The Panama Papers leaked by a root source, apparently for altruistic reasons, has tarred a lot of public figures, including the baritone-voiced Amitabh Bachan, who had set himself up in recent years as spokesman for Gujrat Tourism garbed in the toga of national pride (and is now reduced to explaining, as if this has an iota of credence, that his name was perhaps misused by Panama-registered shipping companies, etc. since 1993! and, contrarily, that it revealed no illegality!).
The more interesting sidebar story (http://indianexpress.com/article/india/india-news-india/panama-papers-mossack-fonseca-files-iaf-navy-italian-firms/) related to the system of payoffs to the Indian military, in the Panamanian case, to officers in the IAF and Indian Navy, by the Italian firm, Elettronica SpA, peddling elint (electronic intelligence) equipment, radar warning receivers, laser warning receivers/missile warning systems, electronic support systems (for helos), and self-protection jammers. The commissions range mostly in double figures from 13% to 17% of the deal amount for basically spares supply and servicing contracts. Thus, a top-end 17% commission for just one 1996 deal totaled 112,399 Euros or approx Rs 85.5 lakhs (at today’s conversion rate) for distribution by the Indian agent to corrupt Indian militarymen. Any delays in delivery that draw penalties result in the penalty sums being deducted from the commissions disbursed. And if the supplier is ever caught in this nefarious payoffs scheme, it invariably responds by brazening it out with statements, to wit by Elettronica SpA, that it “rejects any wrong or illegal practice and can adhere to facts…”, etc.!
Indian arms agents operate on retainer plus basis and Elettronica SpA is a relatively small firm. There are as many as 300-odd foreign arms companies active in the New Delhi circles, the majors with more than a single company representative presence to further their interests. The bulk of these up-front commissions, according to informed persons, are for disbursal to officers in the procurement loops in the three armed services and to officials in MOD, with the registered or unregistered agents being paid off through separate channels.
While rules require arms agents to register with GOI, these are often flouted, so there’s only minimal accountability. Moreover, because the payoffs process is necessarily secretive, just about every minor and major arms vendor has Panamanian-kind of offshore instruments to channel payoffs that are impossibly difficult to trace and their activities just as difficult to track, and well nigh impossible to bring to book. It is a system tailor-made for uniformed and civilian staffers in the procurement process to help themselves with payment — their choice — in cash or kind. So the Panama Papers have uncovered only a small part of the corruption system — the proverbial tip of the iceberg.
This is precisely why I have been maintaining over the years that the armed services which do not admit to the taint of corruption, are about as soiled as the politicians and bureaucrats. Just visit the residences services chiefs build for themselves to get an idea. I know only of one retired service chief who survives on his pension income — Vishnu Bhagwat. He lives frugally in a two room apartment in Colaba. Recall, he was the naval chief dismissed by the socialist defence minister, George Fernandes, in Vajpayee’s govt in 1996, and who followed in the footsteps of ADM Ronnie Periera. The day after his retirement, Periera took to a bicycle coz’ he admitted he couldn’t afford a car. He finally upgraded his conveyance, I am told, to a scooter.
Corruption — the fundamental weakness and historic failing of South Asian societies is the principal cause of internal insecurity and why countries of the subcontinent will always remain vulnerable. It is also one of the main reasons why India will never become a great power, because there’ll always be people within the policy establishment and in the system who’ll do a foreign country’s or an adversary’s bidding for a price.