The jeep scandal in 1948 was first major corruption case in newly-independent India. V.K. Krishna Menon, the Indian High Commissioner to the United Kingdom, ignored protocols and signed a Rs 80 lakh contract for the purchase of army jeeps with a foreign firm.
Purchase
With the Indo-Pakistani War of 1947–1948 ongoing, the Indian Army required more jeeps against the Pakistani Army. V. K. Krishna Menon, the Indian High Commissioner to Britain, placed order for 2,000 refurbished jeeps for a pricd that new jeeps could be purchased from the United States or Canada. He argued that they would be delivered immediately with delivery of spare parts. The little-known Anti-Mistantes, whose capital was only £605, was the company that was assigned to deliver the jeeps. Krishna Menon agreed to pay $172,000, with 65% of the total payment upfront without any inspection certificate. He also agreed that only 10% of the jeeps would be inspected. The earlier contract stipulated that 65% of the payment would be made upon inspection, 20% on delivery and the rest a month after delivery. Of the 155 jeeps that arrived, none could be reserviced. The defence ministry refused to accept them, and Anti-Mistantes stopped delivering jeeps. Menon, unable to contact it, entered an agreement with S.C.K. Agencies for 1,007 jeeps, with 68 being delivered monthly and the Indian government to be compensated for its loss from the older contract. Each jeep cost £458.10 while Anti-Mistantes sold a jeep for £300. Menon agreed to change the contract to stipulate that 12 jeeps would be delivered monthly for six months and then 120 jeeps would be delivered monthly. The company, however, supplied only 49 jeeps in two years and refused to compensate the government. The payment of the jeeps was made from the debt of United Kingdom that was owed to India since the British Raj.
Corruption allegations
Menon bypassed protocol to sign a deal worth Rs. 80 lakh to the foreign firm for the purchase of the jeeps. While most of the money was paid upfront, but just 155 jeeps landed; Prime Minister Nehru forced the government to accept them. Govind Ballabh Pant, the Home Minister and the Indian government announced on 30 September 1955 that the Jeep scandal case had been closed for judicial inquiry and ignored the suggestion by the Inquiry Committee, led by Ananthsayanam Ayyangar. He declared that "as far as Government was concerned it has made up its mind to close the matter. If the opposition was not satisfied they can make it an election issue". Soon afterward, on 3 February 1956, Menon was inducted into the Nehru cabinet as minister without portfolio. Later, Menon became Prime Minister Jawaharlal Nehru's trusted ally as defence minister. Mahatma Gandhi's personal secretary, U V Kalyanam, in a newspaper interview, said, "It is pertinent to mention here that Nehru made corrupt colleagues like Krishna Menon, who was involved in the infamous 'jeep scam' while he was the Defence Minister".
