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Wednesday, 24 October 2012

From Today's Papers - 24 Oct 2012
Army Generals wasted crores, shows MoD audit
Tribune News Service

New Delhi, October 23
An internal audit of the Ministry of Defence has revealed that items purchased by senior Army Commanders in two financial years — 2009-10 and 2010-11 — had caused a “loss” of Rs 103 crore.

Army commanders in each of the six regional commands have been delegated special financial powers to make emergency purchases. The in-house auditing team of the ministry has reported that it studied 55 cases in which this “loss” has been assessed.

The Northern Army Commander has special powers to make purchases worth Rs 125 crore per annum, including that for the counter-insurgency teams of the Rashtriya Rifles. Similarly, the Eastern Commander has powers to spent Rs 50 crore while the remaining commanders — of Western, Central, Southern and South-Western zones — have powers to make purchases up to Rs 10 crore each.

Apart from raising questions on use of funds, the report points to the use of suspected Chinese equipment for communication and the resultant security threat. The report says “mobile phones, satellite phones and certain communication (equipment) of suspected Chinese origin, need to be followed closely by the Military Intelligence to ensure that the software does not contain any spyware”.

The fact that the model and name of the foreign vendor has not been disclosed by Indian suppliers raises apprehension that these have actually been purchased from the “grey market” and are perhaps of Chinese origin, the report says. “Communication sets were procured on DG S&D rates. However, it is under arbitration as the vendor was not able to reveal the original equipment vendor,” said an Army PRO.

The report — a copy of which is with The Tribune — was submitted in December last year. The Army Commanders, the report claims, carried out purchases even as the Master General Ordinance (MGO) branch advised “not to procure” the proposed equipment as it was available in the central inventory or for which orders were being placed.

The report does not spare the MGO either and says: “In some cases, despite the availability of surplus stock in central inventory, the MGO branch authorised Command Headquarters to purchase ordnance stores and equipments… substantial quantities have been purchased, from the intermediaries acting as trading outfits for importing the product from some foreign vendors”.

Auditors have slammed the purchases saying “ these have been made from trading outfits instead of from indigenous/foreign vendors concerned.”

Pointing out at such expenses, the report says: “Tetra pack milk was purchased in excess causing a loss of Rs 30 crore”. The milk is purchased in areas where procuring fresh milk is a problem. “Procedurally, the demand for items is originated from the field formations and the same is deliberated at all levels - Brigades, Divisions and Corps,” said the PRO.

The report slams the integrated financial advisors from the Indian Defence Accounts Services (IDAS) who are attached with each of the Army Commands. “It has been noticed during scrutiny critical questions” were not raised. However, the report probably goes overboard in questioning the purchase of bullet proof jackets by the Northern Command which is tasked with security of Jammu and Kashmir. There has been no central procurement of bulllet proof jackets for the past five to six years as old General Staff Qualitative Requirement of such gear was under review. The jackets are needed on daily basis and the Commander could not have waited as the security situation does not allow such leverages.

Over Rs 100-cr loss

Items purchased by senior Army Commanders in financial years 2009-10 and 2010-11 caused a “loss” of `103 crore, reveals an internal audit

The report points at use of suspected Chinese equipment for communication and the resultant security threat

The Army Commanders, the report claims, carried out purchases even as the Master General Ordinance branch advised “not to procure” the proposed equipment as it was available in the central inventory
Tatra case: CBI quizzes Tejinder, Rishi again

New Delhi, October 23
The CBI today examined Lt Gen (retd) Tejinder Singh and Vectra chairman Ravinder Rishi for the second consecutive day in connection with its probe in the alleged bribe offer made by the retired General to the then Army Chief V K Singh for clearing a tranche of sub-standard Tatra BEML trucks.

Singh denied he had been questioned by the CBI today and claimed that it will be known in the coming days as to why "someone" was raking up this issue one-and-a-half years after the deal.

“I have not been called by the CBI today. Investigation will reveal that I am not involved and also the reasons for someone raking it up one-and-a-half years after the alleged incident,” he said.

CBI sources, however, maintained that he and Rishi were questioned about some infirmities detected in their statements yesterday.

During the questioning, Singh and Rishi denied having any kind of links with each other, they said. The sources said the two Delhi-based businessmen and two executives of Vectra were also questioned in connection with the case and were asked about their association with the officials of the Defence Ministry.

