BOFORS RESURRECTS IN THE MIST OF SECOND GENERATION PHONES

[Comparing India with China can be a daunting task because they are just the north south opposites. India enjoys a reputation of being the largest democracy in the world whereas, China, a socialist country, has its human rights records utterly dismaying. It has declared Liu Xiaobo, the winner of the Nobel Peace Prize for 2010,  a traitor and tossed him in jail. Both India and China are making astonishing economic development in recent years. By 2040 Chinese economy  is projected to reach $ 123 trillion, nearly three times the entire global output of 2000. With annul average growth 9.3%, China may pass United States by 2020. The World Bank projects Indian economy, which grew 7.6 percent in 2010, to surge to 8 percent in 2011. Not far behind the 9 percent rate it predicts for China for each of those years. India, which currently houses 1.15 billion people, is also projected to house 1.53 billion people surmounting China in 2030. By then, in contrast, China will have 1.43 billion people at its peak. Just a couple of examples:  China hosted two successful international sports events: Summer Olympics 2008 and Asian Games 2010  amazingly flawlessly. India also hosted the Commonwealth Games 2010  which remained marred by corruption scandals. The Recent 2G scandal has even rocked harder bringing shame to India. The opposition BJP has taken to the streets; while China is reported to have developed a J-20 stealth fighter planes. And, now the Bofors seems to have resurrected in the mist of 2G phone scam. Bofors is also blamed for untimely death of Rajiv Gandhi. India, should be a corruption free country, taking actions deemed necessary to anyone under the law of the land as in the USA. Otherwise, entering United Nations Security Council as a Permanent Member would not mean her becoming a powerful player in the 21st century world. – Editor]

Indian politicians and journalists were agog this week over the resurrection of the long-lived Bofors scandal, after an income tax tribunal passed an order saying that two folks (one of whom is dead) should pay tax on their alleged Bofors kickbacks, while at the same time the Central Bureau of Investigation was asking to have the case against one of them closed for lack of evidence.

We have a feeling that there are a lot of folks out there who have a sense that the Bofors scandal is (or rather was) important, but don’t have the foggiest about what it involved. That’s not surprising—at least half the country were babies then or not even born yet.

Think of it as your parents’ 2G—a major scandal that infuriated a public usually quite blasé about political corruption. Political observers say it was one of the reasons that former Prime Minister Rajiv Gandhi lost elections in 1989—a year that saw thousands of people on the street protesting the corruption of the Congress government and en masse resignations by the opposition.

And yet there are some important differences between the telecom spectrum allotment scandal of 2008 and the Bofors arms deal imbroglio: the scale, for starters. While a court deliberates over the CBI’s request, here’s a little refresher.

What was the scandal? Here’s the summary from the tax order: “In 1987, a scam in purchase of defense equipments, known as the Bofors Scam was unearthed, indicating that in respect of the gun deal between M/s. Bofors, a Swedish company dealing in arms and ammunition and the Govt. of India illegal commission / kickbacks were paid by Bofors violating specific defense policies on which the deal was signed by the Govt. of India.”

The Indian government agreed in 1986 to buy 400 155mm Field Howitzers and related equipment from AB Bofors for about 14.3 billion rupees (around $1.4 billion then, or about $3 billion today), the order said. The Indian government made a 20% down payment in May that year. Then in April the following year, a Swedish radio station broadcast a story alleging that AB Bofors secured the deal through bribes.

What was the cost to India? According to the Indian tax order, which cited Indian press reports about an official Swedish audit, AB Bofors made payments in the range of $29 million to $42 million to an Indian agent. Bofors denies paying bribes. In any case, how would bribes being paid by foreign firms hurt Indian taxpayers? The most likely cost to the Indians may have come from getting a more expensive deal (the alleged kickbacks probably got factored into the cost of the arms deal) or less suitable equipment than they might otherwise have got.

But it’s hard to put any kind of a number on the potential losses from going with the Bofors guns, rather than weapons from France’s Sofma, Britain’s International Military Service or Germany’s Voest Alpine. An Indian audit report in 1989 said tens of millions of dollars had been paid in bribes and criticized the government for entering into the deal, noting that the howitzers had failed field trials, according to a Los Angeles Times report of July that year.

In the case of the telecom scandal, an Indian government audit report put the potential cost from giving spectrum to firms at discounted prices at $40 billion though that is in revenue the government didn’t collect.

Who’s Ottavio Quattrocchi? He was a chartered accountant who lived in India between 1965 and 1993. He was employed by an Italian oil refinery and pipeline builder called Snamprogetti, the order says. He was also close to Rajiv Gandhi and Sonia Gandhi.

