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AK Antony seeks probe into allegations against Abhishek Verma in defence deals

Rohini Singh, ET Bureau May 7, 2012, 12.51AM IST

NEW DELHI: Defence minister AK Antony has asked investigation agencies to probe into charges levelled against Delhi-based businessman Abhishek Verma, by his former partner, accusing him of acting as a middleman in several defence deals and parking over $205 million in accounts in a bank in the US.

“I have asked the CBI and the Enforcement Directorate to investigate the allegations. The defence secretary has also been asked to take necessary action,” Antony said.
These allegations have been made by C Edmond Allen, head of a New York-based company called Ganton Limited, in a series of letters to Antony. His charges cover purported dealings between Ganton, which Allen – a non-practising attorney – said was incorporated in the US state of Delaware on Verma’s instructions, and major equipment suppliers to the Indian armed forces such as Rheinmettal, Augusta Westland, Hellenic Defence Systems and Hawker Beechcraft.

A top CBI official said the investigations were at a preliminary stage. “We are in touch with Allen and have asked him to submit the documents in original,” said the official. He also said the agency is coordinating with the Enforcement Directorate as there were allegations of large scale money laundering.

Verma, the son of former Congress leader Srikant Verma, is an accused in the naval war room leak case where several sensitive defence documents were stolen and allegedly leaked to Thales, the maker of Scorpene submarines.

He has denied all charges levelled against him by Allen, and said documents implicating him have been forged. Verma said he had received a notice from the Enforcement Directorate asking for an explanation for the money in the accounts but was unable to comment since the matter was sub judice.

“As several petitions filed by me against C Edmonds Allen are pending in various Indian and foreign courts and these cases are somehow connected to alleged foreign exchange violations in which trial is going on in India under FERA Act for ten years, it will not be possible for me to comment as matters are sub-judice,” he wrote.

According to Allen, the escrow accounts belong to Verma but he had the right to handle them as a result of agreements signed between the two in April 2000 and February 2004. Allen has alleged that the money in these accounts has been obtained through illegal means and that Verma has acted as a middleman in several defence deals. Verma, in turn, has issued legal notices to Allen to return the money and a case has been filed in a district court in New York, according to documents reviewed by ET.
Verma, the son of former senior Congress leader Srikant Verma and MP Veena Verma has business links with Jagdish Tytler, a Congress Working Committee member and the party’s Odisha in-charge. Tytler’s fashion designer son, Siddharth, is a founder shareholder in a company along with a former director of Ganton, Arjun Arora. Siddharth Tytler had also signed a joint venture agreement with Ganton India.

Confirming this Jagdish Tytler also told ET that he knew Verma as his parents were colleagues of his. He denied any knowledge of defence deals that Verma is alleged to be involved in.
Tytler also confirmed being an arbitrator in a dispute involving Ganton and another company over nearly hundred acre of land in Noida which belongs to the Yamuna Express Industrial Development Authority.

People close to Verma say that the allegations levelled against him were at Tytler’s behest, a charge that has been strongly denied by both Tytler and Allen. Allen, however, told ET in an email that Tytler and Verma were very close but had fallen out recently over the Noida land deal.

Allen has also alleged that Verma has often flaunted his links with several powerful politicians which has supposedly ensured that no enquiry is initiated against him. Allen also claims to posses several sensitive defence documents allegedly emailed to him by Verma which show his ‘easy access within the government’.

Corruption Charges

The letters to Antony paint a picture of labyrinthine corruption in defence deals with Verma allegedly at the centre. Some of the documents linked to the case, were publicly released by India Against Corruption (IAC) in late April, a group linked to activist Anna Hazare, after Allen sent the documents to lawyer Prashant Bhushan. In a blog posting in New York Times dated April 27, Allen was quoted as saying that he had approached it after Indian authorities showed no interest in his allegations.

In a letter to Antony dated March 28, 2012, Allen alleged that German firm, Rheinmetall AG, paid Ganton $530,000 to reverse its blacklisting by India’s defence ministry. The money was supposedly paid through the firm’s UBS account in Switzerland, according to bank statements of Ganton Limited, and an invoice generated by the company.

