The ministry of defence presumably has its version of events in the Rs 16,000 crore Scorpene submarine deal signed last year, but the recent disclosures in Outlook magazine are too serious to be brushed under the carpet. The defence minister has declared that the contract size is only Rs 13,000 crore, asserted that this is a good price, and denied any payment of agent commissions for the contract. For good measure, Thales (the sub-contracting company that is to make parts of the six submarines on order) has declared as fabrications the copies of e-mails promising commissions, which have been printed by Outlook, and threatened to sue the magazine. Whatever the truth, it must be unearthed—and hence the need for a proper enquiry.
The principal revelation in Outlook is an e-mail, purportedly from the head of Thales to Abhishek Verma (whose family has had strong connections with the Congress) confirming that Mr Verma will be paid 4 per cent of the contract value. Considering that India and France have signed an “integrity pact” to ensure that the deal is above board, and given the longstanding official demand that all agents be registered, the mail, if it is genuine, points to pay-offs on a scale that would put the Bofors scandal to shame. Some other aspects of the deal, as reported, are the absence of competitive bidding, protests by both the Chief Vigilance Commissioner and a defence ministry official, and a sharp 30 per cent increase in the contract value when the UPA government pulled the deal out of cold storage after it had been initially negotiated by the NDA government. Indeed, the magazine has reported that the finance minister thought the price excessive, though it does not explain how the deal could have been signed without his consent.
This story involves dramatis personae who also feature in the leak of apparently sensitive information, including on submarines, from the navy’s war room. It is interesting that, in the wake of the latest disclosures, the government has ordered an inquiry by the Central Bureau of Investigation (CBI) into the war room leak. The CBI’s track record in such matters does not invite confidence, but it is curious that no inquiry has been ordered into the submarine deal—although Outlook refers to unnamed government investigators.
It is well-known that defence deals all over the world usually involve pay-offs. In India, the fall-out of the Bofors scandal has been a tendency by government and defence officials to drag their feet and to avoid taking purchase decisions, for fear of being dogged by controversy later. This has manifestly hampered defence preparedness and shows up in lapsed capital budgets for defence year after year. So the last thing the country needs is another defence purchase scandal. Nevertheless, the government also has to show that it means business, especially after the Tehelka episode pointed to the extent of rot in the system. If a proper inquiry does reveal that commissions were paid in connection with the Scorpene deal, the integrity pact apparently provides for penalties to be paid by the French—and these should be invoked. None of this is to question the navy’s need for modern submarines, especially since Pakistan has ordered three recently. What the country needs is an efficient and untainted defence purchase system, and it is the government’s responsibility to ensure that this exists.
Scorpion`s sting
Business Standard / New Delhi Feb 22, 2006, 22:37 IST
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