The then Army Chief Gen (retd) V K Singh had alleged that Singh offered him a bribe of Rs 14 crore in September 2010 to clear the purchase of a tranche of 1,676 substandard Tatra BEML trucks. — PTI
Fighting terrorism
Factors behind Saudi help to India

THE deportation of Fasih Mohammed, an operative of the Indian Mujahideen, to India by Saudi Arabia underlines the growing cooperation between the two countries in fighting terrorism. Fasih is accused of being involved in the Chinnaswamy Stadium bomb blast in Bangalore and a shooting incident near Delhi’s Jama Masjid. In June, India had succeeded in arresting Abu Jundal, suspected to have played a major role in the 26/11 Mumbai terrorist attack, also because of the cooperation of the Saudies, who deported him to New Delhi. The Saudis, of course, sought all kinds of details to satisfy themselves before taking the necessary action against these terror suspects. But their attitude has been positive, showing it clearly that they are prepared to go to any length in dealing with terrorism in the company of India.

Prime Minister Manmohan Singh’s visit to Riyadh in 2010 and the signing of the extradition treaty between the two countries have, no doubt, changed the complexion of the relations between India and Saudi Arabia. But there are other factors also why the Saudis are more inclined towards strengthening their ties with India. One, Saudi Arabia, like India, figures on top of the hit list of international terrorist outfits, including Al-Qaida. Two, the Saudis, being shrewd investors, see in India safe and vast opportunities of foreign direct investment emerging in different areas. Three, Saudi Arabia, along with the US, wants India to do all it can to prevent Iran from acquiring nuclear weapon capability.

The Saudis, it seems, are ready to use every available opportunity to recast their relations with India. They appear to be not interested in retaining their image of being pro-Pakistan. The Saudis, no doubt, have sympathies for Pakistan, but when it comes to dealing with terrorism or the Iranian nuclear issue, they are unsparing for Islamabad. They, perhaps, want India to forget their old ties with Pakistan. In any case, there is growing realisation in Riyadh that India must get precedence over all other countries in their scheme of things for South Asia. New Delhi must prepare itself to take advantage of the new thinking in Saudi Arabia, the most influential country in West Asia.
India’s hour of disgrace
Time for pro-active diplomacy & strengthening military
by G. Parthasarathy

INDIA'S younger generation can scarcely comprehend the feelings of humiliation, trauma, shame and anger that prevailed in the immediate aftermath of its diplomatic, military and strategic debacle in the 1962 border conflict with China. Responding to President Sarvepallli Radhakrishnan’s admonition of his “credulity” and “negligence,” Prime Minister Jawaharlal Nehru acknowledged: “We were getting out of touch with reality in the modern world and living in an artificial atmosphere of our own making”. Nehru had proclaimed in 1959 to the Congress party that the Chinese were “unlikely” to invade India because they knew that this would lead to a “world war”. He believed that a China faced with a growing rift with the Soviet Union and at odds with the United States would just not go to war with India.

What followed was a disastrous “forward policy” of deploying poorly equipped troops in forward positions to contest Chinese claims despite logistical and operational reservations expressed by then Army Chief General Thimayya and other senior operational commanders. This policy sought to give credibility to a claim in Parliament that “not an inch of Indian territory” would be left undefended. Having raised expectations publicly, the Prime Minister put himself in an untenable position of not being able to negotiate on suggestions by Chinese Prime Minister Chou en Lai, involving Chinese acceptance of the McMahon Line in Arunachal Pradesh (then called NEFA), in return for China diluting its claims in the western sector (Ladakh). Taking any Chinese suggestion on its border claims at face value could, however, have been hazardous, as China’s claims continued to change repeatedly, as they do, even to this day.

Compounding the diplomatic bungling and the incredible naiveté in believing that China would never attack India was the erratic and arrogant behaviour of the then Defence Minister V.K. Krishna Menon. The Defence Minister made it a habit of speaking disparagingly to senior military officials, who dared to disagree with him. He was also given to acting arbitrarily and whimsically on issues like the appointment of Lt.-General B.M. Kaul, an officer of the Army Supply Corps, with no combat experience, as the Corps Commander of the newly established IV Corps in Tezpur, to “throw the Chinese out” in the eastern sector. Not only was the formal chain of command bypassed, but Kaul was allowed to continue commanding active operations from his sick bed in New Delhi. After initial setbacks near the McMahon Line India’s defences collapsed totally on November 19, with the elite 4th Infantry Division beating an ignominious retreat.

