Clean chit for Agusta West­land

Can­cel­la­tion of con­tract on ac­count of mis­de­meanour on the part of in­di­vid­u­als is coun­ter­pro­duc­tive as it would ad­versely af­fect the mod­erni­sa­tion pro­gramme of the armed forces. Such a de­ci­sion would clearly be un­wise and cer­tainly not in the best in­teres

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As per re­cent re­ports in the media, a court in Italy that was deal­ing with the al­le­ga­tions of wrong­do­ing by se­nior func­tionar­ies of Fin­mec­ca­nica in the ex­e­cu­tion of the 3,600-crore con­tract signed with the In­dian Min­istry of De­fence (MoD) for the sup­ply of 12 AW-101 Agus­taWest­land he­li­copters for VVIP travel, has de­liv­ered its fi­nal judge­ment in the case. In a doc­u­ment that runs into 145 pages, the Ital­ian court has stated un­equiv­o­cally that no cor­rup­tion was found in Ital­ian com­pany Agus­taWest­land’s chop­per deal with the In­dian Air Force. Specif­i­cally, the court has found no ev­i­dence of any cor­rup­tion by Air Chief Mar­shal S.P. Tyagi (Retd), the for­mer Chief of the Air Staff (CAS) of the In­dian Air Force (IAF). The court has thus cat­e­gor­i­cally and firmly ac­quit­ted the for­mer CAS of any charge re­lated to wrong­do­ing in the pro­cess­ing of the ten­der and award of con­tract for the Agus­taWest­land he­li­copters.

The Cen­tral Bureau of In­ves­ti­ga­tion (CBI) in In­dia that had been tasked by the UPA Gov­ern­ment to carry out in­ves­ti­ga­tions in­de­pen­dently against a num­ber of in­di­vid­u­als al­leged to be in­volved in wrong­do­ing in­clud­ing Air Chief Mar­shal S.P. Tyagi, is yet to close the case and sub­mit its fi­nal re­port. It is un­der­stood that de­spite all ef­fort, the CBI has not been able to find any ev­i­dence of mis­de­meanour on the part of the for­mer CAS.

Pro­cure­ment of VVIP He­li­copters

The sor­did saga of the ill-fated he­li­copter deal be­gan in Fe­bru­ary 2010 when the MoD con­cluded a con­tract with Agus­taWest­land, a com­pany un­der the Fin­mec­ca­nica con­glom­er­ate, for the pur­chase of 12 AW-101 he­li­copters for the trans­porta­tion of VVIPs. For this task, the IAF had been op­er­at­ing a fleet of Rus­sian MI-8 he­li­copters that had al­ready been over­taken by ob­so­les­cence. The IAF had in­formed the MoD that the fleet of MI-8 he­li­copters would have to be re­tired from ser­vice in the near fu­ture af­ter which there would be no ro­tary-wing air­craft avail­able with the IAF that would meet with the stan­dards re­quired for VVIP travel. The case for pro­cure­ment of new he­li­copters for VVIP use had there­fore ac­quired a de­gree of ur­gency.

In Fe­bru­ary 2013, three years af­ter the con­tract with Agus­taWest­land was con­cluded, the deal was sud­denly mired in con­tro­versy when the Ital­ian author­i­ties al­leged that bribes were paid to cer­tain In­dian of­fi­cials by the com­pany to clinch the deal for the 12 AW-101 VVIP he­li­copters. Un­for­tu­nately, Air Chief Mar­shal Tyagi, who had been the Chief of the Air Staff when the ten­der was be­ing pro­cessed, but had re­tired some six years be­fore the con­tro­versy broke, was also dragged into it as one of the pos­si­ble ben­e­fi­cia­ries of the kick­backs. The to­tal pay out to the par­ties in In­dia was al­leged to have been to the tune of 360 crore. On the face of it the mat­ter ap­peared ex­tremely se­ri­ous as the Ital­ian author­i­ties had ar­rested Giuseppe Orsi, the Chief Ex­ec­u­tive Of­fi­cer (CEO) of Fin­mec­ca­nica, the par­ent com­pany of Agus­taWest­land. The re­ac­tion of the UPA Gov­ern­ment came by way of A.K. Antony, the Min­is­ter of De­fence, freez­ing the con­tract and or­der­ing an in­ves­ti­ga­tion by the CBI into the al­le­ga­tions the day af­ter the ar­rest of the CEO of Fin­mec­ca­nica. Mean­while, the In­dian Gov­ern­ment had al­ready paid 30 per cent of the value of con­tract and the IAF had re­ceived three of the 12 ma­chines or­dered.

