13 May 2005


From Jal Khambata

NEW DELHI: The Government was reluctant to release the Phukan Commission report on the Tehelka Tapes because it unearths the skeletons of Prime Minister Manmohan Singh and Agriculture Minister Sharad Pawar in a massive Sukhoi aircraft purchase scandal.

The Sukhoi procurement was one of the 15 deals, 14 of them involving defence ministry and one of Kandla-Bhatinda pipeline, that were probed by the Phukan Commission.

Just on the eve of the Lok Sabha elections in May-June 1996, the then Narasimha Rao Government had transferred into a New York bank a huge amount of US $142.268 million (about Rs 580 crores) for the aircraft without any contract or cabinet approval for the purchase.

Dr Manmohan Singh was then the Finance Minister and Sharad Pawar was then the Defence Minister. The Deve Gowda government subsequently came to power and it was during the tenure of Samajwadi Party supremo and Uttar Pradesh Chief Minister Mulayam Singh Yadav as the defence minister that the deal was finally signed in November 1996 during his trip to Moscow.

The Prime Minister, who prides in the image of "Mr Clean", had then sought to cover up the scandal of advancing the money without any deal by making the advance secured from the Russian Government to save own skin as it was he as the Finance Minister who gave the money irregularity and he was also party to the Cabinet decision to give away the money as an advance.

Suppression of this embarrassment may be one of the reasons why the Government had slept over the report for 16 months while the Commissions of Inquiry Act makes it compulsory to lay down the report in Parliament within six months of submission.

Justice Phukan had submitted the report to then Prime Minister Atal Bihari Vajpayee in February but the same could not be released because of the Lok Sabha elections in process. The Government had yet another reason not to release the report since it gave a clean chit to former Defence Minister George Fernandes, debunking the charges the Congress and allies had been levelling against him past three years.

The Government has even referred this purchase scandal to the CBI for the probe. The agency has, however, made it easy for the Government to wriggle out as it has returned all the cases, asking what specific charges the Government wants to be probed.

The Sukhoi deal may be dropped but sources in the Congress say the experts are examining if its probe by CBI can fix Mulayam who actually entered the highest ever defence deal in buying SU-30K aircraft from Russia and his Samajwadi Party then started rolling in big money.

Here are the findings of the Phukan Commission on the contract signed by Mulayam on November 30, 1996 for the Sukhoi 30 MKI Aircraft. The Commission has noted the whole deal full of irregularities from day one when the Congress was in power and recommended "an in-house inquiry to find out the persons responsible for the lapses as indicated above and to take appropriate action against those officers."

The Phukan report says: "A huge amount of US $ 142.268 million was paid as advance on 4.4.96 with the approval of Cabinet but without there being any contract and even before the Cabinet approved the acquisition of Sukhoi Aircarfts. The said amount was paid through a bank in New York as per request of the Russian side."

The report also shows how Dr Manmohan Singh had tried to whitewash the scandal as it says: "...the said advance was secured by obtaining a guarantee from Russian Government as suggested by the MOF (Ministry of Finance) with the approval of the then Finance Minister." That Finance Minister was none else but Dr Manmohan Singh.

The deal smacks of gross irregularities at every step and violation of the Defence Procurement Procedure (DPP) laid down in 1992. Here are some of the strictures in the Phukan report:

-- There was no proper identification of sources of procurement, shortlisting and paper evaluation as required under DPP 1992.

-- Non-involvement of representatives of DRDO (Defence Research and Development Organisation) in the trial evaluation in Russia in violation of DPP 1992.

-- Further, the aircraft, i.e. SU-30K which was trial evaluated in June 1994 (during Congress regime) was only air defence/air superiority fighter and not MRCA. However, after modification the said aircraft was supposed to be MRCA.

-- Formulation of SEPS (service equipment policy statement) in consultation with DRDO and other agencies has not been complied with.

-- Clause 6.1 of DPP 1992 has been violated in not formulating the ASR (Air Staff Requirement).

-- Clause17.1 and related provisions of DPP 1992 regarding holding of PNC (Price Negotiating Committee) were grossly violated.

-- Though the PNC proceedings are the most important documents, they were not available in the government records and therefore the Commission records its findings that the PNC deliberations were not held. (This may go against Mulayam since he signed the contract finally.)

The Russians, in fact, could not keep the deadlines agreed upon in the contract dated 30 November 1996. The Commission, however, absolves this fault, stating that it has been satisfactorily explained and proper post-contract review has been conducted.

The Sukhoi contract was further concluded on December 28, 2000 during the tenure of George Fernandes and the Commission says there were "no illegality and/or irregularity" and "there is no evidence indicating or suggesting anything against George Fernandes relating to the transaction 'Sukhoi' as Defence Minister.

The Commission was not only satisfied that proper post-contract review had been done as required under DPP 1992 but that "the imperatives of national security have been furthered in acquiring the Sukhoi Aircraft."

In his report, Justice Phukan has also commented on the "imperatives of the national security" and stated the two touchstones on which these were being tested. These were:

-- Whether the defence equipment in question was procured out of an operational requirement. In other words, whether the said defence equipment was required by the user in view of operational necessity, and

-- Whether the said defence equipment was the best equipment available to India irrespective of whether the prescribed procedures were followed or not.

Justice Phukan has also clearly noted that the question of involvement of any middleman in any of the transactions has not been dealt with in his first report as it "will be dealt with in the subsequent report after giving due hearing to all the Section 8B noticees in accordance with the principle of natural justice.

There were 37 noticees, including former Samta Party chief Jaya Jaitly, Tehelka editor Tarun Tejpal and his colleagues Anirudhaa Bahal and Mathew Samuel and his financer Shankar Sharma and his firm First Global Stockbroking Pvt Ltd.