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Delhi High Court revokes suspension of BEL whistleblowers;

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By Pradip R Sagar October 16, 2019 18:34 IST THE WEEK

The officials have exposed the alleged irregularities in a multi-crore project


Causing embarrassment to the defence public sector undertaking, Bharat Electronics Limited (BEL), the Delhi High Court has quashed the suspension order of three of its senior officers, who have exposed the alleged irregularities in a multi-crore confidential project for the Indian Air Force.

On the basis of inputs on alleged irregularities in awarding a contract to a private firm by violating norms for Integrated Air Command and Control Systems (IACCS) for the IAF worth 79,00 crore, BEL in July 2018 had set up a three-member investigation panel. The panel was headed M.M. Pandey, general manager (Product Support), and comprised R.K. Goyal, senior deputy general Manager (Vigilance), and Sumit Krishna, manager, (Product Support). On October 3 last year, the committee submitted its report which said shell companies were used to gain contract. The investigation panel also pointed irregularities in awarding consultancy contract to a private firm for IACCS project at 10 locations across the country.

On March 29, 2019, the chief vigilance officer submitted its final report to the Chairman and Managing Director of the BEL, supporting the panel’s view. The report had stated: “A company that came into existence in April 2010 showed its employees had an experience of five years in 2013.” Moreover, the report also mentioned role of senior Defence Research and Development Organization (DRDO) officers, who were under the scanner, since it was the DRDO which recommended the name of the private firm to BEL.

However, instead of taking action against the corrupt officials on the basis of CVO’s report, the BEL authorities suspended all three members of the committee on disciplinary charges. A chargesheet and suspension order was issued against the whistleblowers on May 17, 2019.

While delivering the judgment, the court observed that on perusal of chargesheet-cum-suspension order (dated May 17, 2019), it is specifically mentioned that M.M. Pandey, GM, product support, was appointed as Investigation Officer by CVO (vide letter dated July 18, 2018) to conduct a detailed investigation into the alleged irregularities reported in the execution of civil construction works in the IACCS project. It is further stated the he submitted his report October 3, 2018 to the CVO which was received in CVO’s office on October 8, 2018.

“Thus, it is established that the chargesheet-cum-suspension order was issued in pursuance to CVO letter dated July 18, 2018 to conduct a detailed investigation into the alleged irregularities,” Delhi High court stated in its order.

“Since the disciplinary authority concerned for the petitioners have not initiated departmental proceedings, therefore, in my considered view, the order dated May 17, 2019 is illegal and accordingly set aside.” said Justice Suresh Kumar Kait in his order dated October 9, 2019.

IN THE  HIGH COURT OF DELHI  AT NEW DELHI

Date of decision: 09.10.2019

+                      REVIEW PET. 360/2019 and CM APPL. 39523/2019 (Stay)

in W.P.(C) 8188/2019

MAN MOHAN PANDEY AND ORS.                                ….. Petitioners

Through:          Mr. Tarkeshwar Nath and Mr. B.K.Pandey, Advs.

                          versus

BHARAT ELECTRONICS LIMITED AND ORS. ….. Respondents

Through:          Ms.  Maninder  Acharya,  ASG  withMr.   Manish   Paliwal,   Mr.   Vikas Kumar, Mr. Viplav Acharya, Advs. and  Mr.  B.V.  Ramaiyya,  DGM, Legal, BEL./ R-1 Mr. Vijay Joshi, Sr. Panel Counsel for R-2/UOI

Mr. Kirtiman Singh, CGSC withMr. Rohan Anand, Adv. and Mr. Waize Ali Noor, GP

CORAM:

HON’BLE MR. JUSTICE SURESH  KUMAR KAIT

J U D G M E N T (ORAL)

1.       Vide the present petition, the petitioner seeks direction thereby to recall the order dated 31.07.2019 passed by this Court in WP(C) No.8188/2019.

2.       At  the  outset,  it  is  pointed  out  that  in  Para  19  of  order  dated31.07.2019,  it  is  recorded  that  the  petitioners  are  above  level  E-VIII; however, which is factually incorrect.

3.       It is clarified that the petitioner No. 1 is the only officer who comes under the category of level E-VIII whose Disciplinary Authority is CMD. The other two petitioners are below level E-VIII. The grade of the Petitioner no 2 is of level E-VI A and Petitioner no 3 falls under the category of level E-V. Their Disciplinary Authority is the Functional Director.

4.      Further clarified that in Para 19 of the order that the Disciplinary Authority under the delegated powers is the Functional Director also suffers from error which is clear from the Office Order No.HO/144/22 read with CDA-Rules dated 10.04.2001.

5.       Learned counsel for the petitioner submits that the said office order which  relates  to  sub-delegation  of  powers  would  show  that  in  fact  the powers delegated under CDA-Rules amended from time to time/notification of sub delegation of power (SDOP) are unchanged and same as on date contained in CDA-Rules 2001. The said Rules read with office order dated 10.1.2019 is very clear that the Disciplinary/Punishing Authority for an officer upto Grade E-VII is Functional Director. Chairman and Managing Director is the Disciplinary/Punishing Authority for an officer of Grade E-VIII & IX only. CMD has not sub delegated his power for the officers of Grade E-VIII & IX any further. He has sub delegated his powers of being Disciplinary/Punishing Authority for officers upto Grade E-VII to the Functional Director. In other words, the position of CDA Rules 2001 read with sub delegation of powers dated 10.1.2019 is very clear that CMD is the Disciplinary/Punishing Authority in case of petitioner no. 1 and that the Functional Director is the Disciplinary/Punishing Authority in case of petitioner nos. 2 and 3. The said order 10.01.2019 is very clear that the sub- delegated powers will be exercised only by the Executives entrusted with the responsibilities for the concerned work/assignment.

6,         Learned counsel for the petitioners further submits that the issuance of Charge- sheets cum suspension orders by Director (Marketing) in the case of petitioner no. 1 and by GM in case of petitioner no. 2 and AGM in the case of the petitioner no 3 is illegal and unsustainable, which is evident from the table at Page 10 of the Review Petition.

