UPA govt signs Rs10,000 cr Israel missile deal on the sly

Discussion in 'Strategic Forces' started by Auberon, Mar 25, 2009.

  1. Auberon

    Auberon Regular Member

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    Josy Joseph Wednesday, March 25, 2009 2:20 IST Email

    New Delhi: On the eve of the general election, the UPA government has quietly signed a massive, legally opaque, Rs10,000 crore defence deal with Israel Aerospace Industries (IAI), ignoring a continuing probe by the Central Bureau of Investigation (CBI) and initial vigilance concerns.


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    The contract, to supply medium-range surface-to-air missiles (MRSAM), has raised worrying questions of propriety, with key bureaucrats and former defence officers playing influential roles in creating and pushing the deal through.

    The deal, which was signed into a contract this month, comes at a time when India already possesses a more powerful missile in the same class --- the advanced air defence (AAD) missile, part of India's anti-ballistic missile shield.

    DNA investigated the deal by accessing documents, tapping innumerable sources, and interviewing key military officers. A key point that emerged was that legal opinion did not conclusively favour the deal.

    The deal, which is being kept under wraps, could sound the death-knell of the indigenous surface-to-air Akash missile system, into which hundreds of crores have been invested over the years. More importantly, the deal ignores the success of the AAD missile, which could be deployed as a surface-to-air missile and used exactly like the Israeli MRSAM.

    DNA's investigation suggests that some former officers of the Indian Air Force (IAF) played a key role in limiting the large-scale induction of Akash into the force, pushing instead for the Israeli MRSAM. At least one of them is suspected to be working for the Israelis from New Delhi, say several military sources.

    Joint development of the MRSAM between IAI and India's Defence Research & Development Organisation (DRDO) was cleared in July 2007 by the cabinet committee on security (CCS). But defence minister AK Antony did not give it his final administrative clearance because of the CBI's continuing investigation into the Barak missile scam (see box p20). The CBI had by then filed an FIR on the purchase of the Barak missile system in 2000 from IAI and Rafael, naming former defence minister George Fernandes and then navy chief Sushil Kumar.

    Despite CCS approval, a cautious Antony sought vigilance opinion on the file. The defence ministry's vigilance department cited the CBI investigation to suggest that the deal should not go through, two different sources told DNA. So, the defence minister asked the DRDO to keep the file pending.

    But some time in the last week of March 2008, the DRDO was ordered to move the file again for CCS approval. This happened even though the CBI was still investigating IAI and had, in fact, found more evidence of Israeli firms engaging arms dealers for the 2000 deal with the Indian Navy.

    Asked why the government did not blacklist the two firms despite the CBI's FIR, a senior official remarked: "What do we do when we are neck-deep with the Israelis?"

    In the past, whenever allegations about the involvement of arms dealers have cropped up, the government has moved quickly to blacklist the firms involved. These include Bofors, HDW, and Denel. In all three cases, the blacklisting was done even before the CBI had filed FIRs.

    A senior defence ministry official, who defended the government on the contract, said the MRSAM file was sent to the solicitor-general, who felt that the CBI's FIR was not a bar and the government could go ahead with the deal if it considered the missile essential. Similar, vague opinions favouring the deal were obtained by the ministry from other agencies. The Central Vigilance Commission said the deal could go through if it was in the national interest.

    The defence ministry sought the opinion of the law ministry, which said much the same thing: if the equipment was essential to national security, the deal could go ahead.

    After fishing for favourable legal opinion, the "IAF was asked to confirm that it was absolutely essential" for national security, the defence ministry official told DNA. The IAF gave this in writing.

    It's worth noting that none of the legal opinions specifically cleared the deal. They essentially lobbed the ball back to the defence ministry, asking it to decide if the MRSAM was essential for national security. The DRDO used the grey area of national security to prepare a supplementary CCS note, which was approved in December 2008. The DRDO and IAI representatives signed the deal into a contract just days before the elections were announced.

    The deal was done despite a defence ministry guideline that virtually bans dealings with IAI and Rafael. An order issued on October 3, 2008, "with the approval of the Hon'ble RM (Raksha Mantri)", laid down details about how to handle IAI and Rafael. In dealing with them, the defence ministry's order said, tenders in which the two firms were the only competitors should be withheld. Tenders in multi-vendor deals could be given to the two firms, but they would have to be withdrawn if the CBI filed any charge-sheet. In procurements already underway and involving the firms, vigilance clearance had to be sought afresh. It also said repeat orders for Barak should not be issued since the FIR had already been lodged on the original purchase.

    These are precisely the guidelines the defence ministry has breached. IAI was the only competitor for the MRSAM deal. Ideally, the deal should not have been processed.

    But, in 2008, despite the CBI investigation, vigilance guidelines, and lack of multiple vendors in contracts, the government and the air force pushed through several deals with IAI and Rafael. Besides MRSAM, it approved two others: a repeat order for Aerostat radars, and low-level quick-reaction missiles (LLQRM) to protect existing Aerostat radars. Both these purchases were cited as reasons for approving the MRSAM deal.

