IAI statement muddies waters in Rs10,000 crore missile deal
30 Mar 2009
New Delhi: With a Rs10,000 crore deal for the development and supply of medium range surface-to-air missiles (MR-SAM), with Israeli armaments firm Israel Aerospace Industries Ltd. (IAI) beginning to raise a stink that unnecessarily high amounts of ''business charges'' may have been paid to the contracting firm, the Israeli giant may have muddied waters further with claims that it did not announce the deal publicly once it was signed on instructions of the ''customer.'' In plain language this would translate as the ministry of defence (MoD), New Delhi.
With the sensitive defence deal, strategically critical for the nation's antiquated air defence as well as its budding missile defence programme, threatening to run aground in an election year, with political parties only too anxious to milk the issue for political gains, it is now imperative that the MoD issue clarifications.
According to IAI, it signed a $1.4 billion contract with India for air defence systems on 27 February this year. The deal involves the development and manufacture of sea-borne and shore-based systems designed to handle missile attack. According to IAI, part of the payment for the systems will be made during the development period, and the balance would be paid during the 66-month delivery period, which is slated to begin 90 months from the date the advance payment is received.
IAI has agreed to the deal falling under the purview of the military industrial offsets programme and will engage companies in India up to an amount equal to 30% of the contract for services and supplies.
So far, so good.
Now here comes the intriguing part. IAI, according to Israeli business news daily Globes, also said that the reason it had not disclosed the deal so far was because the ''customer'' informed the company that early disclosure was liable to cause material difficulties in execution of the contract, and even result in its cancellation.
IAI also said that it felt that this risk would be substantially reduced once the advance payment was received. But once it learned that the deal was already revealed in Indian newspapers it felt it had come out into the open even though advance payments were yet to be received.
This, as we have mentioned earlier, is where waters become muddied and clarifications are required. Indeed, they need to be forthcoming at the earliest. The time for various party spokesmen to let off steam is past. Before a strategically critical deal falls victim to usual political shenanigans in an election year it is important that the MoD step forward with a statement that addresses questions squarely and seeks to nip an unseemly controversy in the bud.