7.       On the other hand, learned Additional Solicitor General submits that the officers competent to award the minor punishments cannot initiate the proceedings for major penalties. However, it is submitted that the CDA Rules  bearing  Office  Order  No.  HO/772/019  dated  10.04.2011  do  not require the Disciplinary authority to issue a charge sheet for Major Punishment as mentioned in Rule 5(a). The said Rules only provide for the imposition  of  punishments  and  therefore,  the  same  cannot  be  made applicable for initiation of the Disciplinary proceedings.

8.      Learned Additional Solicitor General further submits that BEL has defined the Disciplinary Authority based on the punishments. Though the Disciplinary Authority is referred in the context of the punishment in BEL CDA Rules, the approval for initiation of the Disciplinary proceedings, issuance of charge sheet etc. is based on the formal approval by the Disciplinary Authority as defined in CDA Rules. The punishment will be later on the basis of misconduct and the punishing authorities have been mentioned in the CDA Rules. Once the charge sheet is approved by the Disciplinary Authority, the charge sheet is served by the respective Department /Division/Unit Head or an officer who is at least one level above to the charge-sheeted executive. Such an officer just initiates the enquiry and does not impose the punishment. The imposition of punishment is a separate issue which is decided later by the competent authority within the organisation.

9.       To strengthen her arguments on the above issued, learned AdditionalSolicitor General relied on the decision of the Hon’ble Apex Court in case of Inspector General of Police vs. Thavasiappa, (1996) 2 SCC 145, whereby it is held that a charge sheet need not be issued by the appointing authority and any authority who is the controlling authority can initiate departmental proceedings by issuing a charge sheet. The Hon’ble Court further observed that the charge sheet need not to be issued by the authority empowered to impose the proposed penalty.

10.     Learned  Additional  Solicitor  General  has  further  relied  on  P.V. Srinivasa  Sastry  &  Ors.  vs.  Comptroller  and  Auditor  General  &  Ors. (1993) 1 SCC 419, whereby in the context of Article 311(1), it was held that in absence of a rule any superior authority who can be held to be the controlling  authority  can  initiate  a  departmental  proceeding  and  that initiation of a departmental proceeding per se does not hold the officer concerned with any evil consequences.

11.     Learned Additional Solicitor General submits that Bharat Electronics Limited is a Public Sector Undertaking and it is incorporated under the Companies Act and therefore, the employees do not enjoy the protections as available to the government servants.

12.     In case of Tekraj Vasandi Alias K. L. Basandhi vs. Union of India &Ors. (1988) 1 SCC 236, the Hon’ble Supreme Court had held that the only prohibition, if any, is the inability to pass a final order in the departmental proceeding. However, the charge sheet can be issued by the officer lower than the disciplinary authority but higher than the charged officer. The dismissal or removal of the officer or even the enquiry could be done at his instance. It was also held that the only right guaranteed to a civil servant under that provision is that he should not be dismissed or removed by an authority subordinate to that by which he was appointed. It was further held by the Supreme Court that it is not necessary that the charges should be framed by the authority competent to award the proposed penalty or that the enquiry should be conducted by such authority as there is nothing under the rules which would induce the Court to read in the rules such a requirement. It  is  thus  established  from the  ratio  in  Transport  Commissioner  vs.  A. Radha Krishna Moorthy, (1995) 1 SCC 332 of the aforesaid decision that initiation and conducting an enquiry could be done by an authority other than the authority competent to impose the penalty. Therefore, unless a statutory rule specifically requires that such proceeding is to be initiated and conducted only by a disciplinary authority, the same could be so done even by  a  subordinate  authority.  Thus,  learned  Additional  Solicitor  General argued that there is no merit in the present petition and the same deserves to be dismissed.

13.     On perusal of Charge Sheet-Cum-Suspension order dated 17.05.2019, it is specifically mentioned that Sri M.M. Pandey, Staff No. 205757, GM (Product Support/CO) was appointed as Investigation Officer by CVO vide letter dated 18.07.2018 to conduct a detailed Investigation into the alleged irregularities reported in the execution of civil construction works in the IACCS project being executed by NCS SBU of GAD Unit. It is further stated that he submitted his report dated 03.10.2018 to CVO which was received in CVO’s office on 08.10.2018. Thus, it is established that the Charge Sheet-Cum-Suspension Order was issued in pursuance to CVO letter dated 18.07.2018 to conduct a detailed investigation into the alleged irregularities.

14.     Learned counsel for petitioner has relied upon Vigilance Manual and in Para 7.3.1 regarding framing of Charge Sheet and in Para 7.3.2, it is specifically mentioned that the charge sheet comprises the memorandum, informing the concerned employee about initiation of proceedings against him and giving him an opportunity to admit or deny the charge(s) within a period not exceeding 15 days. The memorandum is to be signed by the disciplinary authority himself.

15.     As  argued  by  learned  counsel  for  the  petitioner  that  since  the disciplinary proceedings initiated against the petitioners are in pursuance of letter dated 18.07.2018 issued by the CVO, therefore, Vigilance Manual is applicable in the case of the petitioner.

16.     On the other hand, learned Additional Solicitor General has argued that in the present case, the departmental proceedings are not initiated pursuant to vigilance departmental inquiry, therefore, the Vigilance Manual is not applicable in the present case.

17.     It is not in dispute that in case of A. Radha Krishna (Supra), it is held that  unless  a  specific  rule  so  requires  that  such  proceedings  are  to  be initiated or conducted only by a disciplinary authority, the same could be done so even by the subordinate authority.

18.    In the present case, the charge sheet is issued without specifically mentioning therein whether a charge-sheet is issued for major punishment or the minor punishment. The aforesaid judgment would be applicable only in case where there is no specific rules or guidelines to this effect. However, in the present case, as per Para 7.3.2. of Vigilance Manual of BEL, the charge- sheet  comprising  the  memorandum,  informing  the  concerned  employee about the initiation of proceedings shall be signed by the disciplinary authority himself.

19.     In  the  present  case,  admittedly,  petitioner  No.  1  is  E-VIII    level employee and undisputedly, the disciplinary authority for the same is CMD, whereas the charge-sheet is issued by Functional Director (Marketing), who is not disciplinary authority.

20.     Regarding the charge sheet issued against the other petitioners, the said charge-sheet was also issued to the petitioner No. 2 by the G.M. Radar, whereas the disciplinary authority is the Director. To petitioner no. 3, the charge-sheet has been issued by the AGM, whereas disciplinary authority is the Functional Director.