    The fact is that there was no open tendering in any of these three contracts. IAI was the only participant from the beginning in the MRSAM contract, and no comparative pricing was done in the international market.

    http://www.dnaindia.com/report.asp?newsid=1242337
     
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  3. EnlightenedMonk

    EnlightenedMonk Member of The Month JULY 2009 Senior Member

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    They haven't exactly killed the PAD/AAD combination yet, but I think this is the first step toward that...
     
  4. EnlightenedMonk

    EnlightenedMonk Member of The Month JULY 2009 Senior Member

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    Let's hope they keep this deal to only the initial procurement phase and not push it further and go indigenous when our own system is ready...
     
  5. A.V.

    A.V. New Member

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    i am still very optimistic about the AAD and the PAD we need a lot of SAM systems for the airdefence atleast 3 tiers are needed the short,medium and long range ones if we have a subdivision there is no harm but the way this deal seems to have been fixed raises quite an eyebrows. hopefully we get an official statement clearing the doubts as to why this was done.
     
  6. EnlightenedMonk

    EnlightenedMonk Member of The Month JULY 2009 Senior Member

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    I am very hopeful for the technological part of it since our DRDO has proved that they can build such a system...

    However I'm not confident due to our inept politicians... This might just be the first nail in the coffin... I hope I'm wrong... but I can't help but imagine the worse...
     
  7. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    why are these things being reported in the press, these are sensitive national interest subjects not news to be reported.
     
  8. EnlightenedMonk

    EnlightenedMonk Member of The Month JULY 2009 Senior Member

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    They are sensitive, but we ought to know boss... especially if the political parties are playing havoc and meddling where they shouldn't :)
     
  9. EnlightenedMonk

    EnlightenedMonk Member of The Month JULY 2009 Senior Member

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    'India told us to keep deal secret'


    http://www.dnaindia.com/report.asp?newsid=1242810
     
  10. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    Israel seals deal with song & dance

    http://www.telegraphindia.com/1090329/jsp/nation/story_10740748.jsp

    Israel seals deal with song & dance
    SUJAN DUTTA

    New Delhi, March 28: Investigations into a Rs 10,000-crore missile venture with Israel are revealing that Tel Aviv swung it by using companies known to use middlemen and peddlers of influence who produce cheesy videos of Bollywood-style item numbers (see graphic).

    The joint venture aims to produce medium-range surface-to-air missiles (MR-SAMs) for Indian land forces. It was signed three days before the elections were announced.

    The deal, being probed by the CBI and also being questioned by the Central Vigilance Commission, is disguised as a “joint venture” between the Defence Research and Development Organisation (DRDO) and the Israeli government’s Israel Aerospace Industries (IAI). Also involved is Israel’s interceptor missile maker, Rafael Armaments Development Company.

    Former defence minister George Fernandes, former navy chief Admiral Sushil Kumar, and arms agents Suresh and Sanjeev Nanda are named in a first information report filed by the CBI in a separate deal in which the Indian Navy procured seven Barak ship missile defence systems from Rafael for $199.5 million and 200 missiles for $69.13 million in October 2000.

    The CBI is investigating charges that commissions of 3.5 per cent were paid to middlemen.

    For the MR-SAMs, IAI was contracted on February 27 (exactly a month back) but it has now told the Israeli media that it delayed announcement of the deal on a specific request from the Indian defence establishment “because the customer (India) informed the company that early disclosure was liable to cause material difficulties in execution of the contract, and even result in its cancellation”.

    The company said it was announcing the deal now —March 26 — because the advance payment had been made, nearly a month after the contract was signed. Investigators are questioning a payment of $600 million on unspecified charges in the contract.

    At its current value of $1.4 billion, the deal with the IAI outraces the Indo-Russian Brahmos to be the largest single arms joint venture between India and any foreign country.

    It is set to make Israel the largest recipient of India’s defence payouts to a foreign country. This pole position has historically been held by Russia.

    The IAI is the systems integrator for the Rs 10,000-crore MR-SAM project and Rafael is the interceptor-missile maker which will jointly collaborate with the DRDO.

    Ironically, the joint venture will kill off the DRDO’s homegrown Akash MR-SAM project that is being inducted by the Indian Air Force but which the Indian Army is not finding good enough despite a series of tests.

    “The IAF has placed orders for two squadrons,” said a DRDO source “but we do not understand why the army is sitting on its order for more than six months now. Sometimes they say the system is not agile enough, sometimes they say it is not mobile enough because it is on a tracked chassis (meaning it is mounted on a tank).”

    The MR-SAM built for the air force is a towed version. What is good for the Indian Air Force is not good enough for the Indian Army, the DRDO says.

    But the Indian Army has made up its mind that what will definitely be good enough for it is the one on the drawing board with Israel.

