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One FIR,Govt blacklists 7 firms,hits artillery upgrade

Cracking down on corruption in defence deals,India has blacklisted seven companies,including those from Israel,Poland and Singapore,and ‘put on hold’ all acquisition from them.

New Delhi |
June 5, 2009 3:47:30 am

Having already taken a knocking with the controversies involving Bofors and Denel,India’s artillery modernisation programme hit another roadblock when the Ministry of Defence,taking note of bribery allegations in a fresh case,blacklisted seven firms,including gun manufacturer Singapore Technologies (ST) and munitions giant Israeli Military Industries (IMI) until further notice.

With all dealings with the two firms put on hold,defence contracts worth over Rs 6,000 crore — all involving artillery guns and ammunition for the Army — are now in deep freeze.

Confirming a report in The Indian Express,the Ministry of Defence said “all acquisition cases in the pipeline” with seven firms have been “put on hold” after their names figured in a CBI probe into corruption charges against former Director General of Ordnance Factory Board Sudipta Ghosh.

Taking a tough stand on charges of bribery against these companies,Defence Minister A K Antony said that the ban “should act as a deterrence to all those who are involved in procurement of system platforms for defence sector.”

The Army’s artillery acquisition programme had already taken a beating following the Bofors scandal and the blacklisting of South African giant Denel on bribery charges in 2005.

With Denel still blacklisted,Singapore Technologies was the frontrunner in a Rs 5,000-crore tender to provide 155 mm light howitzers for Army use in mountainous terrain. ST was the only company in consideration for the contract after BAE Systems Bofors did not take part.

The Army quest for self-reliance in artillery ammunition has also been hit with the ban on Israeli firm IMI. The company had been awarded a Rs 1,200-crore contract in April to set up an ordnance factory in Nalanda to produce ammunition for the 155 mm Bofors guns. Officials said the contract has now been put on hold.

The factory is already five years behind schedule,stalled in 2005 following the Denel scandal. The South African firm had originally been selected to start the factory. Initial payments had already been made when it was blacklisted following corruption charges.

Incidentally,all three Indian firms blacklisted Thursday are also involved in the manufacture of ammunition components for the 155 mm artillery guns of the Army. The companies barred from business are:

• Israeli Military Industries,Israel: The small arms manufacturer recently bagged a Rs 1,200-crore deal to set up a ammunition factory in Nalanda. It manufactures well-known small arms including the Uzi submachine gun,the Tavor assault rifle and the Desert Eagle revolver. In 2002,India signed a Rs 90-crore deal to procure over 3,000 Tavor rifles for its special forces from IMI.

• Singapore Technologies: The Singapore-based firm manufacturers small arms and artillery systems,mainly for its parent country. The firm has a joint venture with OFB on small arms and the two have jointly developed a carbine,the SAR 21 MMS for sale to Indian defence and paramilitary forces. It was the frontrunner in a Rs 5,000-crore tender to provide 155 mm light howitzers for the Army.

• T S Kishan and Co Pvt Ltd: A Delhi-based firm,it manufactures explosive shells for the 155 mm Bofors guns in service with the Army. It has a tie-up with OFB for manufacturing sub-components of the artillery ammunition.

• R K Machine Tools: The Ludhiana-based company supplies critical components to the OFB including 120 mm shells and varieties of 155 mm ammunition and flares.

• Media Architects Pvt Ltd: The Singapore-based firm specialises in new media technologies and is the distributor of several software packages.

• HYT Engg: The Pune-based firm is also involved in manufacture of 155 mm components for the Army.

• BVT,Poland.

The Ministry of Defence spokesperson Sitanshu Kar said that though the CBI has not yet filed a chargesheet,evidence such as transfer of money to personal accounts of government employees involving the companies have been detected.

The Ministry said all acquisitions with these companies have been put on hold. “The matter will be further reviewed as and when the CBI provides more evidence. The Ministry of Defence desires to tackle issues of corruption in procurement cases head-on,” Kar said.

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