India’s hour of shame was, however, not over. As Indian defences in the Eastern Sector collapsed on November 19, panic-stricken Prime Minister Nehru wrote to President Kennedy seeking American air support by 12 squadrons of supersonic fighters, with radar cover, all operated by US pilots. India’s proud claims to nonalignment lay in tatters. The Chinese had, however, planned their diplomacy and military operations brilliantly. A few months before the conflict commenced, the Chinese Ambassador had learnt in secret negotiations in Warsaw with the Americans that in the event of border tensions with India, the United States would not get directly involved.

With the Sino-Indian conflict coinciding with the Cuban missile crisis, the Chinese compelled the Soviet Union to initially remain neutral. It soon became clear that rather than helping out, the Americans and the British were demanding that India should resolve differences over Jammu and Kashmir with Pakistan. It was the Soviet Union that moved meaningfully to help India bolster its defences. The Chinese, however, learned following incursions in 1967 in Nathu La in the Sikkim sector and in Wangdung in Arunachal Pradesh in 1986 that India was prepared militarily and diplomatically to respond to challenges they posed to its security.

In half a century since 1962, China has significantly bolstered its defences on Tibet’s borders with India. Apart from developing impressive road and rail communications, China has deployed 2,20,000 troops in the Lanzhou military region bordering Ladakh, including airborne and motorised divisions. Another 1,80,000 troops are deployed in the Chengdu military region facing our north-eastern states. Beijing has also been augmenting capabilities and training for high altitude warfare. Frontline J 10 aircraft (an Israeli designed variant of the F 16) have been carrying out exercises over high Himalayan peaks. Militarily, the main lesson of 1962 is the need for Indian conventional capabilities along our borders with China which persuade the Chinese that future conflicts will not remain confined to the Indian side of the border. It remains to be seen if the faint-hearted in South Block will endorse such a strategy.

China has vastly expanded its “comprehensive national power” since the 1962 conflict; it has the second largest economy in the world and has made remarkable strides in areas ranging from space to cyber warfare. But it faces serious internal tensions caused by the inherent contradictions of having a relatively free market economy on the one hand and a closed one-party political system, which is becoming increasingly corrupt, on the other. The Han Chinese have historically been extremely chauvinist. The political and military leadership is now pandering to such chauvinism, by stridently asserting maritime boundary claims on virtually all its neighbours and enhancing claims on the land border with India. China is continuing nuclear weapons, missile and defence collaboration with Pakistan and its efforts to enhance its role in Pakistan Occupied Kashmir. It has persistently moved to undermine India’s “Look East” policy by efforts like seeking to block India’s entry into the East Asia Summit. It has behaved none too subtly in attempting to prevent the Nuclear Suppliers Group (NSG) from giving India a waiver on nuclear cooperation. Its ambivalence on India’s quest for a permanent seat in the UN Security Council continues. These are all an integral part of a policy of “strategic containment” of India.

There is virtually no awareness of the security implications of China’s growing role in key sectors of India’s economy like power and communications and of the dangers posed by the domination in these sectors by Chinese companies like Huawei or ZTE. India has, therefore, to combine pro-active diplomacy and build up its offensive military capabilities along its borders with China by also formulating and implementing measures to achieve substantial indigenisation in key sectors like power and communications. Moreover, if the present policies continue, our imports of electronic and communication equipment will exceed our imports of oil and natural gas by 2020. A serious effort has to be made to enable our public and private sectors to develop capabilities comparable to those developed by the Chinese in these strategic sectors of the economy.
Bridging China-India trust deficit
China-India relations have gradually matured after passing through a tortuous course in the past sixty years. There are certain unstable factors in their relations which need to be removed so that mutual trust is steadily enhanced
Cheng Ruisheng
ON April 1, 1950, India became the first country among non-socialist countries to establish diplomatic relations with New China. From 1950 to 1958, China-India relations witnessed a very friendly period of “honey-moon”, with the slogan of “Hindi-Chini Bhai Bhai” resounding across the land of both countries. However, it was indeed very unfortunate that China-India relations sharply deteriorated after 1959 owing to their differences on the Tibet question and China-India boundary question and under the influence of a number of complicated factors, both international and internal, leading to the border conflict in 1962 and confrontation between the two countries for more than ten years. Since 1976, China-India relations have gradually improved. In 1988, the visit of Indian Prime Minister Rajiv Gandhi to China became a major turning point for China-India relations, which entered a new period of overall restoration and development after that, with only a short setback in 1998 after India’s nuclear tests. With the beginning of the new century, a rapid development of China-India relations was achieved and a Strategic and Cooperative Partnership was established in 2005.

