Outgoing Chief smells ARV scam year after MoD got complaintshttps://indianexpress.com/article/news-archive/latest-news/outgoing-chief-smells-arv-scam-year-after-mod-got-complaints/

Outgoing Chief smells ARV scam year after MoD got complaints

204 ARVs bought this year; Bumar of Poland supplies them in collaboration with BEML.

Outgoing Army Chief General V K Singh said he had only just learnt that there were “issues” concerning the WZT-3 Armoured Recovery Vehicles (ARVs) but the Ministry of Defence had been receiving complaints about the contract with Bumar of Poland since last year.

Bumar supplies the ARVs — T-72 tanks re-fitted for repair and recovery — in collaboration with Bharat Earth Movers Limited (BEML) at almost identical terms and indigenisation stipulations as the Tatra-Vectra trucks. And,only four months ago,Bumar bagged a $275-million contract for supply of 204 more ARVs which the ex-Chief says were “useless.’’

A year ago,BJD MP Pinaki Mishra wrote to Defence Minister A K Antony complaining against the slow pace of indigenisation by BEML on the ARVs and what he called “obsolete” technology sold by Bumar to India. He sent a second letter on July 22,2011,alleging “vast details of fraud and misfeasance’’ in the BEML-Bumar contract.

The first order for ARVs was placed by MoD with Bumar in 1999 and with the latest contract for 204 vehicles,the total number contracted for stands at 556 ARVs.


On August 19,2011,Antony replied: “In the last contract of 2004,BEML attained an indigenisation content of 26% inspite of the fact that the RFP for the contract was issued for fully formed imports and without any precondition for indigenization. In the present case for procurement of 204 ARVs,the Ministry has stipulated an indigenisation content of a minimum of 30%. However,BEML will be directed to enhance this to a level of 50% in a time-bound and phased manner.’’

Antony also replied that the “price (of the ARVs) has been deliberated upon extensively by the Contract Negotiation Committee and acceptable prices worked out…’’

While BEML Chairman V R S Natarajan did not respond to messages and calls,Pinaki Mishra said he was not satisfied with the Minister’s reply since a fresh contract was signed by the MoD with Bumar and BEML for the ARVs despite the issues raised by him.

“The ARV case is just like the Tatra case which is now the subject matter of a CBI inquiry,” Mishra said. “The same issues of exorbitantly priced spares,slow pace of indigenization and lack of transparency in the bidding process stare us in the face here too.’’

Also,just as in the case of Ravi Rishi,the owner of Tatra-Vectra,the latest criticism of the Bumar ARV deal has turned the spotlight on Chetan Seth,Managing Director of BIPL (Bumar India Pvt Ltd),the joint venture between Bumar of Poland and the Chemon Group of Companies,established in 2005.

That JV was set up to create “indigenous sources of supply of T-72 parts and WZT-3 parts for supply to BEML/ Ordnance factories/Indian party.’’ Bumar,Poland,holds just under 26% equity in this company.

In response to questions on the ARV deal,Seth gave a written reply that BIPL has been specifically barred from doing “any activity’’ that may influence the sale of Bumar products and that all negotiations for the ARV deal were conducted directly between Bumar,Poland,and BEML.

Seth indicated that if there were issues on the inflated rate of spare parts for the WZT-3s,this could be because of the price difference between what Bumar is charging BEML and BEML,in turn,billing the MoD. Their statement reads,“It came as a surprise to us when we heard Gen V K Singh’s statement on television that BEML was charging 400% profit on Bumar spares. I will recommend that Bumar should ask BEML for an explanation and also request the MGO (Master General of Ordnance) that imported spares should be bought directly from Bumar at very competitive prices and there is no reason for them to be imported via BEML. BIPL could also deliver these spares in India.’’