The avalanche of corruption allegations has not abated for the Indian Army. This time, the deal in question is the massive irregularities in the tender process for the procurement of fuses for three artillery guns: 105 mm, 130 mm and 155 mm. It is alleged that South African firm FUCHS Ltd has monopolised supplies via Indian public sector undertakings for the past several years. The tender is worth about Rs. 1,000 crore.
What is surprising is that as early as 2008, the multi-party Committee of Petitions (CoP) of the Lok Sabha, hearing a complaint on the issue, ruled that fuses must be procured though tenders and no further monopoly should be permitted.
The committee made some strong recommendations, saying, “The entire matter needs to be investigated thoroughly by an appropriate agency to unearth the motives and financial irregularities in procurement of electronic fuses.” It strongly deprecated the “indefensible” arguments of Army Headquarters (AHQ) for sticking to a single vendor in the first instance and deplored the failure of the Ministry of Defence to introduce a multi-vendor system.
Despite this clear directive, AHQ found imaginative ways to scuttle the directive of the CoP, using a request for proposal (RFP) for 10 lakh fuses. At first, a global request for interest was issued as no Indian firm manufactures electronic fuses. But at the next stage of the RFP, the procurement procedure was tampered with by manipulating specifications. A paragraph about giving priority to indigenous products was inserted, knowing well that this would limit participation in the tender. So, no global RFP was issued, leaving the coast clear for the Indian company.
“Tenders were manipulated and crafted in such a way that no other company except FUCHS Ltd of South Africa under the cover of PSU Electronic Corporation of India ltd (ECIL), could qualify in these tenders,” says Maharajganj MP Harsh Vardhan, who is a member of the ministry’s consultative committee. “What is shocking is that to ensure ECIL is not disqualified due to the single-vendor situation, they roped in another PSU, Bharat Electronics Limited (BEL). BEL has never manufactured an hearelectronic fuse. This was just to ensure that ECIL is not in a single-vendor situation on paper and force the MoD to continue purchases from a single source.”
Another complainant, HN Sharma, who used to be political adviser to late prime minister Chandra Shekhar, points out the clear nexus between ECIL and the Artillery Wing. “In a note sent to the Lok Sabha Committee, the army admitted that former director-general of Artillery Lt Gen Charanjit Singh joined ECIL immediately after retirement,” he says. “But since ECIL had been routinely appointing army officers after retirement and nobody ever objected, the army did not do anything about it.”
Sharma, who filed the complaint along with Barmer MP Manvendra Singh, explains, “The three guns have different types of fuses. Yet, clauses like — ‘if the company does not possess all three types of technology for each fuse they will not be considered’ — was inserted. Specification was based on FUCHS’ capability to facilitate the company. What is surprising is that ECIL is not even a defence PSU, but somehow it has emerged as sole supplier of almost 80 percent of electronic fuses. ECIL in turn depends on imports from FUCHS. Companies like ITI, IFB and few others were willing to participate but it was ensured that they do not emerge as a potential threat to ECIL’s monopoly.”
When these anomalies were brought to the notice of the defence minister, he ordered an inquiry into the matter with Joint Secretary Jatinder Bir Singh as its head. After thorough examination in October, the Joint Secretary came to the conclusion that the situation is not all right and recommended retraction of these tenders.
MUCH TO the surprise of many in the MoD, instead of following the recommendation, the then director-general (acquisition) SK Sharma, referred the matter to the Scientific Adviser to the defence minister. Despite the clear directive of the CoP and its own ministry, another committee was appointed under the chairmanship of the scientific adviser, which recommended the continuation of trials and said that if a singlevendor situation arises after two years, the situation can again be referred to the DAC.
According to a senior officer in the MoD, this is shocking. “Who will be responsible for enormous losses to the tune of approximately Rs. 500 crore in case recommendations of the department are implemented after two years of trial? Why was the Committee of Petition’s decision overruled? Where was the need to have another committee?” he asks.
Harsh Vardhan and other MPs have written to both the CAG and CVC for a detailed probe into the issue but they have not received a reply in this case. The wait is on.