In general, India is one of China’s neighbours whose relations with China witnessed big ups and downs after the founding of New China. It will be very beneficial to sum up some experiences and enlightenments from the tortuous course of China-India relations.

Harmony is precious

Through reviewing the history of sixty years of diplomatic relations between China and India and making comparisons of those different periods of friendship, confrontation and renewal of friendship, a conclusion of incomparable importance for both governments and peoples could be obtained, i.e. harmony is precious.

nFriendly relations between China and India from 1950 to 1958 brought out great gains, either from the angle of peaceful construction of both countries or from the angle of safeguarding peace in Asia and the world.

(1) During Premier Zhou Enlai’s visit to India in 1954, both sides fixed the Five Principles of Peaceful Coexistence as guiding principles for China-India relations. At the end of that year, Indian Prime Minister Nehru paid a visit to China, holding very good talks with Chairman Mao Tzedong and Premier Zhou Enlai. In 1956, Premier Zhou Enlai paid another visit to India. All these events led to a high tide of friendship between China and India which had been unprecedented in the history. It was during this period that India gave up its special privileges in Tibet.

(2) China-India friendly relations were conducive to creating a peaceful environment necessary for the peaceful construction of both countries, which had won independence not yet long before.

(3) Maintaining friendly relations with both India and Pakistan, China adopted a neutral stand on the Kashmir question. It was shown that China-India relations were helpful to safeguarding peace and stability in South Asia.

(4) China and India had very good cooperation in international affairs. Take the Bandung Conference in 1955 as an example. Before the conference, both India and Burma (now Myanma) took a firm stand that China should take part in the conference. And at the conference, Nehru made a number of efforts to support Zhou Enlai, giving a helping hand to New China which had just ascended the international stage.

nIn sharp contrast to the above period, the deterioration of China-India relations and the confrontation between the two countries from 1959 to 1976 caused enormous losses.
Dr Manmohan Singh with President of China Hu Jintao: Mutual visits and meetings in third countries could play a vital role in promoting mutual trust
Dr Manmohan Singh with President of China Hu Jintao: Mutual visits and meetings in third countries could play a vital role in promoting mutual trust

1. The China-India border conflict in 1962 brought about serious damage to the friendship between the Chinese and Indian peoples and a long-term suspension of friendly exchanges between the two countries. The shadow of this conflict has not fully vanished even today..

2. The long-term confrontation between the two countries caused great drain on the resources of both countries, negatively affecting peaceful development of both countries.

3. Along with the deterioration of China-India relations, relations between

China and Pakistan were rapidly strengthened, with the result that India had to face a two-front unfavorable strategic environment. And due to the continued improvement of relations between India and the Soviet Union and the formation of an alliance between them, China, whose relations with the Soviet Union deteriorated at that time, also had to face a two-front disadvantageous strategic environment. After the U.S. President Nixon’s visit to China in 1972, there emerged in South Asia the confrontation between China, Pakistan and the United States on the one side and India and the Soviet Union on the other side, giving rise to a serious threat to peace in Asia and the world.

nSince 1976, China-India relations were gradually restored and improved and witnessed greater development in this new century, producing very encouraging “bonus”.

(1) Both China and India are two neighbouring countries on a fast rise among newly emerging countries. The friendly cooperation between the two countries would offer an indispensable and important guarantee to their peaceful rise.

(2) With the swift development of trade and economic relations between China and India, China has become one of the biggest trade partners of India. Since both China and India have quite similar national conditions, they could learn from each other’s strong points to offset their own weaknesses in the fields of economic and social development. It is well known that China’s hardware and India’s software have mutual complementarity.

(3) China has developed friendly relations with both India and Pakistan in a separate way, while trilateral relations between China, India and the United States have maintained a general balance. These are conducive to stability in South Asia.

(4) Both China and India have common stands on a number of major international questions. With both countries taking part in more and more regional and international regimes, they support each other on many important questions such as the climate change.

It can be seen from the above comparison that it is not an empty talk that China-India friendly relations are in conformity with the fundamental interests of the two peoples. That harmony is precious has more and more become a common understanding of both governments and peoples.

Strategic partnership

The policy of good-neighborliness and friendship adopted by both China and India towards each other at present has its rich and important connotation.

1. Both sides, viewing China-India relations as one of their most important bilateral relations, have raised the level of their relations higher and higher. In 2005, both sides announced that they agreed to establish a China-India Strategic and Cooperative Partnership for Peace and Prosperity on the basis of the Five Principles of Peaceful Coexistence. This should be the fundamental starting point for both sides to deal with various specific questions between the two countries.

2. Both sides have reaffirmed in official documents that the common interests of both countries outweigh their differences and the two countries are not a threat to each other. Both sides have decided to settle their differences through peaceful and friendly consultations, without using or threatening to use force against each other. In view of the armed conflict between the two countries in 1962, this policy adopted by both sides has very important significance.

3. On the China-India boundary question, both sides have agreed to a policy of seeking a political settlement and have undertaken that while seeking ways and means to settle the boundary question, both sides would develop their relations actively in other fields. Both sides have also agreed that pending an ultimate settlement of the boundary question, the two sides should strictly respect and observe the line of actual control and work together to maintain peace and tranquility in the border areas.

4. India has readjusted its original stand of recognizing Tibet as an “autonomous region” of China to the present stand of recognizing that “the Tibet Autonomous Region is part of the territory of the People’s Republic of China” and has undertaken that it does not allow Tibetans to engage in anti-China political activities in India. China has recognized Sikkim to be part of India’s territory.

5. Both sides have adopted a policy of actively promoting friendly exchanges in all fields, so that friendly exchanges between the governments, political parties, parliaments, armed forces, industrial and commercial circles, cultural circles, youths and civil organizations of the two countries have continuously increased. Both sides have attached much importance to their trade and economic cooperation, with the result that trade and economic relations have witnessed a swift development.

6. China has adopted a policy of developing friendly relations with India on the one hand, and with Pakistan and other South Asian countries on the other in a separate way and has expressed its desire that South Asian countries could be friendly with each other. China has tried hard to persuade the relevant parties to become reconciled when conflicts occur between India and Pakistan or between India and other South Asian countries. This policy of China is conducive to peace and stability in South Asia. However, up to now, a small number of people in India still consider that it is for “encircling” and “containing” India that China has been developing its relations with Pakistan and other South Asian countries. What is the truth? It has already been more than twenty years since China adopted the above policy. What people can see is that China-India relations have been greatly improved and developed in this period and can not find any kind of “encircling” and “containing” India by China. Perhaps some friends in India are still worried. Then the best way is to continue their watching on this question.

7. In recent years, India’s diplomatic strategy has shown a certain degree of inclination towards the United States. However, India has still adhered to its policy of friendship with China, with the result that a general balance has been maintained in the trilateral relations between China, India and the United States.

‘China threat’ theory

The inadequacy of mutual trust between China and India has been mainly revealed through the fact that the “China threat” theory has been on rise again in India in recent years.

There are a number of factors leading to the inadequacy of mutual trust between China and India. Some are the questions left over from history while some are related to real politics. Thus the situation has been quite complicated.

The first factor is that no major breakthrough has been achieved on the China-India boundary question. Since 2003, a number of rounds of talks have already been held by the Special Representatives of the two governments. During Chinese Premier Wen Jiabao’s visit to India in April 2005, both governments signed the Agreement on the Political Parameters and Guiding Principles for the Settlement of the China-India Boundary Question, thus laying a good foundation for both sides to realize the final solution of the boundary question. However, owing to the complicated nature of this question, it seems that there is still some difficulty to reach the final settlement. Since the impact of the 1962 border conflict between the two countries has not fully vanished, the Indian side still has considerable apprehension about China on the boundary question.

The second factor is that the economic gap between China and India has been widening. In recent years, both China and India have achieved quite fast economic growth, but China’s rate of growth has been higher than that of India, with the result that the economic gap between the two countries has been widening to some extent. Since India has all along had a quite strong motive of competing with China, it seems India has some worry over this question.

