Defence ministry blacklists 7 firms on corruption charges

The Times of India

With former Ordnance Factory Board (OFB) chairman Sudipto Ghosh being arrested by CBI recently in a major defence scandal, the defence ministry has blacklisted seven companies, including major ones from Israel, Singapore and Poland, named in the case.

Keen to curb the widespread murky wheeling and dealing in arms deals, defence minister A K Antony has directed that all acquisition cases and projects in the pipeline with the seven companies “be put on hold till further orders”.

While the foreign firms are Israeli Military Industries (IMI), Singapore Technology, Media Architects (Singapore) and BVT Poland, the Indian ones are HYT Engineering, R K Machine Tools and T S Kishan and Company Pvt Ltd.

All the seven firms were named in the CBI FIR registered on May 17 against Ghosh, M S Sawhney, a Vasant Vihar-based defence dealer, Ramesh Nambiar, an additional general manager with Air India, and three middlemen, Ashish Bose, Pradeep Rana and Kanhai Lal Das.

IMI, incidentally, had inked a contract with OFB, worth around Rs 1,200 crore, to set up an ordnance complex of five plants at Nalanda in Bihar, in the run-up to the general elections in March.

The plants were to manufacture 155mm Bi-Modular Charge Systems (BMCS) and other propellant charges for heavy calibre artillery ammunition for Army’s Bofors howitzers and other guns.

Singapore Technology, one of the biggest aerospace and land systems company in Asia, in turn, was a strong contender in tenders for 155mm artillery guns for Army.

While Media Architects is said to be supplying video-editing software to Indian armed forces, BVT Poland is said to be engaged in marine engineering and naval architecture.

As for the Indian companies, T S Kishan and Company apparently supplies spares and accessories for Army’s T-72 and T-90S main-battle tanks, while Pune-based HYT Engineering provides some components of missiles produced within the country. Ludhiana-based R K Machine Tools, in turn, supplies spares for vehicles and machinery produced by Defence PSU Bharat Earth Movers Ltd.

“While CBI is yet to file the chargesheet, there is concrete evidence about money transfers to personal accounts of the persons named in the FIR. The defence ministry has sought a detailed list of equipment and material that these blacklisted companies provided to the armed forces. It is still awaited,” said an official.

The blacklisting of the seven companies comes four years after the South African arms firm, Denel, was banned for allegedly paying Rs 20 crore as kickbacks in five contracts for supply of 700 anti-material rifles and ammunition as well as transfer of technology to OFB.

But, interestingly enough, Israeli Aerospace Industries and Rafael, named in the kickbacks case in the original Rs 1,160-crore Barak-I anti-missile defence system deal inked in 2000, have not been blacklisted on the ground that it would be “counter-productive” due to the several crucial defence projects underway with them.

The Nalanda project, on its part, has had a convoluted past. The project was first kicked off during George Fernandes’ tenure as defence minister in the NDA regime, with the proposed factory complex at Rajgir in Nalanda located in his earlier Lok Sabha constituency.

Later, the NDA regime identified Denel for the Nalanda project. But after Denel’s blacklisting, the construction of the Nalanda complex, on which an initial Rs 306 crore was spent, had come to a grinding halt.

The UPA government, after coming to office, later constituted an “expert committee” to review the entire project. Subsequently, a global tender was floated after the green signal from the “expert committee” and the Cabinet Committee on Security had approved IMI’s participation in January this year.

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