My piece on how (and why) the defence ministry is finally ready to ‘deal’ with the ghost of the VVIP helicopter scam

Defence Ministry notification regarding Finmeccanica
Defence Ministry notification regarding Finmeccanica

Today onwards, in a partial manner, the Ministry of Defence (MoD) has put to rest the ghost of the AgustaWestland VVIP helicopter scam.

From threatening to blacklist the manufacturer a year ago, it has come around and released a notification titled ‘Dealing with Finmeccanica Group of Companies in All Procurement Cases’.

That the MoD mustered courage and spoke about ‘dealing’ with the giant conglomerate, in itself, is a marked difference from the ‘hands off’ approach of the last administration. Most importantly, it lays down a roadmap to handle an important defence contractor which the MoD, as the world’s largest arms importer can ignore at its own peril.

Before going any further, it is important to understand the circumstances that the armed forces faced as a result of the VVIP helicopter scam.

Even before the MoD charged AgustaWestland with ‘breach of provisions of the pre-contract integrity pact and breach of terms of contract’ and scrapped the contract for 12 AW101 helicopters on January 1, 2014, an unwritten freeze order had come into effect. It dated back to 12 February, 2013 when the case was handed over to the Central Bureau of Investigation (CBI). This freeze ensured bureaucrats and the armed forces did not move on procurements, repairs and upgrading equipment if even the parent firm Finmeccanica, not the alleged culprit AgustaWestland, was involved in the contract.

A case in point would be navy’s experience on Mid Life Upgrade (MLU) of its fleet of Russian-made Kamov28 Anti Submarine Warfare (ASW) helicopters . As they found, this freeze affected even those cases in which another company under Finmeccanica was a sub-contractor! For that and that alone, the navy has, till date, been unable to get going on the desperately required MLU where Selex ES, a part of Finmeccanica was to supply the Russian Original Equipment Manufacturer (OEM) Rosoboronexport with brand new radars to fit them on naval helicopters. For the record, without upgraded Kamov28 ASW helicopters, nation’s biggest warship, INS Vikramaditya remains a sitting duck for the kind of advanced submarines India’s enemies posses. Informed sources point out that a desperate navy even got a CBI clearance for proceeding on its MLU contract but to no avail.

In the absence of political authority, ‘play safe’ was the objective. Towards this, anything, even remotely connected to Finmeccanica, was to be kept at arm’s length. As one has reported in the past, it simply didn’t matter how urgent or critical the requirement of national security was.

Only last week, while commissioning the Anti Submarine Warfare (ASW) corvette INS Kamorta in Vishakapatnam, responding to a question from yours truly, Defence Minister Arun Jaitley signaled that efforts were on to bury the ghosts and that we shall hear from him sooner than later. With the issuance of six, clear points, devoid of routine government jargon and implying a clear ‘go’ & ‘no go’, things should get moving. For, at stake today are existing, vital deals for the navy, army and air force.

Speaking of the MoD notification per se, the first three points are self explanatory and will hopefully end the ‘play safe’ mode of work. Beyond that, things get into the sphere of interpretation and decisions taken henceforth will further clarify the implementation of this decision. What is also interesting to note is the ministry’s pragmatism, cleverly closing the door but not completely. Those in the services say this indicates that if such a situation does arise where anyone among Finmeccanica Group companies emerge as L1, procurement won’t be necessarily stalled.

Finmeccanica will be treated differently, make no mistake. Where there is an option, the ministry will dump Finmeccanica. When there is none, a considered decision will be taken. In short, the days of the freeze are behind us.
This clarity, it is being hoped, will help the navy get its 16 Multi Role Helicopters (MRH) deal – pending for over 15 years now, Collision Avoidance System for its aircraft, Naval Utility Helicopter (NUH), Torpedos for under- construction Scorpene submarines, designs for indigenous aircraft carrier Vikrant, army and air force get Light Utility Helicopter (LUH) as well as a smooth sailing for the Medium Multi Role Combat Aircraft.

“In today’s age, modern platforms come with multiple systems from multiple players who have diverse areas of specialisation. A giant conglomerate is literally omnipresent. In trying to hurt the giant, we shouldn’t let our armed forces suffer,” said an MoD officer.

For the record, this exercise culminating in the notification was undertaken even by the previous administration and opinions were sought from the then Attorney General (AG) as well as the Law & Justice ministry. However, nothing came out of it. Following the election results, the new leadership also sought fresh opinions before framing this policy.

What is still not known is how the MoD views the developments in the Italian court where the prosecution has dropped its case against top AgustaWestland officials over the VVIP helicopter acquisition – the very point which triggered developments in India.

Meanwhile, the final clause in MoD’s notification permits Finmeccanica to participate in every defence deal in India as long as it remains a sub-contractor to a contracting party to the government of India.

Navy’s and the men who operate the Kamov28 ASW helicopters can finally smile.



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