Transcript Jasmine Revolution

In defence of
the Nation?
Nyayapati Gautam
Triumphant Institute of
Management Education P Ltd
www.time4education.com
The Iron Frame?
• Adarsh Scam:
– Promoters violated the law to get fast
track clearance for a 31 storeyed
building.
– CBI has arrested 7 people so far. Two
retired major generals, two retired
brigadiers and three bureaucrats.
• Jodhpur Land Scam:
– Nearly 5 acres of defence land transferred to a
private trust without approvals. It belongs to the
Jodhpur Royal family.
– Defence Minister has ordered a probe.
The Iron Frame?
• Srinagar Land Scam:
– Nearly 200 acres of land near the Srinagar
Airport gobbled up by the mafia.
– Preliminary inquiry done by the CBI. It is said that
the CBI may file an FIR in the case, shortly.
• Sukna Land Scam
– Laws violated to favour private contractor to take
over 71 acre plot next to the military station at
Sukna in North Bengal in 2008.
– Lt. Gen. P.K. Rath was court martialled. Military
Secretary Lt. Gen. Avadesh Prakash too.
Why the armed forces?
• The corruption is not limited to just military
land.
• The biggest area is in the weapons acquisition
process.
Why is that?
– India is the world's largest arms importer.
– Between 2007 and 2011, the country imported
arms worth over $12 billion (Rs.60,000 crore).
– Over the next decade, India will import arms worth
over $100 billion (Rs.5 lakh crore).
– Among the deals in the pipeline are:
• Rs.90,000 crore to buy 126 Rafale combat jets,
• Rs.50,000 crore for six submarines and
• an estimated Rs.20,000 crore to buy 2,700 howitzers.
– India spends Rs.2 lakh crore every year to maintain
its military, the world's third largest.
– Suppliers include the military industrial complexes
of the US, France, Russia, Israel and the UK.
Acquisition Process
• Service Qualitative Requirement:
– The acquisition process begins when one of the
service directorates within an armed force lists the
parameters of a weapon system.
– These requirements are forwarded to the DirectorGeneral, Weapons and Equipment.
– The DG reviews the case and then forwards the file
to the defence secretary for clearance.
• DG-Acquisitions then enters the scene:
– Usually an IAS officer, he heads the Defence
Procurement Board the designated procurement
board for all new acquisitions since 2001in MOD.
– Assisted by: Financial advisor, 3 acquisition
managers, 3 technical managers and three financial
managers dealing with land, air and naval systems.
Acquisition Process
• Commercial bids invited:
– Leading manufacturers who have been identified
as suppliers of military hardware are invited.
– The hardware manufacturers have to bring in their
equipment for field trials, often lasting over a year,
in different climatic conditions.
– Trials are supervised by teams from the Weapons
and Equipment Directorate.
– The directorate carries out a general evaluation
report based on the trial results.
Acquisition Process
• A Price Negotiation Committee:
– The committee picks the lowest bidder and begins
commercial negotiations.
– After the deliberations comes the final stage in
which a proposal is forwarded to the Cabinet
Committee on Security for final clearance.
– This is headed by the Prime Minister.
– It also includes Union ministers of defence, finance,
home and external affairs.
– A contract is signed with the vendor.
– MOD estimates that the entire process could take
up to two-and-a-half years.
– In actual practice, it takes over six years for the
Government to purchase even simple items like
ballistic helmets to protect soldiers.
The Story . . .
• Since 2006, MoD's Defence Procurement
Procedure makes it mandatory to deal with
original equipment manufacturers.
– In 2005, Brigadier I.M. Singh in the office of the
Master General of Ordnance (MGO) (responsible
for procuring ammunition and vehicles in the army)
alleged irregularities in the purchase of Tatra
trucks.
– He was posted out of the MGO.
– In 2006, two private sector defence firms, L&T and
Tata Power, collaborating on a DRDO project,
were asked by BEML to pay Rs.40 lakh extra per
truck over the initial Rs.80. Both companies refused.
The Story . . .
• In August 2009 H. Hanumanthappa, a former
Congress MP from Karnataka:
– alleged deviations in the way the defence ministry
was buying Czech-made Tatra trucks.
– He had a confidential report prepared by an
employee of Bharat Earth Movers Ltd (BEML).
– The report alleged that BEML had violated defence
procurement rules by buying the trucks not from the
original equipment manufacturer but from a UKbased agent, Ravinder Kumar Rishi.