21.     As per the charge sheet-cum-suspension order, the said order is issued in pursuance of the letter issued by the CVO as mentioned above. Therefore, it cannot be said that disciplinary proceedings initiated against petitioners are not a vigilance case.

22.     Be that as it may, as stated by learned Additional Solicitor General that the Ministry of Defence has seized with the matter and instructed the respondents not to proceed further. Accordingly, the departmental proceedings   against   the   petitioners   is   kept   in   abeyance   till   further instructions from the said Ministry.

23.     It is pertinent to mention here that if the charge sheet is accepted and at the end, the disciplinary authority is of the view that major penalty is to be issued, in that eventuality, the authority under the statutes is not competent to issue the major penalty. Thus, while issuing further proceedings against the petitioners, if any, it shall be specifically mentioned that the charge-sheet is issued against the petitioners for minor or major penalty.

24.     Admittedly, since the suspension  order has not been extended further beyond the statutory period of 90 days, in view of the decision in Ajay Kumar Choudhary vs. Union of India & Anr., (2015) 7 Supreme Court Cases 291, suspension is illegal thereafter. In the case in hand, it is not in dispute that more than 90 days of the suspension have been elapsed. Accordingly, the respondents are directed to reinstate the petitioners forthwith. The period of suspension shall be treated as per the rules.

25.     In view of above discussion and legal position, since the disciplinary authority concerned for the petitioners have not initiated departmental proceedings, therefore in my considered view, the order dated 17.05.2019 is illegal and accordingly set aside. However, liberty is granted to the respondents to initiate proceedings as per the statutes and the Vigilance Manual, if so advised, against the petitioners. Accordingly, the order dated 31.07.2019 passed in W.P.(C) 8188/2019 is hereby recalled.

26.          The petition is accordingly allowed. Pending application also stands disposed of.

(SURESH KUMAR  KAIT) JUDGE

OCTOBER 09, 2019

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Pilatus aircraft deal: CBI has fugitive arms dealer Sanjay Bhandari, bureaucrats in its crosshairs

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Yatish Yadav Jun 22, 2019 16:10:17 IST First Post
New Delhi: A few days after the conclusion of Aero India Show at Bengaluru from 6 to 10 February in 2013, a six-page intelligence note landed at the desk of then chairman, Central Board of Direct Taxes (CBDT) detailing unusual activities of certain companies owned by fugitive arms dealer Sanjay Bhandari. The note purportedly provided the first solid evidence against Bhandari, who at that point of time, was allegedly using four firms registered in India to influence a majority of defence contracts.
Bhandari allegedly had a battery of retired defence public sector undertakings officials on his payroll. Firstpost on 9 April reported that two senior officers of Bharat Electronic Limited (BEL) who joined Bhandari’s firm after retirement, were under the scanner of investigating agencies in the basic trainer aircraft deal. The note highlighted crores spent at the Aero India Show by Bhandari’s firm AVAANA and warned about his links into procurement of 75 basic trainer aircraft for which India inked a Rs 2,859 crore deal in May 2012 with Switzerland-based Pilatus Aircrafts.

File image of arms dealer Sanjay Bhandari. CNN-News18

A year later, the Income Tax Department launched a probe and almost three years after the first warning against Bhandari, a preliminary inquiry was launched by the Central Bureau of Investigation (CBI) which culminated in an FIR against the arms dealer, his firms, close aides and the Swiss company.

The CBI tracked down the alleged kickbacks paid to Bhandari’s firms under the garb of consultancy fees. The CBI said after Request for Proposal (RFP) was floated by the Indian Air Force (IAF) in December 2009, Pilatus Aircrafts, Switzerland, dishonestly and fraudulently signed a service provide agreement with Bhandari’s firm Offset India Solutions Private Limited. This pact between the two firms in a bid to obtain the contract for supply of 75 basic trainer aircrafts to the IAF, was in violation of the defence procurement procedure, the agency stated.

“In furtherance of the said criminal conspiracy, Pilatus Aircrafts Limited made payment of 10,00,000 Swiss Franc (in 2010, 1 Swiss Franc was equal to approximately Rs 47) in account No. 52105058250 of M/S Offset India Solution Private Limited with Standard Chartered Bank, New Delhi in two tranches during August & October 2010 and also transferred huge funds, i.e. 49887900 Swiss Franc (Approximately Rs. 350 Crores) during 2011 to 2011 in the bank accounts of Dubai based company namely M/S Offset India Solutions FZC belonging to Sanjay Bhandari to obtain the contract for 75 basic trainer aircrafts. It is revealed that M/S Pilatus Aircrafts Limited dishonestly and fraudulently signed a pre contract integrity pact on 12.11.2010 with Ministry of Defence, deliberately concealing the facts about signing the aforesaid service provider agreement with Sanjay Bhandari,” the CBI said.

The investigating agency claimed Pilatus Aircrafts concealed the first payment of 10,00,000 Swiss Francs made to Offset India Solutions Private Limited and subsequent payments made to Bhandari in Dubai. The agency suspects the money paid to Bhandari was to influence the public servants of IAF and Ministry of Defence associated with the procurement process. After the deal was signed between Pilatus and Ministry of Defence in May 2012, a huge cash amount was moved by Bhandari from one company to another and even in the account of his wife in order to layer the transactions.

CBI said: “Offset India Solutions Private Limited and other Indian companies of Sanjay Bhandari namely OIS Advanced Technology Private Limited , AVAANA Software & Services Private Limited, SB Hospitality & Services Private Limited, Himalayan Helicorp Private Limited, Santech Investment Private Limited, Micromet ATI India Private Limited and Sonia Bhandari wife of Sanjay Bhandari, received Rs 25.5 crore during June 2012-March 2015 in lieu of cash provided by Sanjay Bhandari from various companies of Deepak Aggarwal, namley, Arti Securities & Services Limited, Hare Krishna Garments Private Limited, I-Tech Insurance Brockers Private Limited, Mysore Finlease Limited, Sperryn Gas Products Limited, Jaguar Equity Limited and Tyagi Portfolio Limited.”

