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Saturday, 16 February 2013

From Today's Papers - 16 Feb 2013
Govt to cancel VVIP helicopter deal
Puts AgustaWestland on notice CBI to send team to Italy
Tribune News Service

New Delhi, February 15
In a move that will be keenly watched by governments and defence equipment makers, New Delhi today took the first step to cancel the Rs 3,500 crore deal for 12 AgustaWestland AW-101 helicopters with Italian aerospace major Finmeccanica.
The Ministry of Defence (MoD) issued a formal show-cause notice to AgustaWestland UK, a subsidiary of Finmeccanica, for cancellation of the contract and taking other action as per the terms of the contract and integrity pact, ministry spokesperson Sitanshu Kar said. “With today’s notice, the operation of the contract has been put on hold. The company has been asked to reply to the notice in seven days,” the statement said.

The notice will over-ride existing action such as initiation of a CBI probe into allegations of bribery on February 12. The cancellation of the contract for the VVIP helicopters will mean India would recover the entire cost and damages from AgustaWestland and could also ban its operations in the country. A final call is yet to be taken on whether the entire Finmeccanica group, with its corporate headquarters in New Delhi’s Nehru Place, is banned or its subsidiary AgustaWestland alone faces the ban.
Under provisions of the contract and the integrity pact, India can cancel the contract and recover the money. AgustaWestland did not declare its agents and is under contract to have not paid any amount to any individual or firm for securing the deal.

The cancellation means the helicopter maker will not be entitled to compensation and will be liable to refund payments made by India in terms of the contract with interest. The MoD will also forfeit the bank guarantee running into millions of euros. So far, the MoD has reportedly paid about Rs 1,000 crore to AgustaWestland.

The CBI today registered a complaint on the basis of a letter and the clippings of Italian and Indian newspapers provided by the Defence Ministry asking the investigating agency to probe the alleged Rs 350 crore kickback paid by an Italian firm to clear the deal. A formal case will be registered once the authenticated documents with translations are made available through the Ministry of External Affairs.

A CBI team is also being sent to Italy where the CEOs of AgustaWestland and its parent company Finmeccanica have been arrested on charges that kickbacks to the tune of around Rs 350 crore were paid to bag the deal for the VVIP helicopters.

A complaint was registered when senior officials of the MoD and the CBI met today. The case has been registered to ascertain if any kickbacks were paid, sources said. A warrant in an Italian Court says bribes were paid to cousins of former IAF Chief SP Tyagi to tweak the specifications of the tender. He has denied the allegations.

Yesterday in Europe, the Finmeccania stock dropped and was being traded at Euro 4.19 against Euro 4.76 three days ago. Being banned in the Indian defence market -- that is looking to spend $100 billion in the next decade -- could hive off a major chunk of present and future business for Finmeccanica while its rivals are expected to gain by its elimination. As per the 2012 yearbook of Swedish think-tank Stockholm International Peace Research Institute (SIPRI), New Delhi is the biggest Arms importer.

This is not the first blacklisting of companies and cancellation of contracts. In March 2012, India had blacklisted four foreign companies and two Indian companies on bribery allegation and got the CBI to register a case. Israel Military Industries Ltd; Singapore Technologies Kinetics Ltd; Rheinmetall Air Defence, Zurich; Corporation Defence, Russia; TS Kisan and Co, New Delhi, and RK Machine Tools, Ludhiana, were banned for 10 years.
CAG auditing copter deal, report soon, says Vinod Rai

Mumbai, February 15
Amid the storm over alleged kickbacks in the AgustaWestland VVIP chopper deal, Comptroller and Auditor General Vinod Rai today said an audit of the controversial deal is under progress and a report would be released soon.

"CAG conducts audit of the defence ministry and we have done it in this case (AgustaWestland deal) too. It will come to your notice very soon. We are conducting the audit", he said during a question-answer session on the deal at a bankers symposium here.

On the status of the audit report in the Rs 3,600 crore deal, Rai said, "Audit is under progress but don't know when it will be completed. I am not aware about the stage of audit".

