http://asiasentinel.com/index.php?option=com_content&task=view&id=1934&Itemid=164
Asia Sentinel, 15 Jun 2009, Siddharth Srivastava
Another scandal mars Indian defense
India's corruption-ridden military procurement system has again been
hit by a major scandal that has resulted in the arrest of the chairman
of the state-controlled Ordinance Factory Board and the banning of
seven major domestic and international companies including ones from
Singapore, Poland and Israel.
The current scandal is reminiscent of one – also
involving Singapore – that brought down the government of the late
Prime Minister Rajiv Gandhi, who, along with several others,
was accused of receiving kickbacks from the Swedish arms maker Bofors
AB and led to the defeat of the ruling Indian National Congress in
November 1989 general elections.
Similarly, Defense Minister George Fernandes was forced to step down in
2001 after an Indian website released a secretly filmed video
implicating senior officials in corrupt arms deals, energizing
opposition parties to call for the entire government to quit.
The latest controversy doesn't appear to be likely to bring down the
government. In a strongly worded statement, Defense Minister A K Antony
declared: "I will take strong action if any wrongdoing is detected. No
one found guilty will be spared.
The first victim is Gen. Sudipto Ghosh, the Ordinance Factory Board
chairman, who has been arrested along with several others for taking
bribes in exchange for defense contracts. Although seven companies have been named by the Central Bureau of
Investigation, India's version of the FBI, Israeli Military Industries
(IMI) and Singapore Technologies are among the biggest, currently
estimated to be negotiating contracts over Rs 60 billion (US$1.27
billion).
Despite their size, Israel and Singapore rank among the world's biggest arms dealers. The
Associated Press reported in 2007 that Israel ranked as the world's
fourth-biggest arms dealer after the United States, Russia and France,
selling US$4.3 billion in arms exports, primarily to the United States
and India. .
Singapore has been repeatedly identified as a channel for illicit arms sales. In
1995, Michael Heseltine, the former British Deputy Prime Minister,
asked for an investigation into Royal Ordnance, formerly a state-owned
arms maker, which allegedly was channeling arms through Singapore to both Iran and Iraq.
In the 1980s, the Swedish government announced that all arms exports to Singapore had been frozen in an effort to stop the island nation from being used as a possible channel for the unauthorized export of Swedish weapons. Between 1980 and 1984, according to the Swedes, Unicorn International, an
associate company of Chartered Industries of Singapore, which in turn
was a subsidiary of an arm of Singapore's ministry of defense, bought
304 missiles and 27 field sighting units from Bofors that were traced
to the Middle East.
According to Mark Pythian in his book "Arming Iraq: How the US and Britain Secretly Built Saddam's War Machine," "Nobel Kemi and Bofors, subsidiaries of Nobel Industries Sweden and member companies of EASSP, arranged for arms shipments for Iran to be transferred through conduit countries, most notably Singapore. Singapore was the second-largest largest importer of Swedish arms and accounted for 14.4 percent of all Swedish arms exports. Bofors
sold Singapore artillery shells, 155mm guns, 40mm naval guns, and 70
laser-guided anti-aircraft missiles that were later shipped to Iran."
IMI, the manufacturer of the Uzi, arguably the world's most popular
submachine gun, supplies most of the Indian military's small arms.
Singapore Technologies manufactures the towed 155-milimeter howitzer
among a variety of other weapons.
"Ending (ST's) contract means that a major upgrade to the artillery
equipment will have to end," said the website Bnet. "A whole new
contract proposal and award process would have to be completed,
seriously delaying the reequipping of the military with more modern and
advanced artillery. This means that India may have to reconsider ending
the contracts as they require the capability being provided."
Two other Israeli companies possibly related to the inquiry, Israel
Aerospace Industries and Rafael, were not blacklisted, the website
said, as their contracts are considered so important to the
modernization of India's military.
The other offending companies named are Media Architects of Singapore and BVT Poland. The Indian companies are HYT Engineering, R K Machine Tools and T S Kishan Ltd.
