Ongoing Army probe reveals complicity of army officials and irregularities in contract with private sector software firm
The inquiry took a dramatic turn this year, when a military court issued arrest warrants for former army officials for refusing to join a two year-old probe into irregularities in military intelligence procurements.
An ongoing army investigation has revealed the complicity of army officials and irregularities in a contract with a private sector software firm. The inquiry took a dramatic turn on July 3 this year, when a military court issued summons for former director general of military intelligence Lt General B.S. Thakur and Major General D.N. Asija (retired) of the Directorate of Military Intelligence for repeatedly refusing to join a two year-old probe into irregularities in military intelligence procurements.
Failure to appear before the army Court of Inquiry (CoI) on July 9, could result in their arrest, say army officials. The probe has simmered within the army for over two years. The army ordered a Court of Inquiry (CoI) in 2013 after military intelligence officials complained about irregularities in the procurement of satellite interpretation equipment from a Mumbai-based private sector software firm, Rolta India Limited.
The Ministry of Defence has placed on hold a Rs 165-crore contract with Rolta to supply 27 Photogrammetry and Geographic Information Systems (GIS) to the army because of these complaints. The contract was to have been signed in 2011 but was stalled after the controversy broke out that year. The slow-moving probe has paralysed the army's procurement of newer GI systems critical for processing spy imagery, say army officials. The army's requirement for the systems is meanwhile mounting as old systems are in need of replacement.
Major General Asija's refusal to join the probe, however, is curious given that he was one of the officers who recommended an inquiry in 2011. The inquiry conducted in Sena Bhawan by a brigadier-ranked officer has, so far, established close links between the Directorate of Military Intelligence (MI) and Rolta.
The CoI has not established any financial wrongdoing because the contract did not go through. It has, however, found certain procedural deviations where the Directorate of MI insisted, reportedly on specious grounds, that procuring systems from new vendors would create problems of interoperability and integration. Lt General Thakur, who was DGMI between 2011 and 2013, let irregularities prevail in the directorate, army officials told India Today. Lt General Thakur and Major General Asija did not return calls or messages seeking comment. Responding to a questionnaire from India Today, a Rolta spokesperson clarified that the company was not an accused in the army CoI. The company strongly denied contractual and financial discrepancies in annual maintenance contracts and denied holding back contractual obligations. "Rolta provides comprehensive maintenance services for integrated systems, as contracted," said M.K. Govind, senior divisional director, corporate marketing and sales, Rolta India Limited.
The whistleblowing spook
The controversy began in 2011 when a whistleblower in the MI directorate detected irregularities in a Rs 165-crore contract for purchasing 27 mobile and static photogrammetry and GIS systems. The systems-for command and truck-mounted units for mobile formations-are used to create three-dimensional images of ground data collected from spy satellites, drones and aircraft. These 3D images are laid over GIS software to create a digital library of military targets.
The case came to light quite by accident. Colonel Sujeet Banerjee was posted as officiating director of the MI's sensitive 17th directorate (MI-17) that dealt exclusively with spy imagery. He was a stand-in for Colonel M.K. Chakraborty who was away on a month's leave. The directorate is the nodal agency for processing satellite photographs from various commands and sends it down to various army formations. MI-17 also receives spy imagery from the National Technical Research Organisation (NTRO) and the Defence Image Processing and Analysis Centre (DIPAC) within the Defence Intelligence Agency.
A majority of these imagery tasks were carried out by systems the army had procured for over Rs 500 crore from Rolta between 1996 and 2008. Colonel Banerjee found discrepancies in the annual maintenance contracts the army had signed with the firm. The software had been purchased from three foreign firms-Oracle, Intergraph and Bentley-and supplied to the army by Rolta. Over 70 such systems were purchased for the Indian Army and distributed amongst specially created Imagery Interpretation Teams (IITs) of the army among divisions, corps and commands to interpret satellite imagery and pass it on to tactical formations.
The firm, however, did not offer 'software upgrades and updates' as mentioned in the 1996 contract. From 2008, the annual maintenance contracts were reworded only to include the word 'updates'. Colonel Banerjee suspected this was the case because the firm did not own the original software.
In 2009, the army had initiated the purchase of a fresh batch of GI systems to replace the older ones bought in 1998. It, however, insisted that the systems not be floated as a global tender and be purchased as a repeat order from Rolta. This meant that it would not have to follow the normal procedures of a fresh contract. The army insisted on singlevendor procurement despite the Defence Acquisition Council suggesting otherwise in 2010.
An MoD Cost Negotiation Committee noted that the company had now stamped its name on all the products. This was a marked change from a 2004 contract where Rolta was only the distributor for US-supplied software. Army officials say Colonel Banerjee made several futile attempts to alert Colonel M.K Chakraborty of the irregularities. In March 2011, Colonel Banerjee finally complained against Colonel Chakraborty to his seniors in the MI directorate. His superior officers Major General Asija, the then additional director general, MI (B) and Brigadier R. Chibber, additional director general in-charge of technical equipment in the MI, recommended a CoI. The two officers had by then carried out extensive investigations with all the officers of MI-17 about the dubious software upgrades to establish that there were indeed grounds for a formal CoI.