In a bid to further channelise the alleged kickbacks in legitimate financial deals, Bhandari acquired five companies from Himanshu Verma, who has also been named in the FIR. These companies are: Greenpower Marketing and Advertising Private Limited, Bhayana Housing Private Limited (now VRG Housing Private Limited), Bhayana Reality Private Limited (now Stercon Private Limited), Beats Events & Advertising Private Limited and Efficacy Interiors Private Limited. Bhandari subsequently deposited Rs 39.36 crore in the accounts of these five companies with the help of Deepak Aggarwal. Of Rs 39.36 crore, Rs. 5.4 crore was transferred to a company called Saran Savdha LLP owned by Bimal Sareen. Sareen, who has been named in the CBI FIR, is also a director in Bhandari’s firm Offset India Solutions Private Limited.

“There is strong suspicion that the aforementioned cash amount was part of the commission amount paid by the Pilatus Aircrafts to Sanjay Bhandari to obtain the contract from IAF, Ministry of Defence for supply of 75 basic trainer aircraft,” the central investigating agency claimed.

Now, returning to the genesis of probe against Bhandari and Pilatus basic trainer aircraft, the six-page note indicated that the arms dealer’s involvement may not be limited to allegedly swinging the basic trainer aircraft deal in favour of the Swiss company, but may also extend to other deals. It said: “Crores have been spent in these three-day sojourn, specifically companies like AVAANA (owned by Sanjay Bhandari) which is engaged in mission critical system systems and software solutions, development and integration. Its portfolio includes UAVs and asset tracking solutions.” The note also named Bhandari’s Offset India Solutions Private Limited, Micromet-ATI and AVAANA, further adding that under the garb of offset contracts, large amount of commission have been paid via fictitious billing.

Bhandari fled the country in December 2016 and Indian law enforcement agencies believe he is hiding in London. His extradition to India may not only unravel possible links with the then establishment, but also other unholy defence deals he might have orchestrated in connivance with bureaucrats at the helm.

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Vigilance chief recommends action in Rs 7,900-cr IAF project scam, even as BEL’s management hunts down whistleblowers

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Yatish Yadav Apr 26, 2019 – Firstpost

New Delhi: The top vigilance officer in Bharat Electronics Limited (BEL) has recommended action in the Rs 7,900-crore air defence scam uncovered by Firstpost, but it is learnt that the top management has launched a hunt to identify the whistle blowers in a bid to cover up the revelations, which point towards a conspiracy involving BEL officials and private companies including foreign vendors.

The chief vigilance officer (CVO) Shiva Kumar has recommended the blacklisting of the design consultant of the Indian Air Force’s (IAF) sensitive air command and control centres, and action against eight BEL officers for allegedly favouring domestic and foreign companies at the cost of taxpayer money and national security.

The CVO, in the recommendation note highlighting the deep-rooted corruption, has said irregularities in the Integrated Air Command and Control System (IACCS), which started in the UPA regime, were carried out with criminal intent and government rules were flouted in awarding contracts for civil work as well as plant and machinery.

“There were serious violations involving criminal intent through violation of procedure, misrepresentation of facts to management, favouritism to place order on pre-fixed vendors through vested interest, collusion of interest and attempts to make corporate losses. The unit (BEL) has violated MoF (Ministry of Finance), GFR (General Financial Rules) and CVC (Central Vigilance Commission) guidelines while appointment of consultants, contracts for execution of civil works and procurement of items for plant and machinery and various subsystems,” the CVO directives reviewed by Firstpost said.

The comment by the CVO on the role of accused officers clearly indicates the need for not just departmental action but the initiation of criminal proceedings under the Prevention of Corruption Act and other penal provisions as well. A questionnaire sent to MV Gowtama, chairman and managing director (CMD) of BEL, seeking comments went unanswered. Department of Defence Production, Ministry of Defence and the CVC did not respond to a questionnaire sent on 20 April.

However, sources in the CMD’s office revealed there had been no move so far to act on the findings and recommendations of the vigilance department, but a discrete hunt has been launched to locate whistle blowers.

Vigilance chief recommends action in Rs 7,900-cr IAF project scam, even as BELs management hunts down whistleblowers.
“In this regard, top management is penetrating the computer and electronic records of all BEL employees in Bengaluru and Delhi,” sources in the CMD’s office said on condition of anonymity.

Sources quoted above also claimed that the top BEL management went into a huddle after the publication of the Firstpost investigation and subsequent recommendations by the CVO. It is learnt the officials were threatened for reporting massive irregularities in the project to the Prime Minister Office (PMO), defence ministry and the CVC.

The witch-hunt and silence of the BEL management is intriguing despite the CVO categorically pointing out the conflict of interest. The CVO said the design consultant of the highly-sensitive underground automated air defence command and control centres, M/s RD Konsultants should be blacklisted for the fraudulent transactions with BEL.

“Also as the agency (RD Konsultants) was involved in collusion of interest by executing the works through its affiliates, M/s CS Constructions Private Limited through subcontracting from M/s L&T, which has resulted in conflict of interest in the transactions with BEL. Financial penalty to be levied on M/s RD Konsultants as one way of punishment,” the CVO said.

According to sources in BEL’s finance division, since the IACCS project is worth Rs 7,900 crore and directly linked to national security, the audit committee comprising independent directors may recommend a probe by the Central Bureau of Investigation (CBI). The finance division of the defence PSU had raised several objections over the award of contracts flagging rule-books but the officers were overruled by the top brass. Even BEL officer Nataraj Krishnappa, director (other units) had raised objections while processing a certain contract. Sources close to Krishnappa confirmed that a criminal investigation may be on the cards. A CVO is considered the extended hand of the CVC and constitutes an important link between the concerned organisation, vigilance watchdog and the CBI.

As far as the eight accused officers’ roles are concerned, the CVO has observed that disciplinary proceeding including the suspension of an officer working in the infrastructure division (network-centric system), should be initiated for violating procedures and CVC guidelines, which eventually resulted in favor to M/s RD Konsultants.

“It is observed that there was suppression and concealment of facts by the committee in the proposal initiated during 2013 with respect of appointment of a consultant during 2011, for preparation of a preliminary project report. It is pertinent to mention that in the proposal for appointment of consultants during 2011, there is a noting from Senior DGM (Finance) that as per CVC guidelines issued dated 24 June, 2011, if M/s RD Konsultants is hired as a consultant for preparing a preliminary project report, then it cannot be considered for future similar requirements for an IACCS project. Although the proposal was agreed to by CMD, these facts are not brought in the consecutive file raised and the committee have succeeded to give an order on pre-fixed vendor M/s RD Konsultants. Because of concealment of information with regard to previous appointment and delinking of old files and notings, it led to misrepresentation and concealment of facts which resulted in the placing of order with prefixed vendor M/s RD Konsultants, although an open tender has been called for formality,” the CVO note said.

