Friday, 29 July 2016

Recalling Gandhis’ deadly deal with Westland Helicopters Part – I

 (Part of my Memoirs)

Part – I
(Must read Part II also)

Deal to please Western friends at the cost of Indian lives

Sonia-controlled UPA government’s deal with AgustaWestland for the acquisition of choppers for the VVIPs signed after quite a few politicians, civil servants, high ranking officers of the Indian air force and others became richer and cancelled after the fact became public knowledge (the names of beneficiaries still remaining in the realm of speculation) has been added to its long list of scams. More than 30 years ago, when the Westland Helicopters had a separate identity, after over a year of flip flops and despite protests, Rajeev Gandhi government had signed a deadly deal with Britain to acquire 21 Westland helicopters. The helicopters were grounded after major crashes in which 10 precious lives were lost. Surprisingly, no stigma of scam was ever attached to the deal with Westland Helicopters though it was not above board.

I am one of those few persons alive who can recount how the decision to acquire Westland Helicopters was taken because I was the one who had made strongest protest and I was the one who was censored by Prime Minister Rajeev Gandhi for opposing the deal.

Here is a brief account.

Once a successful company, Westland Helicopters, the last manufacturer of helicopters in Britain,  gradually became unprofitable. By 1984, it had inventory of 41 WG30  helicopters which no country was ready to touch because of serious technical snags. Worried about the consequences of the closure of the company – loss of employment and burden on the exchequer on account of social security schemes – the British Prime Minister Mrs Thatcher started using her political influence to find buyers. Her mission succeeded when Indian Prime Minister Mrs Gandhi agreed to buy 27 helicopters.

The advantage to India, Mrs Thatcher explained to Mrs. Gandhi, was that India did not have to spend its taxpayers’ money for the acquisition of the WG30 helicopters; a part of British aid (in form of outright grant) to India under poverty-alleviation programme would be diverted for the purpose; since it was British money, India should not have any objection.

Mrs Thatcher’s plan got a serious setback when after Mrs Gandhi’s assassination on October 31, 1984, her pilot son and successor openly opposed the deal. Perhaps  Rajeev Gandhi was aware of the defects in WG30 helicopters but not of his mother’s commitment. In reply to a Parliament question, he had said that those helicopters were unsafe. But Mrs Thatcher, the Iron Lady, was not the one to accept defeat so easily. She continued to work on Rajeev Gandhi and ultimately he melted. One fine morning, he suddenly announced his decision to acquire 21 helicopters. (By this time the management of the company had been taken over by the global engineering conglomerate GKN.)

(It seems, our Congress leaders cannot see their foreign friends in trouble. Sonia-controlled controlled UPA government decided to buy AugustaWestland helicopters which were so costly that the USA had refused to buy for its President who flies in the costliest aircraft. Indira Gandhi had agreed and Rajeev Gandhi acquired Westland Helicopters which were considered so unsafe that there was no taker.) 

Since it was the Prime Minister’s diktat, the process of getting clearances was put on a fast track. The Ministry of Civil Aviation circulated a Note for the Public Investment Board (PIB), a Committee of Secretaries to the Government of India, headed by Secretary of the Department of Expenditure, that considers major investment proposals (not exempted from its purview) and recommends sanction, with or without amendment, or rejection by the Cabinet. The materials before the PIB include the proposal of the Ministry/Department (in form of the Note for the PIB) and appraisal report prepared by the Planning Commission. (That was the procedure before the Planning Commission was replaced by Niti Aayog.)

At that time I was heading the Project Appraisal Division of the Planning Commission. It was my responsibility to present an objective appraisal to the PIB. According to the Note for the PIB, a new public sector undertaking known as Helicopter Corporation of India (HCI, later changed to Pawan Hans) to be financed jointly by the Government of India and the Oil & Natural Gas Commission (ONGC, the leading oil producer public sector undertaking) would purchase 21 WG30 helicopters from Westland and 21 Dauphin helicopters from France, for providing helicopter support services to the off-shore exploration operations and air-services to Jammu & Kashmir and the North-East.  It was also stated that for meeting the cost of 21 Westland Helicopters, the British government was giving outright grant of £65 million. In other words, there was no capital cost to India for the acquisition of Westland Helicopters.

