gfiles magazine

April 17, 2013

‘Offset deals have higher & invisible corruption’

mark pyman director, transparency international
Offset deals have higher & invisible corruption’
Everyone agrees that defence deals should be clean and clear. Director, Transparency International UK, Mark Payman, is one of the world’s leading authorities on defence corruption, having studied different shades of the problem in 129 defence companies and 82 governments and countries. In this telephonic interview from London with Neeraj Mahajan, Payman outlines the limitations of the offsets programme that has been implemented by several countries, including India. Excerpts:
Is money always the motivation or there are other incentives in a defence deal? 
That is a tricky question. I will say that in a large number of cases we have seen that money is the motivator. The only exception is where you are seeking to straighten the political alignment between countries or its people. Then you are no longer in the sphere of corruption, you are in the sphere of political calculations. I think there is one other area, which is very relevant to India, in that is most of these defence deals are clubbed with what is called an offsets programme. Offsets programmes carry high width because they are usually less carefully examined. That is the first problem and the second problem is that they usually comprise of a package of different investments by the company, often as many as 50 or 100 investments. Often, these have little to do with the defence contract. They can be a hotel contract or any other investment. And the opportunity of paying someone back or corrupting someone is actually much higher in such programmes than it is through the main contract. There have been a number of deals in recent years where bribes have been passed through the offset contracts and not through the main contract. I think that is what is happening in India as well because you have high offset requirements and therefore big opportunities for corrupt transactions...Read More

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