March 3, 2014

Another scam hits defence ministry, Antony orders CBI probe

The country's defence establishment has been hit by what seems to be another major scandal, forcing the government to order a CBI probe into allegations that global engine manufacturer Rolls-Royce committed irregularities and violated contractual provisions to bag contracts worth over Rs 10,000 crore from 2007 to 2011.

The CBI probe, which was confirmed by defence ministry officials on Sunday, comes soon after alleged Indian-origin arms dealer Sudhir Choudhrie, who has for long been under the scanner of CBI and Enforcement Directorate, and his son Bhanu were arrested in London last month.

Though the father and son were released almost immediately, and strongly denied any wrongdoing, the British Serious Fraud Office is probing allegations that they acted as intermediaries of Rolls-Royce for deals in China and Indonesia.

Sources said defence minister A K Antony ordered the CBI probe after allegations about Rolls-Royce hiring "advisors/consultants" — middlemen are banned under the Indian defence procurement system — surfaced in a letter sent to defence PSU Hindustan Aeronautics Ltd (HAL) recently.
"The letter was received by HAL, which initiated an inquiry into the entire issue after the board discussed the matter. The defence PSU's chief vigilance officer, Anurag Sahai, an Indian Revenue Service officer, on investigation found the allegations had some prima facie credence about violations of contractual provisions and obligations. The matter was then forwarded to MoD for further action," said a source.

On being contacted on Sunday, HAL officials said they "would not officially talk" on the issue since it was now being handled by the MoD and CBI. Rolls-Royce's India and South Asia president, Kishore Jayaraman, in turn, said, "Unfortunately, I have no comments for I have not seen anything yet, whatever this is."

Rolls-Royce has a major presence in India since 1932, supplying engines for fighters like British Jaguars, newly-acquired aircraft like Brazilian VVIP Embraer Legacy jets and American C-130J 'Super Hercules' as well as naval and Coast Guard fast-patrol vessels.

At present, Rolls-Royce is a key player in the ongoing induction of the Hawk advanced jet trainers (AJTs), manufactured by BAE Systems, by the IAF and Navy to train their rookie pilots in the intricacies of combat flying.

India has ordered 143 twin-seater Hawk AJTs, which are powered by Adour Mk.871 engines of Rolls-Royce, in an overall project cost worth well over Rs 25,000 crore. While the first 24 Hawks were supplied directly by BAE Systems, the rest are being licensed manufactured by HAL.

The fresh controversy has the potential to once again derail the modernization of the armed forces, like it has happened in the past.

Antony has blacklisted several global armament majors, like Singapore Technology Kinetics, Rheinmetall and Israel Military Industries (IMI), over the last few years.

The MoD is also moving towards blacklisting AgustaWestland, the UK-based subsidiary of Italian conglomerate Finmeccanica, after cancelling the controversial Rs 3,546 crore contract for 12 VVIP helicopters on January 1.

Finmeccanica and its companies, incidentally, are involved in several ongoing defence projects in India, with one estimate holding the conglomerate is also in contention for Indian military contracts worth over $6 billion, ranging from helicopters and aircraft to missiles and guns.

The Hawk AJT story itself has been riddled with controversies from the beginning. India first ordered 66 Hawks in March 2004 after over two decades of losing hundreds of fighter jets and pilots in crashes, with IAF screaming for AJTs for "transitional training" between sub-sonic aircraft and the "highly-unforgiving" supersonic MiG-21s for rookie pilots.

Then, another 57 AJTs were ordered in July 2010, with the last 20 being contracted at a later stage for IAF's famous Surya Kiran aerobatics team that had been forced to stop its breathtaking manoevres due to a crippling shortage of training aircraft.

If all the Hawks had been ordered at one go, they would have proved much cheaper. It would have also saved many young lives if they had been inducted much earlier. Almost 40% of the around 1,100 crashes recorded by IAF since 1970 have been attributed to "human error (aircrew)", which is often a result of inadequate training.

"Technical defects", caused by ageing machines and shoddy maintenance, is the other equally big killer.
  -Times of india

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