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Israel-India arms talks dogged by scandal

NEW DELHI, Dec. 29 (UPI) -- Senior Israeli and Indian military officials have been discussing ways of enhancing their growing strategic alliance with missile defenses and electronic surveillance systems.

But their plans could be stymied by a corruption scandal involving arms companies in both countries.

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A high-powered Israeli delegation led by retired Brig. Gen. Pinchas Buchris, director general of the Defense Ministry in Tel Aviv, launched talks with Indian officials of the joint working group on defense cooperation on Dec. 21. The Indian team was led by Defense Secretary Praveen Kumar.

Those meetings followed a visit to New Delhi earlier in December by the chief of staff of Israel's armed forces, Lt. Gen. Gabi Ashkenazi.

India's chief of staff, Gen. Deepak Kapoor, was in Tel Aviv in November to discuss, among other things, a $1.1 billion contract for the Barak-8 tactical air-defense missile manufactured by state-run Israel Aerospace Industries.

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Buchris, who may step down in January because of differences with Defense Minister Ehud Barak, a former chief of staff and Israel's most decorated soldier, has been in charge of guiding the Jewish state's military links with India for the last three years.

In that time Israeli military sales to India have exceeded $5 billion. But plans for the transfer of Israeli technology on missile defenses, cyber warfare and electronic surveillance -- a hot issue in India following the terrorist carnage in Mumbai in November 2008 -- could be impeded because of an Indian ban on trading with Israel Military Industries, a major defense firm.

So could the Barak deal. It was signed in April but has been dogged by controversy surrounding alleged kickbacks by a London-based Indian businessman who the Indian media says negotiated deals between Israeli defense firms and India's Ordnance Factory Board, which has joint ventures with IMI.

The ban was imposed by the Indian government in June after the OFB director, Sudipto Ghosh, was arrested with others on corruption charges. That put defense contracts worth billions of dollars at risk.

IMI had signed a $24 million contract with OFB under which it would set up a massive ordnance complex of five plants in northern India to produce 15mm bi-modular charge systems and other propellant charges for large-caliber artillery shells.

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The Barak deal involved Israel Aerospace Industries, the flagship of Israel's defense industry.

In the fallout from the corruption allegations, New Delhi, responding to a political outcry over the bribery scandal, was reported to have warned it would scrap the Barak-8 deal if there was "credible evidence of malpractice."

The alleged broker of the contract, Sudir Choudhrie, who lives in London, has denied any wrongdoing and claims the allegations are politically motivated.

Mumbai newspaper DNA has alleged that Choudhrie was paid more than $150 million over the missile sale.

The use of middlemen to facilitate arms contracts was banned in India after a devastating 1980s corruption scandal involving a multibillion-dollar artillery deal with Swedish firm Bofors that led to the Indian government's downfall in 1989.

Israel's Haaretz newspaper named Choudhrie as a key broker between the Israeli defense industry and India.

An investigation by India's Central Bureau of Investigation revealed that he and two of his companies "received a number of suspect remittances to the tune of millions of dollars from IAI Israel during the years 2008 to 2001."

The Jerusalem Post reported Dec. 24 that Israeli authorities were investigating suspicions of bribery by Israeli defense officials abroad in the first such probes since a new law passed in July 2008 that declared all bribes to foreign public servants illegal.

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Israel Radio said that police were investigating four cases, three involving India and another in Kazakhstan.

No details were given, but one case reportedly concerned two state-owned Israeli companies and a deal worth around $1.5 billion.

Those allegations were similar to those that appeared in the Indian media earlier this year regarding bribes supposedly paid in the Barak missile deal by IAI and Rafael Advanced Defense Systems.

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