The recent Panama Papers leak have not spared a single sector. Politicians, artists, bureaucrats, industrialist, and now the military have been cornered in the expose. Although not all military deals are meant to be declassified, the leaks point to several transactions that the Indian military carried out with an Italian major by the name of Elettronica SpA.
The Mossack Fonseca files run into hundreds of pages that shows detailed alleged commissions that had taken since 1996, for warfare instruments in the Indian Air Force and Indian Navy through two offshore entities.
The agreements date back to 2000, when 5-17% commission was paid by the supplier firm to the two foreign companies. One of these was owned by an Indian national and the other was located in the British Virgin Islands, a tax haven.
What seems like a shady business in the Mossack Fonseca files is that the two foreign entities were registered in the Bahamas in 1993, and in Ireland (1997), but are listed in the records as Panamanian companies. As is the norm with the Panama Papers, Panamanian nationals act as directors of these two companies to dodge any suspicion.
One of the companies, IPCL worked as an “agent for manufacturing and services” and, over the years, signed ambiguous agreements on agency/marketing for defence/infrastructure supplies. IPCL, one of the companies, entered into an agreement with Elettronica SpA with commissions for India supplies going at 17% of the contract price. One communication from Elettronica SpA to Intertrade Projects mentions an earlier contract dated 1996 and extends the contract till 2001.
There is another communication, dated January 14, 2002, from IPCL to Elettronica SpA, informing that they “intend to sign” an agreement with US-based Thunderbird Industries. This is followed by agreements among the three parties — the agreement with Thunderbird was signed by its proprietor, Nanak Kohli.
Nanak Kohli, was known as the ‘‘Rolls Royce Sikh of Washington’’. The founder of the multinational company was into everything, right from telecom to trading, and his group was worth over $200 million a decade back. He became quite the millionaire, and now we now exactly how…
The Defence Ministry contacted Elettronica SpA directly and charged the company a penalty for late delivery in a particular contract. The penalty was levied at the rate of 1% for every seven months of delay. The December 8, 1998 communication was sent from the Directorate of Procurement. The company has decades-long links with the defence ministry. The Elettronica SpA has stated that they had no direct contracts with the Indian government since a decade.
Although the other military business acquisition is reported by media, these acquisitions were kept under the wraps for obvious reasons. They were procuring electronic intelligence systems, radar warning receiver and missile approach warning system for upgradation of Mi-17 helicopters, electronic support measures for Naval Cougar helicopters, self protection jammer for the IAF’s Sukhoi-30MKI.
The 2001-2002 period was a tumultuous one for then defense minister George Fernandes of the BJP. The Mossack Fonseca files only digs up more dirt about the shady deals that had happened during his tenure.
Also, one uneasy thing remains: the Italian connection that point towards Sonia Gandhi. May be the Italian connection is just coincidental, but it definitely intrigues us. The Italians pay the most commission for omission of essential details.
May be legalising commissions for huge acquisitions will bring in some transparency and the ministry need not skirt these shady deals.