In a notable development, the Indian Ministry of Defence (MoD) has reportedly decided to lift the ban on dealings with Italian defence major Leonardo SpA (formerly Finmeccanica) after the company’s representation in the matter was reviewed by a high-level committee.

The MoD decision to resume business with Leonardo SpA is “subject to certain conditions imposed on the company”, Indian newspaper Times of India quoted top government sources in a report on Sunday, 7 Nov. As per these ‘conditions’, Leonardo cannot make any commercial claims or file any suit against the Indian government for any previous deal. The ongoing investigations into the alleged VVIP helicopter scam by Central Bureau of Investigation (CBI) and Enforcement Directorate will also continue “without any prejudice”, as per sources quoted in the media. The decision though is yet to be formally announced by MoD as of Nov 12, 2021.

The ban was imposed in Aug 2014 after allegations of corruption surfaced in the procurement of 12 VVIP helicopters from AgustaWestland, a subsidiary of Finmeccanica (rebranded as Leonardo SpA in 2016). Eight AW101 helicopters customised for VVIP transport and four in freighter role (total 12) were to be procured under a INR 3546 Crore deal with AgustaWestland. Delivery of three helicopters (2 VVIP + 1 freighter) and training of first set of crew had been completed when allegations of kickbacks paid to politicians, middlemen and air force officials quickly erupted into a scam. The inevitable political slugfest and name calling soon followed.

Then defence minister AK Antony, under the UPA government at centre, promptly ordered a CBI enquiry and banned all dealings, not only with AgustaWestland but also with parent conglomerate Finmeccanica. Three AW101 airframes that had reached India have been gathering dust in a corner of IAF’s Palam air base since 2014, no good to man or beast, with lapsed certification and suspect airworthiness. A leading defence journalist told this author in jest, “China would have reverse-engineered the chopper and sold it back to Italians at half price by now”.

When it comes to bans, Indian MoD has a predilection for ‘carpet bombing’ where a ‘surgical strike’ would have been more apt. One of the early casualties of AgustaWestland ban was Indian Navy’s procurement case (from a Finmeccanica subsidiary) for 98 Black Shark torpedoes for six French-origin Scorpene class submarines under construction at Mazgaon Docks Ltd. The case for these heavyweight underwater projectiles was ‘torpedoed’ in 2016 at an advanced stage. A replacement is yet to be found in 2021 even as the fourth boat (designated INS Vela) was delivered recently.

More collateral damage followed. NFH-90 helicopter offered by AgustaWestland for navy’s 16 multirole helicopter program (16MRH) was axed from the race, leaving Sikorsky’s S70B as the sole contender. Subsequently, cost negotiations with Sikorsky fell through, bringing curtains down on a case almost ten years in the making. It is remarkable how the the Indian Navy made a comeback. Their first tranche of MH-60 ‘Romeo’ helicopters is expected to arrive in India next year through a G-to-G Foreign Military Sales deal for 24 helicopters inked with US Navy and Lockheed Martin.

Leonardo and its subsidiaries produce a wide array of military equipment including naval guns, missiles, torpedoes, radars, electronic warfare systems, etc. As per reports, the blanket ban was limiting selection choices in other domains. While a fresh start with Leonardo SpA may be on the cards, any dealings between Indian MoD and the Italian group for helicopters seems unlikely due to adverse publicity the case has drawn in the risk-averse corridors of MoD. The ban period saw many ongoing helicopter programs such as Medium Lift Helicopter (MLH), Indian Multirole Helicopter (IMRH), Naval Utility Helicopter (NUH), Deck-based Multirole Helicopter (DBMRH), Light Utility Helicopter, Reconnaissance and Observation Helicopter (ROH), etc exclude Leonardo SpA.

While agencies engaging in corruption or kickbacks need to face the full force of law, a deeper inquiry is needed into what promotes corrupt practices despite several levels of oversight and weighty rule books. Bureaucratic red tape, archaic decision-making processes, abrupt turnarounds, lack of transparency, indeterminate SQRs framed through unlimited RFIs, NCNC trials — all of this provides a fertile soil where ‘defence experts’, agents and middlemen germinate. Political parties sense opportunity in every whiff of a scam, wielding it as a stick to beat the government. This breeds a risk-averse rather than pragmatic outlook among bureaucrats and ministers who in the absence of domain knowledge are anyway loath to dispense decision. 

It took a defence minister of Manohar Parrikar’s fortitude to move a case for revamping the blacklisting policy in a way that punishes the culprit and not the victim. As per a PTI report, Parrikar’s policy sought to address the problem through ‘a mixture of heavy fines, graded blacklisting and other penalties’ while also allowing companies ‘to appoint ‘agents’ to market their products to the armed forces and the government but with strict oversight which includes opening up of company’s books to scrutiny besides not allowing any success bonus or penalty fees among other measures’.

The case was sent up to Attorney General’s office for legal vetting in 2016 before the trail went cold. 

In the end, it is the service which has to foot the bill for blanket bans and decision paralysis. The scam around Swedish 155-mm Bofors howitzer, which practically won us the artillery war in Kargil (1999), stalled the army’s artillery acquisition plans for over two decades. Today, even after three decades, the name Bofors conjures up images of corruption. ‘Shoot and scoot’ scam mongers beat into submission one of the best ‘shoot and scoot’ self-propelled artillery guns army ever laid its hands on. 

Indian MoD’s latest turnaround on Leonardo should ignite fresh debate into merits and demerits of imposing knee-jerk blanket bans with no timeline, exemption or conditions. Hypothetically, tomorrow, if a scam erupts in Airbus, will we ban EADS? Or, say, if a corruption case surfaces in SLRDC, Secunderabad, will we ban HAL as a whole? What does revoking the ban, seven years later, on a foreign defence conglomerate (Leonardo) for alleged wrongdoings by one of its subsidiaries (AgustaWestland) tell us? What changed or forced the government’s hand? Was it political expediency or policy overreach that enforced the ban in the first place? All these questions must be raised, debated and settled. As of Jun 2021, nineteen firms & contractors are on the ‘blacklisted / banned’ list of MoD, with period extending from one to ten years. Leonardo SpA ban is valid till Nov 2021. An interesting winter session of Parliament lies ahead.

Meanwhile, IAF has been quietly filling the VVIP helicopter gap by modifying few of its existing Russian Mi-17 V5 medium lift helicopters with air conditioning, VIP seats, customised communication equipment, etc. If this jugaad works for us, then why a case for VVIP helicopter? If not, why are we okay with a sub-optimal interim solution? The ban on Swiss firm Pilatus suddenly left the IAF grappling with a huge challenge of maintaining a fleet of 75 Pilatus PC7 Mk1 trainers with severed op-logistics umbilicals. It is learnt that the fleet is now surviving on some ‘exemptions’, renewed yearly. Cutting off the nose to spite the face needs no better example.

Till a critical mass of indigenisation is reached, this system of blanket bans and ‘cancel culture’ will hurt more than it will solve. Banish the corrupt or ban the product — the choice is ours. In a system prone to corruption allegations and opacity, throwing the baby out with the bathwater has repeatedly affected procurement decisions and, in turn, stunted force preparedness. Cancel culture should not become the norm going forward.

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©KP Sanjeev Kumar, 2021. All rights reserved. I can be reached at realkaypius@gmail.com or on Twitter @realkaypius. Views are personal.