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In defence of the Nation?

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  1. In defence of the Nation? NyayapatiGautam Triumphant Institute of Management Education P Ltd

  2. 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.

  3. 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. AvadeshPrakash too.

  4. Why the armed forces? • The corruption is not limited to just military land. • The biggest area is in the weapons acquisition process.

  5. 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 lakhcrore). • 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 lakhcrore 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.

  6. 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 Director-General, 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.

  7. 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.

  8. 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.

  9. The Story . . . • Since 2006, MoD'sDefence 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.

  10. 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 UK-based 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. )

  11. 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.

  12. 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.

  13. 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.

  14. 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.

  15. 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. • AnanthaVenkatarami Reddy, an MP wrote to the PM in December 2011 that MoD officials decided to ignore all Defence Procurement Procedures to favourPilatus. • 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.

  16. 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?

  17. 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. • 'Defexpo2012' 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?.

  18. 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.

  19. 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."

  20. Thank You nyayapati.gautam@time4education.com