    Rafael has outsourced its marketing to a company named Elul Technologies — headed by David Kolitz, a former senior employee — whose Asia wing is also headed by the former chief of Rafael’s Asia wing. Elul and Rafael are tapping into Indian expertise.

    The expertise is offered by senior Indian Army and Indian Air Force officers who have retired recently and are networked with the bureaucracy of the defence establishment.

    This information is available to the investigators who have been carrying on with their work despite the cabinet committee on security approving the “joint venture” in July 2007, defence ministry sources have told The Telegraph. The joint venture was contracted last month even as the run-up to the elections began.

    The MR-SAM, for which the DRDO will give the brains, the IAI will take the brawn from Rafael and put the two together and sell to India’s land forces with item numbers thrown in, will not be in small numbers.

    The Indian Army will take as many as nine squadrons of the MR-SAMs, each with a range of 70km or more for area air defence.

    The package will include 10 command and control centres, 18 acquisition radars, 18 guidance radars, 54 launchers and 432 missiles.

    Rafael, which is already supplying Spyder air defence systems (low-level, quick- reaction surface-to-air missiles) to the Indian Air Force, will corner a third of the revenues generated from the project.


    [​IMG]
     
  11. A.V.

    A.V. New Member

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    Ex-IAF officer played key role

    Who were the main actors pushing for the controversial Rs10,000 crore medium-range surface-to-air (MRSAM) contract with the Israel Aerospace Industries (IAI)?



    The deal, signed on February 27, just days before the general election was announced, had an unheard of clause for paying Rs600 crore (6% of the contract value) as "business charges".

    While Israel's Elul Group is already under scrutiny, serious questions are also being raised about a retired Indian Air Force (IAF) officer who played a crucial role in formally proposing purchase of MRSAMs from Israel.

    This officer was also responsible for scuttling the large-scale induction of the indigenous surface-to-air missile Akash.

    Over the past few days, DNA's investigation has raisedquestions about the controversial deal with IAI, which is already being probed by the Central Bureau of Investigation in connection with the Barak missile deal of 2000. The MRSAM deal was signed despite initial vigilance objections, neutral legal opinions, and the success of the indigenous Advanced Air Defence missile of similar capability.

    DNA's investigation found that the IAF officer, who retired about two years ago, is now working for the Israeli arms industry in New Delhi.

    Without naming the officer, Defence Research & Development Organisation chief M Natarajan told a press conference in Bangalore during the Aero India show last month that the officer had slashed his predecessor's commitment to induct eight squadrons of Akash missiles. The officer had brought the figure down to just two squadrons. Akash has a range of 27km, while MRSAM has a range of about 70km.

    A source in the defence ministry confirmed that even for the induction of these two Akash squadrons, the IAF put a condition that the DRDO must first agree to the MRSAM project. "We were blackmailed into the MRSAM project," said the source.

    "He [the former IAF officer] killed Akash, blackmailed us to agree to MRSAM, and is now working for them [Israeli arms companies] openly."

    "Yes, we are aware (that the officer is working for Israelis)," said a senior defence ministry official, who had defended the government for going ahead with the MRSAM deal.

    The official said the ministry has not yet sought clarification from the officer because he retired "two years ago". But "he has very limited access in the defence ministry and air headquarters," the official claimed.

    The retired officer had held such a crucial position in the IAF that it is surprising why the government has closed its eyes to his alliance with foreign arms firms after retirement.
    The role of another IAF officer is also coming under scrutiny in this matter. He is associated with Nova Integrated Systems, the Tata-IAI joint venture which will be integrating the MRSAM.

    Several officials in the defence ministry are baffled how a private-sector firm has been nominated as the integrator for the sensitive missile system. In India, all missile systems are integrated in public-sector units, usually Bharat Dynamics Limited (BDL).

    In fact, DRDO suggested BDL as the integrator for the MRSAM, with Israelis supplying the seeker and some radar components and DRDO making the airframe, servos, and propulsion. But Nova will be doing the integration now.

    This is yet another decision that has raised eyebrows. Sources in the defence establishment believe it is a perfect example of how the Israelis were able to get through whatever they wanted.
     
  12. jackprince

    jackprince Turning into a frog Senior Member

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    Allegation of wrong-doing... though nothing new...

    http://www.dnaindia.com/report.asp?newsid=1244938

     
  13. Dark Sorrow

    Dark Sorrow Respected Member Senior Member

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    Another corruption case of Congress. Congress must be made to pay for such scandals
     
  14. LETHALFORCE

    LETHALFORCE Moderator Moderator

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    and in a very sensitive area this is a disaster.
     
  15. EnlightenedMonk

    EnlightenedMonk Member of The Month JULY 2009 Senior Member

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    Congress always plays around with the defence of the country for petty politics.... I hate them for that !!!

    BJP also had its fair share of scandals like the Coffin scam, but they were never outrightly seen to be soft and corrupt. Unfortunately, that is exactly what the Congress is perceived to be...
     

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