– The price of the trucks was also being inflated, with
the trucks being imported at between Rs.40 and
Rs.80 lakh each but sold by BEML to the Ministry of
Defence (MoD) for twice the amount. (L&T e.g.
above. )
The Story . . .
• In March 2010, the MoD bought an additional
788 trucks from Global Vectra.
– This is owned by Ravi Rishi.
– The rates were inflated by over 40 per cent.
– Over 7,000 Tatra trucks have been bought over
the past 25 years for over Rs.5,000 crore.
The Story . . .
• In a March 26 newspaper interview, General
Singh alleged:
– he was offered a Rs.14-crore bribe to clear '600
substandard vehicles' in this deal.
– The September 2010 bribe offer, the chief
alleged, came from retired Lt-General Tejinder
Singh.
– In his formal complaint to the CBI in April, General
Singh named Rishi as the person on whose behalf
Lt-Gen Tejinder Singh was offering a bribe.
Sub-Plots …
• Just before the Government inked the deal
for 126 new generation fighter jets for the
Indian Air Force (IAF) on January 31:
– Bernard Baiocco, a French arms consultant, visited
New Delhi to take part in negotiations with top
defence officials.
– Subramanian Swamy, suggests Baiocco's role was
influential.
– He stayed in Delhi for nearly a week and met a
number of key people.
– Apparently the Eurofighter (produced by an Italian,
Germany and UK consortium EADS) had almost won
the Rs.90,000-crore contract.
– Suddenly, everything changed and Dassault won
the deal.
Sub-Plots …
• On January 30, the Cabinet Committee on
Security (CCS):
– delayed a Rs.1,850-crore deal for buying 75 basic
trainer aircraft for the IAF.
– CCS sought clarifications from the defence ministry
after an official complaint from the South Korean
government to the Prime Minister's Office (PMO) on
the selection process
– The reason they complained? Korean Aerospace
Industries (KAI) was placed second.
– Switzerland's aviation giant Pilatus Aircraft Ltd was
another contender.
– KAI, placed second in the pricing bid, alleged
discrepancies in the commercial bid of Pilatus, which
won the bid.
Sub-Plots …
• The allegation:
– the Swiss had not factored the costs of maintenance
and transfer of technology (TOT) into the bidding
price, and were thus able to show a lower bid.
– If true this would leave the IAF with a much higher
cost of ownership/life cycle of the aircraft.
– Anantha Venkatarami Reddy, an MP wrote to the
PM in December 2011 that MoD officials decided
to ignore all Defence Procurement Procedures to
favour Pilatus.
– MoD received a lot of technical and financial data
from Pilatus post opening of bids in order to
complete their files. This is complete violation of the
laid down procedures of MoD.
CBI/MOD Inactivity
• Reports of the inactivity of the MOD and the
CBI have been swirling in the press.
• A counter-point:
– The CBI, looks into matters if it receives ‘credible
evidence‘.
– The investigators built their case without any fuss.
– Late Feb is when the minister gave the sanction to
prosecute.
– This was about five weeks before General V K
Singh's interview. The sanction was given not just to
'investigate' but to 'prosecute'.
– So, why did the CBI wait to go after Ravi Rishi, the
man behind Vectra?
CBI/MOD Inactivity – A
Counterpoint
• Is Ravi Rishi is an 'NRI’ or a citizen of the
United Kingdom.
• If he is UK citizen then trying to extradite a
British citizen from Great Britain is difficult.
• 'Defexpo 2012' was scheduled to start on
March 29.
– It is extremely unlikely that any manufacturer would
refuse to visit the same.
– Did the CBI wait till Ravi Rishi was in India and
available for questioning?
– That the defence minister ordered a probe only
after General Singh's interview refers to the
specific allegation of bribery.
– Was the CBI was already probing Tatragate?.
Not just India
• Acc to Liu Yuan, the son of a former president
of China and one of the PLA's rising stars –
– The institution is riddled with corruption and
professional decay
– Compromised by ties of patronage
– and asphyxiated by the ever-greater effort
required to impose political control.
– "No country can defeat China. Only our own
corruption can destroy us and cause our armed
forces to be defeated without fighting."
– "Certain individuals exchange public money, public
goods, public office and public affairs for personal
gain, flouting the law and party codes of conduct,
even resorting to verbal abuse and threats,
clandestine plots and set ups.
China …
– "They physically attack loyal and upstanding
officials, kidnap and blackmail party leaders, and
drag in their superiors to act as human shields. They
deploy all of the tricks of the mafia trade within the
army itself."
Thank You
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