The scathing CVO note also reveals that entire scam was engineered since screening stages in 2011 and 2013. It said that the defence PSU’s committee, comprising officers, constituted to select the consultant did a shoddy job with a clear intention to favour a particular vendor.

“It is observed that the committee during the initial screening has brought down 26 agencies to 14 agencies with shallow scrutiny and with total arbitrariness. After presentations further screening has resulted in qualifying only six agencies. It is pertinent to mention that after presentations, M/s Super Dynamics was disqualified citing only two years turnover against the required pre-qualification of a three-year turnover. However, preferential treatment was given to M/s RD Konsultants. This shows a clear-cut case of vendor favouritism. During evaluation of pre-qualification criteria, the committee had violated the CVC guidelines and the company’s work contract procedures with respect to evaluation of documents submitted by M/s RD Konsultants, non-evaluation of relevant documents pertaining to works completed by M/s RD Konsultants. It appears that wrongful clearance was provided to M/s Konsultants and the committee had facilitated M/s RD Konsultants for pre-qualification by violating the company’s procedures, to place the order on pre-fixed vendor M/s RD Konsultants. The committee during evaluation of pre-qualification criteria had created confused trends by changing the pre-qualification criteria twice without any reason and during such changes, post facto approvals are taken from CMD, forcing the management to committee’s decision,” the CVO observed.

The CVO report has flagged collusion with design consultant and other vendors involved in sensitive air force installations at 10 locations across the country. The report has termed an affiliate as a benami firm, raising suspicion over the role and connivance of BEL officers. The CVO has also attacked the design consultant and BEL management for rigging the confidential contracts.

“The agency M/s RD Konsultants also was involved in collusion of interest by executing the works, through its own benami company M/s CS Constructions Private Limited which has resulted in collusion of interest in the transaction with BEL and capturing both design and execution of project. Under para 4B 3.2.3 of the design and engineering contract, M/s RD Konsultants and his affiliates as well as sub-consultants have been debarred from providing any goods works or service. It is observed that M/s RD Konsultants had violated the contract terms, CVC guidelines by involving in collusion with benami through rigging of contracts. This happened at various levels. The quote by M/s RD Konsultants was nearly the same as that which was estimated by BEL which leads to doubt whether the methodology of estimate was known to M/s RD Konsultants. It is pertinent to mention here that, PK Bhola, then DGM (Marketing-Network Centric System) who was the main resource in BEL for raising all the files and interfacing with customer for the project, joined M/s RD Konsultants after his retirement. This is a matter of great concern,” the CVO has noted.

The corruption in the project being handled by BEL was so blatant that even CCTV footage at the air force’s command and control centres construction site was compromised to facilitate the collusion as evident from the CVO report, which said the surveillance cameras were “not kept in the proper record, which led to non-maintenance of measurement books, subleasing and collusion of parties”.

Drdo

How a CAG report exposed DRDO’s mishandling of AEW&CS programme

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The CAG report showed irregularities in the selection of aircraft for the programme

By Pradip R Sagar August 29, 2018

Indian Air Force’s indigenous AEW&CS in action during ‘Exercise Iron Fist’ in Pokhran | PTI

THE WEEK

As the indigenous Airborne Early Warning and Control System (AEW&CS)—aircraft fitted with a radar system—flew over the Rajpath during the 2017 Republic Day parade, India joined an elite group of five countries that had this capability. But, before it could be formally inducted into the Air Force fleet, the ‘Eye in the Sky’ has flown into turbulence.

A report by the Comptroller and Auditor General, which was recently tabled in Parliament, has made startling observations about the programme, on which the Defence Research and Development Organisation has spent more than Rs 2,500 crore.

The CAG report showed irregularities in the selection of aircraft for the programme. The auditor slammed the DRDO for the cost overrun—the initial cost was Rs 1,800 crore—and its claims about indigenousness. Moreover, preferred vendors were selected to benefit certain companies, said the report. Though the Air Force had accepted the AEW&CS last year, it is yet to get the final operational clearance.
The AEW&CS is a moving surveillance platform, making it difficult for the enemy to locate the exact position of the aircraft. With its long range and detection capabilities, it gives a 360 degree view of the sky and can track many aircraft simultaneously.

China currently has 20 such airborne warning systems, while Pakistan has eight. The Indian Air Force has only three—Israeli Phalcon radar systems mounted on Russian IL-76 aircraft. India had bought the radar systems from Israel in 2004. According to experts, India currently does not have the capability to cover its entire airspace during a war.

A programme to develop an indigenous early warning system was taken up in 1994, but was shut down after a fatal crash. Subsequently, the defence ministry in 1999 approved the import of three airborne warning systems (the ones from Israel) and decided to meet further requirement through indigenous development.

In October 2004, the cabinet committee on security approved indigenous development of AEW&CS at a cost of Rs 1,800 crore. The deadline was April 2011. Under the project, two AEW&CS were to be supplied to the Air Force. DRDO’s Bengaluru-based laboratory, Centre for Air Borne Systems (CABS), was the nodal agency for design and development.

Considering the operational importance of this project, the CAG carried out an audit to know whether the system had everything that was promised. K. Subramaniam, principal director of audit, Air Force, recently sent the classified report to Dr S. Christopher, the then secretary of the Department of Defence Research and Development—which found serious irregularities in the programme.

The report has come down heavily on the programme over its claim of indigenousness. Despite the project being called home made, it was only 48 per cent indigenous. The DRDO had claimed it to be 81 per cent. And, the cost of foreign consultancy, about Rs 106 crore, was categorised as indigenous.

The CAG’s observations draw strength from the ongoing CBI investigation into alleged kickbacks in the process of selecting the aircraft. The Embraer EMB-145 aircraft from Brazil was shortlisted for the project in 2007. However, Brazilian media reported that Indian officials were bribed to swing the deal in Embraer’s favour. In 2016, the CBI registered a case against NRI arms dealer Vipin Khanna and two private companies based abroad. The case was about the alleged payment of more than $5.70 million as kickbacks to seal the deal for the aircraft.