Can­cel­la­tion of Con­tract and its Im­pli­ca­tions

With­out wait­ing for the fi­nal re­port on the find­ings by the CBI or of the Ital­ian court, in Jan­uary 2014, the In­dian Gov­ern­ment can­celled the 3,600-crore con­tract with Agus­taWest­land. The rea­son for the can­cel­la­tion of con­tract as stated by the gov­ern­ment was “Breach of the Pre-Con­tract In­tegrity Pact and the agree­ment by Agus­taWest­land In­ter­na­tional Ltd”.

The re­mark­ably swift ac­tion by an oth­er­wise lethar­gic gov­ern­ment to can­cel the con­tract with Agus­taWest­land for the sup­ply of 12 AW-101 VVIP he­li­copters merely on un­sub­stan­ti­ated re­ports of wrong­do­ing in the pro­cess­ing of con­tract for the mil­i­tary he­li­copters, did sig­nal the se­ri­ous­ness of the in­tent of the gov­ern­ment to the global aerospace and de­fence in­dus­try that in the pro­cure­ment of mil­i­tary hard­ware, In­dia would not ac­cept mal­prac­tices as­so­ci­ated with the em­ploy­ment of mid­dle­men such as the pay­ment of bribes or kick­backs to in­flu­ence de­ci­sion mak­ers in or­der to se­cure lu­cra­tive high value de­fence con­tracts. How­ever, while this ac­tion by A.K. Antony, Min­is­ter of De­fence, would ap­pear eth­i­cally cor­rect and noble, it left the IAF high and dry with plans for re­vamp­ing the ro­tary-wing fleet for VVIP travel gone com­pletely awry. The IAF was lit­er­ally left ‘hold­ing the baby” with three AW-101 he­li­copters al­ready de­liv­ered by the com­pany. Pro­cured at con­sid­er­able ex­pense, these three ma­chines are gath­er­ing dust at IAF Sta­tion, Palam as in the ab­sence of prod­uct sup­port from the orig­i­nal equip­ment man­u­fac­turer (OEM) Agus­taWest­land, these will be of lit­tle use to the IAF as these can nei­ther be used for VVIP travel nor for rou­tine op­er­a­tional de­ploy­ment. Con­se­quently, the IAF was left with no op­tion but to di­vert few of the latest ac­qui­si­tions of the MI-17V5 from op­er­a­tional squadrons to be re­fit­ted and ded­i­cated for VVIP travel. Un­doubt­edly, this would have dented the op­er­a­tional po­ten­tial of the ro­tary-wing fleet of the IAF apart from the MoD sad­dled with a le­gal bat­tle in Ital­ian courts to re­cover the ad­vance paid to the An­glo-Ital­ian com­pany.

