It may be about the dignity of the dead Kargil soldiers. It may be about the murky defence deals. It may also be about the impending elections in three states. But more than any of these, it is about Defence Minister George Fernandes. The Opposition attempt to nail Fernandes over the Comptroller and Auditor-General's (cag) allegation of improprieties in defence purchases during the Kargil war has made him the most targeted minister in the nda Government. This, in addition to Fernandes' image of being the most whimsical, the most quirky and arguably the most spartan of ministers.

Fernandes has courted controversies as defence minister: be it the sacking of Admiral Vishnu Bhagwat in December 1998 or his unilateral declaration of China as India's enemy No. 1 earlier that year. But he became the Opposition's prime target only in March this year following Tehelka's expose of shady defence deals that lead to his resignation.
The nda convener had his way, returning to the Government in October even before the Venkataswami Commission appointed to probe into Tehelka's allegation cleared his name. It was the defence minister's return to the Government that added fire to the cag report. Confesses a Congress MP: "We would not have raised a din on the CAG report if George had not been re-inducted into the Government." The emotive issue of Kargil, the whiff of corruption and the impending elections in Uttar Pradesh, Punjab and Uttaranchal all added to make for a heady mix for the Opposition's offensive against the Government.

That was till December 13. The terrorist attack on Parliament has taken some wind out of the attack on Fernandes. But issues raked up by the CAG's special review of purchases for Operation Vijay during the Kargil war go much deeper. Has the CAG, known to nitpick over small expenses, been its usual nagging self? Or is its review a serious indictment of politicians and bureaucrats feasting on something as sensitive as the Kargil war? The 40-odd specific cases of irregularities pointed out in the CAG's review amount to four major charges against the Defence Ministry:

Inflated Prices

The cag's finding that has been highlighted the most is the alleged inflation in the prices of aluminium caskets imported for ferrying bodies of dead soldiers. Aluminium caskets can be hermetically sealed and are a major improvement over the wooden caskets in which bodies decompose much faster.

According to the CAG, the Defence Ministry contracted Buitron and Baize of the US in August 1999 for the import of 500 aluminium caskets at a price of $2,500 a casket. The contract was worth $1.5 million (Rs 6.55 crore). However, an Indian commander of the UN Peace Keeping Force deployed in Somalia said in 1994 the price of these caskets was as little as $172 a unit.

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The first lot of 150 caskets that arrived in India in December 1999 weighed 55 kg each against the specification of 18 kg. The ministry cancelled the contract, but had already paid 90 per cent of the price of 150 caskets-$337,500 (Rs 1.47 crore). It did not pay the remaining 10 per cent and also enchased the Rs 6-crore warranty bond furnished by the supplier. But Rs 1.02 crore is still to be recovered from Buitron and Baize. The CAG's conclusion: the deal achieved nothing other than benefit (Rs 1.02 crore) the supplier. The ministry is also reported to have bought 22.5 million rounds of ammunition for AK-47 rifles and spares for 155-mm guns at inflated prices. In all, the ministry paid an excess of Rs 44.21 crore across several purchases.

The Rebuttal: The Government points out two fundamental errors in CAG's findings. The commander's claim of the UN having purchased caskets for $172 was never verified after 1994. Moreover, the demand for aluminium caskets was first raised in 1996 and price quotes obtained in April 1997 through the Indian military attaché in Washington DC were in the range of $2,500 to $2,118. These prices were also negotiated with Buitron and Baize. To recover the money already paid for the 150 unused caskets, the ministry will go in for arbitration.

Delay in Purchases

The CAG's other major charge is that nearly all supplies apparently meant for Operation Vijay were received or contracted well after the end of the Kargil war in July 1999. Of the total purchases worth Rs 2,175.4 crore for the operation, supplies worth Rs 2,150 crore came after July 1999. Of these, supplies valued at Rs 1,762.21 crore were received after January 2000, six months after the war ended. Contracts for Rs 1,606.26 crore were actually signed after July 1999. Since the Defence Ministry had relaxed its normal and elaborate procedures for purchase only to meet the urgent needs of the Kargil war, such delays in supplies not only defeated the purpose of procurement but also amounted to flouting of price and quality norms.

The Rebuttal: The Government's reply is simple. At the time of war nobody knew when it would end. In fact, the armed forces were asked to prepare for a full-fledged conventional war against Pakistan if the intruders did not vacate Kargil. The threat of a war in September 1999 was very high and it continued to remain so till the summer of 2000. That's why purchases continued well after July 1999.

Defence Ministry officials say they had shared this information with the CAG one month before it submitted the review. The CAG was also shown secret records of the meetings of the Cabinet Committee on Security and intelligence and military inputs on the post-Kargil threat perception. The ministry has decided to submit these documents to the Parliamentary Accounts Committee, which reviews all cag reports and suggests action on them.

Substandard Supplies

According to the CAG, Rs 91.86 crore worth of ammunition bought for Operation Vijay was expired and purchases valued at Rs 260.55 crore did not meet the army's quality standards. Such purchases include 12.7-mm cartridges and fuses for 155-mm guns. In some cases, the ammunition was 15 years old as against the seven-year shelf life prescribed by the Directorate General of Quality Assurance.

The Rebuttal: Ministry officials say that during the Kargil war, the army's ammunition stocks had to be replenished urgently. The demand was so critical that ammunition was bought from whoever was ready to sell. That was also the time when post-Pokhran sanctions had made defence purchases difficult. The sudden spurt in demand from India had led to hikes in prices of equipment and ammunition. Admitting that some expired ammunition was imported, the ministry promises action against erring officials.

Needless Imports

The CAG review found that purchases worth Rs 107.97 crore were in excess of what was authorised or required and goods valued at more than Rs 342.37 crore were imported on the grounds of operational emergency even though they were being or could have been manufactured in India. These included 20,000 bulletproof jackets, over 4,000 pairs of wrong-sized boots and hand-held thermal imagers.

The Rebuttal: Former army generals contest some of the CAG's allegations. Lt-General Vijay Oberoi, who retired as vice-chief of the army staff in September this year, feels that the CAG review "focuses only on financial accountability and is oblivious of operational requirements". The Defence Ministry further points out that it was Fernandes who had requested a special audit of all Kargil-related purchases. He would not have done so if he had anything to hide.
Unfortunately, by relying on half-truths for some of its findings, the CAG has done some damage to its own credibility as an impartial examiner of government expenses.

-with Sharad Gupta