The tax order says that he arranged for AB Bofors to engage the services of a U.K. firm to help secure the contract, and in return the Swedish armaments maker was to pay 3% of the contract value to the U.K firm. The order says that a payment made by AB Bofors to the U.K. firm was remitted through a series of accounts into one that was controlled by Mr. Quattrocchi.

India’s federal investigative agency, the Central Bureau of Investigation, tried and failed to extradite him to India. Mr. Quattrocchi has denied receiving any money from AB Bofors.

Who was accused? Everyone. Most importantly, the man at the top. Sure, Prime Minister Manmohan Singh has been racked by allegations of presiding over a government riddled with corruption. But even those criticizing him are quick to add that they don’t think he’s personally corrupt, but rather that he failed to rein in the corruption of those around him. In the Bofors scandal, Prime Minster Rajiv Gandhi was personally accused of accepting bribe money to swing this arms deal, although he said he had never done so.

Were there investigations into the scandal? Yes, the scandal was investigated by a joint parliamentary probe, the sort of inquiry the opposition Bharatiya Janata Party has been requesting for the 2G scandal. According to the tax order, the parliamentary inquiry cleared Mr. W.N. Chadha, whom the Indian tax department described as an agent for Bofors in India and on whom the agency has been trying to levy taxes for his alleged kickbacks. Other news reports from the time say the parliamentary probe findings appeared to be inconclusive, which may have stoked public anger further and led to the 1989 electoral defeat.

@ The Wall Street Journal 

A CHINESE STEALTH CHALLENGE?

[The exact origin of the photographs is unclear, although they appear to have been taken by Chinese enthusiasts from the grounds of or around the Chengdu Aircraft Design Institute in western China, where the J-20 is in development. A few experts have suggested that the pictured aircraft is a mock-up, rather than a functioning prototype of a stealth fighter—so-called because it is designed to evade detection by radar and infrared sensors.]

BEIJING—The first clear pictures of what appears to be a Chinese stealth fighter prototype have been published online, highlighting China's military buildup just days before U.S. Defense Secretary Robert Gates heads to Beijing to try to repair defense ties.

The photographs, published on several unofficial Chinese and foreign defense-related websites, appear to show a J-20 prototype making a high-speed taxi test—usually one of the last steps before an aircraft makes its first flight—according to experts on aviation and China's military.

WSJ's Rebecca Blumenstein explains to Simon Constable new photos indicate the possibility that the Chinese military has developed a new stealth fighter jet, confirming fears of a military buildup.

The exact origin of the photographs is unclear, although they appear to have been taken by Chinese enthusiasts from the grounds of or around the Chengdu Aircraft Design Institute in western China, where the J-20 is in development. A few experts have suggested that the pictured aircraft is a mock-up, rather than a functioning prototype of a stealth fighter—so-called because it is designed to evade detection by radar and infrared sensors.

On display at Air Show China in Zuhai late last year: this CIA-style drone with missiles.

But many more experts say they believe the pictures and the aircraft are authentic, giving the strongest indication yet that Beijing is making faster-than-expected progress in developing a rival to the U.S. F-22—the world's only fully operational stealth fighter.

China's defense ministry and air force couldn't be reached to comment on the latest photos. Even without official confirmation, however, the photographs are likely to bolster concerns among U.S. officials and politicians about China's military modernization, which also includes the imminent deployment of its first aircraft carrier and "carrier-killer" antiship ballistic missiles.

Such weapons systems would significantly enhance China's ability to hinder U.S. intervention in a conflict over Taiwan, and challenge U.S. naval supremacy in the Asia-Pacific region.

Gen. He Weirong, deputy head of China's Air Force, announced in 2009 that China's first stealth fighters were about to undergo test flights and would be deployed in "eight or 10 years." But there was no clear physical evidence of their existence until the latest photographs emerged.

Chinese authorities who monitor Internet traffic in the country appear not to have tried to block the J-20 pictures.

"The photos I've seen look genuine," said Gareth Jennings, aviation desk editor at Jane's Defence Weekly.

"It's pretty far down the line," he said. "The fact that its nose wheel is off the ground in one picture suggest this was a high-speed taxi test—that usually means a test flight very soon afterwards. All the talk we've heard is that this could happen some time in the next few weeks."

U.S. officials played down Chinese advances on the plane, which American intelligence agencies believe will likely be operational around 2018. "We are aware that the Chinese have recently been conducting taxi tests and there are photos of it," said Pentagon spokesman Col. David Lapan. "We know they are working on a fifth-generation fighter but progress appears to be uneven."

