The rupee drops / An end to graft? Probably not
Some claim that the current Indian government is trying to stamp out graft among elements identified with rival political bodies that had comprised the previous government, but not among its own officials.
Taking bribes outright and accepting other delights are the norm in not a few third-world countries. It is true that the developed world has half-heartedly been trying to stop the practice, but the road remains long and weary. Though New Delhi has been trying to stamp out graft, India is still no exception.
Some claim that the current Indian government is trying to stamp out graft among elements identified with rival political bodies that had comprised the previous government, but not among its own officials. In practice, say private businessmen who work there, not even a machete could cut through the jungle of Indian red tape, so the only way to make progress is to offer bribes to local officials.
By quite a coincidence, a few days before bribery allegations against Israel Military Industries were announced in 2009, Israel signed a treaty not to use graft as a means to win government tenders in the third world. With that it became the 38th developed nation to sign the treaty, which was part of the process by which Israel joined the Organization for Economic Cooperation and Development.
Following its signature, the legal counsels at not a few Israeli defense companies with agents vying in third-world tenders could be observed scurrying frantically. The agents would get a cut of any deal closed through them, even as much as 15%. When the deal is worth a billion dollars, that's quite a chunk of cash. But, said one defense source, "Five percent is reasonable. When the amount is above that, corruption is involved."
IMI denies paying bribes in India. But if the investigation by the Indian Central Bureau of Investigation got it right, one could argue that IMI merely followed an unmarked trail blazed by predecessors from around the world - and had the bad luck to be caught just when somebody decided to crack down.
Behind closed doors in the defense industry, they claimed then, and still claim today, that all the defense companies from everywhere in the world pay bribes. "We can't do differently or we'll lose tenders," said one source. Indeed, wily agents will find ways to circumvent the OECD ban on bribery, and Israelis are known for their innovation.
The problem of corruption becomes all the more acute when the defense company belongs to government, as IMI does, just like Rafael and the Israel Aerospace Industries. Accusing IMI of corruption is practically tantamount to accusing the Israeli government, and with one small step that could lead to trouble for Rafael and IAI. IMI is losing contracts worth tens of millions, or maybe a bit more, but the others are in line for billions of dollars worth of work.
Strategic relations between India and Israel are at stake. No wonder then that the Defense Ministry hastened to IMI's defense.
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