Chethan Kumar, Bangalore, April 24, 2013, DHNS: – DECCAN HERALD

The Aeronautical Development Establishment (ADE), one of the agencies working on light combat aircraft — Tejas had struck an agreement with BAE Systems Overseas Inc for supply of 15 ship sets of integrated flight control systems line replacement units costing US$3,06,00,000, without the approval of competent authority, states the audit of the Office of the Director of Air Force Audit.

BAE Systems Overseas Inc was to have delivered the units by March 2009. “Under the contract, ADE received 14 shipments. The consignment containing the 15th set consisting of actuators (total 15 numbers) valuing US$21,27,215 (Rs 10.63 crore) in one case weighing 206-kg was sent via shipper number 54151 dated December 17, 2008 by British Airways. However, the consignment was not received by ADE,” the report, completed in 2010 reveals.

Bringing this to the notice of Defence Minister A K Antony, Javed Abbas Technical Officer ‘B’, retired, in a letter said there are several other irregularities going on at ADE, a lab under Defence Research and Development Organisation (DRDO), regarding appointments, promotions and transfers.

The audit report, annexed in to the letter, further states: “as per documents provided by BAE Systems, USA, the consignment was received by British Airways and the aircraft left the John F Kennedy International Airport (New York) for Heathrow Airport, London on December 12, 2008 by flight number BA 114.”

While 40 per cent of the value of these products had already been paid to BAE, payment for balance, amounting to 60 per cent of value was effected in October 2009, well after the deadline for delivering of the units was passed, and, the consignment had not reached ADE.

The auditors point out that as per para 7.2 of Purchase Management procedure, 2006, stores costing Rs 2.5 crore might be insured against loss or damage in transit and that insurance cover will invariably be obtained from the insurance agency before dispatching the consignment by the supplier.

“However, the consignment was not insured by DRDO in contravention of the regulation. On reasons for non-insurance, the ADE stated that the clearing agent Air Consolidation Agent — Balmer & Lawrie & Co did not advise the establishment to do so,” the report adds. Observing that the excuse is not tenable, the audit said, onus of deciding on whether the consignment should be insured or not rests with ADE and not the clearing agent.

“Thus, by not insuring the consignment by ADE, as provided in the regulation, the State had to bear loss of Rs 10.63 crore,” the report concluded.

DRDO sources said the consignment, eventually never reached the organisation, and it was lost in transit!