This Article is From Mar 27, 2012

Rs 14-crore bribe offer to army chief exposes scam worth crores in Tatra trucks

New Delhi: The revelation by the Army chief, General VK Singh, of an offer of a 14-crore bribe has sharply brought into focus what was really at stake. The bribe was allegedly offered by a lobbyist for a truck supplier who flooded the Army for more than two decades with 7,000 over-priced vehicles which performed poorly when put to use. Yet, this supplier, Tatra, a Czech manufacturer, who supplies the trucks to the Army through a Defence Public Sector Undertaking Bharat Earth Movers Ltd. (BEML) was not blacklisted. In fact, the swindle worth hundreds of crores appears to have been facilitated by the government-owned BEML which supplies the Army with trucks and other equipment.

The middleman who met General Singh wanted clearance for one more batch of 1600 vehicles in September 2010. For this, the lobbyist allegedly offered 14 crores. (Read: 14-crore rupee bribe offer recorded on tape: Sources) In 2010, the government changed the rules so that different manufacturers could apply for the contract through open bidding. After nearly 25 years of a monopoly, Tatra became one of three or four contenders. Since then, the contract has not been awarded to any supplier.

Tatra all-weather all-terrain trucks are used to transport missiles, artillery and troops. These trucks are manufactured in the Czech Republic. The cost to the country has been huge. A 4x4 Tatra truck, for example, costs between 40 to 50 lakhs in Europe. It was sold by BEML to the Army at nearly double that price. Ashok Leyland and Tata Motors supply similar trucks for 16-18 lakhs. Jacks for the Tatra truck, available in the market for Rs 3000 for similar heavy vehicles, were bought for Rs 30,000 each by BEML on behalf of the Army. (Read: RTI document on Army's purchase of over-priced trucks)

The top dollar paid for the trucks wasn't matched by performance. A whistleblower named Anil Bakshi reveals that the Army has, for a while, been unhappy with the performance of the Tatra trucks. Mr Bakshi was a defence contractor for the Indian Army and was contracted to prep vehicles for the Army's use after they had been bought. In 2009, he said that 45 Tatra trucks arrived with faulty or damaged tyres and old batteries. He refused to clear them for usage.

Other experts say that spare parts are not easily available for Tatra trucks. BEML takes upto two years to deliver spare parts.

Instead of buying these trucks directly from the manufacturer, BEML uses a middleman named Tatra Sipox, a London-based trading company. However, government rules make it necessary for all defence equipment to be bought directly from the manufacturer. In 1986, India signed a transfer-of-technology agreement with a Czech company named Omnipol. The idea was for BEML to learn how to eventually build heavy vehicles locally. That deal continued till 1997 when BEML signed with Tatra Sipox, a London-based trading company, and not the original manufacturer of the trucks. The Czech company is the original manufacturer. In violation of defence rules, a middleman or dealer had entered the picture. BEML never gathered the expertise to eventually build a Tatra-like truck on its own.