Cartels fleece India in defence deals

Cartels fleece country in defence deals

The government of India paid Rs 17,805 for a spare part for the Indian Navy, a D(408) B Crystal worth just Rs 35. It paid Rs 11,192 for a Relay PEC-9 part worth Rs 95. It paid Rs 46,750 for a balancing piston worth Rs 1,475. These and other spare parts were purchased from a cartel including M/s Makalu, M/s Machinery Sales Corporation and M/s HC Supplies. These are figures supplied by Rear Admiral Suhas V Purohit, assistant chief of personnel, to the Delhi High Court through a writ petition filed by him in the Delhi High Court against the Union of India and the Chief of Naval Staff last week. The petition, complete with documents, seeks the court’s intervention in ensuring Rear Admiral Purohit’s promotion to the rank of Vice-Admiral, stating that this “has been held arbitrarily and illegally thereby infringing his fundamental rights.” Gross corruption surrounds defence deals, all of which are reportedly negotiated by the Ministry of Defence through middlemen and middle companies. Crores of rupees are lost to the nation each year as rules are bent or openly flouted to encourage cartels, float and finalise hasty tenders, purchase similar items at different rates, and procure spares at exorbitant prices. “Financial impropriety in defence deals with the active participation and collusion of bureaucrats both from the administrative and financial services has got highlighted in major arms procurement deals. While HDW and Bofors may be more glaring due to the capital expense aspect, similar activities pertaining to revenue expenditure can be and are far more damning, more difficult to identify and very nearly impossible to put right without the active support of the entire system,” wrote Rear Admiral Suhas V Purohit, assistant chief of personnel, to the Chief of Naval Staff in May last year. This letter now forms part of the annexures submitted with his petition. Other items that give an indication of the kind of money being paid by the Ministry of Defence to middle companies include Lower Cover 383-1-38, which costs Rs 1,475 and was purchased for the Navy for Rs 38,725; Contact 8BC-553-005, which has a departmental price of Rs 145 and was sold to India for Rs 7,755; LO Pressure Cut out (M) CT 1.5A, which cost the country Rs 27,876 against the original price of Rs 608 and SN-23 Pump (Complete) which was sold to the government for Rs 20,82,556 as against its departmental price. After the government ban on HDW it had, according to Rear Admiral Purohit’s annexures, “passed its product support obligations to a company called Marlog. HDW and a steel maker, Ferrostal, own this entity 50 per cent each. Prior to the procurement of spares for the mid-life refit of Shishukumar being taken up, all SSK spares procurements were limited to a single source, namely M/s Marlog. The Navy actually had no contractual obligation to procure spares only from M/s Marlog, yet every effort to forestall open tender enquires were made by the vested interests.”According to figures submitted before the court, M/s Marlog cited quotations far in excess of similar prices quoted by the company itself earlier. For example, within two years it had hiked the price of a piston rod of Rs 626 to Rs 98,420 and of a valve cover seat ring from Rs 436 to Rs 7,539. Shedding more light on the corruption involved, Rajya Sabha MP Jayant Malhotra, who is also a member of the Consultative Committee for the Ministry of Defence, said in Parliament in the last session, “I am not alleging the presence of middlemen. I am charging that there is no defence deal without the presence of middlemen, agents, traders and middle companies.” He named, on the record, a number of businessmen. Malhotra, while initiating a debate on defence procurements in the Upper House, went on to say, “We have political facilitators also. The agent may get two, five or eight per cent but the facilitator may get 25 to 30 per cent.”