An officer and a middleman

Wink, wink, nudge, nudge: round up the usual gang of suspects. What the arms middlemen fear the most is peace breaking out in the region.

Some of the responses to the scandal, presently consuming New Delhi, bring to mind the tongue-in-cheek comment of Captain Renaud, the venal police chief from the movie Casablanca, as he walked into Rick's Café: "There is gambling going on here? Shocking!" Perhaps the scandal will end with another of the movie's famous lines: "Round up the usual suspects…" Wink, wink, nudge, nudge.

Journalists, scholars and regular defence commentators, indeed most people within New Delhi's inner circles, have nothing to be surprised about with the recent revelations. They have known, indeed could hardly have ignored, the scale of corruption in the Indian defence establishment over the last two decades. Huge fortunes have been made on Indian defence purchases, the most notorious being the Bofors scandal which brought down a government and tarnished Rajiv Gandhi's name forever. And even in that scandal, now over a decade old, very little has been made public yet. No one has been sent to jail for it, no one has recovered the money.

There have been other revelations of corruption in the Indian defence establishment. When  the grandson of retired Admiral SM Nanda was eventually arrested for running over and killing a policeman in Delhi with his BMW in the dead of night, scores of stories emerged about the Nanda family, the biggest arms dealers in India. It was reported that Admiral Nanda had decommissioned a number of destroyers on his last day in office as Chief of Naval Staff and on the very next day bought them back for one rupee each. When Admiral Vishnu Bhagwat was sacked by defence minister George Fernandes, one of the charges the former Chief of Naval Staff made was that this was punishment for his opposition to foreign arms purchases. But the operation is the first time the public has seen an expose of this kind.

But India is hardly an exception in the international defence corruption game. From the beginning of the 20th century, the image of the "merchants of death" who were assumed to be lurking behind any major deal, and actively pushing countries to war in order to profit further, has had wide currency. Armament exporting countries actively encouraged such arms transactions. Until very recently, the tax laws of France and Germany included write-offs for bribes since these were treated as part of the cost of doing business overseas. Now, thanks to pressure from the European Union, this tax shelter has been officially closed.

But the United States is in a class by itself when it comes to passing the government's money to private hands. The laws in that country make most activities, that elsewhere would be illegal, completely above board. Think of the revolving door system that allows lobbying firms to hire retired government officials to lobby their former colleagues, think of the huge campaign contribution system, so-called 'soft money' that channels money from corporations to the political parties in order to get legal exceptions for the corporations, think of the endless cost overruns and faulty equipment that the US armed forces—and hence the American public—have had to pay for in order to keep the within-the-Beltway nexus of political parties, lobbyists, defence contractors and the Congress happy.

Since the network is global, investigation and punishment become all the more difficult. Bribery, like any commercial transaction, involves both the seller and the buyer, and so if we are to get to all the details of corruption in India, or anywhere else, it will need investigations in Israel, Russia, South Africa, UK and other places from where there have been sales to India. Indeed, these foreign arms dealers are important players in a well developed system of espionage that lets countries know what their enemies are buying so that they can buy the same product. The obvious result—profits are doubled.

Field trial
Defence deals are deemed to be atypical in one sense. Unlike the generalised corruption that is part of the functioning of the political system in most countries, when it comes to defence a different set of criteria is meant to operate, at least in principle. This is because what is being purchased has an enormous emotional as well as material impact on the affairs of  the state. At stake here is the security of the country. Thus, it was interesting to see, over and over in the  transcripts, the emphasis on field trials. The one line that apparently cannot be crossed is the one of actual performance. The equipment being sold had to, at a minimum, work as claimed. This might convey the impression that there is some honour even among thieves. Well, not really.

About a decade ago, while researching a project on India's defence production industry, I talked to a retired Indian air vice marshal about his experiences in service. We discussed the inordinately high casualties among IAF pilots, especially those flying the most advanced aircraft. At one point in the conversation he turned to me with tears in his eyes and anger in his voice, and said, "Those Ministry bastards, they killed them." He went on to explain that the reason why there were so many crashes among India's pilots was simple—the IAF did not have an advanced jet trainer. These pilots were expected to fly an extremely advanced aircraft, worth millions of dollars, without the flying experience that an advanced jet trainer would provide, because the "Ministry bastards" could not decide which trainer to buy.

Behind the delayed decision were competing arms merchants and their political networks, each peddling a different brand. The choice back then was between the Alpha and the Hawk. Today, a decade later, the choice is still between the same two jets, with the addition of a third—the MiG trainer. In the years since my research, nothing has changed. A final decision on the advanced jet trainer has still not been made, and India's fighter pilots are still in danger because of the lack of proper training. Hence, the emphasis on performance in the transcripts must be measured against the costs of inaction, equally a part of the system.

The transcripts make interesting reading for the very reason that they are incredibly banal. If one reads them not to see which political figure or bureaucrat is named but just to get a worm's eye view of how the system works, they are amazingly revealing. One realises, for instance, that you do not have to know anything about defence matters to sell defence equipment. Over and over, the journalists show their ignorance of even the most basic facts of the defence industry.  That they do not know the names of firms like Sagem or MTR was perhaps not surprising, but not to have heard of Daimler Chrysler was. They were not even sure who Abdul Kalam, the well-known scientist and scientific adviser to the Indian prime minister, was. More important, the people they were trying to get close to do not seem to be surprised by this at all, which is indicative of how deep the rot is. Indeed, at one point in the discussions, a senior military official explains to a senior civilian of the defence ministry that the Tehelka journalist is not a technical person, and hence does not know the details of what he is selling. Both then proceed to advise the journalist on what his name card should say if he is to be taken more seriously.

