BEML Chairman drives Tatra Truck into muddy waters

DNA exclusive: Gen hit it right on the bonnet when he said Tatra trucks unfit
Published: Monday, Apr 2, 2012, 9:30 IST
By Gangadhar S Patil & Sandeep Pai | Place: Mumbai
Army chief General VK Singh was right. Not only are Tatra trucks substandard but they are also overpriced.
VRS Natarajan, chairman and managing director of BEML, on Friday had rubbished whatever the general had said about Tatra trucks. But documents with DNA show that BEML officials knew that Tatra Sipox (UK) had been fleecing the country over the years by supplying outdated trucks.
Ever since Gen Singh alleged on March 26 that a retired lieutenant general had offered him a bribe of Rs14 crore to “clear the tranche [purchase of 600 substandard Tatra-all-terrain vehicles]”, skeletons have been tumbling out, pitting the army against the defence ministry and BEML.
Of the several letters and notes exchanged between BEML and Tatra Sipox (UK) Ltd to finalise a new agreement on transfer of technology in 2008-09, it is clear that the UK company dictated the price at which the PSU would buy the trucks.
Each time Tatra Sipox sent the agreement to BEML for signature, mid-level officials of the PSU rejected it on several grounds. In fact, they even demanded that Tatra Sipox supply the latest versions of the trucks, which the company had not done in the past.
In 2003, Tatra Sipox had accepted that it had provided outdated models of Tatra trucks and formally agreed to provide the latest versions. When the agreement came up for renewal in 2008, however, it was back to square one.
Replying to Tatra Sipox’s draft agreement, a BEML official pointed out in December 2008: “Tatra Sipox (UK) Ltd have cunningly once again omitted references to the previous understandings/agreements.”
The UK company, in fact, chose to keep the terms of the agreement vague so that it could continue supplying outdated versions of the truck. The draft had no specifics of the trucks to be supplied. The agreement proposed by Tatra Sipox is “one-sided and does not cover” BEML’s interests, one letter from the PSU stated.
In the draft, Tatra Sipox kept its option of supplying trucks compliant with Euro I or II or III standards open. That meant it could also supply trucks compliant with Euro I norms. BEML officials, however, insisted on engines compliant with Euro III and IV standards. It noted that the “purchase of Euro II engines would not be viable because Euro IV emission standards are in vogue across the world” and automobile companies were moving towards Euro V standards.
A former BEML employee told DNA that “Tatra Sipox wanted to keep the agreement vague so that they could keep supplying Euro II engines”. It also meant that the company could charge extra for upgrading the engines.
The matter did not end with old models; Tatra Sipox kept increasing the price according to its convenience. A November 25, 2008, letter from a BEML official commented on the agreement: “Tatra Sipox (UK) Ltd is well known for its unjustified demand for increase in prices”. It went on to list a few examples. “Of late, the UK company has been insisting on steep increase in prices of completely knocked down (CKD) kits and spare parts.” Tatra Sipox had drafted a clause that would provide it with room for “demanding additional money”, the letter said. “[This] need not be agreed to. We must be satisfied with the adequacy of technical support and there need not be any room for negotiating further course of action.”
Clik here for the explosive report