The can­cel­la­tion of the con­tract for the Agus­taWest­land he­li­copters is of lit­tle mil­i­tary sig­nif­i­cance as these ma­chines were meant solely for the trans­porta­tion of VVIPs and were not be­ing pro­cured for op­er­a­tional tasks. How­ever, what is and ought to be a mat­ter of con­cern is the cal­lous dis­re­gard by the gov­ern­ment for the dele­te­ri­ous im­pact of such ill-con­sid­ered de­ci­sions on the op­er­a­tional po­ten­tial of the armed forces. The UPA Gov­ern­ment had a par­tic­u­larly strong in­cli­na­tion for or­der­ing in­ves­ti­ga­tions into pro­cess­ing of ten­ders or award of con­tracts for pro­cure­ment of mil­i­tary hard­ware, black­list­ing of firms and can­cel­la­tion of con­tracts at the slight­est hint of wrong­do­ing. In the wake of al­le­ga­tions of mis­de­meanour, man­u­fac­tur­ers of mil­i­tary hard­ware of global re­pute from Is­rael, Switzer­land, Rus­sia, Sin­ga­pore and South Africa were black­listed lead­ing to sup­ply chain prob­lems for the In­dian armed forces that con­tinue to de­pend on for­eign sup­pli­ers for around 70 per cent of their re­quire­ment of mil­i­tary hard­ware. The ten­der for ar­tillery guns for the In­dian Army was can­celled five times and that for 197 light util­ity he­li­copters was ab­ro­gated twice fol­low­ing al­le­ga­tions of wrong­do­ing and fi­nally scrapped leav­ing the troops de­ployed in the high moun­tains of North In­dia with­out the re­quired level of lo­gis­tic sup­port.

Re­struc­ture the De­fence Pro­cure­ment Pro­ce­dure

Part of the prob­lem lies with the De­fence Pro­cure­ment Pro­ce­dure (DPP) which was pro­mul­gated af­ter the emer­gence of a unipo­lar world fol­low­ing the end of the Cold War. The ob­jec­tive of the DPP was to pro­vide the armed forces with a wide choice in the global mar­ket, to ob­tain the best value for money and to en­hance the ca­pa­bil­ity of the in­dige­nous aerospace and de­fence in­dus­try through off­sets. The DPP pro­vided a frame­work that was rather rigid with no room for any of the func­tionar­ies in the armed forces or the bu­reau­cracy in the MoD to ex­er­cise dis­cre­tion. It also had in-built pro­vi­sion for lit­i­ga­tion. Over the years, the DPP has been re­vised pe­ri­od­i­cally and with ev­ery re­vi­sion, it be­came in­creas­ingly in­flex­i­ble. To­day, the DPP has been re­duced to be­ing merely a cler­i­cal ex­er­cise as over last decade-and-a-half, it has to­tally failed to ad­dress the im­per­a­tives of na­tional se­cu­rity. This is abun­dantly clear from the fact that so far only one ten­der, that for the Pi­la­tus PC-7 MkII ba­sic trainer air­craft from Pi­la­tus of Switzer­land, had been suc­cess­fully com­pleted.

For­tu­nately, the gov­ern­ment of the day ap­pears to be aware of the lim­i­ta­tions of the DPP as was ev­i­dent in the brief­ing by Manohar Par­rikar, the Min­is­ter of De­fence, to the media af­ter the ten­der for 126 medium multi-role com­bat air­craft (MMRCA) had been scrapped. The MMRCA ten­der floated un­der the DPP, af­ter eight years of ef­fort, had come up against an in­sur­mount­able road­block and had to be re­placed by a di­rect deal with the gov­ern­ment of France for pur­chase of 36 Rafale com­bat jets. Now that the gov­ern­ment has em­barked on an ex­er­cise to re­struc­ture the DPP, hope­fully, the armed forces will be able to in­duct weapon sys­tems to re­store its op­er­a­tional edge over the ad­ver­saries in a re­spectable time frame.

A re­struc­tured DPP must nec­es­sar­ily in­cor­po­rate a pro­ce­dure to sep­a­rate of­fence from con­tract and deal with the guilty with­out jeop­ar­dis­ing the con­tract it­self. Can­cel­la­tion of con­tract on ac­count of mis­de­meanour on the part of in­di­vid­u­als is counter-pro­duc­tive as it would ad­versely af­fect the mod­erni­sa­tion pro­gramme of the armed forces. Such a de­ci­sion would clearly be un­wise and cer­tainly not in the best in­ter­ests of na­tional se­cu­rity.

AW-101 Agus­taWest­land he­li­copter for VVIP travel

AIR MAR­SHAL B.K. PANDEY (RETD)

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