sree45
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Relentless pressure from the Indian Navy has given a new lease of life to a controversial Rs 2,300 crore deal with a South Korean company for eight minesweepers. This deal was lying dormant for three years under allegations of corrupt practices and engagement of middlemen during the tenure of the previous UPA government. Engaging middlemen for defence deals was prohibited by India.
After the new government encashed a Rs 3 cr bank guarantee deposited by the South Korean Kanganam Corporation in May this year on grounds of violation of the pre-contract integrity pact — signalling imminent cancellation of the tender — the Navy put its foot down to stop the termination of the procurement process.
The message is that the armed forces are done with crucial weapons acquisitions being indefinitely held hostage to allegations of graft and a corrupt procurement system run by the civilian Ministry of Defence.
In an unprecedented thumping of the table before the political leadership, the Navy top brass has conveyed that it "won't take 'No' for an answer". "Absence of these ships is a critical vulnerability for India. We cannot afford cancellation of this procurement," the Navy insisted, invoking national interest in going ahead with the deal. The Navy requires 24 Mine Counter-Measures Vessels or minesweepers to clear mines laid by enemy warships and aircraft to blockade harbours during war.
To begin with, a tender for eight minesweepers was floated in 2008. Kanganam Corporation was declared the winner, as it met the requirements and was significantly cheaper than the only other contender, Italian Intermarine. Contract negotiations with Kanganam were completed in October 2011.
But the process was stalled after Radha Mohan Singh, then a BJP MP and now Union Agriculture Minister, complained to the then Defence Minister, A.K. Antony that middlemen had been engaged by the South Koreans to win the deal. It was further alleged that these middlemen even participated in the contract negotiations on the pretext of being the company's partners for discharging counter-trade obligations (offsets).
Antony responded typically by ordering an inquiry and putting the deal on hold. The inquiry did confirm that "people were hired" and that they were present during negotiations with the Korean company.
The company's bank guarantee was encashed in the early days of the new government. But after the very strong representation for saving the deal by the Indian Navy, and a decision to review the blacklisting policy of the UPA regime, the case was referred to Attorney General Mukul Rohatgi for opinion. Rohatgi has submitted his opinion earlier this month, Ministry of Defence sources confirmed to The Sunday Guardian.
Based on the Attorney General's earlier opinion that "pragmatism" and "national interest" be the guiding factor in deciding whether or not to go ahead with arms deals which face unresolved allegations of corruption, the NDA government is reviewing the policy of stopping business with arms companies at the first complaint of corruption.
The government has recently taken South Africa's Denel gun company off the blacklist, and partially lifted the ban on the Italian Finmeccanica group, which faced criticism in the VVIP chopper deal. There are also reports about the Attorney General conveying a view that a ban on the aero and marine engine company Rolls Royce would hurt Indian interest. Rolls Royce — which provides engines for Jaguar fighters, C-130J Hercules airlifters, Hawk trainers, Naval Sea King helicopters and turbines for several ships — was accused of engaging a middleman in a civilian deal with HAL.
"The Navy cannot afford any more delay in the procurement of minesweepers and helicopters," naval sources stressed, warning that India did not have the resources to adequately protect even one major harbour from enemy mines. It seeks the urgent replacement of 12 Soviet-era Pondicherry class minesweepers acquired between 1978 and 1988. Seven of these 12 ageing ships are functional.
Of the eight new minesweepers planned in the current tender, two are to be built in South Korea and six at the Goa Shipyard under Transfer of Technology. "The Goa Shipyard has already invested Rs 300 crore from naval funds to create infrastructure for building these ships," a senior officer disclosed, emphasising urgency. Navy build-up plans require 16 more of these minesweepers to be built subsequently under a different tender at the Goa Shipyard over the next decade. The estimated cost of these 24 Mine Clearance Vessels is Rs 24,000 crore.
Navy dry-docked by Antony’s delays: naval HQ
After the new government encashed a Rs 3 cr bank guarantee deposited by the South Korean Kanganam Corporation in May this year on grounds of violation of the pre-contract integrity pact — signalling imminent cancellation of the tender — the Navy put its foot down to stop the termination of the procurement process.
The message is that the armed forces are done with crucial weapons acquisitions being indefinitely held hostage to allegations of graft and a corrupt procurement system run by the civilian Ministry of Defence.
In an unprecedented thumping of the table before the political leadership, the Navy top brass has conveyed that it "won't take 'No' for an answer". "Absence of these ships is a critical vulnerability for India. We cannot afford cancellation of this procurement," the Navy insisted, invoking national interest in going ahead with the deal. The Navy requires 24 Mine Counter-Measures Vessels or minesweepers to clear mines laid by enemy warships and aircraft to blockade harbours during war.
To begin with, a tender for eight minesweepers was floated in 2008. Kanganam Corporation was declared the winner, as it met the requirements and was significantly cheaper than the only other contender, Italian Intermarine. Contract negotiations with Kanganam were completed in October 2011.
But the process was stalled after Radha Mohan Singh, then a BJP MP and now Union Agriculture Minister, complained to the then Defence Minister, A.K. Antony that middlemen had been engaged by the South Koreans to win the deal. It was further alleged that these middlemen even participated in the contract negotiations on the pretext of being the company's partners for discharging counter-trade obligations (offsets).
Antony responded typically by ordering an inquiry and putting the deal on hold. The inquiry did confirm that "people were hired" and that they were present during negotiations with the Korean company.
The company's bank guarantee was encashed in the early days of the new government. But after the very strong representation for saving the deal by the Indian Navy, and a decision to review the blacklisting policy of the UPA regime, the case was referred to Attorney General Mukul Rohatgi for opinion. Rohatgi has submitted his opinion earlier this month, Ministry of Defence sources confirmed to The Sunday Guardian.
Based on the Attorney General's earlier opinion that "pragmatism" and "national interest" be the guiding factor in deciding whether or not to go ahead with arms deals which face unresolved allegations of corruption, the NDA government is reviewing the policy of stopping business with arms companies at the first complaint of corruption.
The government has recently taken South Africa's Denel gun company off the blacklist, and partially lifted the ban on the Italian Finmeccanica group, which faced criticism in the VVIP chopper deal. There are also reports about the Attorney General conveying a view that a ban on the aero and marine engine company Rolls Royce would hurt Indian interest. Rolls Royce — which provides engines for Jaguar fighters, C-130J Hercules airlifters, Hawk trainers, Naval Sea King helicopters and turbines for several ships — was accused of engaging a middleman in a civilian deal with HAL.
"The Navy cannot afford any more delay in the procurement of minesweepers and helicopters," naval sources stressed, warning that India did not have the resources to adequately protect even one major harbour from enemy mines. It seeks the urgent replacement of 12 Soviet-era Pondicherry class minesweepers acquired between 1978 and 1988. Seven of these 12 ageing ships are functional.
Of the eight new minesweepers planned in the current tender, two are to be built in South Korea and six at the Goa Shipyard under Transfer of Technology. "The Goa Shipyard has already invested Rs 300 crore from naval funds to create infrastructure for building these ships," a senior officer disclosed, emphasising urgency. Navy build-up plans require 16 more of these minesweepers to be built subsequently under a different tender at the Goa Shipyard over the next decade. The estimated cost of these 24 Mine Clearance Vessels is Rs 24,000 crore.
Navy dry-docked by Antony’s delays: naval HQ