At this stage it would be relevant to throw some light on the economics of the British aid to the developing countries. During visiting fellowship at the Oxford University (1978-79) I had a brief attachment with the British Overseas Development Ministry which gave me an opportunity to study and understand the subject. All aids were tied; funds had to be utilised according to the British terms and conditions. Before committing any aid which was in form of outright grant, a cost-benefit analysis was carried out. Very often, aid was tied to acquisition of products of companies facing financial crisis. Cost-benefit analysis indicated whether the value of aid was more or less than the cost of social security in case the company closed down. If the cost was less, it made more economic and political sense to pass on the product to a developing country as aid. The face value of aid could be easily inflated to impress the recipient.  The use of aid for the acquisition of Westland Helicopters very much fitted in the scheme of things.

The gist of my appraisal report was as follows.

·  Need for the project: The Ministry of Civil Aviation had not established need for 42 helicopters. At the most, about 21 helicopters could be justified.

·  Economic viability of the project from the point of view of the country: Even though 21 Westland Helicopters were coming free, their operation and  maintenance cost was so high that the entire project would be economically unviable.

·  Financial viability of the new company: Due to the high cost of operation and maintenance, the company would incur losses every year. The loss in the first year was estimated at Rs. 60 (sixty) cr. (As far as I remember, the company incurred that much loss in the first year.)

·  Safety of helicopters: The Planning Commission had no expertise on the subject. However, according to a reply given by the Prime Minister himself on the floor of the Lok Sabha, the Westland Helicopters were unsafe.

My conclusions were: (a) there was absolutely no justification for  Westland Helicopters and (b) HCI should acquire only Dauphin helicopters.

Before the matter came before the PIB, as was the practice, the Financial Advisor & Additional Secretary of the Ministry convened an inter-ministerial meeting to sort out the differences. It was an exercise in futility. After listening to my objections, he said that he would put up the minutes of the meeting to his Secretary who in turn would place it before the Minister who in turn would inform the Prime Minister. The message was loud and clear.

Around that time I found the Petroleum Secretary very tense. I had known him since the early 1970s when he was a Joint Secretary. During an informal chat he told me that being Secretary of the administrative ministry of the ONGC which was party to the proposal, he could not oppose it but wanted me to make a strong case against the Westland Helicopters.

In the PIB meeting held one evening to consider the proposal, three Secretaries including the Secretaries of the Planning Commission and  the Department of Expenditure supported my stand and recommended acquisition of only 21 Dauphin helicopters. The Civil Aviation Secretary, the only other member of the PIB present that day, announced that the PIB decision was not acceptable to the Ministry and that the Ministry would seek the approval of the Cabinet. Shortly thereafter, the Cabinet approved the proposal for the acquisition of 42 helicopters.

My role as an advisor on the proposal was over and I got busy with appraisal of other projects. But something happened a couple of days after the Cabinet approval that keeps me haunting even now. At the next meeting of the PIB to consider some other proposals, I was the last to enter the meeting room which was packed to its capacity. Several Secretaries and other senior officers as well as heads of several public sector undertakings were present. I was about to occupy a chair in the last row when the Chairman of the PIB saw me and asked me to sit in the front row. After I had occupied the chair, he looked at me and said: ‘That evening you were making so much noise. Do you know what Prime Minister has written about you? He has virtually censored you. He has written that the appraiser failed to appreciate  the fact that the Westland helicopters were outright gift to India.’

For a long time I have been debating within myself whether to share my reaction with the people I do not know. (Before writing today, I have shared it  only with my family and close friends.) Ultimately I have decided to make it public. I think, at the fag-end of my life – I am 75+ – I should share not only my achievements and failures but also my stupidity.