The third factor is the influence of geopolitics. Along with the development of China-India relations, the impact of geopolitical factors on China-India relations has been reduced gradually. However, these factors still play a role to some degree. India still has some apprehension on China’s relations with India’s neighbours, while China has also its concern on India’s military and security cooperation with countries like the United States and Japan.

The above factors are interwoven together instead of being isolated with each other, leading to a rather complicated situation. Therefore, time and patience are needed. At the same time it is advisable that both sides would attach much importance to this question and make more efforts to enhance their mutual trust in an active way.

In accordance with the situation of China-India relations and with reference to historical experiences of China’s relations with some other countries, if both sides could make greater efforts in the following three areas, it would play an important role in enhancing mutual trust between the two sides.

1. Judging from the situation in recent years, mutual visits and meetings in third countries between leaders of China and India could play a vital role in promoting the mutual trust between the two countries. Leaders at the highest level of both countries have cherished very much these opportunities of personal contacts and conducted in-depth exchange of views, from a strategic altitude, on ways and means to further develop relations between the two countries, offering some new thoughts and proposals and publishing some very important documents which have much significance in guiding the relations between the two countries, so that greater impetus has been given to the development of relations between the two countries. These mutual visits and meetings have also shown outstanding effects in dispelling the dark clouds which might appear sometimes in the sky of China-India friendship and promoting the confidence of both peoples in the future of their friendly relations.

2. The final settlement of China-India boundary question will be the most important key to greatly enhancing mutual trust between the two countries. Judging from the present situation of China-India relations, it seems conditions are already mature for the final settlement.

3. Both sides could also take more active steps to support each other on questions involving core interests of the other side. This would fully reflect the practical significance of their Strategic and Cooperative Partnership and play an important role in promoting mutual trust.

The situation in recent years has indicated that both sides have taken a number of steps in this respect with good effects. The main steps taken by the Indian side in support of China are: recognizing Tibet as part of China’s territory; taking resolute measures so that the Olympic torch passed through New Delhi successfully in April 2008. The main steps taken by the Chinese side in support of India are : recognizing Sikkim as part of India’s territory; making positive remarks on India’s desire to become a permanent member of the United Nations Security Council; taking a flexible attitude so that the resolution to lift nuclear embargo against India could be passed by the Nuclear Suppliers Group. Since both China and India are large countries very active in international arena, both sides could find a number of problems on which mutual support is needed in the future. If both sides could give more and more support to each other, the mutual trust between the two sides would certainly be greatly enhanced.

The writer is China’s former Ambassador to India

Trade facts

India-China trade in 2011 stood at US$ 73.90 billion, recording an increase of almost 20% over the previous year

India’s exports to China in 2011 reached US$ 23.41 billion, recording a growth of more than 23% when compared to year 2010

China’s exports to India in 2011 reached US$ 50.49 billion, recording an increase of 23.50% compared to 2010

The trade deficit for India in 2011 stood at US$ 27.08 billion

India-China trade for Jan-July, 2012 stood at US$ 39.53 billion, recording a decline of almost 5%

Trade deficit for India for Jan-July, 2012 stood at US$ 13.69 billion

Indian exports

Ores, cotton, copper, organic chemicals, gems and jewellery, plastics, salt, cement, boilers, machine parts, electric machinery, sound and TV equipment, animal or vegetable fats, iron and steel, raw hides and skins, leather

Indian imports

Nuclear reactors, machine parts, electric machinery, organic chemicals, fertilizers, iron and steel, plastics, optical and photo equipment, medical and surgical equipment
Army chief, top generals wasted crores, shows defence ministry audit
New Delhi: Army chief General Bikram Singh, his predecessor General VK Singh and other top generals wasted over Rs. 100 crore of public money in just two years, an internal audit of the Ministry of Defence (MoD) has revealed.

Defence Minister AK Antony, taking a grim view of the profligacy, has come down hard and has ordered that spending of the commanders must now be cleared by the MoD.

Not just has the money been wasted, but the audit also finds that guidelines to buy foreign equipment have repeatedly been disregarded, and equipment rejected by one part of the Army has been bought by another.
In one example that goes beyond just the wastage of money, the auditor points to Chinese-origin communications equipment which was bought by the Generals, when they were commanders-in-charge of their regions, armed with special financial powers to make emergency purchases. In this case, the auditor found that even the Chinese-origin equipment was bought from agents rather than directly from the manufacturer as required, and despite the fact that similar Indian equipment would have been cheaper.

