Exclusive: CAG report suggests VIP jet scam
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Rajesh Ramachandran
NDTV Transcript
Friday, March 10, 2006
A draft report filed by the Comptroller and Auditor General (CAG) has
revealed the latest multi-crore scam.
According to the report, more than Rs 100 crore were paid extra to get jet
planes for MPs.
The deal in which the VVIPs bought planes for themselves, was a sordid waste
of public money and could also have led to a defence scandal.
The Embraer Executive jets were ordered by the NDA in 2003 to fly the
nation's VIPs.
At Rs 142 crore each, the plush Brazilian planes were bought to ensure the
President, Vice President and Prime Minister would travel not just in
comfort, but in style.
But the draft report submitted by the CAG to the defence ministry reveals
that the deal was questionable.
NDTV has a copy of the draft, a final report of which could be presented in
Parliament.
Questions raised
The draft says Rs 25.36 crore extra was paid for each aircraft to improve
interiors and in-flight entertainment, while every Embraer jet already had
plush interiors.
This was about 25 per cent of the cost of each aircraft.
The draft also mentions that there was no global tender for the deal and the
second lowest bidder Dassault Aviation has a substantial shareholding in
Embraer, proving that the bid was not competitive.
Also, in-flight entertainment and the interiors were arbitrarily priced and
Embraer's quote was five times higher than the second bidder, which the
Price Negotiating Committee (PNC) did not negotiate.
The draft also points out that the VIP squadron already had two Boeings,
seven Avros and six MI-8 helicopters.
Only four per cent of Avro time was used for VIPs and a whopping Rs 712
crore were spent on replacing the Avros.
Govt backs NDA
Even by today's prices, the NDA government paid Rs 18 crore extra for each
aircraft.
But defence ministry sources say that while replying to the CAG's queries,
the UPA government backed NDA defence minister George Fernandes.
That too, despite the CAG making out a clear case of overpayment which could
even mean kickbacks of over Rs 100 crore in the deal.
Showing posts with label Defence Deals. Show all posts
Showing posts with label Defence Deals. Show all posts
Wednesday, April 1, 2009
Tuesday, July 24, 2007
George haunted by his own prize defence
8 May 2002
Rajesh Ramachandran
NEW DELHI: In a pamphlet published in January and commended by Defence Minister George Fernandes to MPs, two letters were prominently displayed to support the claim that $2,500 was an appropriate price for India to have paid for coffins meant for men killed in Kargil.
One was from US ambassador to India Robert Blackwill, the other from Indian ambassador to the US Lalit Mansingh. Blackwill’s letter to Fernandes dated December 20, 2001 — nine days after questions over the price paid for the coffins rocked Parliament — states: ‘‘I have been informed that aluminium caskets in the US Navy procurement system cost $2,768.40 each...
Inquiries on the Internet and with a casket supplier in the US indicate that $2,500 is an appropriate and reasonable price for a rubber sealed aluminium casket of the type used in funeral homes in the US.’’ Blackwill was replying to a query from Fernandes.
Mansingh’s letter gives the identical price as Blackwill down to the last decimal, citing ‘‘informal indications by military sources’’. It was written on the same day as Blackwill’s letter. Blackwill’s endorsement of the MoD price appears intriguing given that a Pentagon agency, the Defense Supplies Centre, Philadelphia (DSCP), buys identical caskets for around $1,200 a piece.
Though the DSCP bills specific branches of the US military a higher sum to cover costs, Tom Sidor of the medical material’s directorate of DSCP told TOI that $1,200 would be the approximate price the Indian Army would pay were it to approach a US casket supplier directly.
Sidor explains why the DSCP charges a huge mark up over the procurement price. ‘‘The... DSCP buys these items for depot stock. Once at the depots, any of the branches of the military may requisition them. However, to pay all of our bills, we currently have what we call a cost recovery rate that we add onto the purchase price of all items in our depots, and because of a variety of business reasons, we currently add 130.7 per cent of our purchase price onto the prices of these depot stocked items...’’
Thus, when Fernandes asked Blackwill about the price paid by the US armed forces for such caskets, he was technically correct in replying that this was around $2,500. But Blackwill may not have known — or perhaps chose not to reveal — that the actual procurement price of the caskets within the Pentagon’s procurement system was half that sum.
