Tatra: mountains of trouble
On March 26, the Hindu reported:
[Chief of the Army Staff General V.K. Singh] said the lobbyist offered him the bribe in order to have a tranche of 600 sub-standard vehicles of a particular make cleared for purchase. He said the vehicles, 7,000 of which were already in use in the Army, had been sold over the years at exorbitant prices with no questions asked. He said there was no proper facility where they could be serviced and maintained and yet they continued to be sold to the Army: “Just imagine, one of these men had the gumption to walk up to me and tell me that if I cleared the tranche, he would give me Rs. 14 crore. He was offering a bribe to me, to the Army Chief. He told me that people had taken money before me and they will take money after me.”
The Army chief said the brazenness of the act shocked him out of his wits. “I was shocked. If somebody comes and tells you, you will get so much, what can you do?” He said the man had recently retired from the Army, indicating how deeply entrenched the problem was.
Days later the Hindu reported a defamation suit filed by the accused against the general:
Lieutenant General (retd.) Tejinder Singh on Tuesday filed a complaint in the Patiala House District Courts here, accusing Army Chief General V.K. Singh, and four senior Army officers of criminal conspiracy to defame him.
Lt. Gen. Tejinder Singh accused his former colleagues of issuing a press release on March 5 that alleged he was involved in spreading stories to the news media about mobile phones of top Defence Ministry officials being intercepted by the Army.
However, the Army Chief, in response to a legal notice issued by Lt. Gen. Tejinder Singh’s lawyer, said the Army had evidence to back the contents of the release and would produce it in court, if called for.
The other officers named by Lt. Gen. Tejinder Singh are Vice-Chief of the Army Staff Lt. Gen. S.K. Singh, Director General of Military Intelligence Lt. Gen. B.S. Thakur; Additional Director-General of Public Information in the Army Headquarters Maj. Gen. S. L. Narasimhan and officer in the Public Information Department Lt. Col. Hitten Sawhney.
What are Tatra trucks? What is the possible crime here? Tehelka gives the background:
Defence PSU Bharat Earth Movers Limited (BEML) tied up with Czech firm Omnipol in 1986 and then Tatra Sipox UK in 1997 to procure the trucks.
Tatra Sipox UK is a London-based trading company and not the original manufacturer. This violates the first rule of procurement, which says you must buy from the manufacturer. At the time of signing the MoU, Sipox was registered as a company providing spiritual, religious and social services. The holding pattern then further changed, and BEML signed a joint venture between Tatra and Vectra. Both firms have Ravi Rishi as a major shareholder.
BEML signed another 10-year agreement with Tatra Sipox (UK) in 2003, four years before the first agreement ended. Successive army chiefs cleared the purchase of subsequent tranches of Tatra vehicles.
In February 2010, General Deepak Kapoor signed a fresh procurement request, later turned down by General Singh after he was allegedly offered a bribe by Lt Gen Tejinder Singh.
A Tatra truck that costs Rs 40 lakhs was sold to the Army for Rs 1.10 crore, leading to a loss of Rs 750 crore to the exchequer.
General VK Singh wanted to open up the bidding process to include Ural India, another manufacturer of defence vehicles, to get the truck at a cheaper cost. DRDO chief VK Saraswat countered Singh’s claim saying that there was nothing substandard about the vehicles used as base for launching missiles like Prithvi and Agni.
BEML chief VRS Natarajan has also denied any wrongdoing on the company’s part or that of the original equipment manufacturer (OEM) in the sale and delivery of Tatras to the armed forces. The PSU paid a substantial amount in advance for the order of 788 trucks.