"There is an apprehension that the stores have actually been purchased from the grey market and perhaps are of Chinese origin," the report says.

Chinese-made communication equipment has been found to be embedded with malignant software. In a few cases detected in the past, it was found that Chinese and other foreign security agencies were exploiting these chinks in critical equipment to gather secret information.

The Military Intelligence (MI) and the Director General of Information Services have issued exhaustive guidelines on equipment purchase and checks. The audit, however, found these have been completely violated. "This would be a major security risk apart from being a serious financial irregularity," the auditors observe.

The auditors also found that despite clear guidelines to source directly from manufacturers, most foreign-origin equipment have been purchased from Indian agents. In some cases, middlemen were used even though the original equipment manufacturer was present in India.

The report points out that High Resolution Binoculars were purchased by the Eastern Command at higher cost from an Indian agent when the original manufacturer was selling the same equipment at a lower cost.

In yet another major lapse, the auditors say that while the Army Headquarters rejected a certain make of bullet-proof jackets for troops because they were of a low quality, the same were purchased by the Northern Command.

The Comptroller of Defence Accounts (CDA), under instructions from Mr Antony, carried out an audit of Special Financial Powers of the Army Commanders for two years - 2009-10 and 2010-2011 - and just looked at 55 transactions across six of the seven commands of the Indian Army. The audit report observes the total estimated losses were to the tune of Rs. 103.11 crore. 55 transactions were sampled during the audit and in most cases, the auditors weren't able to establish the amount of loss due to the manner in which financial records were kept, and the lack of complete information made available, the report has said. It suggests that future audits should try to quantify the loss.

Perhaps, most worrying is the fact that "none of the Army commanders have furnished complete data" of the purchases made by them to the auditors. The auditors noted that purchases took over a year to reach the Army and in some cases, the delivery took as long as three years. The report says that "the delay in utilisation" suggests that "operational urgency for which stores" were acquired "could not either be addressed or there was no real operational urgency for the purchase of stores." The report also observed that although auditors are posted in the commands, they are intimidated by military officers in command, who are also their reviewing officers. 

The auditors have told the ministry that there is need for complete audit of all purchases made using the special financial powers of the Army Commanders, and have also suggested that "it would not be advisable to consider any proposal for enhancing the existing delegated (financial) powers. Whole system of delegated powers available to the Army Commanders needs to be reviewed."

Army refutes allegations

The Indian Army, in a written response to the NDTV report on the mishandling of funds by Army Commanders, said that the report was "based on half-truths." NDTV would like to clarify that it has not come with any facts on its own but is only reporting the findings of an internal audit conducted by the Comptroller of Defence Accounts. The Army, however, does not contradict that an additional layer of oversight mechanism has been introduced by the Ministry of Defence.

The Army says that Financial Advisors (FA) attached to individual commands play a vital role in all purchases made by the commands and therefore the questions of mishandling does not arise. The Army hasn't commented on the observations of the audit that FAs post in the command are intimidated and unable to perform their duties at the command.

On the audit observations that of Chinese-made communication equipment may have been purchased in violation of the cyber security guidelines compromising security, the Army said transaction was "under arbitration as the vendor was not able to reveal" who had manufactured the equipment.

The Army also says it is ensured that all procured items reach the units and even reserves are not maintained. "Delays" are, Army says, "due to terrain and weather conditions." The Army does not comment on audit findings that tetra pack milk procured by Eastern and Northern Commands were wasted and several stations did not receive any milk.
Antony directs defence secy to scrutinise deal
Defence minister A.K. Antony has asked defence secretary Shashi Kant Sharma to correspond directly with the Italian government to ascertain whether there have been any irregularities detected in Italy over the already-inked deal for acquisition of 12 AW-101 helicopters (for VVIP use) by India for the communications squadron of the Indian Air Force (IAF) from Italian-owned company Agusta Westland.
It may be recalled that Mr Antony had earlier directed his ministry officials a few months ago to get a report from the Indian embassy in Rome on Italian media reports alleging malpractices.
The MoD had said earlier, “The Indian embassy reported that Italian authorities were conducting preliminary investigations on allegations of financial malpractices occurring within Finmeccanica and its subsidiaries in general.”
The MoD had also earlier said, “Any such complaint or allegation received will be investigated and the contractual provisions invoked, in case any wrong doing is established, in addition to action that may be required under law.”
Army brass caused Rs 100cr loss in 2009-11: Defence audit
NEW DELHI: An internal audit report of the defence ministry has detected a loss of over Rs 100 crore in spendings by six army commanders between 2009 and 2011, prompting defence minister A K Antony to order strict checks and balances on expenditure.