The CBI in its first information report stated that Ghosh vigorously
pushed Israeli firms for defense-related purchases and entered into
"criminal conspiracy" with a "private person and other accused" to
demand and obtain "huge illegal gratification" for supply orders. New
Delhi has thus put on hold all procurements and projects underway with
the seven firms till CBI completes its probe into the alleged huge
commissions.
Sources say that the armed forces will now have to look for new
suppliers of the defense equipment, critical to keep their arms
updated. The contracts affected were between IMI and the Ordinance
Board in March, worth around Rs 12 billion (US$252 million), to set up
an ordnance complex at Nalanda in Bihar to manufacture propellant
charges for artillery ammunition meant for Bofors howitzers.
Blacklisted firms have not been allowed back into Indian defense
contracts due to the political repercussions of such moves. The Nalanda
complex has been a particular victim. In 2004 a South African firm,
Denel, was blacklisted which then went into oblivion from the Indian
scene. Denel had been originally sought for the construction of the
Nalanda Ordinance factory, which also went into limbo.
Similar has been the fate of the then-Swedish Bofors (now owned by BAE
Systems), which was caught in the controversy involving commissions to
middlemen that cost Gandhi his job. Despite India's desperate need for
howitzers, Bofors has been unable to break back into the Indian
scenario; the guns that were delivered have proved their mettle during
the Kargil war between India and Pakistan in 1999.
Officials say that given the latest moves to blacklist companies, IMI
will be particularly impacted. It will certainly affect future
Indo-Israeli defense ties, which now run into billions of dollars. In
addition to the Uzi and Tavor 21 submachine gun, variants of which
cater to the needs of the Indian forces, IMI supplies 125mm tank shells
and manufactures Zitara carbines and cargo ammunition (a variant of
cluster bombs).
The Indian Defense Research and Development Organization (DRDO) was
also to be assisted by IMI in the development of the long delayed
indigenous Arjun tank for the Army. The OFB and IMI were also looking
collaborate on the development of PB500 bombs capable of penetrating
two-meter-thick concrete.
Meanwhile, ST was to supply Pegasus
howitzers (140 air-mobile ultra-light ones) valued at nearly Rs30
billion. The firm was also contending to win the Rs80 billion deal to
sell 400 155mm/52-calibre towed artillery guns, along with transfer of
technology for indigenous manufacture of 1,100 howitzers. The
Pegasus howitzer was due for field testing in the western state of
Rajasthan this summer. The guns are needed to be deployed in rural
areas as well as along the India-Pakistan and India-China borders.
Among the Indian firms blacklisted, T S Kishan Co was to supply spares
and accessories for T-72 and T-90S main-battle tanks of the Indian
Army; Pune-based HYT Engineering components of missiles produced within
India and the Ludhiana-based R. K. Machine Tools spares for vehicles
and machinery produced by state unit Bharat Earth Movers.
Observers say that the latest scandal and blacklistings will certainly
impact India's defense modernization efforts, one of the largest
globally, pegged at over US$50 billion between 2007 and 2012 aimed at
building an immediate strike force against Pakistan and longer term
deterrence against China.
In a report last year, the Associated Chambers of Commerce and Industry
of India said the country over three years (2004-7), spent US$10.5
billion on military imports, making it amongst the largest arms
importers in the developing world.
Last month the IAF inducted the first of the three Israeli Phalcon
AWACS, India's most potent force multiplier, capable of tracking down
incoming missiles and can keep an ``eye'' on neighboring nations
without infringing airspace. India is paying US$1.1 billion for the
three AWACS.
Another system India recently purchased from Israel for US$600 million
are aerostat radars to also spot surreptitious guerilla attacks such as
the one in Mumbai wherein the attackers used dingy boats to infiltrate
the city. New Delhi has also signed a US$1.4 billion deal with Israel
to purchase a 70 km shore-based and sea borne anti-missile air defense
system.
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No surprise. ST supplies arms to the junta of Myanmar as well.
Originally posted by Fantagf:No surprise. ST supplies arms to the junta of Myanmar as well.
Yeah, mines, artillery shells and our old SAR-80 and 88 assault rifles