The CAG report also pointed out inadequacies in management, which stretched the development period to 13 years. “And, the operational requirements, instead of being based on the functional needs of the Air Force, were being adjusted according to the aircraft that was ‘pre-selected’. It took seven years to finalise the operational requirements,” said the report.


During the design and development stage, some operational parameters were compromised because of the Embraer’s limitations. Also, there was no competitive bidding while selecting the aircraft. The Embraer was shortlisted through a nomination. Notably, several aircraft, such as the IL-76, and models from Gulfstream, Bombardier and Boeing were available at the time.

“The justification given for the selection of EMB-145 was not tenable,” the CAG observed. “No objective assessment of the merits and demerits of available options was done. The selection of EMB-145 was arbitrary and based on preconceived preference.”

Initial operational requirements stipulated that the system should be able to operate from high-altitude locations like Leh to have a much deeper view into the Chinese army’s activities. As the EMB-145 was incapable of doing so, claims the report, the Air Force had to drop this requirement in February 2006.

The report also said that the Air Force officials working with the DRDO reiterated that Embraer was not the suitable aircraft.

The CAG also criticised the project for the way the pilots were trained. “From the scrutiny of the expenditure on training, the audit found that the training commenced in June 2007. At this point, the procurement contract for EMB-145 was yet to be awarded and negotiations were underway between the CABS and M/s Embraer. Therefore, training of pilots on an aircraft even before finalising its purchase is highly unjustified,” CAG pointed out. Six pilots were trained abroad at a cost of Rs 23 crore.

Of the 18 requirements specified by the Air Force, AEW&CS could not fully achieve ten important ones. Despite this, the Air Force accepted the first system in February 2017.

“Since EMB-145 was selected, the weight of the mission system had to be adjusted to the optimum payload capacity of EMB-145, which was 3,000kg. The radar along with its associated systems, which was to be mounted on the fuselage, had to be limited to 1,500 kilos due to structural limitations,” the CAG said.

The probable date of completion was revised four times and the final date of completion was extended by over six years, said the report. The Air Force kept changing its requirements. In the middle of the programme, the Air Force demanded air-to-air refuelling and a de-icing system. It led to a delay of nearly two years.

Christopher, who was the head of CABS, said the repeated modifications in the operational requirement by the Air Force played a major role in the delay of the project. “It is all recorded in official documents and no one can find fault with me for it,” he said. “However, I believe that operational requirements is a prerogative of the user and you, as a developer of the equipment, cannot challenge it.”

Regarding the aircraft, he said, “Embraer was a well-proven aircraft. The decision to buy Embraer was taken in consultation with the then IAF chief S. Krishnaswamy. Four countries were using this platform as AWACS—the generic term for such a system. Moreover, the IAF decided that it has to be a turbo jet, not propellant. Turbo engine gives them the desired speed and efficiency.”

When contacted, Krishnaswamy said the selection of aircraft was purely DRDO’s decision. “The IAF was using Embraer for its VVIP fleet and thought of commonality if it is selected for AEW&CS. Since AEW&CS was DRDO’s project and budget was allocated to them, the final decision for selecting aircraft was DRDO’s only,” he said, adding that any modification in the operational requirements was a collective decision of the Air Force and the DRDO.

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Foreign nations have shown interest in Akash missile: DRDO

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PTI|May 19, 2018 The Economic Times Defence

There is a growing demand for the Akash, an all-weather medium-range surface-to-air missile: DRDO Chairman

COIMBATORE: Several countries have evinced interest in procuring the indigenously developed Akash missile, a top Defence Research and Development Organisation (DRDO) official said here today.

There is a growing demand for the Akash, an all-weather medium-range surface-to-air missile, and many nations have shown interest in it, DRDO Chairman S Christopher told reporters here.

Developed by the DRDO, the Akash missile system has the capability to neutralise aerial targets such as fighter jets, cruise missiles and air-to-surface missiles as well as ballistic missiles.

Talks were underway with the countries and “it (orders for the missile) will come”, Christopher said without divulging further details.

To a query on the allocation for research and development, he said this year the organisation has a budgetary allocation of Rs 2,000 crore.

Christopher, who was here to participate in a function, also said there were export inquiries for the BrahMos missile.
BrahMos is joint venture between the DRDO of India and NPO Mashinostroyenia(NPOM) of Russia.
PSU Bharat Dynamics Ltd Chairman and Managing Director, V Udaya Bhaskar said the Akash missile is going to be in good demand for another three to four years as both the Indian Air Force and the Indian Army need them in good numbers.

L&T Board whole-time Director (Defence) Jayant Patil said a new aerospace facility in the district will become operational in another 10 months and it will manufacture rocket motors for ISRO.

The defence arm of the L&T, which has so far invested Rs 500 crore in the unit here, is also supplying air frame to BrahMos missile and will expand the product range in the near future.

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3,600 Crores Later, Made-In-India Akash Missile Fails Tests, Says Auditor

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The Akash and its newer variant, the Akash Mk-2, are a medium-range surface-to-air missile system designed to intercept enemy aircraft and missiles at a distance of 18-30 km.
All India | Written by Vishnu Som | Updated: July 28, 2017 18:41 IST NDTV

The Akash was produced by the state-run Bharat Electronics.

NEW DELHI: As many as a third of the home-made Akash surface-to-air missiles have failed basic tests, says the country’s national auditor, claiming the deficiencies of the missiles “posed an operational risk during hostilities.”

The report of the Comptroller and Auditor General (CAG) is a big setback for the Make-In-India initiative which seeks to reduce India’s dependence on imported arms. The report, given to parliament, says, “the missiles fell short of the target, had lower than the required velocity, and there was malfunctioning of critical units.”

The Air Force has refused to comment on the report.

The Akash was produced by the state-run Bharat Electronics. The auditor says that though 3,600 crores have been paid to the manufacturer, none of the missile systems are installed at the six designated sites even though it has been seven years since the contract was signed.

The Akash and its newer variant, the Akash Mk-2, are a medium-range surface-to-air missile system designed to intercept enemy aircraft and missiles at a distance of 18-30 km. Tested extensively by the Indian Air Force, the Akash, which was first handed over in December 2008, was seen as a breakthrough indigenous system and in 2010, an additional six squadrons were ordered.