Emails sent by ET to Rheinmetall officials did not elicit a response.

AK Antony and the problem of corruption

KP Nayar

Wednesday, 11 April 2012 09:47

“Will Minister Antony resign?” More than any other, this is the one question that I have been asked by Americans in recent weeks about the defence minister who has been in the news for the better part of this year. Most of the people asking this question have some connection with the military-industrial complex in the United States of America or the country’s defence and strategic community.

The reality, howsoever unpalatable, is that few defence ministers can survive after incurring the personal displeasure of an American defence secretary, unless they are defence ministers in Russia and China or in countries like Iran or North Korea, which are in various stages of confrontation with the US.

A.K. Antony attracted the wrath of the Obama administration last year by his determined refusal to receive the then defence secretary, Robert Gates, who tried to inject himself into a US delegation that was to travel to India for the second round of the “strategic dialogue” between New Delhi and Washington. Gates wanted to lobby with Antony on behalf of American companies, which were then in the running for 126 medium multi-role combat aircraft being sought by the Indian air force, the biggest military aviation deal hitherto.

Antony made it clear to his cabinet colleagues, who were persuaded by the secretary of state, Hillary Clinton, to plead the case of the Pentagon’s civilian head, that if Gates arrived with Clinton he would go to the remotest location in Kerala where even his mobile phone had no signal for the duration of the American’s stay in New Delhi. Kerala was then in the middle of its state assembly election campaign, which gave Antony enough of an excuse to be in his home state.

The defence secretary did not give up. Gates used the ruse that he was demitting office in July and that he wanted to make a farewell call on Antony: at that point, April was being considered for the strategic dialogue, which eventually had to be postponed because of the defence minister’s insistence that he will not meet Gates as long as the aircraft contract was at a sensitive stage in the acquisition process.

Pentagon officials have told reporters on background that “the defence secretary was informed that it would be suicidal” for Antony to meet Gates and that this message was conveyed by Indian diplomats in Washington, who were negotiating the strategic dialogue arrangements with the Obama administration at that time.

At the end of April 2011, American companies were eliminated from the race for the multi-role combat planes, the US ambassador, Timothy Roemer, resigned the next day, and Gates lost any further interest in making his farewell call on Antony. The strategic dialogue eventually took place in July last year without a top-level defence participation.

After an unstated policy of having no ministerial exchanges in defence for 50 years — except on a solitary occasion, that too botched — US defence secretaries have lately taken exceptional interest in their Indian counterparts and senior Indian ministers in the last decade. The most famous of such exchanges was when Donald Rumsfeld, who was predecessor to Gates, called on the deputy prime minister, L.K. Advani, at his hotel on a Sunday in a well publicized effort to highlight a new chemistry in their ties.

Rumsfeld felt somewhat proprietary about the new defence relationship that the administration of George W. Bush considerably advanced with India, but luckily for New Delhi, he did not stay at the Pentagon long enough to see Washington’s hope of bagging the much-sought-after combat aircraft deal crumble into dust. There is no saying how the mercurial Rumsfeld would have reacted to such a disappointment. Gates, a man of great dignity, took the setback in his stride, at least in public.

The Pentagon is not alone in being disgruntled by Antony’s ways. He has consistently refused to visit Israel, which interchangeably shares the first or second spots with Russia among the sources of arms imports for India.

As if to add injury to insult, last month the defence ministry blacklisted Israel Military Industries for 10 years for allegedly paying bribes to secure contracts in India. IMI is not just another arms-seller. It is owned by the government in Tel Aviv, a leading weapons manufacturer for Israel’s defence forces.

It was not expected that Tel Aviv will take the ban lying down. Additionally, the ban by Antony’s ministry has cast a shadow over plans by the Netanyahu government to privatize IMI. There are now question marks about the timing of the privatization: if the world’s number one arms buyer — India — has found IMI unsuitable to do business with, it could have ramifications for investors seeking to buy into the company.

