Thursday, June 11, 2009
By Ansar Abbasi
ISLAMABAD: Defence deals of the Pakistan Air Force in recent years, worth billions of US dollars, need a public scrutiny amid growing reports of kickbacks, procedural violations and compromise on technology.
While a former air chief, Saadat Kaleem, has already accused General Pervez Musharraf of ruining the PAFís $1.2 billion Saab Surveillance System deal by adding the Chinese technology with the Swedish for possible kickbacks, producing a mismatch, some insiders insist that the situation is worse than what the former air chief has hinted at.
A credible source said that the PAFís Air Board had been bypassed in quite a few defence deals during the recent years owing to pressures both from within and outside the force. The PAF spokesman, however, insists that the contracting of various items is the prime responsibility of the concerned branch of the Air Headquarters and is not required to be discussed and approved by the Air Board.
Before the last major PAF deal worth $1 billion for the first consignment of JF-17 aircraft, an influential Pakistan International Airlines (PIA) pilot having close association with a key ruler in Islamabad was seen visiting the top offices at the Air Headquarters in Islamabad. Following these visits towards the end of January 2009, the $1 billion deal on JF-17 moved on a fast track. The same PIA employee interestingly travelled to China, along with President Asif Ali Zardari, in February this year to obtain a one billion dollar loan.
PAF spokesman Group Captain Tariq Mehmood, however, did not respond to the question about the strange visits of strangers to the Air Headquarters before the loan contract was signed. Mehmood said that the JF-17 serial production contract was being negotiated since December 2006 and was almost finalised in June 2008 but could not be concluded due to non-release of funds by the government.
This delay, he said, was adversely affecting the operational capability of the PAF and the work at the PAC Kamra. ìSince then, efforts are being made for the arrangement of funds,î the PAF spokesman said in a note that he gave to this correspondent in response to a number of queries e-mailed to him. For quite some time, the spokesman was hesitant to respond to The News queries but later came up with his response on selected questions, still requesting to delay the story by a few weeks.
A source disclosed that the March deal of $1 billion was not presented before the JF-17 projectís Board of Directors for approval, but the PAF spokesman said: ìThe JF-17 Board of Directors was regularly updated on the status of the JF-17 Serial Production (SP) contract.î
He said that in January 2009, a presentation was given to the president, the prime minister and other cabinet members following which the federal government directed the Ministries of Foreign Affairs and Finance to take up the matter with the Chinese authorities for concessional credit. ìSubsequently, with the efforts of Pakistanís ambassador to China and the PAF, the seller (CATIC) offered a sellerís credit facility for the SP Contract.î
The spokesman said that on the instructions of the prime minister, the offer was subsequently negotiated by a joint team of the PAF, JF-17 project representative, the Ministry of Finance and the Pakistan Embassy.
He said that the case was finally put up for the governmentís approval, which was later approved. An agreement was then signed for a credit of about $1 billion to be payable over seven years at a cost of around $100 million (approximately at the rate of 1.4 per cent per year).
The PAF spokesman did not clearly respond if the JF-17 BoD and the PAFís Air Board approved the proposal too. He dispelled the impression that the loan had been obtained at an extraordinary mark-up. Sources said the prevalent rate in the world was less than one per cent.
ìThis is the most economical credit facility ever negotiated,î said the spokesman, adding after the formal approval of the government, the contract was signed by the JF-17 PMO and the PAC Kamra on March 7. ìAll principal staff officers at the Air Headquarters and the Chinese ambassador witnessed the signing ceremony.î
Tariq Mahmood said that the JF-17 contract was signed on highly favourable terms that included transfer of technology for airframe manufacturing immediately and avionics package next year. The contract, he said, heralds the realisation and commitment of both Pakistan and China to turn their cherished dream of co-producing a modern fighter into a reality and beginning of a new era of aviation industry in Pakistan.
According to a source, besides the latest deal, the PAF Air Board was also ignored in a few other deals worth $800 million struck with Brazil, South Africa, Russia and Italy in the last few years for purchase of different technologies for the PAF.
Tariq Mehmood, however, explained every case was not supposed to go to the Air Board for approval. He said the vice chief of the air staff, who manages the PAF budget, allocates funds for all such contracts and hence is always in the loop for such authorisations by the Air Headquarters. He said once the proposal was approved by the Air Headquarters, the ministries of defence and finance do further scrutiny, hold negotiations and finalise contracts. ìThe process is totally transparent and above board. The Air Board is periodically apprised of all these issues,î he claimed. The sources said in the coming few years, defence deals worth $8-10 billion were expected for which the government should evolve a mechanism so that right purchases were made for the countryís air force without any chance of kickbacks.
I agree with General Musharif's anticipation on a battle field you need to diversify your options don't depend on just one strategy you need multiple option
Very aptly put Niaz sahib. 