These additional squadrons, composed of missile launchers, radars, associated vehicles and hundreds of Akash missiles, were meant to be deployed at six air force bases in the East for which the government approved related infrastructure including storage facilities, workshops and ramp structures. These were supposed to be constructed by Bharat Electronics on a turnkey basis at a cost of approximately 100 crores. However, this infrastructure “could not be completed till October 2016 at any of the sites.” The auditor also says though work was nearly complete at two bases, the “IAF had not taken over these buildings because of defects in the construction, which rendered them unsuitable for strategic missile system storage. In other stations, the progress was below 45 per cent as of October 2016”.

While the missiles were indeed delivered to air forces bases between April 2014 and June 2016 after a delay of between 6 and 18 months, the missiles were found to be deficient in quality. According to the auditor, “Out of 80 missiles received upto November 2014, 20 missiles were test fired during April-November 2014. 6 of these missiles, ie, 30 per cent, failed the test.”

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‘Nirbhay failed due to use of recycled material’

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Sumit Bhattacharjee – VISAKHAPATNAM, JULY 01, 2017 – THE HINDU 

Sub-sonic cruise missile will be ready by month end, says DRDO chief
The fourth test of Nirbhay, the long rage sub-sonic cruise missile that is designed and developed by the Defence Research and Development Organisation (DRDO), failed on December 21 last year because of use of faulty material, said Chairman of the DRDO and Secretary of Department of Defence R&D S. Chirstopher here on Saturday.

Speaking to The Hindu after inaugurating a workshop on indigenous lithium-ion batteries for special applications, hosted by the Naval Science and Technological Laboratories (NSTL), the DRDO chief said, “The fourth test of the missile took place from the Launch Complex-III of Integrated Test Range (ITR) at Balasore in Odisha and after lift-off the missile developed snags over one of its wings, started to bank on one side and veered dangerously. We had to activate the ‘self-destruct’ mechanism to kill it mid-air. On investigation, it was found out that the vendor who manufactured it used recycled material for one of the key components that operates the wings of the missile and that was the reason why it failed. The strength of the recycled material was not sufficient to operate the parameters. Though the vendor followed all specifications, the use of re-cycle material was not disclosed.”

But, according to Dr. Christopher, the same vendor had been told to produce another one ‘free of cost’ under the same specifications but without any short-cuts. “Everything was right in the missile, only this faulty material caused the failure. But now it will be ready by July end or August and we shall go for the fifth test,” he said.

Nirbhay is an all-weather, low-cost, long-range sub-sonic cruise missile capable of carrying both conventional and nuclear warheads and is considered to be a strategic weapon.

Roadmap

Pronouncing the roadmap, Dr. Christopher said once the test was successful they would identify the production partner whom they referred to as strategic partner and would go for further variations. “It is a guided missile and right now there is no problem with the path in the higher altitude. But there are some glitches in the lower altitude and we will be working on the seekers for pin-point accuracy. The missile should be ready by next two to three years,” he said.

According to him, the DRDO is working on the strategic partner model who would have stake in the production. “This will make the agency responsible and we will get rid of the tendering process for every small thing. There may be multiple indigenous strategic partners for each of our weapon and defence systems,” he pointed out.

On the naval variant of Tejas–Mark II (light combat aircraft), Dr. Christopher said the prototype was ready and had fullfilled the parameters of ski-jump on board aircraft carriers. But the Navy had been insisting on twin engines and they were working on the power of the engines. “We are also looking for strategic partners and the partner may be a foreign firm that would provide back-end support,” he said.

The DRDO chief sounded very enthusiastic about the indigenously built AEWACS (Airbone early warning and control system). “We have already inducted one indigenously built system and it is flying from Bhatinda.”

In total, they intended to induct 15 AEWACS and of them five would be from Israel and the remaining indigenous ones.

Of the indigenous ones, two would be smaller ones mounted on Brazilian Embraer-145 jets and the remaining would be on Airbus 330. “We have already received the order for six from the Indian Air Force and the negotiations with Airbus is in the final stages. The indigenous ones will have all the features of the Israeli make so that there may not be two teams operating on two different makes,” said Dr. Christopher.

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India Relods, Aims to Figure on Military Map

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Pradip R Sagar – The Sunday Standard 25 September 2016

NEW DELHI: At a time when Pakistan is engaging in war games with Russia for the first time, New Delhi has stepped up its military engagement with major military powers of the world. After joining hands to procure Rafale fighter jets from France, the Indian Army is carrying out drills with the US and Russian militaries simultaneously.

The US military contingent represented by a Company of 5th Infantry Battalion, 20 Infantry Regiment, two Stryker Brigade Combat Team, seven Infantry Division, is already carrying out a military exercise titled “Yudh Abhyas” on the hills of Uttarakhand. The two-week long joint drill to hone tactical and technical skills in countering insurgency and terrorism in a UN peacekeeping scenario involving combined deployment at the brigade level, according to Indian army.

State-of-the-art equipment for surveillance and tracking, specialist weapons for close quarter battle with terrorists, explosive and IED detectors, as well as the latest communication equipment is being fielded by both sides.

As the Indo-US military exercise is yet to be finished, an Indian army delegation has landed in Vladivostok in Russia to participate in joint military war games. Over 250 soldiers from Kumaon regiments are being trained in Russia in semi-mountainous and jungle terrain military operations in the eight edition of India-Russia Join military exercise ‘Indra-2016’.

Engaging with the two world powers coincided with the Indian Air Force inking deal to procure 36 Rafale fighter jets from France, to give much needed superiority air power over Pakistan.

“Engaging with three world powers simultaneously shows New Delhi’s influence in the world map. World’s top militaries wanted to join hand with India, as it is a growing super-power in contingent,” said a military official.the-sunday-standard-25-sept-16

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Files reveal links between Agusta, Embraer deals

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By Ashish Singh | NEW DELHI | 18 September, 2016 – The Sunday Guardian
ashish-embraer-story-edited-1The DRDO was not on board with the IAF over selection of the Embraer aircraft.
ashish-embraer-story-edited-2The CBI has registered a preliminary enquiry (PE) against unknown Ministry of Defence officials to probe the Embraer aircraft deal scam, in less than 12 hours after this correspondent revealed on NewsX the minutes of four meetings held in December 2006 to finalise the aircraft for the AEW&C project.

