The Rajiv Gandhi government banned middlemen and agents in Defence deals in 1987 but two years later, the same government diluted the ban so much so that today agents and middleman are all-pervasive leading to a ‘‘non-transparent’’ system in Defence purchases. One solution: given that agents are present all over the world, the need is to review the toothless “ban” and bring in an “open system of registering” the agents. This is one of the key conclusions of the Central Vigilance Commission’s 284-page report into Defence deals, yet to be made public although it was submitted four years ago by then CVC N Vittal. The NDA had commissioned it after an uproar over allegations of corruption in specific deals made by former Rajya Sabha MP Jayant Malhoutra and Rear Admiral S V Purohit. Now that the tables have been turned—the UPA has referred 38 NDA Defence deals to the CBI and will shortly register a case in the Denel affair—the NDA wants the CVC report tabled, a request that has been refused. Not without reason. CBI all set to file FIR in Denel case Speaking to The Indian Express from Chennai, Vittal, the lead author of the report, said: • It’s the prerogative of the government to do what it wants with the report but it should at least table the ‘‘gist on defence deals’’ in Parliament. • Every bit of involvement of middle-men has been substantiated thoroughly in the report. • The NDA move to register agents in November 2001 was a step in the right direction but even this has failed as middlemen did not register as their tax records and bank statements would have been under scrutiny. The CVC then blames it on the wording of the circular: ‘‘Practically everybody can escape through the loophole of the definition of weapon and weapon systems.The ban on agents in the purchase of weapon and weapon systems is a hollow restriction and an exercise in verbal cosmetics .In fact, many companies are known to make a lot of money in the spare parts supply than in the original equipment.’’ ‘‘The ban on agents in procurement of weapons and weapon systems as mentioned in 1989 circular is, in effect, no ban at all. While in the entire spectrum of defence purchases, agents exist; only in the area of weapons and weapon systems agents are banned. But there are adequate inputs to come to the conclusion that in spite of the ban, agents are active. Source information received by the CVC during the inquiries has been referred to the CBI. The present ban and the way it has operated leads to a non-transparent system in defence purchases.’’ Though the CVC did not find any explicit open reference to middlemen in the 302 arms deals files sent by Defence Ministry, the Vittal report says : ‘‘In most cases the presence of middlemen and middle-companies can be arrived at by making reasonable inferences looking to the circumstantial evidence.’’ The CVC report names certain middlemen on the basis of its inquiries with the CBI. These middle-men also feature on the ‘‘undesirable contact men’’ (UCM) list of the CBI. Quoting a senior retired defence official, the report says that arms agents ‘‘have been operating front firms and subsidiaries and accounts in private/ foreign banks.’’ However, Vittal in his report makes it clear that finding out about middlemen in arms deals is an ‘‘extremely time-consuming’’ exercise with investigative agencies not willing to part with information and points to the Bofors gun investigation to substantiate its argument.
