The Telegraph
Thursday , February 21 , 2013
Since 1st March, 1999
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Chopper cancel threat aimed at secrets
Posturing to pressure Italians to spill names

Washington, Feb. 21: An inter-agency team now in Italy to ferret out details of bribery in the VVIP helicopter deal is carrying the subtle message that the purchase of 12 AgustaWestland helicopters would not be cancelled if its suppliers share full details of bribes that were paid to Indians for securing the contract.

Despite the public posturing about cancelling the deal, including a notice to AgustaWestland to that effect and stoppage of further payments to the company, defence minister A.K. Antony believes that such actions cannot advance the mission of transparency in arms procurement that he has sought to implement since he was handpicked for the portfolio precisely for such a mission.

According to highly placed sources in the government privy to Antony’s strategy, the team in Italy has been told to dangle the stick of cancellation before the new management of AgustaWestland’s parent company Finmeccanica and the Italy’s political leadership in the hope that it can extract a carrot: the names of Indians who were bribed in the helicopter deal.

Antony today departed from the prepared text of his speech to the Second International Seminar on Army Air Defence in New Delhi to address allegations of bribery in the helicopter purchase. “In spite of taking so many precautions, again here and there things are happening…. Last moment we have to reverse the process because of the foul play. We are back to square one.”

This is the only indication in public that the defence minister has so far given into his thinking that cancelling the contract does not serve the purpose of fighting corruption in arms deals.

The defence ministry’s official position is that it is within its rights to initiate “strict action including cancellation of contract, recovery of payment, blacklisting and penal action” against AgustaWestland under an “integrity pact” and that it is “determined to take all possible legal and administrative action against the guilty parties.”

But Antony has been under fire, especially from American arms suppliers, for what has often been described as his obsession for transparency over the demands for speedy modernisation of the defence forces.

In his speech today, Antony made clear that he was sensitive to such criticism. “We cannot take risk,” he said, by delaying such modernisation in view of the “volatile security scenario” in the country’s neighbourhood.

At one meeting after the arrest of Finmeccanica’s head in Italy attended by a small circle at the centre of the defence ministry’s arms procurement, Antony is said to have asked searching questions about the process of acquiring the necessary helicopters if the AgustaWestland deal is ultimately scrapped.

His exasperation today that “we are back to square one” reflects the briefing he received on those queries.

It is not just $749 million that Finmeccanica stands to lose if the helicopter contract is scrapped. With the cancellation will come a mandatory blacklisting of the Italian company which has fingers in many pies.

Having demonstrated its acceptability in India with the supply of VVIP helicopters, Finmeccanica had set its eyes on another lucrative contract: supply of 56 light helicopters for the navy. A subsidiary of Finmeccanica, Alenia Aermachhi, had hopes of bagging a deal for replacement of the aged Avro transport planes of the Indian Air Force.

Defence analysts estimate that the VVIP chopper deal was merely the icing on the Italian conglomerate’s Indian defence cake and that in the coming years Finmeccanica could have made anything up to $10 or $12 billion if things had not suddenly gone wrong.

That is why the probe team in Italy has been told to seek the names of bribe beneficiaries in the expectation that the company would not like to see future contracts of such huge value elude its grasp.

Antony has discreetly asked trusted aides in his ministry to dig up archival material on Arun Singh’s decisions, notes and correspondence when the Bofors scandal broke. Singh, who was then minister of state for defence, had the same ideas then that Antony has now.

Singh’s preference was to get Bofors to co-operate with the Rajiv Gandhi government in finding out the recipients of bribes in the gun deal by using the threat of cancellation of the contract. But Singh was overruled and the deal was scrapped. No one eventually discovered the full extent of the bribery or the end recipients of the illicit money.

Unlike Singh, however, Antony’s position in the government is vastly different. He is virtually second in the Manmohan Singh cabinet after the Prime Minister. Congress President Sonia Gandhi has become dependent on him on political matters, more so after Pranab Mukherjee left active politics to become President.

For that reason, when Antony recused himself yesterday from the official delegation for talks with British Prime Minister David Cameron, the rest of the government accepted his decision without demurring. But the decision also was a signal that Antony was trusting his judgement alone in the AgustaWestland challenge.

In New Delhi, where the Prime Minister’s Office (PMO) has amassed US or French presidential-style powers over decades, there is shock that Antony served notice on Finmeccanica for cancellation of the chopper deal and stopped its payments without so much as informing the PMO.

Nor did he seek the approval of the Cabinet Committee on Security (CCS), telling officials in his ministry, instead, that they were within their powers to act under an integrity pact with Finmeccanica.

External affairs minister Salman Khurshid’s emphasis on CCS involvement during media interactions on his way back from Dhaka yesterday reflected consternation within sections of the government over the defence minister’s determination to flex his muscles and trust his judgement in this matter.