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The kickback diaries
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Wed Oct 10 08:00:53 GMT 2012
One of the worlds most lucrative arms markets, India imports
almost 70 per cent of its weapon systems.Between 2007 and 2011,
India accounted for 10 per cent of the global arms market, says the
StockholmInternational Peace Research Institute. While Indias
defence buying grows, the shady underbelly of kickbacksand bribes
is also growing. A few examples:Singapore Technologies Kinetics Ltd
was blacklisted for 10 years after it was found that the company
hadpaid a consideration to Sudipta Ghosh, former director general
of ordnance factory board. It was the maincontender in $1.8 billion
deal for 400 towed artillery guns, to be followed by production of
up to 1,180 pieces inIndia.Israel Military Industries Ltd, Israel's
state-run defence equipment supplier, was blacklisted for bribing
Ghoshto release 20 per cent as advance payment. The defence
ministry has encashed its bank guarantee of 0224crore for violating
an integrity pact to set up an ammunition plant in Nalanda,
Bihar.Blacklis ting proceedings were initiated against Rheinmetall
Air Defence, Zurich, for allegedly bribing Ghosh.The CBI is now
investigating the charge that the company had also paid $5,30,000
to middleman AbhishekVerma to get the it off the
blacklist.Corporation Defense, Russia , was blacklisted in a
corruption case involving Ghosh, which came to light threeyears
ago. Founded in 1993, the company specialises in the development
and manufacture of armour formilitary vehicles.T.S. Kisan & Co.
Pvt. Ltd, Delhi, and R.K. Machine Tools Ltd, Ludhiana, were
blacklisted after the CBIfound that they were paying
kickbacks.Bharat Earth Movers Ltd chief V.R.S. Natarajan was
suspended after it was found that BEML violatedpurchase guidelines
by placing orders for Tatra trucks with Tatra Sipox UK, a
middleman, and not with the
original manufacturer. The pricing and quality of the trucks
have also come under the scanner.Hellenic Defense System, Greece,
is under investigation after it was found that the company had
engagedVerma's services. It is illegal to engage middlemen in
Indian defence deals.AugustaWestland, the Italian company, is under
investigation for allegedly agreeing to pay a commission of 8per
cent on fully equipped helicopters and 15 per cent on spare parts
sold with helicopters.Bharat Electronics Ltd and Prizmatech, a
subsidiary of Star Defence Systems, Israel, are allegedly underthe
scanner in a night-vision devices deal.South Africas Denel was
blacklisted for allegedly paying kickbacks. It was one of the
contenders for a $2billion deal for about 400 155mm self-propelled
howitzers.
The No list
* While defence deals in India often go through middlemen and
brokers, the defence ministry's (MoD) integritypact bars companies
from entering into in any corrupt activity, such as hiring
middlemen or influencinggovernment officials and processes.
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* The MoD signs an integrity pact for all contracts worth over
0100 crore. The pact testifies that the companysigning the contract
has not engaged any middlemen, not paid bribes and has not used
unfair means duringany stage of the bid.* Under this pact, bidders
are prohibited to offer, directly or through intermediaries,
commission, fees,brokerage or gifts to the buyer.* The MoD can
invoke the pact to cancel, blacklist or even fine the bidder or
encash bank guarantees providedby the bidder.
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