World

Arms Scandal Rocks India

By CBSNews.com staff CBSNews.com staff

March 15, 2001 / 7:13 PM EST / CBS

India's defense minister resigned Thursday as a corruption scandal involving a fake arms deal secretly filmed by journalists shook the government.

George Fernandes, one of Prime Minister Atal Bihari Vajpayee's closest allies, said the allegations against him were "completely false," and suggested they were meant to undermine national security and morale.

"To uphold the morale of our armed forces and prevent further damage to our national defense, I've decided to resign from government," Fernandes, a 70-year-old socialist firebrand, said on state-run television.

"While there are black sheep in every organization, and it is possible that some individuals could have been corrupted in this vast machinery of government, it would be wrong and despicable to tarnish everyone with the same brush," he said.

Soon after Fernandes sent in his resignation, three of his Samata party colleagues, including the federal agriculture minister, also offered to quit, but their resignations had not been accepted by the prime minister.

The scandal erupted on Tuesday when the Tehelka.com Internet media company publicized hidden camera videos of party, military and defense ministry officials accepting money and discussing kickbacks in a sting operation.

As part of a project it dubs "Operation West End," Tehelka.com said its reporters spent months pretending to be defense dealers and pushing a fake $870,000 deal for hand-held thermal cameras and other equipment.

The president of Fernandes' Samata Party resigned earlier Thursday after videotapes had shown journalists, posing as arms dealers, handing over cash as they chatted with her in the defense minister's home.

In protest, Railways Minister Mamata Banerjee, leader of the regional Trinamool Congress who is facing tough elections in the state of West Bengal next month, pulled her party out of the government.

Including Trinamool's nine deputies, the government had a fairly comfortable majority, commanding more than 300 votes in the 545-seat lower house of parliament.

"There is no threat to government. We continue to enjoy majority support," said Law Minister Arun Jaitely.

Analysts agreed Vajpayee's 15-month-old administration was in no immediate danger of collapse, but with a reduced majority in parliament it was now more vulnerable to the vacillating loyalties of regional parties.

"The situation is grim for them, but I wouldn't say they are going because the (ruling) alliance is still largely holding up," said Kuldip Nayar, a political commentator.

"The government is not immediately undermined in terms of numbers but its reliance on its allies has increased," political analyst Mahesh Rangarajan said.

However, increasingly critical newspapers and former government officials had joined opposition calls for Fernandes' resignation.

Opposition parties, scenting blood, promised to step p their pressure over the scandal.

"This is the beginning of the disintegration of the alliance," Congress party spokesman Anand Sharma said.

Vajpayee needs to hold his National Democratic Alliance together through May to survive the budget vote in Parliament, which amounts to a confidence motion.

The president of Vajpayee's Bharatiya Janata Party, Bangaru Laxman, resigned Tuesday night after Tehelka.com released videotapes of him accepting $2,175. Laxman said he gave the money to his party treasurer.

Accepting money to arrange defense contracts carries a sentence of up to seven years in India.

Since he came to power in March 1998, Vajpayee's government had not been accused of corruption.