Those familiar with New Delhi’s lay of the land in such matters were not, therefore, surprised when grumblings of discontent, which began as whispers after Antony rebuffed Gates, grew louder following the rejection of American bids for the multi-role combat aircraft. It was not entirely unexpected that after the decision against the Israelis, Antony would be put in a spot by a steady flow of news stories and purportedly thoughtful op-ed articles.

The Americans and the Israelis are not alone in being at the receiving end of Antony’s efforts in full throttle to do what he can to curb corruption in defence purchases and create a level playing field. Singapore is a country with which India enjoys a relationship that is totally free of trouble. That has not, however, prevented Antony from banning Singapore Technologies Kinetics from future contracts for a decade.

This land systems and specialty vehicles company has launched an all out bid to clear its name, including recourse to the Supreme Court. It has also threatened to seek international arbitration, creating an irritant in bilateral relations.

Russian defence suppliers who have had a free run of New Delhi’s procurement process for many decades have similarly been slapped with punitive sanctions as part of Antony’s anti-graft drive. The defence minister has further angered Swiss, South African and many more arms manufacturers, lining up a formidable array of forces, all of which would be glad to see him move out of his present job.

Typically, nobody is criticizing Antony for cracking down on corruption. Instead, the strategy of those who want him out of the way is to attack Antony for slowing down the modernization of the armed forces by creating bottlenecks in arms purchases, and for creating a trust deficit between the civilian and uniformed segments of the defence establishment. All in all, the effort is to show up the defence minister as a man incapable of running an enterprise as vast and complex as the one for which he is tasked with providing leadership.

The age controversy about General V.K. Singh, the army chief, was the best thing that Antony’s detractors could have hoped for. Unfortunately for the defence minister, both propriety and constitutionality demand that he cannot truthfully tell his side of the story.

For instance, Antony personally believes that the army chief is not lying about his age and that General Singh was born in 1951. Similarly, the General has been a steadfast ally of Antony in what the latter is trying to do about corruption in the defence establishment. It may be a hard idea to sell, especially after a sensational story about troop movements, but the personal warmth and respect for each other between Antony and Singh are nothing short of total. Which is why there has been no move to dismiss the army chief or get him to resign. Even though Antony believes that General Singh made a mistake about his date of birth, an episode from his own past prevents Antony from doing anything about it except to follow the letter of the law. Antony was chief minister of Kerala when a similar controversy dogged the state government.

Raman Srivastava, an Indian Police Service officer of the Kerala cadre who became director-general of the state police and later headed the Border Security Force, was at the centre of this controversy. A mere five months separate him and his brother, Vikram Srivastava, an IPS officer of the Uttar Pradesh cadre, who became director-general of the Central Reserve Police Force: a biological impossibility since both the brothers were born of the same mother.

As chief minister, Antony did not allow the Kerala cadre officer to change his date of birth. There is no way he would have acted any differently with General Singh. What is more, it is Antony’s estimate that there are at least 3,000 such cases of incorrect birthdays in government service records. That is a Pandora’s Box, which is best left shut.

-The Telegraph, Calcutta

The Lab Optimists

Open Magazine – feature

BY Madhavankutty Pillai 31st March 2012

From battle tanks to mosquito repellents to dosas in space, the DRDO is a laboratory of sweeping ideas, many of which will take a lifetime to execute.

Last year, the Indian Air Force got a taste of something they didn’t much like. The newspaper DNA reported that IAF officials had been to the Defence Food Research Laboratory (DFRL) in Mysore, where they were shown a tube from which food could be squeezed out. It might sound odd that anyone would eat like that but this was a necessity stemming from the IAF’s induction of long-range aircraft into its fleet—the pilot would have to be fed if he was going to be in air for hours. But the tube-food wasn’t what they expected. It wasn’t a paste or even semi-liquid; it was solid. Negotiating it would not only mess up the cockpit, it would be a minor battle in itself. The IAF rejected it and the DFRL went back to the lab to make it pastier. The same laboratory is also working on something equally unusual—what to feed Indian astronauts when they eventually go up in space. The lab director was quoted as saying that they were exploring all options—from north Indian chapatis to south Indian dosas, albeit in bits and bites.

