"Bribery scandal could harm defense ties with India"

India is one of the largest customers of Israels defense industries.

Allegations made by the Indian Central Bureau of Investigation that Israeli defense firms bribed Indian officials so that they would prefer Israeli products could chill defense ties between the two countries, warns US magazine Defense Week.

The Defense News article said that the atmosphere in New Delhi had aroused fears in the Israeli defense sector that the scandal could harm Israeli arms exports to India, one of the largest customers of Israels defense industries. Such fears have only been expressed behind closed doors at IDF General Staff Headquarters or company offices. Publicly, defense industry officials have continued to give reassurances.

On October 11, Globes reported defense sources said the Indians were investigating arms deals made in 1998-2001. A senior defense official told Globes, This is an internal investigation in India, and I dont think Israel Aircraft Industries Ltd. (IAI) will have a problem.

However, Defense News claims that it has seen the complaint filed by the Central Bureau of Investigation with a court in New Delhi and it referred explicitly to IAI and Rafael Armament Development Authority Ltd., together with three senior Indian officials who are suspected of taking bribes from both companies in 2000. The three men are former defense minister George Fernandez; former Chief of the Naval Staff Admiral Sushil Kumar, and another former naval officer.

Minister of Transport Shaul Mofaz, the first senior official to comment publicly on the affair said last night, Any harm to our relations with a country like India is not good for Israel. This harms our ability to develop defense ties with, and sales to this country. I dont know whether these allegations have any foundation but they should be investigated and substantiated. If they are true, this is very serious.

Mofaz was speaking to Israeli reporters in Washington. As reported in Globes, the Ministry of Defense has decided to proceed with caution and avoid making any statements out of fear that any comment on this sensitive issue could harm defense exports.

Published by Globes [online], Israel business news - www.globes.co.il - on October 24, 2006

Copyright of Globes Publisher Itonut (1983) Ltd. 2006

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