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Indian army paying kickback money for defense purchases
http://www.paktribune.com/news/index.shtml?180355
http://www.paktribune.com/news/index.shtml?180355
NEW DELHI: India has spent Rs 44,000 crore over the past three years on defence purchases to emerge as the biggest arms importer in the world, overtaking China.
The involvement of middlemen in arms deals and that they pay commission to swing deals with the Indian government for their clients has been hardly a secret.
In a rare instance of its kind, an Austrian firm has created a flutter by telling the Supreme Court that Russian armaments manufacturer Kazan Helicopters paid Rs 29 crore to swing a Rs 180- crore deal to supply 16 MI-17 helicopters to the ministry of defence and BSF.
Even though the ministry of defence has angrily denied the charge, a fallout of a business feud between the middleman and the Russian company. Leveled in a PIL, the Supreme Court has taken serious note of the matter. It has sent notices to the ministries of defence, finance and home, as well as CBI, according to sources.
The judicial vigil makes sense considering that India spent Rs 44,000 crore over the past three years on defence purchases to emerge as the biggest arms importer in the world, overtaking China.
If the admission of the Austrian firm that Kazan had pledged to pay 16% of the deal amount as commission to thee middlemen is taken as the industry norm, then suspicion is sure to rise about huge cost padding which leaves the armament firms enough room to pay generous commission to middlemen.
The commission confession in the PIL filed by Dipak Kumar Jena is significant also because it shows that for all the much hyped resolve of successive regimes to banish middlemen, they have not only been in business but have jacked up their cut. The commission paid in the Bofors deal worked out to be just over 5% of the total value of the howitzer deal.
And it took a bitter fight between the middlemen � Singapore - based Austrian firm Rite Approach Group Limited and the Russian Rosoboronex � Ports � for the dirty secret to tumble out. The Austrian firm has acknowledged the veracity of the charge in the PIL that Kazan had contracted to pay 16% of the deal amount to the two agents. The collaboration, worked fine till the Russian partner allegedly turned greedy and cornered the entire commission from Kazan.
Jena's PIL, I as of on a TOI report of November 21, 2005, had sought a CBI, probe into the matter alleging that commissions were paid over which two foreign firms fought and had sought SC assistance in adjudication of their dispute.
Rite Approach Group Ltd (RAGL), represented by Austrian Trade Commission with its office in New Delhi had acted as the agent of the Russian firm and claimed to have helped in clinching the deal.
The claim by an Austrian firm that Russian armaments manufacturer Kazan Helicopters paid Rs 29 crore to swing a Rs 180 crore deal to supply 16 MI-17 helicopters to the ministry of defence and BSF has led to a new controversy. In an affidavit before the apex court on May 11, Erich Gutmann of Paolo Santini Warenvertriebs GmbH, which owns RAGL- the agent of the Russian firm � said, �The price of helicopters paid for by the Union of India to Rosoboronexports included the component of 16% commission�. A copy of the affidavit is with TOI.
Undeterred by the defence ministry's strong denial, Gutmann mainained, �Kazan Helicopters had also confirmed payment of $6.5 million (Rs 29 crore) as commission in terms of the contract�.
The defence ministry had produced a letter from Kazan Helicopters to back up its protestation that no commission was paid.
The affidavit also stressed that it has no bones to pick with the defence ministry. �Santini Warenvertriebs GmbH is only concerned with the fraud played by Rosoboronexports in misappropriating the entire 16% commission payable under the agreement dated April 14, 2000, between RAGL and the Russian firm�, the Austrian firm said.
But the firm argued that Rosoboronexports should be held liable for violation of any policy decision of the government not to pay commission in defence deals.
