IAI denies wrongdoing in MRSAM deal

The allegations of impropriety raised against the $1.4 billion Medium Range Surface-to-Air Missiles (MRSAM) contract with Israel Aerospace Industries (IAI) have elicited a response from both IAI as well as the Indian government.

IAI has come out with a guarded denial to these allegations by issuing a statement without naming any specific contract, customer or country.

The following is the statement issued by IAI.

‘Israel Aerospace Industries Ltd. (IAI) does not release general information regarding transactions with its customers, except for such information as is required to be reported by law.

Lately, various articles have appeared in the media regarding a large transaction for the sale of weapon systems to the country of a foreign customer, which have included information that is incorrect and biased, and which have originated, apparently, from entities that are trying to harm IAI’s business ties with this customer.

It was published, among other things, that notification regarding a large transaction for the sale of weapon systems to a foreign customer was delayed until receipt of the advance payment for such transaction, and this on the claim that representatives of that country’s government requested that the notification be delayed.

IAI’s management wishes to make it clear that these claims and articles have no basis in reality and, in any event, have not emanated from IAI.’

Israeli business news daily Globes had reported that ‘IAI stated that it delayed announcing the contract until now because the customer (i.e., the Indian government) informed the company that early disclosure was liable to cause material difficulties in execution of the contract, and even result in its cancellation’.

The spokesman for the Congress Party (the lead member of the ruling United Progressive Alliance) Abhishek Manu Singhvi has denied any wrongdoing on the part of the government to Hindi news agency UNI Varta. “These are wild and baseless allegations, not even credible charges, and do not deserve any response. So far as involvement of six per cent charges is concerned, these are legally permissible charges meant for bank guarantees, transportation and warranty charges. The six per cent is not commission, as they are alleging,” he is reported to have said.

The news agency PTI had also earlier reported similar denials by the Congress, saying the party ‘rubbished the Communist Party of India – Marxist’s (CPI-M) demand for a CBI probe into alleged kickbacks’.

“The demand for a CBI or any other inquiry is preposterous, unsound and baseless. All such deals are made as per the laid down procedure with transparency,” All Indian Congress Committee (AICC) media department chief M Veerappa Moily was reported to have said.

Readers may recall criticism of the deal has centered on the charging of six per cent of the project value as ‘business charges’ by IAI, with some reports alleging the head to be a cover for commissions paid to middlemen. There was also criticism following reports mentioned above of the alleged secrecy about the contract imposed by the Indian government and the reportedly ‘hurried’ conclusion of the deal just before the announcement of the schedule of the general elections. Allegations have also been raised that this deal has come at the cost of India’s indigenous Akash missile program.

IAI is still under investigation with regard to the Barak missile deal where it has been charged with the alleged payment of bribes in a contract signed in 2000.

The total project is reported to be valued at around $ 2 billion with the Indian partner DRDO getting an around $ 600 million share in the project.