Back in the 1960s, a million dollars was a lot of money. Not surprisingly, Willie Wyler’s film on the heist of a statute from a Paris museum was called How to Steal a Million . Those days scams were measured in sums of a million dollars or thereabouts. But it is a reflection of the changed circumstances and social mores of today’s society that for a scam to grab people’s attention the sums involved will have to be of an order of magnitude many times that.
Corruption in the procurement of helicopters from AugustaWestland for ferrying VVIPs, eminently qualifies for such a billing.
It is now well accepted across a broad spectrum of political parties in the country that there has been corruption in the procurement of these choppers. The only point of dispute seems to be on the identity of the beneficiaries.
Managerial accountability
From the Congress party's perspective, the best case scenario would be if it turns out to be the handiwork of foreigners who used a defence contract from a poor third-world country which is unused to the ways of the corrupt practices of defence contractors in the West, to squirrel away money that belonged to the Indians.
Never mind the managerial accountability of those in the Government at the highest echelons for allowing this to happen right under their noses. Terms such as ‘managerial accountability’ is strictly for the private corporate sector unsuited to the rigours of modern-day public administration. At the other end of the spectrum is the view that someone very high up the executive authority of the Government of the day was involved in it.
No matter where the truth lay, it is nevertheless a fit case for students of management to subject it to a scrutiny to get a sense of what it takes to swing a corrupt deal. This requires an assumption a priori that there exists a vibrant market for corruption involving a large number of willing bribe-givers and an equal number of bribe-takers. But that shouldn’t strain our credulity as such is the stuff of so many movies from Bollywood.
As a corollary, we can also postulate that it is in the interest of the bribe-taker to have an extra bribe-giver as he stands to gain if the number of potential bribe-givers increases. Even in a situation where there is only a single seller and he is willing to offer a bribe, it doesn’t hurt to have an extra seller. This is analogous to a product market where no matter how many sellers there are, the buyer would always wish for an extra seller so that his negotiating position vis-à-vis those sellers improves relative to his position earlier. This is the case with the AugustaWestland deal.
The Plot
This poses a problem, specially an acute one, in the purchase of defence hardware. Though the hardware may be generic in nature (as helicopters in this particular case), it is not uncommon to find that under certain circumstance peculiar to the external environment of a buyer-nation, a generic product becomes so exclusive that the product market has overnight turned into a single-vendor situation — a buyer’s ultimate nightmare. The decision to procure helicopters for ferrying VVIPs ended up being precisely that. So even if the shortlisted vendor is amenable to passing on some under-the-table consideration the buyer can never really be sure that he is able to extract the maximum out of the situation. The situation clearly called for the addition of at least one extra player.
But the technical specifications that must have been drawn up after considerable brain storming involving many people who have an extensive knowledge of the external environment are a stumbling block. The question now is how to bring about a change in these specifications?
There are two ways to bring this about. One, bring a superior principle which somehow dilutes the inviolability of the original technical specifications. You could say that there is a higher moral or commercial consideration which somehow necessitates revisiting original specifications. Alternatively, introduce the existence of a new entity whose input has somehow not gone into the drafting of the initial specification which led to the single vendor situation.
The Final Act
In the AugustaWestland deal both these principles were invoked. It was represented that it was somehow a shameful situation if not outright sinful, that the Government of India should be dealing with a single vendor with all its implications of a crass, profit-driven vendor running India’s nose to the ground because of his advantageous position. So something ought to be done. If that means diluting the initial technical standards, so be it.
The sacrosanct principle that technical specifications once drawn up cannot be diluted especially in defence purchases can be trumped by a higher moral principle that India cannot be at the mercy of a solitary vendor. If that means that the helicopter need be capable of climbing only up to 4,500 metres and not 6,000 metres as was stipulated initially then it has to be modified even at the risk of endangering the lives of the very VVIP for whose needs that these choppers are needed in the first place. The single vendor situation is an abomination worse than sacrificing the life of a President or a Prime Minister. The second principle too was invoked by brining in the fact that yet another agency which should have been consulted (in this case, the Special Protection Group, responsible for providing protection to VVIPs) in laying down the specification had not been consulted.
The stage had thus been set for converting a single vendor situation to two or possibly more vendors. In a competitive market for kickbacks it is but natural that one vendor must emerge victorious over every one else. But the challenge is how to tweak the tender norms in such a way that he alone qualifies. The system solution is to identify that parameter on which the preferred vendor scores over everyone else and make that out as the most desirable aspect of the product to be purchased.
As luck would have it, the AugustaWestland chopper did possess the attribute of higher cabin height and this touted as an advantage. From a situation of not having been even pre-qualified to emerging as the successful bidder had been possible a systems approach to the problem of how to select a preferred vendor had been followed. It was game, set and match to Augusta Westland.