Army chief bribe row and the shady world of arms deals

The Army chief , Gen VK Singh’s, sensational allegation that he was offered a Rs 14 crore bribe by a retired Army officer-turned-lobbyist (subsequently identified as Lt Gen Tejinder Singh) to approve the purchase of Army trucks has refocussed attention on the shadowy world of defence procurements.

It is an intricate web that involves, by some accounts, some Indian politicians, although there is as yet no confirmation of the role that they played.

Gen VK Singh alleged that Tatra trucks, which have been on Army ‘duty’ for close to two decades – it saw action during the Kargil war - were “substandard” and overpriced. The Tatra deal has been under a cloud for a long while now, but until Gen VK Singh blew the whistle, no serious effort had been made to get to the bottom of it.

Army chief bribe row and the shady world of arms deals

The Army chief's allegations have opened a can of worms. AFP

The first agreement for procuring Tatra trucks was signed in 1986 with Omnipol Foreign Trade Corporation of the Czechoslovakia. But about the time that the Soviet empire was collapsing in the early 1990s, and the satellite states (including Czechoslovakia) were spinning out of orbit, Ravi Rishi, an astute NRI businessman, moved in to pick up Tatra on the cheap, through his London-based consortium Vectra.

Tatra’s fortunes in India soared since then; in 1992, the Indian public sector undertaking BEML starts buying the trucks from Tatra Sipox UK.

Tatra Sipox UK was, according to documents with CNN-IBN, a London-based trading company and not the original manufacturer. Procuring from Tatra Spiox broke one of the cardinal rules of defence procurement – that all procurement should be sourced directly from the manufacturer, not a third party.

Curiously, Tatra Sipox’s balance sheets of those years show it had a working capital of just 30,000 pounds. And the firm was registered as providing “spiritual, religious and social services.”

Listed among the shareholders of Tata Sipox UK was Joseph Majeski, a Slovakian national who at one time faced a jail term for misappropriation of funds.

In 2003, more than a decade after the first deal, BEML and Tatra Sipox (UK) sought to increase the scope of the relationship. But at that point, they faced the first hurdle, when the Equipment Branch of the Army raised objections to the deal.

CNN-IBN has in its possession a copy of a letter in which probing questions were asked of the deal, in particular: Who was the original manufacturer of the truck? What was the source of procurement? What was the price at which it was being procured? And what was the role of Tatra Sipox UK?
But within two months, the letter was treated as cancelled, for reasons that are not clear.

Subsequently, the holding pattern of the companies changed, after which BEML signed a joint venture with Vectra, of which Ravi Rishi was the major shareholder.

Under the terms of the 2003 agreement, the Chief of Army Staff has to sign on the procurement deal for the trucks every year. The last time the deal was signed was in February 2010, by Genenral (Retired) Deepak Kapoor.

But within weeks of taking over as Army chief, Gen VK Singh applied the brakes on a pre-approved order for the supply of 788 Tatra trucks on the grounds that they had not performed optimally and were horribly overpriced. He was inclined to consider a rival manufacturer, the Kolkata-based Ural India Ltd, which offered to sell the all-terrain vehicles for Rs 40 lakh each (against the Rs 1 crore price tag that the Tatra trucks came with). Ural India is a joint venture between URALAZ, the Soviet heavy-duty automobile company established at the height of the Second World War, and Motijug Agencies owned by JK Saraf.

It may have been the prospect of being shut out of the lucrative Indian market that  prompted the desperate offer of a bribe to Gen VK Singh.

Once earlier, the Vectra Group, which pimped for the Eurocopter in India, had had the mortifying experience of being similarly shut out. In 2007, Defence Minister 2007 pointedly cancelled a contract for the purchase of 197 aircraft for the Army after revelations that a senior Army officer had links to a Vectra group company.

Vectra Group is believed to be keen to sell all-terrain vehicles and helicopters to the Home Ministry, which is low on such equipment for the operations against Maoists in central India.

Writing in The Sunday Guardian, Madhav Nalapat claims, citing unidentified sources, that Lt Gen Tejinder Singh, who stands accused of fronting for Tatra and offering Gen VK Singh a bribe, is connected to at least one upcoming politician. Tejinder Singh, he writes, “operates in tandem” with a retired major and his son, “both of whom are well-known” to Home Minister P Chidambaram’s son Karthi Chidambaram.

Subramanian Swamy too has pointed to connections between the “triumvirate” of Tejinder Singh, the retired Major, and Karthi Chidambaram.

None of this has been established beyond reasonable doubt, but it's fair to say that Gen VK Singh's sensational claim has literally thrown open a can of worms. The CBI's ability to get to the bottom of it all will be on stern test.

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Updated Date: Mar 28, 2012 06:50:49 IST

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