The Times of India asked the US embassy whether Blackwill knew that the US navy price included the 130.7 per cent internal book-keeping mark-up and that the true cost of the caskets was around $1,200. The embassy was also asked to identify the casket supplier who told Blackwill $2,500 was ‘‘a reasonable and appropriate price’’.
However, all Gordon Duguid, press attache, was prepared to say was, ‘‘We stand by the facts in (Ambassador Blackwill’s) letter of December 20, 2001’’. While Blackwill’s letter could touch upon issues of diplomatic propriety — both because of the incomplete information it contains and the use Fernandes put it to — the substantive issue is why the defence and external affairs ministries could not track down the original casket manufacturers instead of paying an inflated price to a middle-man like Victor Baiza.
Related Stories: Coffingate rocks RS again, Oppn walks out
Earlier report: India overpaid for Kargil coffins
Govt not averse to probe on coffingate: George
Rajesh Ramachandran
NEW DELHI: In a pamphlet published in January and commended by Defence Minister George Fernandes to MPs, two letters were prominently displayed to support the claim that $2,500 was an appropriate price for India to have paid for coffins meant for men killed in Kargil.
One was from US ambassador to India Robert Blackwill, the other from Indian ambassador to the US Lalit Mansingh. Blackwill’s letter to Fernandes dated December 20, 2001 — nine days after questions over the price paid for the coffins rocked Parliament — states: ‘‘I have been informed that aluminium caskets in the US Navy procurement system cost $2,768.40 each...
Inquiries on the Internet and with a casket supplier in the US indicate that $2,500 is an appropriate and reasonable price for a rubber sealed aluminium casket of the type used in funeral homes in the US.’’ Blackwill was replying to a query from Fernandes.
Mansingh’s letter gives the identical price as Blackwill down to the last decimal, citing ‘‘informal indications by military sources’’. It was written on the same day as Blackwill’s letter. Blackwill’s endorsement of the MoD price appears intriguing given that a Pentagon agency, the Defense Supplies Centre, Philadelphia (DSCP), buys identical caskets for around $1,200 a piece.
Though the DSCP bills specific branches of the US military a higher sum to cover costs, Tom Sidor of the medical material’s directorate of DSCP told TOI that $1,200 would be the approximate price the Indian Army would pay were it to approach a US casket supplier directly.
Sidor explains why the DSCP charges a huge mark up over the procurement price. ‘‘The... DSCP buys these items for depot stock. Once at the depots, any of the branches of the military may requisition them. However, to pay all of our bills, we currently have what we call a cost recovery rate that we add onto the purchase price of all items in our depots, and because of a variety of business reasons, we currently add 130.7 per cent of our purchase price onto the prices of these depot stocked items...’’
Thus, when Fernandes asked Blackwill about the price paid by the US armed forces for such caskets, he was technically correct in replying that this was around $2,500. But Blackwill may not have known — or perhaps chose not to reveal — that the actual procurement price of the caskets within the Pentagon’s procurement system was half that sum.
The Times of India asked the US embassy whether Blackwill knew that the US navy price included the 130.7 per cent internal book-keeping mark-up and that the true cost of the caskets was around $1,200. The embassy was also asked to identify the casket supplier who told Blackwill $2,500 was ‘‘a reasonable and appropriate price’’.
However, all Gordon Duguid, press attache, was prepared to say was, ‘‘We stand by the facts in (Ambassador Blackwill’s) letter of December 20, 2001’’. While Blackwill’s letter could touch upon issues of diplomatic propriety — both because of the incomplete information it contains and the use Fernandes put it to — the substantive issue is why the defence and external affairs ministries could not track down the original casket manufacturers instead of paying an inflated price to a middle-man like Victor Baiza.
Related Stories: Coffingate rocks RS again, Oppn walks out
Earlier report: India overpaid for Kargil coffins
Govt not averse to probe on coffingate: George
Kargil coffins bought at twice US price
7 May 2002
Rajesh Ramachandran
The Times of India
NEW DELHI: Contrary to Defence Minister George Fernandes' claim that $2,500 was the right price for the Kargil-era coffins imported by his ministry, the coffins cost less than half that amount. The Defence Supplies Centre Philadelphia (DSCP), a US defence procurement agency, buys aluminium caskets with the identical specifications for around $1,200.