The DFRL is part of what is known as the Defence Research and Development Organisation (DRDO), an umbrella for over 50 laboratories that make everything from tube-food to tanks to combat aircraft to mosquito repellents. Even toilets. In his recent Railway Budget speech, former Railway Minister Dinesh Trivedi announced that from next year, 2,500 rail coaches would have what he called green toilets to replace the holes that now exist in train latrines. These ‘bio-toilets’ have been developed by the DRDO. The DRDO’s mandate, however, is not to cater to the Railways or India’s space programme. It is to make India self-reliant in defence systems and equipment. Stated ends and realities do not always meet. The main criticism of the DRDO—and it comes mainly from its primary clients, the armed forces—is that its scientists are a bunch of optimists. This is why we hear announcements from them that seem fantastic. Consider this public statement by DRDO Director General VK Saraswat just a few months ago: “We are working on building soldier robots that can work like a human soldier. Such a robot needs a database and artificial intelligence to carry out its activities and the DRDO is planning to build such a robot.” Is he talking of the Terminator? In the same exchange with reporters, Saraswat also talked about robotic mules, which then leads to the question: why would anyone need robotic mules? If the purpose is to transport cargo, won’t a suitable vehicle do?

All this would not be so suspect if the DRDO did not have a reputation for routinely shooting off its mouth. We asked a former Chief of Army and a former Chief of Navy whether it was true that the DRDO was quick with announcements and slow with execution. Says former Army Chief General VP Malik: “I tend to agree with critics who say that. The track record of the DRDO so far, primarily on account of delayed/non-delivery of weapons and equipment promised to the armed forces, does not inspire confidence.”

And this was former Chief of Naval Staff, Admiral Arun Prakash: “That impression is correct. They are very optimistic and don’t live up to their time schedules, cost schedules, etc. They don’t consult the armed forces enough. They spend the budget the way they think best.”

The Navy, ironically, is the institution that has managed to get the maximum benefit (relatively speaking) from the DRDO and that’s because it made a practice of embedding naval officers into DRDO projects. Admiral Prakash said, “Whenever there’s a naval project going on, there are always naval officers associated with it. Even otherwise the Navy makes available some of its bright officers to the DRDO.”

The two projects for which the DRDO has got the most brickbats are connected to the Air Force and Army—the main battle tank Arjun and light combat aircraft (LCA) Tejas. The Arjun project took off in 1972. In 1974, Rs 15 crore was set aside for its development. The project, which finally cost around Rs 350 crore, got delayed by decades and even now many of its components are imported. The DRDO had initially hoped to make 2,000 tanks and, after about 40 years, has 124 operational. The Army is not happy with these and is pinning its hopes on the impending upgrade, the Arjun Mark II. Similar delays have plagued the LCA Tejas. It has been in the making for just under 30 years and is yet to become operational. Its second phase is now scheduled for completion by December 2012. The indigenous engine, Kaveri, for the LCA didn’t live up to standards and an imported engine is being used.

The problem, according to one view, stems from the DRDO wanting to reinvent the wheel. It was a patriotic thing to build everything from scratch, but, as everyone now recognises, it didn’t have the capability in most areas. This can have consequences. General Malik was Chief of Army when the Kargil war happened. In 2009, when he said in a television interview that Kargil casualties could have been lower if the DRDO had delivered on time, it instantly led to a furore. He elaborated on it in an email interview, ‘I was referring specifically to the non-availability of weapons-locating radars, which were required to engage Pakistani artillery and mortars quickly and effectively during the Kargil war. This would have reduced the effectiveness of Pakistani artillery and mortars. In 1997, after long negotiations with a manufacturer, some of these radars were about to be purchased. At the last moment, the DRDO caused this deal to be scuttled, with a promise that it would develop and produce these radars in the next two years; a promise that was never fulfilled. Incidentally, these very radars were purchased from the same manufacturer in 2003.’

