The Central Bureau of Investigation is inquiring into the irregularities, if any, in the purchase of the all-terrain Tatra vehicles by the Indian Army from the Bharat Earth Movers Limited.
The serious charge of corruption in purchase of Tatra vehicles was made by Army Chief General V K Singh in a recent interview. Since 1986, the Indian Army has bought over 7,000 Tatra trucks.
Rediff.com on the basis of first hand information accessed from the multiple sources tries to give answers to the frequently asked questions about the tainted deal.
What are the allegations of corruption regarding the purchase of Tatra trucks?
The allegation is about the very high cost of the Tatra trucks to the Indian army. Tatra AS is a Czech company who manufactured the world-class trucks. Tatra AS has undergone a change of ownership. (Those details a little later).
The alleged dubious route though which trucks reached the Indian Army is the focus of the investigation by the CBI. If, what the sources in the army claim are true, then it is a serious allegation involving corruption worth crores of rupees.
The allegation is that the deal worked like this:
1. The Czech company sold the trucks to Venus Projects of Hong Kong, the trading arm of Vectra Worldwide, at a 35 per cent discount. (This is the first stage of loss to the Indian Army. The discount would have come to the purchaser, that is Indian Army, if a direct deal was struck with the manufacturer or a part of the discount could have been passed on to the Indian Army by the dealer/seller.)
2. Venus Projects sells the trucks to Tatra Sipox (United Kingdom) Ltd. This UK-based company is the holding company of Vectra Worldwide, owned by controversial businessman Ravi Rishi. He need not pay tax on the deal because there is a no taxation treaty between the two countries. But the price of the Tatra trucks goes up by 30 per cent.
3. Tatra Sipox then sells the inflated-priced trucks to BEML, the government owned company, after adding its profit of around 15 to 20 per cent.
4. BEML sells these trucks to the Indian Army after adding 25 to 35 per cent.
So, if you take into account the addition of transaction cost, commission, profit whatever you say at the four stages quoted above the Indian Army was getting the Tatra trucks paying 100 to 120 per cent higher than the factory price. This is what General Singh was complaining about. The CBI is, also, focusing on these dubious dealmakers at every stage.
How does the Indian Army get spare parts?
That is, probably, another scam. The Indian Army places orders through BEML for the spares. Tatra Sipox gets the intimation and forwards it to a company called Jupiter Slovakia, which is a holding company of Vectra Worldwide.
Jupiter contacts the suppliers of the Tatra spare parts but it does not go to the original Czech company. Thus, the pricing of the spare parts is arbitrary and mostly exorbitant. The Indian Army ends up paying 200 to 300 percent more than the actual cost. Since, the spare parts are not acquired from Tatra AS one is not even sure of the quality. Is there any other such dubious deal?
Yes. Brahmos, the Indian-Russian missile joint venture, needs cranes. BEML procures Atlas Cranes from Tatra Sipox. The same modus operandi is used by the Ravi Rishi. He gets it at around 35 per cent discount from Atlas Machinen GMBH, the German company that makes the cranes.
Tatra hikes the cost by some 25 per cent or more and sells to BEML who in turn gives it to the Brahmos after adding its own margin. India pays some 75 per cent plus higher cost by not buying straight from the Germans.
Ravi Rishi Money Laundering cycle
Govt denies money laundering cycle of 2G Scam: P Chidambaram and his son Kartik being protected- A Tango Duo
The serious charge of corruption in purchase of Tatra vehicles was made by Army Chief General V K Singh in a recent interview. Since 1986, the Indian Army has bought over 7,000 Tatra trucks.
Rediff.com on the basis of first hand information accessed from the multiple sources tries to give answers to the frequently asked questions about the tainted deal.
What are the allegations of corruption regarding the purchase of Tatra trucks?
The allegation is about the very high cost of the Tatra trucks to the Indian army. Tatra AS is a Czech company who manufactured the world-class trucks. Tatra AS has undergone a change of ownership. (Those details a little later).
The alleged dubious route though which trucks reached the Indian Army is the focus of the investigation by the CBI. If, what the sources in the army claim are true, then it is a serious allegation involving corruption worth crores of rupees.
The allegation is that the deal worked like this:
1. The Czech company sold the trucks to Venus Projects of Hong Kong, the trading arm of Vectra Worldwide, at a 35 per cent discount. (This is the first stage of loss to the Indian Army. The discount would have come to the purchaser, that is Indian Army, if a direct deal was struck with the manufacturer or a part of the discount could have been passed on to the Indian Army by the dealer/seller.)
2. Venus Projects sells the trucks to Tatra Sipox (United Kingdom) Ltd. This UK-based company is the holding company of Vectra Worldwide, owned by controversial businessman Ravi Rishi. He need not pay tax on the deal because there is a no taxation treaty between the two countries. But the price of the Tatra trucks goes up by 30 per cent.
3. Tatra Sipox then sells the inflated-priced trucks to BEML, the government owned company, after adding its profit of around 15 to 20 per cent.
4. BEML sells these trucks to the Indian Army after adding 25 to 35 per cent.
So, if you take into account the addition of transaction cost, commission, profit whatever you say at the four stages quoted above the Indian Army was getting the Tatra trucks paying 100 to 120 per cent higher than the factory price. This is what General Singh was complaining about. The CBI is, also, focusing on these dubious dealmakers at every stage.
How does the Indian Army get spare parts?
That is, probably, another scam. The Indian Army places orders through BEML for the spares. Tatra Sipox gets the intimation and forwards it to a company called Jupiter Slovakia, which is a holding company of Vectra Worldwide.
Jupiter contacts the suppliers of the Tatra spare parts but it does not go to the original Czech company. Thus, the pricing of the spare parts is arbitrary and mostly exorbitant. The Indian Army ends up paying 200 to 300 percent more than the actual cost. Since, the spare parts are not acquired from Tatra AS one is not even sure of the quality. Is there any other such dubious deal?
Yes. Brahmos, the Indian-Russian missile joint venture, needs cranes. BEML procures Atlas Cranes from Tatra Sipox. The same modus operandi is used by the Ravi Rishi. He gets it at around 35 per cent discount from Atlas Machinen GMBH, the German company that makes the cranes.
Tatra hikes the cost by some 25 per cent or more and sells to BEML who in turn gives it to the Brahmos after adding its own margin. India pays some 75 per cent plus higher cost by not buying straight from the Germans.
Ravi Rishi Money Laundering cycle
Govt denies money laundering cycle of 2G Scam: P Chidambaram and his son Kartik being protected- A Tango Duo
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