It is alleged that kickbacks to the tune of Rs 362 crore were paid to bag the contract.

Referring to the spate of corruption issues, Rai said that things have changed and the silent majority can no more be bullied by the minority.

"The myth that has been debunked is that of the silent majority. The majority is always silent because the minority feel that they have a mandate and they are exercising that mandate.

They are more articulate and aggressive than the silent majority...... But, the times have changed....but, the so called people who have the mandate, are typical what I would call, bullies. The majority has to be consistent in their efforts to see the changes in the system," Rai, whose reports on scams has raised the hackles of the government, said in response to a question.

The government auditor said compulsion of coalition politics in every democracy is leading to convenient deviations. The dominant culture of adjustment is prevalent... with honesty and integrity becoming the casualty," he added.

The most oft repeated statement by the public officials over the large number of misdemeanours which have been reported are that the law would be allowed to take its own course.

"It is unfortunate that this is exactly what doesn't happen and any number impediments are created in law taking its own course," he added. When asked whether he had any plan to join politics post-retirement, Rai quipped, "Is there any thing wrong in it?'" — PTI
Can’t lower guard against China: Arunachal Guv
Tribune News Service

Chandigarh, February 15
India-China bilateral relations remain largely cordial and there is tremendous scope for further improvement in various fields, but we cannot afford to let our guard down.

Stating this while delivering a special Panjab University Colloquium lecture here today, Governor of Arunachal Pradesh Gen JJ Singh (retd) stressed that we should continue to modernise and enhance the capabilities of our armed forces, improve border infrastructure and strengthen our intelligence agencies.

He said that there has never been so much of “concentrated” development before in Arunachal as was taking place at present, with a four-lane highway connecting it with the rest of the nation expected to be ready next year and a rail link likely to be ready this year.

While a forward airfield at Vijaynagar was activated recently, another 5-6 landing strips are expected to be activated in the near future.

“These development works are aimed at the socio-economic uplift of the local people. Other advantages they offer are incidental,” he said.

Listing out the challenges in bilateral ties, which include an unresolved boundary dispute, the Chinese perception of a US-India tie-up against it, potential for unrest in Tibet and the political and economic dimensions of two rising competitors, General JJ Singh said that the new Chinese leadership is giving greater importance to relations with India. He said that while bilateral trade was growing, measures were required to check the trade imbalance.
For LoC, Army to procure new surveillance systems
Tribune News Service

Chandigarh, February 15
To beef up border guarding capabilities and keep a tab on movements in the proximity of the Line of Control (LoC), the Army's Northern Command is procuring new border surveillance management systems.

These systems would be equipped with zoom sensors and have the ability to transmit information from an observation post to controllers located at a surveillance centre at least 25 km away, besides being operated remotely from the centre.

Consequently, by deploying several systems in a networked configuration, a single surveillance centre would be able to observe a wide swath of area. Each centre would be able to control at least four observation posts.

The Army's move to procure new systems comes in the backdrop of continued infiltration from across the LoC as well as frequent violations of the ceasefire agreement with Pakistan.

The Army's requirements mandates that the surveillance system be equipped with a thermal imager camera that is able to observe and record images both during day and night, with the minimum detection range being 6 km during day and 3 km in the dark.

The observation device would transmit images, both still and streaming either through radio link or optical fibre cable to the surveillance centre, where operators would have the ability to remotely control all functions of the observation post such as switching on the camera, panning, tilting, zooming and recoding.
From Bofors to Agusta: How can defence deals be kept clean?
If there’s one thing in common with procurements by the Indian armed forces – from Bofors guns down to AgustaWestland helicopters – it is that they have all been characterised by allegations of corruption in high places, which generated much heat and dust in the political realm, but yielded little else.

