Rattled by kickbacks in the defence deals, the UPA government is now becoming indecisive in taking calls that can backfire, according to defence industry sources.
This approach is evident from the government’s move to defer a decision on Bharat Electronics Limited’s (BEL’s) proposal to produce hi-tech defence communication equipment in technical collaboration with France’s Thales Communications SA (TCSA)
The French company is a member of France-based Thales group that has been rocked by allegations of kickbacks at home and abroad over the years. The group operates in 50 countries.
A public interest litigation pleading for registration of a criminal case against group company Thales Avionics SA in the $3bn Scorpene submarine deal is pending before the Delhi High Court.
Central Bureau of Investigation (CBI) had, however, last year reportedly claimed that it had not found any evidence of kickbacks in this 2005 deal. The Public Accounts Committee of Parliament is reportedly bracing to probe this deal.
Notwithstanding CBI’s claim, Ministry of Home Affairs (MHA) had drawn the attention of the Department of Industry Policy and Promotion (DIPP) to this litigation as well as slew of other charges against Thales group.
MHA’s vigilance has put the Department of Defence Production (DDP) on the back-foot. It also forced two inter-ministerial panels, industrial licensing committee (ILC) and Project Approvals Board (PAB) to defer grant of requisite approvals to BEL.
PAB’s mandate is to decide on foreign technical collaboration applications that are not covered by automatic approval route.
Both ILC and PAB are serviced by DIPP. Both the committees deferred decision on BEL’s respective applications at their last meetings held on September 11, 2009. BEL does not figure in the two separate lists of approvals issued by the two committees made public a few days back. There is, however, some confusion on this count.
An industry source, however, pointed out that ILC and PAB actually took contradictory decisions. PAB recommended the proposal for technical tie-up for approval as applied for by BEL. ILC, on the other hand, deferred a decision on BEL’s application following a request from representative of DDP.
DDP officials had, in fact, sought deferment of decisions at the meeting of both the committees in the light of MHA’s adverse observations about Thales group. Prior to the meeting, DDP had proposed clearance of both the applications.
PAB noted that BEL was free to take any appropriate action in future including blacklisting of the foreign collaborator, if need be. PAB noted that blacklisting did not come under the purview of DIPP.
In its comments on BEL’s applications, MHA had alleged that TCSA has the reputation of using corrupt business practices to clinch lucrative business deals.
It also pointed out that Thales group is heaved up allegations of roping in political leaders across the world to clinch deals.
The World Bank had blacklisted Thales from many of its projects on account of alleged bribery. In 2005, an ex-senior executive of Thales had disclosed that two per cent of the group’s revenue of $12 billion was paid as secret commissions to the powers that be in different countries.
Thales group companies have been saddled with corruption charges in Taiwan and South Africa.
Without disputing MHA’s observations, industry sources point out that BEL already has an existing technical collaboration agreement with Thales. Tata Power’s Strategic Electronics Division (SED) and another private sector company Rolta India Limited have tie-ups with different Thales group companies.
Thales itself has an Indian subsidiary named Thales India Private Limited. It would thus be unfair to single out BEL for any alleged malpractices by Thales. UPA government should take a transparent policy decision in dealing with foreign companies that have a case history of allegations of offering slush money.
About a year back, public sector BEL had filed two applications with the government – one for industrial licence to produce surveillance equipment named “TRC 6200 V/UHF interception and direction finding receiver” and another for transfer of technology for this equipment from TCSA.
TRC 6200 is a digital radio sensor. It is integrated with other equipment to create light vehicle-based direction finding system. BEL has drawn a three-phase programme to produce 37 systems whose production cost is estimated at euro 6.53 million. In the first phase, BEL would import 16 systems from Thales. In the second phase, the former would import kits for nine systems for assembly at its Hyderabad plant. In the third phase, BEL would produce the systems in-house with imports from Thales restrict to only two types of modules.