VIENNA: The commission on the Bofors deal was or at the least was to be more than Rs 400 crore, says Mr. Peter Unterweger former managing director of Voest Alpine the Austrian gun company that lost the Howitzer race to its Swedish rival.

And Mr. Unterweger should know. For he says, he himself offered the Indians a 20 percent commission or Rs 300 crore but Bofors outbid him.

“The Indians were negotiating ‘commissions with all the four companies in the race” says Mr. Umerweger. “At first we offered them an 11 percent cut. Then it climbed to 20 percent. He says that Bofors offered marginally more than that to bag the order.

“That is the way the arms business works” says Mr. Unterweger “whoever offers the highest cut wins the order.”

Mr. Unterweger is at present facing trial for selling arms to warring nations in West Asia where his company is believed to have paid 5 million as commission.

Paying commissions says Mr. Unterwever is not a crime either in Austria or Sweden. “I know it is not morally right but then have to do business. And in all my experience I have never negotiated an arms deal without first settling the commissions.” ‘was then the company’s marketing director in India. All negotiations ‘on the part of the Indian authorities were conducted by “professionals” he says.

“That is standard politicians and officials never negotiate their cut with a seller directly they depute a professional (a la Martin Ardbo’s reference to a Gandhi trust lawyer) says Mr. Unterweger.

In 1984, things were looking very bright for the Austrian gun. It had offered a 20 percent commission. It had been rated as the best gun by the Mayadas committee. Also says Mr. Unterweger it was still the cheapest gun in the race.

“And our Chancellor had come to India in 1984 to discuss the deal with Indian leaders,” he says.

Then suddenly the table turned. The Swedish Prime Minister Mr. Olaf Palme interceded in the matter.” says Mr. Unterweger. And even before the Austrians knew what was happening, they realized that the Swedes had outbid them.

Basic game

 Mr. Unterweger has no doubt that this was the sole factor that swung the deal for the Swedes’ higher commissions. All rival companies he says keep close tabs on each other. That is the basic game.

Voest Alpine was willing to offer 20 percent of commission on the Rs 2,000 crore deal. In other words over Rs 400 crore. And Mr. Unterweger says that Bofors paid more than that.

A section of the Austrian press has charged Mr. Unterweger with paying powerful men in India around 200 million Austrian schilings as advance commission for a contract he never got. Mr. Unterweger labels this “commercial idiocy.”

“I promised them far more than that. I think we also spend around. 20 to 30 million schillings on project costs. After all we had to gather information about what the other companies were offering. But there is a specific system in such deals which ensures that the actual payment is released only after a contract has been won” he says. Mr, Unterweger says that after the deal and the commissions are finalized the money is deposited in a Swiss bank account. When the order is formally placed the bank is told to release the payment. After all this we have to inform our own government about the account number and the identity of the recipient. Our government is free to cross check this, but of course it will never release names to a third party,” he says.

Then after a moment of reflection Unterweger said. “There were so many officials and departments involved. We could not afford to antagonize any of them. If we had to make sure of the order, there was one person I could pay, your head of government” he does not elaborate.)

Right now of course, Mr. Unterweger is involved in a trial for selling arms to Iran and Iraq which were at war with each other when the sale took place. Austrian and Swedish Govt’s do not prohibit the payment of commission to win orders. They only prohibit sale of weapons to warning nations.

Parallel probe

Meanwhile a patrolled investigation has already been launched by an Austrian Parliamentary committee. While the courts deal with matters of law, the parliamentary panel will deal with the involvement of politicians in the companies gun deals.

“Though we are focusing on the west, deals for the time being we will consider the company’s dealings in India as well” says Mr. Peter Pilz leader of the Greens party. He spearheads the parliamentary probe.

Mr. Pilz says that so far his investigations have revealed that “some money was missing from the company’s Indian account. He said further investigation will reveal whether a part of it was actually paid to the Indians.

But he does not doubt Mr. Unterweger claim of a 20 percent cut offered to Indians. That is quite unusual he says. And Voest Alpine promised to pay Rs 400 crore and was still outbid by the Swedes then only fraction of the Bofors story is known so far.

Article extracted from this publication >>  December 22, 1989