Private-Public Partnership in Defence Scams

Even as the Army Chief indicated a massive defence corruption scandal, alleging that a retired army officer had offered him a bribe over the purchase of trucks, a massive Defence Expo was underway in New Delhi, with international armaments giants vying for arms deals.

According to the global think-tank Stockholm International Peace Research Institute (SIPRI), India has emerged as the world’s largest importer of arms. Competitive muscle flexing and arms race with Pakistan and China has been the pretext for huge progressive hikes in the defence budget. Inevitably, kickbacks and scams have emerged as a constant feature of defence procurement.

Strangely, the million-dollar question of defence corruption has been obscured by the matter of ‘leakage’ of the Army Chief’s letter to the Prime Minister, stating the sorry state of India’s military infrastructure and preparedness. It has been said that such matters ought to remain between the Government and Army, and kept from the public, in the name of national security and the morale of the armed forces. Shrouding defence deals and related issues in secrecy cannot be justified in the name of national interest. What can be worse for national security or even soldiers’ safety and morale, than the fact that substandard equipment is being procured at inflated costs, lining the pockets of top personnel in the military, defence ministry, and defence PSUs?

The Tatra truck procurement scam exposes how defence scams are yet another instance of ‘public-private partnership’ in corruption, involving a nexus between defence PSUs like BEML that work as middlemen, private companies, and the Defence Ministry. Substandard equipment is bought cheap abroad by the BEML, and sold at twice the price to the army. While the BEML is supposed to ‘indigenise’ the equipment procured from foreign firms, even this minimal requirement is ignored: the Tatra trucks continue to have a left-hand drive even today!

One of the justifications for liberalisation and privatisation in India’s economy in the 1990s was that it would cleanse the system of corruption. Instead, it has resulted in an unprecedented scale of corruption, flowing from the corporate drive to plunder of precious resources and monopolise public assets and services. Now, in the wake of the news of serial scams in defence deals, and the Army Chief’s remarks about poor defence preparedness, increased privatisation is again being touted as the solution.

At the Def-Expo 2012, Ministry of Defence officials indicated that they intended to concede the private sector’s demand that the long-term equipment plans of the army, navy and air force be shared with them. The CEO of the Mahindra Group has said that there is a need to “change the complete template” of defence procurement, increasing the involvement of the private sector in the country’s defence industry. The facts, however, indicate otherwise. The defence industry was first opened up for the private sector in 2001, with FDI allowed up to 26%. Private companies such as Tata, L&T, Mahindra Group, and Wipro are already in agreements with foreign arms equipment manufacturers. Since 2001, the spate of defence scams has grown in scope and size rather than abated. With Defence allocation being hiked dramatically in every Budget, private companies and MNCs are eyeing a lucrative defence market in India. A 2010 report of the corporate institutions ASSOCHAM and KPMG, titled ‘Homeland Security in India,’ speaks of the massive increase in India’s ‘Homeland Security Budget’, noting that this creates the potential “for large industry players to enter into the Homeland Security market,” and advocating “public private partnership” in this sector. As huge private corporations compete to corner this huge market, kickbacks are bound to follow.

Major defence scams that have come to light in the past few years include the scams revealed by the Tehelka sting and the Kargil coffin scam in the NDA regime, a string of defence procurement scams straddling the NDA and UPA regimes, the Adarsh housing scams, the Sukna land scam and a series of other defence land scams that continue to unfold, a ration supplies scam, a frozen meat scam, and an ordnance factory scam. The unearthing of these scams has failed to be followed by credible and timely probes. In some cases, foreign firms and middlemen fail to face any action despite being repeatedly implicated in scams. Just as the Radia tapes scandal was followed by proposals to legalise lobbying, CBI officials have hinted the same in the case of defence scams too, lamenting that while paying commissions is a crime in India, it is an accepted practice in many other countries. ‘Lobbying’ and brokerage of arms deals in return for kickbacks are clearly the norm rather than the exception in Indian arms procurement, with former army officers acting as brokers in many cases. The CBI’s lack of autonomy is a major factor in its lack of success in taking probes into defence scams, in which top echelons of the military, Defence Ministry and Government are implicated, to their logical conclusion.

The fact that the Army Chief notes poor military preparedness in spite of massive defence expenditure, indicates that defence spending is motivated by the drive to benefit private profit-seeking arms corporations and a corrupt military-industrial-politician nexus, rather than in response to any genuine needs of the armed forces. The pervasive defence scams once again underline the need for a genuinely independent Lokpal, with the armed forces too under its ambit, to thoroughly probe all defence procurements and army land transactions, and ensure punishment for all the facilitators and beneficiaries of such scams, be they in the Defence establishment, political establishment or the military-industrial complex.

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