The whiff of a scandal would have immediately led to an inquiry particularly as it was flagged by two senior MI officers who put their complaint down in writing. However, the DGMI Lt General Thakur did not order a probe. What he did next only piqued the interest of the officials handling the current inquiry. In August 2011, Lt General Thakur verbally asked the Military Secretary's branch to post three officers out of the Directorate of MI-the whistleblower Colonel Banerjee, Brigadier Chibber and a third officer in MI-17, Lt Colonel Sandeep Ahlawat, who had red-flagged the aberrations. All three officers were posted out of the directorate one month apart and sent to inconsequential appointments outside Delhi. Colonel Banerjee was posted to the Army Welfare Housing Organisation, a career dead-end. The matter seemed buried.
Rolta's sale of a Rs 165-crore contract for purchasing sensitive spy imaging systems cleared in 2010 did not go through.
Death and resurrection
In January 2013, another military intelligence officer detected anomalies in the Rolta contracts. Major Shubda Naik, an intelligence corps officer posted in MI-17, wrote to then army chief General Bikram Singh about the discrepancies. On July 29, 2013, the army ordered a CoI headed by Brigadier Ashwani Kumar. The key witness for the prosecution was going to be the original whistleblower, Colonel Banerjee. This was when matters took another curious turn. On January 26, 2014, just a day before he was to depose before the Board of Inquiry, Colonel Banerjee was found dead in his room in the United Services Institution (USI) in south Delhi.
A post-mortem revealed the cause of death to be heart attack. The inquiry was hobbled by his absence but continued as the court examined other officials who had pointed out irregularities. The CoI is now over two years old. Unusual because army COIs don't last more than six months. But then, few cases in the army have seen not one but three whistleblowers stand up and report irregularities. The delayed probe has stalled the army's attempt to replace its 1990s vintage imagery interpretation systems that one officer terms "junk". The blocked procurement pipeline is believed to now include a requirement for over 40 such systems, a glaring capability gap that has been repeatedly flagged by army commanders in internal conferences.
One reason being given for the CoI's slow progress is the fact that Lt General Thakur, Major General Asija simply refused to join the probe. This left the court with no option but to issue arrest warrants against them. The warrants are with the district magistrates in Gurgaon and Noida where the two officers live after their retirement. The officers have so far refused to respond to the CoI which was reconvened on June 23. Army officers say a fresh set of arrest warrants will now be served on them.
Past imperfect
This is not Rolta's first brush with controversy. In an April 2015 report, a California-based capital markets research firm, Glaucus Research Group, noted that "preponderance of evidence suggests that the vast majority of Rolta's reported capital expenditures have been fabricated". The report was an assessment of $500 million of junk bonds issued in the US market by Rolta's Delaware subsidiary between 2013 and 2014 which had attracted investors by offering tempting yields. The group said that the IT firm's reported spending in India was "disappearing into phantom prototypes, mysterious construction projects and computer systems of questionable authenticity and utility".
It also flagged the fact that an ongoing Ministry of Defence inquiry had been omitted from its bond prospectuses, "which in our view is a material omission because the scandal could jeopardise future contracts with the Indian government. These incidents are further evidence of the lack of transparency or accountability at Rolta." Rolta has contested Glaucus' findings, terming them "baseless", riddled with "factual errors" and "inaccuracies". It referred to news reports cited by Glaucus of the defence ministry inquiry as making no express allegation or conclusion against the company or its officials. Accordingly, it is just an attempt to falsely imply the company's complicity and impact its reputation, Rolta claimed.
The CoI has photographs that show Colonel Chakraborty, director MI-17 and Colonel Banerjee's boss, on a private holiday with Rolta executives in 2009. Colonel Chakraborty did not return calls for comment.
Preliminary findings of the army CoI seem to agree with what the MI whistleblowers had said in their written complaints since 2011. The CoI established contractual and financial discrepancies in the annual maintenance contracts concluded with Rolta after December 2008. Original contracts with Intergraph and Bentley and other third party software updates and upgrades were not provided by Rolta despite the mandate for the supplier in the original contract. Rolta merged the costs of hardware and software in 2008, making it difficult for the army to work out the loss to the exchequer due to the denial of software upgrades, officials familiar with the CoI say.
Company officials, however, strongly denied these findings. "Rolta has been providing comprehensive maintenance services to the Indian Army for two decades now and army users are completely satisfied with these services. There are no contractual and financial discrepancies in any annual maintenance contract with Rolta. In fact, army users have issued hundreds of letters appreciating Rolta support services," a company spokesperson said.
Rolta refutes it had withheld any deliverable that had been contracted for, a constant charge made by several army whistleblowers. "Rolta provides comprehensive maintenance services for integrated systems, as contracted," the spokesperson told India Today in a written response. "Rolta has met and exceeded all its contractual commitments, including supply of all software updates and upgrades. We categorically deny that Rolta has withheld or not provided any deliverable that has been contracted for."
Responding to charges that it had pushed its software onto the Indian Army in the absence of competition from other software developers, the company spokesperson said that Rolta had followed due process in obtaining all required sanctions, its software had been tested by army users before induction by conducting an extensive pre-dispatch inspection and a joint receipt inspection, as per contractual provisions. "This software has been in sustained use at army formations for the last six-plus years and the company has received numerous appreciation letters from army user sites all over the country, which stand testimony to the quality of Rolta software and support services."
As the court of inquiry hurtles towards a long-awaited conclusion, the embattled whistleblowers in Military Intelligence hope to have proved them wrong.
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