The army, however, contested the loss of Rs 100 crore in procurements and insisted that no rules have been violated.

The defence ministry had ordered the Controller of Defence Accounts (CDA) to audit expenses made by the army commanders under their special financial powers of up to Rs 125 crore to procure urgently-required items for troops.

Taking a strong view of the financial mismanagement under its departments, defence minister A K Antony has decided to impose strict checks and balances on expenditure made under special financial powers by all officials under the ministry having such authority.

The audit report has assessed 55 transactions made by the commands between the period 2009-11 when present Army Chief Gen Bikram Singh was heading the Kolkata-based Eastern Command.

The report suggests that certain equipment, including Chinese communication equipment, has been purchased from grey market. Mismanagement in milk procurement in Northern Command has also been suggested by the report.

It also mentions the procurement of binoculars by the Eastern Command from a foreign vendor when the same were available at lower prices in the Indian market.

Ministry officials said efforts are being made by the defence minister to streamline the entire financial management system of all the departments under the ministry.

The ministry is putting in place checks and balances especially in organisations where no such measures existed. The steps are likely to include appointment of auditors for ensuring that all rules and regulations in financial management are observed and followed.

A budget of around Rs 125 crore and Rs 50 crore for army commanders of Northern and Eastern Commands respectively and Rs 10 crore each to other four commands, has been provided for meeting the requirements of these unforeseen situations, the report suggested.

The internal audit report said there was a loss of around Rs 30 crore in procurement of special packaged milk in the Northern Command.

"Procurement of extra quantities of both tetra packed milk and fresh milk, over and above the authorised quantities as per scales has resulted in excess expenditure of Rs 94 crore during a period of two years and these losses are required to be regularised," it said.

The report has also suggested the review of the special financial powers of the army commanders and other officials.

In its response to the contents of the report, the Army Headquarters said, "On the issue of communication sets with Chinese components, they were procured on DG S&D rates which have been included in the list after thorough inspection by them."

However, it is under arbitration as the vendor was not able to reveal the original equipment manufacturer, the army headquarters added.

The Army said it has already responded to observations raised in the audit report of the ministry and "no observations have been found to be true".
Joined Army to fight Nazism: Gen Jacob
The hero of the 1971 India-Pakistan war over Bangladesh, 89-year old Lt. General (retd.) JFR Jacob's recalls that he joined the army to fight the Nazis.

Lt General Jacob is the scion of an old Baghdadi Jewish family that immigrated to India some 200 years ago in order to escape persecution in their native lands.

Despite the opposition of his father, in 1941, he enlisted in the British Army in order to fight the Nazis, whom he had heard were committing atrocities against the Jews.

"No I would not have taken a career other than the army. After the 1945 war, I went for a review and was offered a career in the Indian Civil Service. I refused to join the ICS and became an Indian commissioned officer," General Jacob told ANI.

"I joined the army to fight Nazism. I saw atrocities and requested to be sent to the Middle East. I just wanted to fight and there was no other reason for joining the forces," he added

However, for the majority of his time, General Jacob found himself fighting the Japanese in Burma, Sumatra, and other parts of south Asia.

Deciding that he liked the military life, he continued to serve, and after India gained independence in 1947, he joined the new national army, rising to the rank of Lieutenant General. While he has no regrets about his decision to serve in the army for 37 years, he had to remain a bachelor as marriage proposals slipped, as he had to serve in operational areas.

The highlight of his career was undoubtedly the 1971 Indo-Pakistani war.

Lt General Jacob was the Chief of Staff, Eastern Command, during the 1971 war and took many operational decisions at his own risk, despite differences with seniors. He was the mastermind of implementing the surrender programme by the Pakistan Army led by Lt. General AAK Niazi, who headed the Eastern Command of the Pakistan Army.

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