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Israeli arms companies on graft watch list: Parrikar

‘M/s IAI and M/s Rafael are however not blacklisted for business with the Government of India.’

VISHAL THAPAR  New Delhi | 14th Mar 2015

Manohar Parrikar

Top Israeli arms companies, IAI and Rafael that supply critical equipment to India's armed forces, are on the corruption watch list, Defence Minister Manohar Parrikar indicated to Parliament this week.

"The Ministry (of Defence) has not issued any instructions blacklisting M/s IAI and M/s Rafael from doing business with the Government of India. However, vigilance instructions on procurement proposals involving M/s IAI and M/s Rafael were issued in 2011," Parrikar informed the Lok Sabha on Friday, disclosing a precautionary protocol in dealing with these companies.

The Defence Minister further stated that a contract for the procurement of Barak-1 missiles for the Indian Navy was signed with Rafael Advanced Defence Systems Ltd in October 2014 at a cost of Rs 875 crore.

IAI and Rafael figure prominently in the rapid inroads made by Israel in the Indian defence market. They are part of key projects like the joint development of the Long Range Surface to Air Missiles (LRSAM) and Medium Range Surface to Air Missiles (MRSAM) with India's DRDO. This capability is critical for defence against enemy missile attacks.

These companies are also poised to bag the multi-billion dollar contract for supplying the Spike anti-tank guided missile, which has been listed by the Indian Army as critically required equipment. IAI and Rafael are also reported to be close to sealing deals for repeat orders for two additional AWACS for the IAF and four aerostat (balloon) radars and 16 Heron UAVs for the Army.

The UPA government had ordered a CBI probe into the Barak-1 missile deal signed with Israeli Rafael by the Atal Behari Vajpayee government. The CBI could not unearth any evidence of wrongdoing. But the investigation delayed replenishment orders for the crucially required Barak-1 missiles, which provide the only credible defence for Indian warships against enemy missile attacks. Parrikar referred to the repeat order finally being placed by the NDA government in October 2014 after the Navy pressed the panic button.

The vigilance instructions are a reflection of doubts of corruption hovering over defence deals. Parrikar has often spoken of the dilemma on banning arms companies on the basis of mere allegations or unproven corruption charges. He has expressed the view that blanket bans hurt Indian defence preparedness, and urged a pragmatic and nuanced approach. A policy to allow arms companies to legitimately engage facilitators — whom some would call middlemen — with proper systemic monitoring is on the anvil.

Earlier, the NDA government partially lifted the embargo on dealing with the Italian group Finmeccanica, whose group company Agusta Westland is facing investigations for alleged bribery in the Rs 3,600 crore VVIP helicopter deal signed by the previous UPA government in 2010. Circumstances in which business could be done with the Finmeccanica group were publicly declared last year during the tenure of Arun Jaitley as Defence Minister. The Finmeccanica group was bidding for several key tenders, some of which could be derailed by the group's exclusion.

In 2012, the UPA government, with A.K. Antony, as its long-serving Defence Minister, banned six companies on allegations of corruption for 10 years. These included international companies like Singapore Technologies Kinetics, Israel Military Industries, Rheinmetall Air Defence (Zurich) and Corporation Defence (Russia). Earlier, in 2005, the UPA government banned South African Denel, which was a key artillery partner for India, on the basis of a newspaper report published in South Africa alleging corruption in a gun deal. The CBI could not substantiate the allegations.

Unproven corruption allegations have delayed several key Indian military procurement programmes, including the one to set up a factory at Nalanda in Bihar for producing charges for artillery ammunition.

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