Geography Reference
In-Depth Information
the rank of a lieutenant colonel in the army to be included. Substantial payments are often
needed for smaller and medium-size firms to be put on component-supplier lists by DPSUs
and research organisations. This is especially significant if officials are to be persuaded not
to go out to tender and only deal with a single supplier, which accounts for about 70-80 per
cent of public sector orders.
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This happens in many countries, of course, and is probably worse in some, not least in
Russia where officials expect to be paid bribes for supplying products as well as placing
contracts. In India, the system has become so embedded that it is dragging down both the
ethos and the military effectiveness of the armed services.
Bofors and Others
When I first came to India in the early 1980s and Indira Gandhi was the prime minister,
there was gossip over who might have been involved, in Paris as well as Delhi, during the
handling of alleged large-scale bribes on a big contract with Dassault of France for Mirage
fighters, and on a 1981 order for four $150m submarines with HDW of Germany. The as-
sumption, which seemed to be acceptable publicly, was that bribes were collected for Con-
gress party funds, but that Gandhi did not personally benefit. She was believed to have a
very small group of three or four people including a top minister, an official in her office,
and a businessman located abroad who handled the money discretely and secretly in Delhi,
London and maybe Switzerland. Sanjay Gandhi was also sometimes rumoured to be in-
volved. In May 1987, I wrote in the
Financial Times
that Congress had 'increasingly relied
on large kick-backs from defence and other international contracts for party funds', and
that Sanjay Gandhi 'was believed to have orchestrated this for his mother before he died in
a light aircraft crash a few days before the submarine deal was finalised in 1981'.
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Kickbacks ranging from 5 per cent to 10 per cent, I wrote, were assumed to have been
paid to the Congress, irrespective of 'whether they were paid in India, into Swiss bank ac-
counts, or were laundered in some way'. Having gained specific information from defence
companies, I added, 'virtually every big contract was assumed to include such arrange-
ments, and companies often knew whom to expect as the collector … often the middlemen
were assumed to be creaming off some cash for themselves, while individual ministers and
top bureaucrats also made their own demands'. On one deal I heard directly about, the Lon-
don collector said to the company chairman, 'do involve me from the beginning of your
negotiations next time'.
The Mirage and HDW deals were eclipsed in 1987 by India's longest running and polit-
ically most significant defence scandal that arose while Rajiv Gandhi was prime minister,
after India placed a $1.4bn contract in 1986 for 400 155mm howitzer guns with Bofors of