Outlook investigated and came away with paydirt:
The army’s projected requirement for the next few years is roughly 5,000 high mobility vehicles (HMVs) and it has been recommended that procurement be initiated by inviting competitive bids from multiple vendors, instead of the single vendor system (BEML-Tatra) resorted to earlier. After Operation Parakram in 2001-02, a decision was taken to upgrade the Tatra fleet to increase their load-carrying capacities. New parameters were formulated and a request for proposal (RFP) was floated in 2010 by the weapons and equipment directorate where six vendors, namely M/s Vectra, M/s Ural, M/s Mann Force Trucks, Vehicle Factory Jabalpur, M/s Tata Motors and BEML were shortlisted for 10-tonne 6×6 vehicles. Simultaneously, a request for information was also floated for 12-tonne 8×8 vehicles to expand vendor base and trials began. The then Master General of Ordnance branch (MGO), Vinay Sharma, recommended that since trial testing is likely to take 3-5 years, procurement for 644 vehicles take place through the single vendor (BEML) as before, to meet immediate operational requirements.
Documents with Outlook show that following the chief’s objections, even this had been rejected in favour of the multi-vendor route. An audit report from 2008 sheds more light on why the army is keen to get rid of BEML. In ’06, the MGO had placed an order for 490 Tatras (6×6) for Rs 254 crore with BEML. The scrutiny showed that though the other two vendors, Tata Motors and Ashok Leyland, had carried out the new modifications suggested and approved by the army, BEML had not. Yet it got the supply order, on the strong recommendation of secretary, defence production, MoD. It also discovered that though the army needed the lighter Tatra 4x4s to ferry troops, they had not been given troop carriers, but vehicles built for laying mines. “Thus vehicles not designed to carry troops had been procured…to keep BEML’s production line alive,” the ’08 report noted.
BEML chairman V.R.S. Natrajan, who has not fought shy of calling the army chief names after the CBI came knocking, has publicly admitted that it procured completely knocked down (CKD) kits from Tatra Sipox (UK) Ltd, and that the UK-based firm has been appointed by the original equipment manufacturers (OEMS)—Tatra Slovakia and Tatra Czech —to market Tatra products in India. He also said that Tatra Sipox, Tatra Cz and Tatra Sl were all owned by the same organisation, the Vectra Group, “a consortium whose majority shareholder is Ravi Rishi, an NRI entrepreneur”.
But this is what Tatra, the original Czech company, has to say through spokesman Vladimir Bystrov. “Tatra wishes to state that neither Mr Ravi Rishi nor his investment company, Vectra Ltd, have control or have ever controlled, directly or indirectly, Tatra a.s. The British company, Vectra Ltd, is a minority stakeholder in Tatra Holdings and in principle holds one of the four votes. Nonetheless, Tatra will request from Mr Rishi and Vectra Ltd an explanation of the information about any initiated investigation of him and Vectra Ltd by the Indian CBI as it relates to sales of products branded with the ‘Tatra’ name.”
Parts of this case should not have come as a surprise to anyone. Tehelka drives home this point by digging up the persecution of a whistle blower inside the BEML from a decade ago:
On 15 November 2002, KS Periyaswamy, who was an employee of Bharat Earth Movers Ltd (BEML), wrote to the joint secretary of the MoD, demanding a detailed probe into the supply order for Tatra trucks placed by BEML with the UK-based company Tatra Sipox Ltd.
In his letter, he alleged that while the trucks were being manufactured by Tatra AS of Czechoslovakia, BEML was placing supply orders with Tatra Sipox. He claimed that Tatra Sipox was a middleman company and that there was a conspiracy behind giving the contract to Sipox. He received no reply or acknowledgement from the MoD and the ministry took no action on his information.
Periyaswamy, who is also a shared holder in BEML, first raised questions about the Tatra deal in the company’s 2002 Annual General Meeting. He continued to question the deal in subsequent general meetings and when he did not receive satisfactory answers, he wrote to the British High Commissioner in 2005.
In his letter he sought to know the ownership details of the UK company. Following this he claims that he was asked by BEML officials, who came to know of the letter, to drop the enquiries. In September 2005, Periyaswamy was suspended by BEML and later dismissed from service.
The case has now been handed over to the CBI for investigation, but other problems with defense procurement and preparedness keep coming to light. These multiplying cases only reveal the old truth: the way to a clean department is to keep it always open to public scrutiny. Procurements are not defense positions. Hiding procurements from public scrutiny only ensures that other governments know more about Indian defense preparedness than the Indian public.