You are footing arms deal bribes

Is the taxpayer paying for all the bribes and excess costs being billed to the country in its hush-hush arms deals?

Paying commissions to agents and middlemen is illegal in India, and Rajiv Gandhi paid a high political price for it in the Bofors deal. The Rs10,000 crore medium-range surface-to-air missiles contract with Israel Aerospace Industries (IAI), which includes payment of Rs600 crore (6% of the deal value) as “business charges”, allegedly for banking, insurance, and transport, is unlikely to have been an exception, given the large number of Israeli arms agents swarming in Delhi. The contract, which is for the Indian Air Force, was signed towards the end of February, and first payments were reportedly made within days of its signing.

A controversial Israeli arms agent has been playing a crucial role in swinging several defence deals in India. David Kolitz, his partner Israel Yaniv, and their Elul Group are key to many arms deals in India, according to several sources here and abroad with whom DNA interacted. They work as agents for Israeli firms and operate in India through a prominent Indian arms dealer who is related to a Union minister.  

That Elul takes commissions on its India deals is no secret. That the costs are loaded on to the Indian taxpayer are less known. In an article as far back as September 2001, Israel’s Ha’aretz newspaper quoted Elul Group vice-president Joseph Ravkaie as confirming that the “company has had a commercial agreement with Rafael for five or six years”. He did not give details about the level of commissions paid in deals beyond saying that it was “not 5%”.

(Rafael will be designing the missiles for the MRSAM system and is expected to get about 25% of IAI’s Rs10,000 crore contract value.)

Yaniv told the paper that Elul played a great role in Rafael’s sales growth in India. He said: “When we started to work, the India market was virgin territory for Rafael. When I started to deal with India, Rafael had zero sales there. Nowadays Rafael is selling there very well. On top of which their connection with us doesn’t cost them money. When there is a deal, the client pays for it and that includes our commission, too.”

The client, obviously, is the Indian government, which does all defence deals. And the taxpayer is paying the commission! The surprising thing is this: when Elul is so open about its commissions in Indian deals, how is the government turning a blind eye to this blatant breach of our law banning commissions? India continues to do big business with both IAI and Rafael, both of which have Elul as agent, according to DNA’s investigation.

Yaniv was an employee of Rafael until 1995 when he moved out and joined Kolitz to start Elul Asia. It was around the same time that India established formal diplomatic ties with Israel and kick-started aggressive arms procurement from that country. Yaniv holds 20% in Elul Asia through Yisraniv Asia Investments, while Kolitz holds his stake in Elul Asia through Elul Technologies.

Sources among private players in the Indian defence sector told DNA that they were aware of the power of Kolitz in swinging defence deals. In fact, one of them said Kolitz may have had a significant role in firming up a strong partnership between an Indian industrial house and a leading Israeli defence firm.

According to DNA’s investigation, the Israelis have engaged Sudhir Choudhary in recent times to handle local political, bureaucratic, and military contacts. Choudhary is related to a prominent Union minister.

Choudhary replaced Suresh Nanda, Israel’s earlier arms dealer, against whom the Central Bureau of Investigation (CBI) has instituted a case. Nanda, son of a former navy chief SM Nanda, is under scrutiny for handling the purchase of Barak missiles from IAI and Rafael in 2000.

Choudhary, too, is under investigation for another Israel deal. The CBI believes he received kickbacks from Israeli firm Soltam in the contract to upgrading India’s 130mm field guns to the standard 155mm calibre.

DNA’s inquiries with sources in the intelligence set-up revealed that there never has been any effort to end the operations of Kolitz and his men in India.