On Tuesday, Rediff carried the first part of former Rajya Sabha MP Jayant K Malhoutra's interview with Associate Editor Savera R Someshwar. In this, the concluding part of the conversation, Malhoutra suggests steps that would cleanse the defense establishment, even as he admits he is not to optimistic about any kind of postive change.
What about the PMO and the prime minister? Are they are involved in defence deals?
I don't want to comment on whether they are involved. Every intelligence agency reports to the PMO. If the intelligence services are so incompetent that they cannot even keep their prime minister informed, then something very serious is wrong with the system we have created. I am more worried about this than about whether anyone has made money.
The more serious thing is: why isn't anyone doing anything about it? The facts are there, they were there about two years ago. Why did they have to wait for tehelka.com? What has Tehelka said that is not said here (slams his hand on a copy of the speech he had made in Parliament)?
Were you surprised when you found out that service officers themselves were on the take?
I can't believe that you have Rs 30,000-40,000 crore worth of junk lying without people in authority not being involved. There is something weak in the whole system. We have some checks and balances, but they are not enough. I've given all the papers to the CAG, the CVC, the President, the vice-president, the prime minister, the home minister, the defence minister, every member of Parliament. Now all I have to do is give it to 100 crore Indians which now Tehelka has been able to do because of its web site.
How would you change the system?
If I were defence minister, I would allow legitimate agents. Every company can't open an office here. One of my companies exports goods to about 40-50 countries. We don't have offices, but we operate through agents. Why should it be any different for defence? I don't believe you can totally eliminate commissions in defence. The agents and their roles should be recorded with the MoD and they should pay taxes on the income they earn in India.
Before 1985, agents were allowed in India. But after Bofors they made these changes in a hurry. Now they have found other substitutes. Mipro, for example, has just a little hole-in-the-wall office in Vienna or somewhere and they get orders from us for hundreds of crores of rupees worth of spares. Agents used to get eight per cent commission at the maximum. Now there is a new class of political facilitators who get 25-30 per cent.
Though I was a member of the committee that used to make the agenda for the Rajya Sabha, it took us two years to have this debate on defence because they said defence was a holy cow. That holy cow has now become a corrupt cow! Wherever there is lack of transparency, this is inevitable.
Most of our agreements are technology-transfer agreements. But, in the end, that does not really happen. The Russians send technology manuscripts in Russian and they lie untranslated in some filthy godown in Delhi. That is why the officer at Vizag did not have the drawings and the material specifications.
It does not matter whether we use the material. If we use indigenous knowhow, then these companies can't give kickbacks and commissions. So we still continue to import.
But look at all our indigenous attempts. The LCA is still not ready. The Arjun and the Agni have taken so long.
That's because they've never had the intention to produce! The order for 124 tanks was placed with the Avadi factory only because the MoD was under intense pressure from people like me. But why was the order delayed for more than a year? The middlemen and their money decide whether you should indigenise, whether you should manufacture, whether you should import, from where you should import, all these things. What's frightening is how the whole decision-making process in the ministry has been vitiated.
What are the hurdles to any kind of transparency in defence deals?
Intent. You must have the intention to clean up. I hope Tehelka brings about a change in thinking because it is only then that people will realise how serious a problem they have created. It's not just the money I am talking about, I'm talking about our country's security. If that is compromised, then tomorrow we will again be a colony.
Can defence deals be made completely transparent?
They certainly don't need to be conducted the way they are now. Of course, they can't be transparent because we get a lot of information from RAW and other sources, which would normally not be available to us from other countries. But regular procurement has to be transparent.
One of the areas that needs serious attention is that of advances. Do we get anything in return for these hundreds of thousands of crores worth of advances that have been given? Has anyone audited these accounts? Or, like the fertiliser deal, has nothing has come of it? There, we opened an LC (letter of credit) and they got caught. In defence, there may be hundreds of such LCs but they never get caught because it's all secret.
We pay money for technology transfer, but is there a reconciliation between what has been spent and what we have actually used? These are areas where thousands of crores are involved. They have to be checked and controlled. Unfortunately -- either out of ignorance, stupidity or crookedness -- no one is bothered about these things.
Has this been going on since 1947?
I've not gone that far back. In fact, I was against George Fernandes's intent of having defence deals from 1985 onwards investigated. It is impossible even for the CVC to find the 1985 documents. We need to go from 2000 backwards so we can deal with what is current. The fact that the CVC has been asked to examine deals from 1985 onwards itself stinks. Nothing is going to come out of it.
Should the defence procurement industry be privatised?
Not privatised. But private companies, which are already involved, should be more involved. A lot of them are very good companies. As for the ordnance factories, those that are good should be further improved and those that are junk and obsolete should be done away with. After all, Indian companies are better than foreign companies. When you are giving your drawings and secrets to Russia and Sweden and Germany, do you think they are secure?
What is the average size of kickbacks in a defence deal? Is the cost of the kickback that needs to be paid incorporated into the cost of the deal? Do you think there has been any defence deal where there were minimal/reasonable commissions?
Of course, we as taxpayers are paying for these kickbacks from our pockets.
Before 1985, the commission would range from three to five to eight per cent. The Sukhoi deal, for example, is worth Rs 3,600 crores. It does not take a genius to figure out what a three per cent commission will come to. Now, I am told people pay 30-40 per cent.
We are paying about 40 per cent more than what Australia and South Africa have paid for the advanced trainer jets. And those are 25-year-old planes. Why are we doing that? Why are we paying Rs 12-15 crore for T-90 tanks, when there is no such thing as a T-90 tank? It is just an upgraded version of a T-72S tank.
Lieutenant General N Foley (retired) -- a BJP-nominated honorary member of the Lok Sabha and former director-general of the mechanised forces -- agreed with me and termed the whole deal 'fishy.' In 1994, the T-72S was priced at Rs 3 crore. Today, it costs Rs 5-6 crore. Now, just because the Russians have upgraded the engine to 1000 HP and given it a new name, they have hiked the price to somewhere between Rs 12-16 crore. Why? These are questions no one is willing to answer.
We are talking of kickbacks that could run into thousands of crores.
What is your opinion about the Bharatpur fire that destroyed the ordnance depot there?
I have been told that some of them were motivated because the ammunition was old and could not be used. Once they were destroyed, one could buy afresh. But I have to make it absolutely clear that I do not know whether this explanation is true.
Why does it take so long for a defence deal to be finalised and procurement to take place?
You can't take instant decisions for procurement of weapons systems. Take, for example, the Sukhoi deal where we have paid an advance of thousands of crore. These Sukhoi-30s are just upgraded Sukhoi-28s. The ones that were sent to us were only good for acrobatics; they did not have any armour on them.
When you develop a new range of tanks or aircraft on a new platform, it takes 15 years. Then it is good for the next 25 years. It is at the development stage that enlightened middlemen or agents can help. They can keep you posted on what is happening in those companies so you know the direction they are going in and can decide whether you want to procure them. By the time they start making prototypes, you are already in touch with them so you can check the prototypes.
Has national security been compromised?
I think so. What were the intelligence agencies doing? Tehelka walked in and out of the ruling party's president's office and the defence minister's house interviewing people and no one got to know of it? This is a bigger scam and needs to be investigated.
Have your efforts to cleanse the defence establishment been successful? Has it made any difference?
I was in Parliament for eight years; I've been away for 10 months. So far nothing has happened. It is the biggest disappointment of my life. Despite all my effort, I don't think I have been able to make a dent.
Do you, at any point in time, see a cleaning of the system?
If it does not happen, there is no future for this country and its people.
Design: Dominic Xavier.
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