The day of the fixer
The transcripts make clear that the arms dealers, armed forces officials and bureaucrats caught on video tape seem to have absolutely no anxiety about getting caught. They are intensely aware of the rules of personal security that surround the offices and residence of important figures, hence, the journalists are advised to carry their bribes in paper or plastic 'packets', not in briefcases, as these are often not allowed into inner rooms. But this is different from questioning the bona fides of these representatives of the mysterious "West End" company, based in England, which sells "many things" and wants to break into the Indian market.

Middlemen spend a lot of time on the tapes talking about the deals they have done in the past, by way of showing how well-connected they are, as a kind of résumé. And this leads us to the troubling realisation that they are not in the least bit wary about getting caught because of the frequency of these encounters. They have clearly done them so often that this kind of meeting is devoid of any concern other than the amount of money that is
at stake.

But it does not mean that no rules apply. In fact, the greatest asset of the fixer is the knowledge of how the system works—to explain to the potential client what exactly the procedures are and who is the key decision-maker at every stage in the process. This is privileged information (though it should not be), and hence, people who have worked in the system are particularly useful as employees for the arms dealers. The system seems so rule-bound that even the percentages of commission are well known—as a number of people explain in the transcript, roughly five percent for the politicians, two percent for the Raksha Mantralaya (Defence Ministry) bureaucrats, and one percent for the users (the armed forces). Over and above this, the brokers expect about five percent for themselves; in other words, the typical defence deal involves costs of 13 percent added on to the actual asking price of the product. In a deal like the ongoing Barak missile deal worth INR 560 crores—USD 1200 million—(according to the person identified in the transcript as the Samata Party treasurer, R. K. Jain), that would be INR 72.8 crores (USD 162 million).

The system is not foolproof, of course. There are a number of people in the decision-making chain who could act as "nuisances", the journalists are told, but all that really means in the end is that the spread of illicit gains has to be a little wider. Even a weapons system that has been rejected once can be resurrected again with a push in the right place.

Obviously, the result of such a system of graft is that it affects domestic defence production. With domestic defence industries—largely public sector units—the opportunities for bribery on this scale largely disappears. This had led, in some cases, to the armed forces purposely asking for weapons systems with technical specifications well beyond anything any corporation in the world can meet, let alone a technologically weak domestic industry. Once the DRDO (Defence and Research Development Organisation) expresses its inability to meet the user's needs, the floodgates are open to the world's arms merchants. It is then of little surprise that the DRDO's greatest successes have come in sectors where there is an arms embargo or where other countries are reluctant to sell advanced equipment to India for strategic

All this begs the question of who is the real threat to India's national security. The next time you hear someone talk about the ISI and its sinister penetration of India, recall how easily the system will accommodate outsiders, provided they come well armed with cash and contacts. After all, it was not so long ago that defence secrets were being sold from a xerox shop for a bottle of Scotch whisky. The present system will not change, notwithstanding the fall of defence minister George Fernandes and a few token bureaucrats and officers. Too many powerful people have invested in it

National security red herring.

In the weeks to come, we will hear about changes that need to be made. Clearly, there is need for greater transparency at India's Defence Ministry and the government generally. If the Indian public cannot find out about the inner workings of the government, if decisions are always hidden from public scrutiny for "national security" reasons, if scholars cannot have access to public records, if the Central Vigilance Commission is kept toothless and dependent on public outrage for results, if the government always relies on a handful of cronies to evaluate the system, cronies who inevitably return reports recommending the smallest of minor changes, then nothing will change.

For a real transformation to happen, we need a sea change in attitude, and most particularly, the elimination of the culture of secrecy that allows the mandarins of New Delhi's South and North Block to get away with everything because no one knows what they have done. This is no small task, for it involves taking on the ingrained culture of New Delhi, one which reeks of money and sleaze, and where only money and more money is respected. Decentralisation of as many government functions as possible is a start. Moving away from the capital city will help change the culture of government in a way that few other things will. A real Freedom of Information Bill needs to be passed, and more important, government officials and politicians need to be held accountable to it. Corrupt officials at the highest levels need to serve jail time if their culpability in the current scam is proven.

Above all, we must note that these individuals will not change their workings as long as political parties need huge amounts of money to run their election campaigns and keep their supporters happy. Donations to political parties need to be public and open, and regularly audited by an independent body. Journalists need to free themselves from the sycophantic culture of New Delhi and take on's kinds of investigations with greater frequency and sophistication.

If there was ever an argument for why India and Pakistan, especially, and South Asian countries more generally, need to resolve their outstanding political and military differences, this is it.  Given the enormous difficulties in making these changes outlined above, it is actually far easier to imagine changing the conditions which lead to greater expenditures on defence. All the parties involved in this system fear, more than anything else, peace breaking out across the region.

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