This correspondent has revealed that the Defence Research and Development Organisation (DRDO) was not on board with the Indian Air Force under then Air Force chief S.P. Tyagi over the selection of Embraer aircraft.

PE is the very initial measure taken by the CBI to examine any case before lodging a First Information Report (FIR) against suspected persons.

The CBI told this correspondent that “CBI has registered a PE (preliminary enquiry) against unknown officials of the Ministry of Defence (GOI) and others. This on a reference from the said Ministry on allegations related to M/s. Embraer employing an agent to facilitate various contracts. These include the contract for AEW&C project wioth CABS/DRDO for procurement of 3 aircraft”.

This correspondent has accessed the key 10-page documents that form part of the “Embraer files” that are being investigated by the CBI and the Enforcement Directorate. The documents contain the minutes of the four meetings held in December 2006 to finalise the aircraft for the AEW&C project.

In the first of the four meetings, held at Air Headquarter, New Delhi on 5 December 2006, the documents suggest, then Programme Director (AEW&C) Dr S. Christopher (who is currently the DRDO chief) had proposed two alternative options with different configuration and endurance for the aircraft as a platform for this project. He also pointed out that better options will be available with the change of aircraft. But the Air Force under S.P. Tyagi overruled Christopher’s arguments and stated that the DRDO will work with Embraer, the world’s third largest aircraft manufacturer that is now under the scanner of the US and Brazilian authorities for alleged kickbacks.

The Embraer files accessed by this correspondent reveal that four meetings had taken place on 5,6, 8 and 19 December 2006 among the Air Force officers, DRDO officials and the scientific adviser to the then Defence Minister, A.K. Antony.

“Dr. Christopher brought out that better options will be available with change of aircraft. The Chairman (the then Deputy Chief of Air Staff) stated that we need to work with EMB-145 and develop a prototype with the configuration that CABS will formulate and send to IAF for consideration”, stated the minutes that are available with this correspondent.

The minutes further state: “The Programme Director, AEW&C stated that CABS has proposed two options with different configuration and endurance. DCAS asked him to submit a clear proposal of what can be achieved with a 24T aircraft.”

The Defence Ministry is also expected to seek information from Brazil and the US through Indian defence attachés deployed in Indian embassies in the two countries.

According to the Brazilian newspaper Folha de Sao Paulo, Embraer had allegedly engaged a UK-based defence middleman and paid him kickbacks in order to ink the deal with India. Media reports further alleged that Embraer officials had paid commissions to middlemen in order to finalise similar deals in Saudi Arabia. The US Justice Department has been scrutinising Embraer’s deal with India.

The newspaper report claimed that the Brazil based company came under the US scanner after the US Justice Department smelled a rat in 2010 following the former’s contract with the Dominican Republic.

In 2008, a $208 million deal with Embraer was signed by the Defence Research and Development Organization (DRDO) for three ERJ-145 aircraft to build indigenous Airborne Early Warning and Control Systems for the Indian Air Force. The three aircraft were to serve as an air-borne radar system known as airborne early-warning and control systems or AEWCS for the Indian Air Force.

Significantly, the Embraer deal reminds one of the AgustaWestland VVIP helicopter scam due to the many similarities. Both Embraer and Augusta deals were inked when S.P. Tyagi was the Air Force chief and A.K. Antony was the Defence Minister.

Both deals were cleared between 2008 and 2010 despite alternative options being available. In both deals, UK based middlemen and aircraft company officials are allegedly involved.

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India-Embraer jet deal under scanner for graft, Defence Ministry seeks firm’s reply within 15 days

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Jugal R Purohit, New Delhi, September 10, 2016 – Indiatoday.in

“We are as surprised as anyone else. If there was an investigation, they should have informed us. This is mentioned in the contract,” said a senior Defence Ministry source.

embraer-story_647_091016015848
Rocked by allegations of corruption in its deal with Brazilian aviation firm Embraer, which is under investigation in Brazil and USA, the Ministry of Defence (MoD) responded by saying it had asked for an explanation from the firm over the matter.
“We are as surprised as anyone else. If there was an investigation, they should have informed us. This is mentioned in the contract,” said a senior source.
Defence Minister Manohar Parrikar who was in Goa following his tour to the US had been briefed over the matter and with his concurrence, a communication was being sent at the time of writing this piece. “Within 15 days, they are to respond,” said the source.
On its side, the DRDO and MoD will begin re-examining their files for anomalies it was informed.
WHAT HAPPENED
The Airborne Early Warning and Control (AEW&C) System is under-development by the Bengaluru based Centre for Air Borne Systems (CABS) for the Indian Air Force. As a part of the deal, the Brazilian aircraft manufacturer modified its jet aircraft, EMB-145 to carry the Active Array Antenna Unit (AAAU), developed by the DRDO, on the aircraft’s fuselage. A total of three modified EMB-145 aircraft had been developed under this agreement.
The various sub-systems of the AEW&C Mission system were integrated into the ‘modified green’ aircraft by DRDO and the full-fledged EMB-145 based AEW&C tested from 2012. The AEW&C system comprises many sub-systems like Radar and communication links that are being designed and developed by DRDO.
WHAT IS AIRBORNE EARLY WARNING AND CONTROL SYSTEM
As the name suggests, this is a mobile, aerial platform to keep an eye on the enemy for any missile launches or fighter plane launches taking place and responding accordingly. It can also be used as a communications platform to direct own planes and missiles, in response.

As per reports which appeared in the Brazilian press, government agencies in Brazil and USA were looking into Embraer’s business deals. It was reported that the firm had hired the services of a UK-based agent for the Indian sale of EMB 145 plane, an arrangement which is disallowed as per the MoD rules.

The deal was concluded in July 2008. A DRDO release from then stated, “A few EMB-145 based AEW&C/AWACS versions are already in operation with Air Forces of Brazil, Mexico and Greece”.

IMPACT OF ALLEGATION

  1. Surprised, Defence Ministry asks Brazilian firm to explain.
  2. Critical project, IAF is awaiting delivery of three planes from DRDO.
  3. DRDO was keen to export this plane with own radar systems to friendly countries.
  4. No action till Embraer explains.
  5. If blacklisted, could curtail India’s options.
  6. India unable to build planes, relies on imports.
  7. IAF uses Embraer for VVIP travel also