To ensure transparency, government will soon allow foreign defence firms to appoint agents but the companies will have to upfront mention the “reasonable” remuneration to be paid and won’t be allowed to dole out any bonus or success fees, Defence Minister Manohar Parrikar said.
Drawing a distinction between agents and middlemen, he said the government will not leave room for any “hanky-panky”.
“Agents do not mean middlemen. There will be scope for a company to appoint an agent to represent it or to get over technical difficulties by paying him or her reasonable fees which will have to be mentioned upfront,” Parrikar told PTI in an interview.
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He said that the new Defence Procurement Procedure, which is in final stages of completion, will clearly define the role of agents.
He agreed that there is already a provision for agents legally but said, “In short, agent word was there but without clearly defining what his role would be. It was not very well defined. That is being defined properly.”
The Defence Minister said that appointment of agents does not mean that defence firms are allowed to give commissions or something like that.
“Sometimes you cannot open office because the quantum of business does not justify an office. So how do you deal here? You can’t send a person from foreign country here all the time. So hence this is a provision but it does not allow any hanky-panky,” Parrikar said.
He said agents’ fees will have to be mentioned upfront and success fee, bonus or any such payments will not be allowed.
“Not even penalty for failure. Sometimes, you give upfront and then get it back through penalty if work is not done,” he said.
The government’s move will bring in much-needed transparency, even if limited, in the murky world of multi-billion dollars defence contracts where middlemen have had a field day, defence experts said.