Friday, March 25, 2016

(The Rot N Sloth in the MoD ?)The Great Whitewash By the Ministry of Defence – By Lt Gen PC Katoch (Retd)

NEW DELHI: During a press conference on March 4, Defence Minister Manohar Parrikar made a startling announcement, revealing he had discovered India was paying the US Department of Defence (DoD) for new weaponry, even though US$ 3 billion which had been earlier paid by MoD was piled up and lying forgotten in a Washington account. Despite Parrikar stating this at a press briefing, the issue curiously didn’t find mention in national dailies. MoD had reportedly put the said money in a Pentagon account for weaponry that was to be bought under the Foreign Military Sales (FMS) agreement. This is the shortest way of procuring weaponry from the US under which the DoD procures equipment on behalf of the foreign government from US vendors. The US opened up FMS sales to India in the immediate aftermath of the 9/11 terrorist attacks.
It is unclear when the money was paid by MoD but if it was piling up in Washington, it obviously was paid over a period of years. US$ 3 billion is not a small amount considering that in rupees today it amounts to some Rs 20,100 crores. How could it be “forgotten” if FMS procurements are supposed to be in quick time? Isn’t it intriguing that such a large amount lying unspent and earning interest money for the US was not once pointed out by the Comptroller and Auditor General (CAG)? Of course if the CAG is a former Defence Secretary who himself was party to such stashing away of defence money in his former avatar, he obviously would remain mum.
It certainly raises a stink that needs to be thoroughly investigated by the CBI. What military modernization could have been done with US$ 3 billion can be gauged from the fact that INS Vikrant, India’s indigenously built aircraft carrier launched in August 2013 was at a cost of US$ 7.7 billion. Parrikar referred to the lapse as “because of ill-management or lack of attention to this account”. Did this comment indicate a lid was to be put on the issue in the exuberance of this new find of forgotten billions? 
With reference to the above, the Press Information Bureau (PIB) has now come out with a statement which says MoD has fine-tuned FMS procedure with the US Government where all the bills have been pooled together in a corpus; so for contractual obligations the said amount is being withdrawn from the corpus - payment is being effected from the corpus of 2.3 billion US Dollars. The PIB release adds, “This has happened through scrupulous and holistic financial management. Consequently, while US government will continue to meet their contractual obligations, there will be no additional burden on Government of India on this account”. 
But under what regulations does MoD have the mandate of creating a corpus abroad to the tune of billions of dollars, especially when Parrikar clarified on March 4 that this $3 billion stash was not earning any interest for India. If , as the Defence Minister refers in an open forum, the lapse was “because of ill-management or lack of attention to this account”, without doubt it is ill-management because such an amount can’t simply be forgotten”.
On the contrary this was most likely a willful act. It does seem that billions of dollars accumulated like this over years with the CAG not pointing out the lapse could have ulterior motives? What if it was “forgotten” for a few more years? The question also arises whether there are more such stashes abroad, a possibility which exists with CAGs failing to point this out even once.
The question begging an answer is how come within a fortnight of the Defence Minister’s remarks about “ill-management”, the government is patting the bureaucracy of MoD on the back for “scrupulous and holistic financial management”? What an incredible whitewash by the MoD? What next? Awards for this stupendous feat, perhaps a cash award or allowance for Scrupulous and Holistic Financial Management? After all if the 7th Central Pay Commission recommends Rs 45,000 per month for a civil servant just to be posted at Shillong, scrupulous and holistic financial management of this type deserves many times more that paltry sum.
What the MoD has tied up with US about the corpus (PIB release) obviously is post discovery of the lapse by the Defence Minister. So, if the guilty instead of being punished are being given a pat on the back it simply leads to just one conclusion – the current dispensation like all previous ones is incapable of undertaking vital administrative reforms because of the vice like grip of the bureaucracy and the rampant corruption in the defence and governmental defence-industrial complex.
That is why the MoD simply blocks out the military’s recommendations to the 7th CPC. That is why successive CPCs have degraded the military to the best of their abilities, with the 7th CPC taking the cake. That is why 28 anomalies of the 6th CPC pointed out by the military have not even been addressed. That is why while violent quota protest causing crores of rupees loss to public and private properties evokes a response from the Govt in that the issue will be taken up in the next Parliament session, military veterans peacefully protesting at Jantar Mantar are baton charged by the police and the Defence Minister refers to the protesters as holding a gun to the head of the Govt.
A survey in The Hindu had reported, “...while the Army continued to be the most trusted institution. The civil service was perceived as the most corrupt, more so than local, State and Central governments“. The political leadership allowing the bureaucracy to weaken the morale of the military will cost the nation dear in terms of national security, as the military is called out by the state and central governments as their instrument of last resort, to pull the chestnuts out of fires frequently caused by a combination of political chicanery and bureaucratic incompetence-cum-corruption.

