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Amitabha Pande: The military-corruption complex

by Dilip, 22 February 2013

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Corruption is deeply embedded in the architecture of defence transactions and anything short of a complete transformation of structures, systems and processes will not make any difference. There is no deal in which middlemen do not play a role and hefty commissions are not paid.. The focus should shift to looking at the money trails, who paid whom and when, the specific role of big-time deal-fixers and their political connections. Yet, in all the major investigations so far, the role of these brokers has never been properly investigated... the focus on nailing the corrupt ends up paralysing the honest and ensures that the corrupt find more ingenious ways of making money. Only systemic reform can change things. Naturally, that has few takers. Who would like to shut off such an important source of revenue?
The writer is a former secretary to the GoI and handled army procurement in the 1990s

I have been quietly amused by the pother over the AgustaWestland helicopter scam, as though bribes were paid because the government exercised its choice in favour of that company and someone "tweaked" the requirements to limit the choice. This shows a lack of understanding of corruption in defence. This case (like others before it) will follow a predictable course: investigators will earn junkets to Rome, honest reputations will be damaged, major procurements will halt and procedures made even more tortuous and centralised. Meanwhile, rent-seeking, like water, will seek new outlets.
How we squander each opportunity for systemic reform by opting for the short-term excitement of hunting the corrupt! We so easily overlook two cardinal factors. First, in our defence procurements, most bribes are paid not for choosing X over Y but for simply proceeding with the procurement process and crossing the hurdles placed. The choice of vendor is generally made on reasonably strong professional grounds and merit is almost never sacrificed, because it is well established that whoever is selected will pay. Second, in a system where responsibility for a decision is so widely dispersed, the big fish invariably escape and small fish are caught for all the wrong reasons.
In this case, there appear to be two red herrings. First, that money was paid for tweaking the requirements and much is being made of who tweaked the requirements, and when. This does not sound right. Money is normally paid for restricting competition and tailoring specifications to favour a particular vendor, not for expanding it and allowing more vendors to compete. While being given a chance to compete may command a price, it does not guarantee eventual success, particularly when AgustaWestland’s competitors may have had an edge in terms of capacity to pay bribes.
The second red herring is to draw attention to the role played by Air Marshal Tyagi and his relatives. Quite apart from the fairly convincing denial offered by Julie Tyagi and the former air chief, this was not an air force related procurement, where the air chief would have had a prominent role. This was a civilian requirement and the air force played, at best, the role of technical advisor to facilitate the SPG in meeting its requirements. In any procurement process, the determining role in laying down specifications (GSQRs) or in tailoring processes to benefit favourites is that of the buyer, not of those giving technical advice. Why should any payment be made to someone whose role was so peripheral?
There are three tracks of corruption in defence procurement. The first is demand estimation, demand vetting, demand projection and inter se priority determination; the second is technical, from framing the GSQRs to preparing the engineering specifications, technical trials, user trials and techno-commercial evaluations before the procurement process commences. Both are the jealously guarded turf of the services and brook no interference from outsiders. Neither the processes nor the practices are audited or subjected to independent professional scrutiny. However, this case being an SPG requirement, these tracks are irrelevant.
The focus should be on the third track, the actual procurement, where the onus shifts to the ministry. .. Read more: 

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