What I was told was so sudden and so unexpected that I had no time to think how to react. On the spur of the moment, without realising the implications of what I was saying, some words came out of my mouth which I could not have uttered publicly had I time to think. Without losing a moment I gave my uncharitable reaction: ‘Sir, what can I say when Prime Minister has censored a small fry like me but I can tell you a joke. I wanted to buy a necktie but it was costing Rs. 100. I’m a poor man. I could not afford to pay Rs. 100. Taking pity on me, the shopkeeper offered me a pair of old shoes free of cost. I put those shoes around my neck. This is what the Prime Minister has done.’

I heard loud laughter which was followed by pin-drop drop silence. Then I heard the voice of the Chairman, PIB. In a very serious tone he said: ‘Your days are numbered.’ It was at this stage that I realised my stupidity. He was very fond of me and always stood by me whenever I was in trouble due to my free and frank advice but this time I had crossed all the limits. Perhaps he felt that if I faced any trouble because of what I had uttered, he would not be able to come to my rescue. Among those present there were a few who were sympathetic to me but most of them must have been happy that they would get rid of a trouble maker.

But I was lucky. Either the matter was not reported to the Prime Minister or, if reported, he did not take it seriously though sometime later a proposal came from the PMO to post an officer to supervise my work. It was scuttled by Secretary of the Planning Commission. I completed my tenure on  December 30, 1987. Despite the best efforts of Secretary, Planning Commission for extension for one tear, I was allowed extension only for 13 days. Thereafter, under an arrangement with the Department of Revenue, my parent Department, I worked in the Planning commission for a few months during which salary was paid by the Department of Revenue. Later, I was denied the third term in the Commission. For some time I carried the impression that it was all due to my remarks against the Prime Minister. But I was wrong. The real reason was something else, a much bigger scam I had exposed shortly before the end of my tenure. (I will write about it at a later stage.)

Arrival from Britain as helicopters, return (partially) as scrap

The formal agreement for the acquisition of Westland Helicopters with £65 million of British grant was signed in March 1986. Incidentally, two more important agreements were signed that month: (a) $285 million contract for the acquisition of Bofors guns and (b) contract for the acquisition of the British aircraft carrier HMS HERMES of 1953 vintage which was commissioned in May 1987 as INS VIRAAT .

It seems, Rajeev Gandhi, the youngest Prime Minister in Indian  history, the only one to be sworn in as Prime Minister even before the parliamentary party enjoying majority in the Lok Sabha had formally elected him as leader and overconfident due to unprecedented mandate in general election held after his appointment as Prime Minister, was in great hurry to win friends and get influenced by them. He paid the price only for the Bofors deal which had been finalised after payment of commission, but not for the Westland helicopter deal which was not above suspicion and which caused death of 10 persons in two crashes.

The 14-seater helicopters arrived in 1987. It was found that even its payload was severely constrained by its rotor capacity and its engine required servicing after every 70 hours of flight making it costlier that what had been estimated earlier. The first crash took place in 1988 and the second crash took place in 1989, both due to design flaws.  The entire fleet had to be grounded and it was decided to dismantle and sell the remaining 19 helicopter as scrap. After nine years of efforts AES Aerospace of Britain agreed, reportedly at Westland’s request, to buy the entire scrap for £900,000, much less than the reserve price of £1.9 million. However, after acquiring scraps of six helicopters, the buyer discovered that the cost of shipping was very high and there were no buyers of the spare parts. The deal was cancelled. Perhaps 13 dismantled helicopters are still lying in crates somewhere in Mumbai’s dockyard. The remains of WG30 could be seen in the Helicopter Museum in Somerset, England. 

  Rajeev Gandhi who acquired Westland helicopters knowing very well the defects and who was therefore squarely responsible for the death of 10 persons in two crashes, was (posthumously) awarded Bharat Ratna and is still worshipped  by the Congress.

Devendra Narain
A former head of the Project Appraisal Division of the Planning Commission
May 5, 2016

Please see Part  - II about repercussions in Britain, end of the separate identity of Westland Helicopters and what made Rajeev Gandhi change his mind. Link: