Israeli firms set to get another defence deal

Central vigilance panel clears Rs10,400cr joint venture for missiles

NEW DELHI: In an unusual development, the Central Vigilance Commission has given the go-ahead for a massive joint venture with two Israeli defence firms that are under investigation for kickbacks in the Barak missile scandal.

The JV that involves Israel Aerospace Industries and Rafael teaming up with India’s Defence Research and Development Organisation and the Indian Air Force to build medium range surface-to-air missiles (MRSAMs) could be kickstarted very soon, sources said. The deal, worth Rs10,400 crore, would be India’s biggest defence JV with a foreign country.

The CVC clearance for the project — it has been on hold since June 2007 despite approval from the cabinet committee on security — has caused surprise in official circles. For, a few months ago, the law ministry had given a very ambivalent opinion on the JV when the ministry of defence (MoD) referred the matter to it.

Sources said the CVC clearance for the deal came in the last week of August and the “file is being processed”. The CVC approval is a clear departure from the government’s policy on defence scandals and middlemen. Over the past few decades, the government has blacklisted firms such as Bofors and Denel of South Africa when allegations rose of them paying middlemen, even before clear evidence was found of corruption. Official circles were, however, reticent on the latest development.

The CBI has claimed in its Barak chargesheet that it has found evidence of kickbacks in the original Barak deal of 1999-2000. That Rs1,150-crore deal for the purchase of seven Barak-1 anti-missile defence systems made by Israel Aerospace Industries and Rafael had been opposed by the DRDO. The CBI has named then defence minister George Fernandes, then navy chief Admiral Susheel Kumar, and arms dealer Suresh Nanda among others in the deal.

The investigations started after Fernandes’s Samata Party’s treasurer RK Jain was caught on camera speaking about kickbacks, in a sting operation carried out by Tehelka.  

The CVC clearance now reflects the unprecedented run Israel is having in the Indian defence market. Only a few days ago, the cabinet committee on security cleared the outright purchase of Spyder low-level quick reaction missiles from the same Israeli consortium of IAI and Rafael. The Israeli consortium already has a programme in collaboration with DRDO under way for developing a ship-borne next generation Barak (called Barak NG) for the Indian Navy.

However, the move to now firm up a JV with IAI-Rafael would have much more serious repercussions for the future, because of the virtual monopoly it would offer the Israelis in IAF’s MRSAM domain.

Sources said the proposed MRSAM JV would initially build two regiments, 36 numbers, for the IAF. Only the missile launcher and the command post would be made in India, the rest of the complex system including the missile itself would be made in Israel.

The proposed MRSAM will replace the old Pechora missiles of the IAF, and would have a range of about 70 km. DRDO will station at least 25 of its scientists in Israel for the project. The first prototype is planned in about two and a half years and the development would be completed in five years from its start.