Re-examine blacklisting

National interest paramount in defence procurement

As the AgustaWestland helicopter bribery case occupies the headlines, the question of how the defence procurement system should react to such accusations has become even more pressing. Under the defence minister in the previous, United Progressive Alliance, government, a particular method was used: the blacklisting of any company accused of bribery. Perhaps the motivation for this was understandable, given the political sensitivity of defence bribery accusations. However, it rapidly became clear that it is a blunt tool — and, furthermore, one which if used at length will seriously compromise India’s national security. Consider the case of India’s newest range of submarines, being produced under what is called Project 75. The decision was taken to expand India’s aging fleet of 13 diesel-electric submarines, many of which are long past their decommissioning dates, and which pose a threat to lives and security. Project 75 was supposed to deliver six submarines — the design would be from the French Scorpene line. The first of these, INS Kalavari, is going through its sea trials at the moment, and is scheduled to be commissioned at the end of this year or the beginning of the next. But, incredibly, it will be commissioned without its main armament; it has now been reported that the heavyweight torpedoes, worth Rs 1,200 crore, that were supposed to be bought for the submarines have had their contract scrapped. Why? Because they are made by Whitehead Alenia Sistemi Subacquei, or WASS. And WASS is a subsidiary of the Italian company Finmeccanica — as is, unfortunately for the torpedo contract, AgustaWestland.

A submarine without a torpedo is not particularly useful. There is little to be gained from commissioning it thus — except, that is, bragging rights. Without the torpedoes, the new Scorpenes will not have a chance against their Pakistani counterparts, the French-designed Khalid-class. Many other related procurement processes will be affected by a wholesale blacklisting of all Finmeccanica subsidiaries: for both medium and heavy artillery on warships; radar systems; and transport aircraft. Clearly, a wholesale blacklisting is something that must be enforced with great care. To its credit, the National Democratic Alliance government, when it came into power, understood this. Early on, the previous NDA defence minister, Arun Jaitley, pointed out that the government has “to balance between two competing public interests”. What is of concern now, however, is that the very public nature of the AgustaWestland case – given that it can be used politically against the Gandhi family – might cause this nuanced approach to be permanently abandoned. But this, if carried through, would surely amount to putting political interest above the national interest.

Accusations of bribery and corruption in defence procurement must receive the most painstaking, speedy, and resourceful investigation. Wrong-doers must be identified and prosecuted. The problem is that this part of the system has failed to work — which has led to politicians using other methods, such as blacklisting. The latter can at best be a temporary and limited measure, while prosecution resources are built up, fast-track trials arranged, and more fool-proof transparent procurement systems designed. If used instead as a replacement for the hard work needed to clean up the defence procurement system, then the country’s defence preparedness will suffer. While it is unclear what the appropriate action may be in the current case, the principle is far from unclear: the national interest must come first, and that is best served by an application of mind rather than of political calculation.