Col. Lapan said it appears the Chinese are still seeking engines for a fourth-generation fighter from Russia, an indication that they are "still encountering problems" with development work toward the fifth-generation aircraft, the J-20.

But the 2018 estimate suggests U.S. officials believe China's development of the fifth-generation fighter has accelerated. In 2009, Mr. Gates predicted that China wouldn't deploy a fifth-generation fighter until 2020. U.S. officials said the latest disclosures wouldn't affect any U.S. aircraft-development programs.

China has made rapid progress in developing a capability to produce advanced weapons, also including unmanned aerial vehicles, after decades of importing and reverse engineering Russian arms. The photographs throw a fresh spotlight on the sensitive issue of China's military modernization just as Washington and Beijing try to improve relations following a series of public disputes in 2010.

U.S.-China Disputes in 2010

January: China suspends military ties over U.S. arms sales to Taiwan

March: China refuses to blame North Korea for sinking of South Korean ship

July: China protests after Secretary of State Hillary Clinton says U.S. has national interest in South China Sea

September: China angered by perceived U.S. support for Japan in row over disputed islands.

U.S. House of Representatives passes bill authorizing action against China for manipulation of its currency

October: U.S. congratulates Liu Xiaobo, jailed Chinese dissident, for winning the Nobel Peace Prize

November: China refuses to condemn North Korea for artillery raid on South Korea.

U.S. sends aircraft carrier to joint military exercises with South Korea

December: U.S. again expresses support for Liu Xiaobo ahead of Nobel ceremony. U.S. moves two more aircraft carriers to the region

Defense Secretary Gates is due to begin a long-delayed visit to Beijing on Sunday—almost exactly a year after China suspended military ties in protest over U.S. arms sales to Taiwan.

China's President Hu Jintao is then due to begin a state visit to the U.S. on Jan. 19. President Barack Obama joined in preparatory talks at the White House on Tuesday between his national security adviser, Tom Donilon, and Chinese Foreign Minister Yang Jiechi. During the meeting, Mr. Obama said he was committed to building a bilateral relationship that is "cooperative in nature," the White House said.

The two countries clashed last year over issues including the value of the Chinese currency, China's territorial claims in the South China Sea and vocal U.S. support for a jailed Chinese dissident who won the Nobel Peace Prize.

The U.S. was also frustrated by China's refusal to condemn two North Korean attacks on South Korea, while Beijing was angered by a U.S. decision to respond to the second attack, the shelling of a South Korean island in November, by sending an aircraft carrier to take part in joint naval exercises with Seoul near China's coast.

The U.S. and its Asian allies have also been alarmed by China's naval maneuvers and more forceful stance on territorial issues, while China's military strategists have accused the U.S. of trying to "contain" China—most recently by sending two more aircraft carriers to the region in December.

"The U.S. wants to retain its global hegemony and also preserve its regional interests. It is not comfortable with China's military rise," Senior Col. Han Xudong, a professor at China's National Defense University, was quoted as saying in the Global Times newspaper Tuesday.

Experts who said they thought the photographs were authentic included Andrei Chang of the Canadian-based Kanwa Asian Defence Monthly, and Richard Fisher, an expert on the Chinese military at the International Strategy and Assessment Center in Washington.

Several experts said the prototype's body appeared to borrow from the F-22 and other U.S. stealth aircraft, but they couldn't tell from the photographs how advanced it was in terms of avionics, composite materials or other key aspects of stealth technology.

They said that China was probably several years behind Russia, whose first stealth fighter, the Sukhoi T-50, made its first flight in January 2010, but that Beijing was catching up faster than expected.

The U.S. cut funding for the F-22 in 2009 in favor of the F-35, a smaller, cheaper stealth fighter that made its first test flight in 2006 and is expected to be fully deployed by around 2014. The F-22 has mainly been used for exercises and operations around U.S. airspace, but some have been deployed to Guam and Okinawa to help maintain the U.S. security umbrella in the Asia-Pacific region.

The Chinese prototype looks like it has "the potential to be a competitor with the F-22 and to be decisively superior to the F-35," said Mr. Fisher. The J-20 has two engines, like the F-22, and is about the same size, while the F-35 is smaller and has only one engine.

China's stealth-fighter program has implications also for Japan, which is considering buying F-35s, and for India, which last month firmed up a deal with Russia to jointly develop and manufacture a stealth fighter.

—       Adam Entous in Washington contributed to this article.

 @ The Wall Street Journal