to see last five years CAG re­ports. The bot­tom line is that our mil­i­tary pro­cure­ments have been dogged by long de­lays and al­le­ga­tions of graft, some even through anony­mous let­ters.

In­dia is the world’s largest arms im­porter, hav­ing spent ` 83,458 crore in just the last three years in ac­quir­ing weapons from the US, Rus­sia, France, Is­rael and oth­ers. Over­all, In­dia has inked arms deals worth well over $60 bil­lion since the 1999 Kargil con­flict. But there are just a hand­ful of le­galised de­fence agents on the rolls of MoD. The move to le­galise agent of arms com­pa­nies is not only timely but im­per­a­tive be­cause: mas­sive voids in mil­i­tary’s de­fence needs must be filled up speed­ily; with call of Make in In­dia and re­lax­ations in FDI, many for­eign com­pa­nies are look­ing at In­dia and JVs must have au­tho­rised agents to deal with the of­fi­cial ma­chin­ery; de­fence deals don’t orig­i­nate only on gov­ern­ment-to-gov­ern­ment ba­sis es­pe­cially where pri­vate in­dus­try—there­fore agents are es­sen­tial; le­galised agents can as­sist for­eign ar­ma­ment com­pa­nies in re­ply­ing to arms ten­ders, trial eval­u­a­tion of sys­tems, price ne­go­ti­a­tions, en­hanc­ing the qual­ity of after-sales ser­vice and in re­solv­ing per­for­mance and war­ranty is­sues, and; le­galised agents will cut down on cor­rup­tion in de­fence pro­cure­ments. Reg­is­tra­tion of a greater num­ber of le­galised agents un­der a new pol­icy is cer­tainly re­quired.

The ar­ma­ment com­pa­nies should be free to choose any­one they want to act as their agents pro­vided they are not black­listed. It should also be left to the company to de­cide how much com­mis­sion it wants to pay the agent. As to black­list­ing, the gov­ern­ment may go for any amount of strin­gent mea­sures but from the mil­i­tary point of view it is es­sen­tial that an al­ter­na­tive source of sim­i­lar de­fence equip­ment should be avail­able, least the voids grow ex­po­nen­tially. This was one of the blind spots with for­mer De­fence Min­is­ter A.K. Antony who black­listed firms at the drop of a hat, even on anony­mous com­plaints, with­out al­ter­na­tive source of pro­cure­ment, lead­ing to mount­ing crit­i­cal­i­ties in the armed forces.

The ar­ma­ment com­pa­nies should be free to choose any­one they want to act as their agents pro­vided they are not black­listed.

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