Yet, over the decades, despite all the outrage, nothing has been done to put in place mechanisms that can make such procurements transparent – and try and rid the process corruption-free to the extent possible. Although the matter comes up for mention in thundering newspaper editorials whenever reports of corruption in procurements come up – the latest such editorial appears in today’s Business Standard – the vested interests in the system that profit from opacity have ensured that no effective change has been brought about.

In defence procurement, typically, a balance has to be struck between urgency of acquisitions, which would determine the speed of acquisitions, and the transparency that surrounds the process. A completely transparent system has many merits, but not when the armed forces’ requirements are urgent. Defence Minister AK Antony’s reflex action in “blacklisting” defence manufacturers has the merit of being seen to be moral, but it has effectively only created bottlenecks in the procurement process without ending the problem of corruption, which such actions were intended to address.

Last year, for instance, the then Army chief, Gen VK Singh, raised the red flag on the perilous state of India’s defence preparedness owing to delays in acquisitions of arms and ammunition. It’s a fair bet that things haven’t improved dramatically on that front, despite becalming assurance from armed forces chiefs.
Critics tend to blame the complexity of the defence procurement procedure (DPP) protocol for the opacity surrounding defence procurements, and the scope for corruption. The document (here), which lays down the minutiae of procurement procedures, has been revised eight times in the past few years. The constantly shifting goalpost has meant that companies that wish to sell to India need a platoon of subject matter experts and lawyers to make sense of the fine print – and perhaps even the services of lobbyists and middlemen who know the terrain and can grease the tracks.

Lack of transparency and accountability are the most frequently cited problems to account for the problems in arms procurement. And yet, despite the many iterations that the DPP has undergone, it has failed to remedy this.

In any case, the DPP applies only to procurement by the armed forces; ordnance factories, the DRDO and public sector defence units march to the beat of a different drum. And, in fact, arms deals that are struck on the fast track or under the umbrella of the inter-government agreements manage to circumvent the provisions of the DPP – and the tendering process.

Other strategic analysts have argued, controversially, for lifting the ban on middlemen in defence deals – and get them to work under a transparent regulatory framework. “It is hard to see how we can continue to justify the failed policy on middlemen,” this blogger claims. “Unless you are blind to reality, blinkered by sanctimoniousness or bound by hypocrisy, it should be clear that the consequences of the anti-middlemen mindset are eating into the moral fabric of our defence services.”

That’s persuasively argued, of course, but it fails to convince. The point has been made elsewhere that it is not the illegal status of the ‘middlemen’ that greases the tracks for corrupt deals. For instance, a sales representative selling medical equipment – a perfectly legitimate authority doing a perfectly legal function – is part of a business model where, in order to advance sales, he provides bribes to the procurer (which go into padded invoices). Likewise, legitimising the middleman isn’t going to end corruption in arms procurement.

For more than a decade now, politicians frequently invoke the emotional rhetoric about the compelling need for indigenisation of arms manufacture. Yet, progress on that front has at best been glacial. Dependence on foreign suppliers remains high to this date, driving India to the top of the charts as an arms importer. And given the fact that vested interests that profit as shadowy middlemen in the procurement process have gamed the system, that’s unlikely to change in a hurry.
Helicopter bribe scandal threatens India’s defense modernization
NEW DELHI — Allegations of corruption in the purchase of 12 Italian helicopters are threatening India’s desperately needed multibillion-dollar modernization of its defense forces.

The chief executive of the Italian defense and aerospace company Finmeccanica, Giuseppe Orsi, was arrested in Milan this week on charges of bribing Indian officials to secure a $750 million deal in 2010 to sell the AW-101 medium-lift helicopters.
In response, India ordered a federal probe into the charges and put payments on hold. The Defense Ministry also deferred discussions this week on another contract to buy 197 light utility helicopters, fueling fears that the controversy may paralyze the government’s already painfully slow decision-making process.

Defense Minister A.K. Antony told reporters Wednesday that if the probe reveals proof of graft, the Italian company and its Britain-based subsidiary “are liable for criminal actions; they are liable to be prosecuted; the company is liable to be blacklisted.”