There are areas in which the DRDO has been successful, like the missile programme. In the development of naval sonars, weapons avionics and torpedoes too, it is recognised to have done useful work. There is the counter-view that it is unfair to blame it for everything and that the DRDO has become a favourite punching bag. Wing Commander Ajay Lele, a weapons expert and Research Fellow with the Institute of Defence Studies and Analyses, says the gestation period in military technology is always long. The Lockheed Martin-developed F22 Raptor aircraft went to the drawing board in the Cold War era in the early 70s, but it formally entered the US air force in 2005. “Also, components for defence technology are not easy to come by. The DRDO cannot create everything on its own. It needs industrial back-up and our country lacks in that,” he says.

There is no clear accessible overview of the research DRDO does because there is no proper audit of it. A cloud called ‘Classified’ hangs over it. Prabhu Dandriyal, who worked in the DRDO from 1982 to 2003, is a whistleblower. After being forced into retirement when he started to expose corruption in the institution, he has been on a relentless mission. He says it has reached a stage where he is now called to assist the CBI and IB in corruption cases in DRDO labs because they don’t understand engineering concepts. He filed an RTI application asking how many technical papers DRDO scientists had published in international scientific journals between 1990 and 2010. He didn’t get it until the Chief Information Commissioner passed an order in his favour. “What is the surest way of showing that fundamental research is on? Publishing papers. The reply I finally got was ‘nil’. There had not been a single published paper. All these announcements they make, not one thing happens. All they do is talk,” he says.

Another criticism of the DRDO is that it expends time, money and focus on things that should not really be in its ambit. One journalist who went to a DRDO laboratory 15 years ago as a student was shown a banana that had been reduced to a tenth of its normal weight, the size reduced by 20 per cent. There are high altitude barfis for soldiers to partake of during festivals. There is a medicine for leucoderma. There are cockroach-killing tablets, instant idlis, betel leaf juice and chickenpav bhajis. A fungus found on a caterpillar has been cultured, which among other things is supposedly beneficial in the treatment of impotence. And so on goes the vast and bewildering list.

But, according to Ajay Lele, there is method to this madness. “The armed forces have set requirements. Until and unless the Government tells private industry ‘you provide us an alternative, this is the money, put it into R&D and give us the returns over a period of time’, the DRDO will have to make these things. Take the mosquito repellent. Anyone who is aware of conditions in the Northeast will tell you that the mosquitoes there are very different. Battle casualties are far lower than casualties from malaria. Good Knight [the repellent brand] is not going to develop such a mosquito repellent unless there’s some incentive for it,” he says.

The DRDO is now spinning these technologies commercially. Since 2008, it has a tie-up with Ficci to market products they think have demand. It goes by DRDO-FICCI Accelerated Technology Assessment and Commer- cialisation. Says Shyam Sunder, Deputy Director at Ficci’s Centre for Technology Commercialisation, “The DRDO has nominated more than 200 technologies to this programme. We shortlist them based on our assessment. We then contact Indian companies to introduce these technologies for manufacture or licensing. The response has been very good.”

Nearly everyone save the DRDO itself agrees that the institution has to be reinvented. A committee headed by P Rama Rao, former secretary, department of science and technology, made a number of recommendations. The main thrust of the recommendations was that the DRDO should focus on key areas like missiles, unmanned aerial vehicles, electronic warfare and so on. Its laboratories should be restructured and those not central to the new mandate must be hived off to civilian scientific bodies. The report is yet to be implemented because of opposition from the DRDO.

Another way to reinvent the DRDO, say some, is to make it like DARPA in the US, which does no research but instead mediates between the armed forces and the private sector. Unless the DRDO is remodelled, there will inevitably be situations in which the kit for the soldier in Siachen has to be imported while the DRDO works on a robotic mule.