The probe into alleged pay-offs by South African arms firm Denel in the supply of anti-material rifles to India has gathered momentum with the company admitting that it did indeed engage the services of one Varas Associates between 2001 and 2004.
This is a significant admission given that Denel had dismissed the first report in Cape Argus, a South African newspaper, which first mentioned Varas Associates, a company registered in the British Virgin Islands.
Sources involved in the investigation said that Denel has now confirmed that Varas was engaged for a fee for providing ‘‘technical assistance’’ for the Indian contracts. This admission, sources said, has come through diplomatic channels and has since been conveyed to the CBI.
A fortnight ago, the CBI had registered a First Information Report (FIR) in the Denel case, alleging pay-offs to the tune of Rs 20 crore for the rifle contracts. The FIR said that Denel had paid Varas 12.75 per cent commission on all deals it had secured despite the ban on agents.
Denel, though, denies it has violated any Indian laws and has described reports of pay-offs for procuring papers of the Price Negotiating Committee as alleged by South African newspapers, as ‘‘nonsensical.’’
Incidentally, a team from Denel, headed by its new Chief Executive Officer, Shaun Liebenberg, is in New Delhi and held consultations with senior officials of the Ministry of Defence and Defence Production.
CBI officials, who have been coordinating with the MoD and the Ministry of External Affairs, say they have copies of agreements between Denel and Varas as well. These agreements were reportedly given by Denel after Indian High Commission officials in Pretoria contacted them.
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Significantly, CBI sources say, an early scrutiny of the Varas agreements shows that certain portions, probably the financial clauses, have been erased before being submitted to Indian officials.
The CBI is now working on a Letter Rogatory (request for investigations) that will be sent to Pretoria. The MoD, meanwhile, is continuing with its freeze on all dealings and negotiations with Denel.
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The Denel deal: what it was and how it’s played out
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• Under deal, first signed in 1999 by NDA govt, 100 AMRs (anti-material rifles) bought for Rs 23 crore. They are used to bust bunkers
• Now Army has about 400 Denel AMRs, was to get about 400 more. All that frozen now
• Denel also involved in setting up ordnance factory in Fernandes’ constituency Nalanda, also in the running for artillery sale
• April 15: South African govt replaces Denel CEO over “financial mismanagement” charges
• April 17: South African daily Cape Argus says Denel paid British agency Varas money to procure secret Indian government contract documents
• April 20: MoD suspends all ongoing deals with Denel which denies any wrongdoing
• April 21: Govt asks Denel to explain, announces CBI inquiry into all Denel contracts, others under NDA regime
• June 6: CBI files first case of corruption against Denel
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