India confiscates Israeli defense firm’s $70m guarantee, clouding relations

The Israeli government spared no effort to save the day. However, even after Prime Minister Netanyahu’s security adviser Yaacov Amidror visited New Delhi to intercede with top security and government officials, India decided, for the first time in its history, to penalize a foreign defense vendor, Israel’s Military Industries (IMI), for alleged breach of contract.

To the dismay of officials in Jerusalem, the IMI was singled out for the penalty with loud publicity from among five defense vendors – three foreign and two Indian – recommended for blacklisting in March for alleged involvement in a graft case. Its $70 million guarantee was accordingly confiscated.

In Jerusalem, it is strongly suspected that India is deliberately cooling its defense relations with Israel to fit in with its new alignment with Tehran and Moscow. All three refuse to join US and European sanctions against Iran.
The IMI signed a contract with the Indian OFB-Ordinance Factory Board to build ordnance factories at Nalanda in Bihar for manufacturing bi-modular charges for the Indian Army’s 155mm howitzers. The $260 million contract contained an “integrity pact” covering a commitment to abstain from “malpractice.”

Delhi says the IMI forfeited its guarantee because it was allegedly involved in the offer of a bribe to former OFB director general Sudipto Ghosh in 2010.
IMI sources pointed out that an Indian court had ruled the encashment of the guarantee improper. The firm operated within the law and intends to appeal the decision and the handling of the case before the competent authorities. The decision, they say, was based on disputed facts and ignored the documents and information refuting the charges which were presented to the Indian Defense Ministry.
debkafile’s military sources add that Israel’s defense leaders made every effort, including an appeal by Yaacov Amidror to Indian defense minister A.K. Antony, to get its military industries removed from the blacklist banning its operations in India for 10 years, and reinstated.
It was all in vain. New Delhi’s decision to confiscate the $70 million guarantee was taken and published Tuesday without letting Jerusalem know it was coming.
The next day, Antony visited the OFB ordnance factory and approved a special operating budget for getting production at Nalanda up and running without outside help.

On March 12, the Indian Chief of Staff Gen. V.K. Singh sent a letter to the prime minister in Delhi complaining that the army’s tank fleet is short of guns and ammunition for fighting off a potential enemy (Pakistani) tank assault; 97 percent of its air defense systems are inoperative; and its special forces have neither the right arms for their operations nor ammo. The situation in the Indian infantry, engineering and signals corps is no better.
The letter, say our military sources was fired off as a shot in the feud among India’s top generals, security chiefs and politicians. In the free-for-all, they all accuse each other of corruption and graft related to military procurement. Gen. Singh said he too was offered a $2.8 billion bribe in 2010.
All Israel’s efforts to keep its defense transactions with New Delhi clear of its domestic infighting were fruitless. 

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