Op-Ed: Corruption Fears Freeze India Acquisitions
(Source: defense-aerospace.com; published Nov. 12, 2013)

By Giovanni de Briganti
PARIS --- The Indian government has put three of its most urgent defense acquisition contracts on hold while it deals with unproven corruption allegations regarding its VVIP helicopter contract, leaving its armed forces to continue operating largely obsolete helicopters for the foreseeable future.

The issue is that India’s defense acquisition bureaucracy, and particularly Defense Minister A.K. Antony, appears to come to a standstill each time an allegation of corruption surfaces. The proximity of general elections in April or May 2014, and the emergence of strong anti-corruption movements, mean that the main political parties, including the ruling Congress Party, are taking care to burnish their anti-corruption credentials at the expense of everything else.

The result is that large, competitive acquisition contracts are taking far longer to complete as the government has taken to suspending tenders, and to order investigations, each time an allegation of bribery is made, whether or not it is credible or indeed plausible.

India’s contract with AgustaWestland for the supply of 12 AgustaWestland AW101 VIP transport helicopters, for example, has been suspended since February, after the arrest if the CEO of Finmeccanica and the CEO of its subsidiary AgustaWestland by Italian investigating magistrates for suspected false invoices and other alleged contractual irregularities.

AgustaWestland has always protested its innocence, and will finally meet with Indian Ministry of Defence representatives in late November to decide the contract’s ultimate fate. In the meantime, the company has filed for arbitration because MoD unilaterally suspended payments and deliveries without having contractual justification to do so. To date, India’s Central Bureau of Investigation has opened investigations against several Indian citizens, but no employees of AgustaWestland.

Yet, despite the MoD’s decision to black-list AW, another government department, the Foreign Investment Promotion Board (FIPB), has approved the proposal of Indian Rotorcraft, a joint venture between Tata Sons (74%) and AgustaWestland (26%). The decision, taken Sept. 19, was only made public Nov 11.

BJP, the main opposition party, termed as a "shocking development" the government's decision to allow the joint venture. "In fact, this company should have been blacklisted and all deals be scrapped till the probe gets over, but the UPA is acting to the contrary. The Tata-AgustaWestland deal not only affects the investigations but legitimises a rogue company," opposition Bharatiya Janata Party (BJP) spokesperson Meenakshi Lekhi told Press Trust of India.

Indian authorities are also investigating a separate tender, for 197 utility helicopters, in which a senior Indian Army officer is alleged to have requested a bribe to influence the final outcome. "No final decision to scrap the 197-helicopter project has been taken till now. But it's unlikely to materialize due to the pending CBI inquiry into the case," the Times of India reported Nov. 11, citing unnamed sources.

The Kamov Ka-226T and the Eurocopter AS 550 C3 Fennec are competing for this contract, which was earlier won by Eurocopter but later cancelled because of bribery allegations.

A third contract, under which local manufacturer Hindustan Aeronautics Ltd. (HAL) was to provide 187 Dhruv light utility helicopters has also been delayed, as the company is unable to ramp up production. One issue is the engine, whose selection was long delayed, and engine deliveries from France’s Turboméca are not due to begin before mid-2014.

Although the Dhruv is slowly entering Indian service, with for example the first navy squadron being stood up Nov. 12, the rate of production is such that it can only marginally improve the situation.

A fourth Indian helicopter contract, which has not yet been put to tender, covers the acquisition of 56 naval helicopters for surveillance, electronic intelligence gathering and search and rescue operations. But the $1 billion project, too, is yet to take off.

Consequently, the Indian armed forces have no modern VIP helicopters, and continue to operate locally-assembled Alouette II and Alouette III light helicopters which are over 40 years old, and Sea King Mk 48 anti-submarine helicopters which are not much younger.

In other words, the Indian armed forces are short of about 600 modern helicopters that are not being acquired because of the government’s fear of being caught up in allegations of corruption.

Add to that that Indian officials are also dragging their feet on the contract to buy 126 Dassault Rafale fighters, despite the Indian air force’s desperate shortage of combat aircraft, and the picture is rather dismal, of politicians loath to act for the fear of jeopardizing their re-election, whatever the consequences for the armed forces they are supposed to lead.

All this despite the lack of any proof to back up the allegations made to date: all evidence made public to date has been hearsay, and no accusations have received any substantiation.

Is this the way to run the world’s largest democracy?


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