“We are not bothered about who the companies are, how strong they are, how influential they are,” Antony said. “Nobody will be spared.”

In a statement Friday, the Defense Ministry said it has notified the Finmeccanica subsidiary, AgustaWestland, that it is seeking to cancel the contract. The company was asked to reply to the notice in seven days.

Defense analysts said the dramatic revelations of bribery that are being splashed across Indian newspapers every day — and the probe they have prompted — may cast a shadow over India’s ambitious plans to replace its aging military arsenal. Those plans made the country the world’s largest arms importer last year. The bribes were allegedly offered to officials as high as the former air force chief.

The case has reminded many Indians of another defense corruption scandal in the 1980s, which helped bring down a government and pushed back many key defense purchase decisions. A similar delay, they now warn, may threaten India’s security at a time when its lumbering military needs to urgently transform itself into a leaner and more lethal force to face potential threats from neighbors such as China and Pakistan.

“The unfortunate fallout of the current helicopter controversy is that decisions will get stalled, people will play safe and not take any decisions at all, and that will affect our defense modernization and preparedness adversely,” said Mrinal Suman, a retired army major general who instructs foreign defense manufacturers on Indian weapons procurement policies. “The modernization of our armed forces is already lagging behind by 15 years. About half of the weapons and equipment in India’s armed forces are obsolete.”

In 2011, V.K. Singh, then chief of the Indian army, said the army’s major combat weapons were in an “alarming” state, making India unfit for war.

India in recent years has embarked on plans to upgrade its Soviet-era arsenal with new fighter aircraft, antitank missiles, maritime patrol aircraft, infantry combat vehicles, helicopters, assault rifles and submarines — a shopping list worth about $100 billion over more than a decade.

U.S. companies hope to corner a predominant share of this market in the coming years. Defense trade between the United States and India has generated nearly $8 billion since 2005, coinciding with a new era of closer ties between the two nations.

But each defense purchase takes an average of eight to 10 years, frustrating many foreign vendors.

“Overcautious officers delay the process by looping in and marking defense acquisition files to every senior [official], just to avoid taking individual responsibility for their decisions,” said an industry observer familiar with the process.

The reason for such nervousness, analysts said, is the bruising aftermath of a defense corruption scandal in 1989, in which Indian officials were accused of receiving bribes from the Swedish company Bofors in return for a contract to buy howitzers. The scandal cost the then-ruling Congress party dearly in elections that year.

“It took at least 15 years for the government to recover from the shock of the Bofors scandal and pick up the courage to take decisions on buying weapons again,” said Suman.

An editorial Thursday in the Indian Express newspaper warned against “the system’s tendency to lapse into inertia and indecision when faced with demands for greater accountability.”

As in the aftermath of the Bofors scandal, “procurement may again be slowed, suspended or banned, apprehending scandal,” the editorial said. “Asked to prove its innocence, the system could again choose to retreat to the comforts of inaction and prevarication.”
Army launches eviction drive
RAMGARH: Taking serious note of the encroachment on defence land along NH-33 at Thana chowk locality in Garrison town, Ramgarh which is under active possession of the Indian Army, army station headquarters has initiated an eviction drive and set a 10-day deadline for vacating the land which is allegedly encroached upon by citizens, Ramgarh district police association and a Durga Puja committee.

Lieutenant Colonel Thomas Kuttu of army station headquarters in Ramgarh said on Thursday that eviction notices were pasted on the walls and doors of four dwellings constructed on defence land including district police association office and a Durga mandap near Thana chowk of the town. The land occupied is defence A-1 land which is under active possession of the Indian Army and the station headquarters reserved the right of eviction without seeking civil administrative orders and support.

"We have directed the illegal occupants of the defence land to vacate it latest by February 22 by pasting notices on the dwellings failing which the army might evict the illegal occupants," Lt Col Kutti said adding that they have been asked to appear before competent army authority at station headquarters to prove their right to construct a structure on defence land before February 22 as the police association's plea seeking a stay order has already been rejected by a court.

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