The civil-military divide has become the widest under the present dispensation, quite visible on national TV channels, which is making our adversaries exceedingly happy.
Rather than taking refuge behind the Make-in-India allure, the Defence Minister needs to muster courage and address the much needed reorganization of the higher defence set up including the MoD bringing in military professionals. It is disheartening to note that the Defence Budget 2016-2017 is the lowest since 1962. 

But getting back to the $3 billion stash, the Defence Minister should have pushed for institutionalizing the recommendation of Parliament’s Standing Committee on Defence recommendation of April 2015 . This is for a “non-lapsable and roll-on allocation” fund for 5-10 years for defence equipment, administered by experts with strict controls on timelines to reduce bureaucratic hurdles and be more attuned to practical realities. 

(The author is veteran, Special Forces of Indian Army.)

(Source- Via e-mail from A Sunder Rajan, Vet / The Citizen, online daily)


  1. Great post!

    Useful information worthy of thanks ,

  2. 3 billion USD,almost forgotten..SHOCKING .Bureaucrats and Gens should be accountable .

    1. True, the Generals too are accountable along with the bureaucrats and not to talk of the politicians and the silent media on the subject. This will be another biggest scam of the century. The heads must roll out.

  3. The Defence Budget allocation is the cash cow that feeds the IAS bureaucrats and the politicians under the guise of secrecy, that's why the active military is kept away from decision making even for their own career progression. This secret stashing of $3 billion for FMA with the US Department of Defence (DoD) is an ice berg in the vast past and present economy of the nation, and we know not how much of FMA lies with the other friendly nations. The diluted OROP and the down grading 7CPC alms are given to the veterans/family pensioners and the servicemen with crocodile tears for their short but dedicated service to the nation. The man in the PM's chair is clueless as to the happenings. For example, take the rural electrification, on a map of India, he is shown by his bureaucrats that all the electrification work is done on a colourful map and he believes them whole heartedly and comes out on radio talk to claim that he fulfilled the promise he made. The RM, time and again claims the OROP for the ExServiceMen is fully given, has the PM checked with the affected parties if it is true? No is the big answer. If he is a man of his words, he should attend an ExServiceMen mela and meet the veterans to assert the truth. Has he got the guts. Just to quote an anomaly or two; the MNS officers up to the rank of Majors got OROP in the PCDA [P] Circular 500 during the UPA regime, but not in the recent Circular 555, secondly, the Majors, Lt Col and the Colonel's pensions are determined notionally with no logic or rhyme based on non existent pensions in those ranks in the year 2013. This gives raise to the doubts on the notional fixation of the pensions for the PBOR and the JCOs too which are far below their dues. While splurging and parking such a immense sum to a tune of $3 billions on foreign soiling forgetting it in secrecy, the GOI is hampering the security of the nation wilfully, so is the case with the rest of the nation. It is time to correct the system. In India the system is not corrupt, the corruption is the system and the instruments of this system are the highly self-paid few thousand IAS/IPS lot and the short lived 5 year ego of the politicians. Lastly, the CAG is a toothless tiger which is a wasteful organisation.

  4. There may be many more such cases.

  5. Dear sirs,

    one of the worst incidents of money being into dustbin, it shows their poor accounting procedure, tax payers money is at suspense acct in USA, very shameful