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Defence Scams Galore: HONESTY TAKES BACKSEAT, By Dr Col (Retd) PK Vasudeva,17 Dec 2007 Print E-mail
DEFENCE NOTES
New Delhi, 17 December 2007

Defence Scams Galore

HONESTY TAKES BACKSEAT

By Dr Col (Retd) PK Vasudeva

Prof, ICFAI Business School, Chandigarh

The Indian Armed Forces are known for their honesty, integrity and professionalism. However, due to the booming and fast growing economy, the over Rs one crore per year sky-rocketing pay scales in the corporate sector coupled with the fat-perquisites-sans-accountability of politicians and bureaucrats, the bug to-get-rich-quick   has also affected some of the Armed Forces officers. Resulting in a below-standards leadership, corruption and a large number of scams at various levels.

Basically, the Forces are not directly involved in the procurement of high-cost modern arms, equipment, aircrafts and naval frigates. They only carry out the user's trial and recommend a particular arm or equipment. The purchases are directly carried out by the Ministry of Defence (MoD).  One of the biggest Army scams still pending with the CBI for the last two decades is the Bofors gun deal. 

Recall, the Army initially planned to acquire a Howitzer gun which could clear the steep mountains and the long distance 30 km. But after conducting the user trials, the Army did not recommend the purchase of the Bofors gun because better guns were available. However, the MoD which preferred the Swedish gun ordered 3000 Howitzers. But due to the infamous 'Bofors Scandal' in 1987 only 410 guns were purchased. Thus, Bofors became a synonym for political skullduggery.

It was alleged that Bofors along with the other accused entered into a criminal conspiracy to obtain the contract by deceiving the Indian Government by fraudulent representation about the price and quality of the gun and gun system by stating that it was superior and cheaper than the `Sofma' and that no agent/middlemen would be used in the negotiations.

After obtaining the contract, Bofors paid a commission of SEK 50.46m to the Italian businessman Ottavio Quattrocchi through AE Services Ltd; SEK 192.15m to the Hinduja brothers through Mc Intyre Corporations in the name of Svenska Inc, Panama and SEK 80.79m through the Hanover Trust, SEK 31.98m through the Swiss Bank Corporation, Geneva and SEK 11.77m through Credit Suisse, Geneva. All to cheat the Indian Government.  Resulting in a loss of Rs 100 crore. While some of the accused have been exonerated, the case against Quattrochi is still going on without any results.

That apart, the MoD is inquiring into allegations of kickbacks in seven major deals relating to the acquisition of sub-systems worth thousands of crore in 2007. One of the cases pertains to the procurement of the multi-beam echo sounders for the Indian Navy.   It is designed to perform sea-bed mapping and sea-bed imagery in full ocean depth with an unusurped resolution, coverage and accuracy.

The other deals that are being investigated by the MoD’s Chief Vigilance Officer (CVO) are the procurement of the ground-based mobile ELINT systems, which constitute components of the Phalcon Airborne Early Warning, the Command and Control Systems (EWACS) that were purchased in 2004 from the Israel Aircraft Industries for $1.1 b. The systems receive, analyse and locate radar signals covering 360 degrees.

The Rs 260-crore deal for the Autonomous Underwater Vehicles (AUV), the Navy's first- ever from Norway's Kong's Berg Maritime is also being probed by the CVO. Two potential vendors, UK's Ms Hydroid, Europe and US's Bluefin Robotics Corporations earlier this year, complained that the contract was awarded without the floating of global tenders. They alleged that the guidelines were not followed.

Scrutiny also remains incomplete in respect of the MoD's "suspect decision" to source 80 per cent of the electronic fuses required for the artillery gun from one source and without floating a global tender. Another case relates to allegations of kickbacks totalling $3,65,935 in the anti-material rifles deal with the South African vendor Ms Denel Pty Ltd.

Besides, the Udhampur-based Northern Command Chief, Lt-Gen H S Panag, has sought explanations from 16 personnel about irregularities in the procurement of eggs. "It's a case of not allowing even a minor aberration to go unnoticed. An inquiry is in progress to determine whether it's the mischief of the contractors or some Army officers or both working in collusion," said an officer.

Coming as it does after the petrol, liquor, cereal and other scams, the Army top brass is taking the "egg scam" seriously. The loss to the exchequer could run into crores, considering that over one-third of the 1.13-million Army is deployed in J&K.

Further, the Army has ordered administrative action against a Lieutenant-General and several others, for alleged irregularities in the procurement of frozen meat meant for the troops posted in Ladakh.

A court of inquiry, headed by a former Deputy Chief of Army Staff. Lt-Gen G.D. Singh had indicted Lt-Gen S K Dahiya, at present posted as Commandant Army Service Corps (ASC) Centre, Bangalore, for his role in the matter. The procurement was done when General Dahiya, in the rank of Major-General was heading the ASC branch at the Northern Command Headquarters.

More. Seven years after the Kargil war, the Central Bureau of Investigation has finally nailed some senior Army officers and the company that sent the coffin boxes for the dead soldiers at twice the market rate in what has come to be known as Coffin Scam.

The CBI has registered a criminal case against a recently retired Major General, who was the then Military Attaché, Indian embassy in the USA; a Colonel ranking officer, who was the then Director, Master General Ordnance; another Colonel ranking officer, who was the then Joint Director, MGO; a private vendor in America and others in regard to the procurement of aluminium caskets and body-bags.

"The Ministry of Defence had imported aluminium caskets and body bags from a US based funeral service company to enable the Indian Army to transport the mortal remains of the soldiers from the battlegrounds to the places of their next of kin with exalted decorum and efficiency. But the suspected officials entered into a contract during 1999-2000 with the US-based supplier to import 500 aluminum caskets and 3000 body bags at an exorbitant rate of $ 2500 (approximately Rs.1.20 lakh) per casket and $ 85 per body bag flouting the rules of established procedure of defence procurement.” 

Not only that. The Army is now investigating allegations of irregularities in the purchases made from funds released under the Army Commander's special financial powers in Jammu and Kashmir. According to sources, tents and other ordnance equipment was purchased from local sources under the special funds. The purchases pertain to the last 2-3 years and are valued at about Rs 17 crore. The role of around 50 officers, most of them from the Army Ordnance Corps (AOC), is being investigated for the purchases. 

If Army tradition has any standard-bearer, denying a jawan, guarding the country's borders, his daily rations would amount to treason. For troops serving in the tortuous upper reaches of Siachen-Leh-Kargil, the special high-altitude rations flown in by helicopter is their sole source of sustenance.

Now, a shocking Rs 5,000-crore scam involving the large-scale diversion of essential food supplies meant for the troops in this sensitive border region has set alarm bells ringing at the Army headquarters. Reports detailing the extent of the scam, allegedly involving senior officers of the Leh-based 14 Corps are now with the Union Defence Minister, A.K. Antony. The revelations, the result of an investigation by the J&K police, have deeply embarrassed the Army's top brass.

Another fraud that has been reported is vis-à-vis the convoy which goes from Srinagar to Leh, for stocking of the winter rations, ammunition and other stores. It has now been detected that the fuel is sold to civilians on the way.

The region's Petrol Tank Owners Association asserted that the scam involving drivers, officers and middlemen has cost hundreds of millions of rupees. The Army has not commented on the claim but said it was investigating the scam. It was found that seven tankers of diesel bound for Ladakh had been sold off and replaced with water. Additionally, more than 30 per cent of the oil supplies meant to the Army are stolen. The association asserted that the scam worsens during the winter supply season. --- INFA

(Copyright India News & Feature Alliance)

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