In the US system, the product is called a ‘human remains transfer case’ and bears the national stock number (NSN) 9930-00-823-9805. The Times of India asked the DSCP whether $1,200 rather than $2,500 was an appropriate and reasonable price for a human remains transfer case if the Indian Army were directly to approach its suppliers.
Tom Sidor of the directorate of medical material, DSCP replied: ‘‘The answer is yes. The price that these manufacturers charge is, of course, related to the quantity being bought. We have bought quantities between 34 and 78 and paid prices ranging from $1,159 to $1,328.’’ In contrast, the MoD agreed to pay $2,500 per casket (with another $500 per casket for transport) even though it ordered 500 caskets.
Even as recently as last year, Pentagon procurers bought the same caskets for half that price. ‘‘The last award we made for this item was on October 19, 2001, for a quantity of 70. The unit price for that order was $1250.00,’’ Gregg Tatarka, the contract specialist at the directorate of medical material, DSCP, told TOI.
During the Kargil war, the ministry approved the urgent purchase of aluminium caskets to transport the bodies of martyrs. On July 28, 1999, the MoD’s price negotiating committee comprising L M Mehta and Maj-Gen S P Murgai of the Tehelka fame awarded the contract to Texas-based Buitron & Baiza on the basis of a written quotation of April 29, 1997, viz. ‘‘Item no.12342... NSN 9930-00-823-9805, unit price, $2,500 each.’’
The first consignment of 150 caskets reached India on March 6, 2000, but was rejected as over-weight. Subsequently, the Comptroller and Auditor-General indicted the MoD for paying an inflated price and not attempting to seek quotations from other suppliers. Fernandes has publicly attacked the CAG for this ruling.
Despite the existence of at least three US suppliers, a pamphlet setting out the MoD’s case and endorsed by Fernandes insists the ministry had no option but to go to Baiza & Buitron. It states: ‘‘...There is only one manufacturer now of such aluminium caskets in the world, located in the US. ...It is obvious that avenues abroad were explored but there were just no other sources’’.
Curiously, Buitron Funeral Homes or Buitron & Baiza is not a ‘‘source’’ for caskets as far as the US military is concerned. ‘‘We have two trusted sources of supply for this item,’’ Tatarka of the DSCP told TOI. ‘‘Delta Industries, PO Box 50128, Idaho Falls ID 83405, and Dayton Manufacturing, 3327 Elkton Ave, Dayton OH 45403.’’ Another firm, LaMar Construction, had also bagged an award for transfer cases.
According to Sidor of the DSCP, ‘‘Concerning Buitron Funeral Homes, I have no knowledge of them ever having bid on these items for Richmond (Defence Supply Centre Richmond, another procuring division), but I highly doubt it. We have never received bids from Funeral Homes on this item, or even on any of our human remains pouch procurements. Funeral Homes evidently are just service-oriented industries.’’
Related Stories:
Coffingate rocks RS again, Oppn walks out
George haunted by his own prize defence
Govt not averse to probe on coffingate: George
Rajesh Ramachandran
The Times of India
NEW DELHI: Contrary to Defence Minister George Fernandes' claim that $2,500 was the right price for the Kargil-era coffins imported by his ministry, the coffins cost less than half that amount. The Defence Supplies Centre Philadelphia (DSCP), a US defence procurement agency, buys aluminium caskets with the identical specifications for around $1,200.
In the US system, the product is called a ‘human remains transfer case’ and bears the national stock number (NSN) 9930-00-823-9805. The Times of India asked the DSCP whether $1,200 rather than $2,500 was an appropriate and reasonable price for a human remains transfer case if the Indian Army were directly to approach its suppliers.
Tom Sidor of the directorate of medical material, DSCP replied: ‘‘The answer is yes. The price that these manufacturers charge is, of course, related to the quantity being bought. We have bought quantities between 34 and 78 and paid prices ranging from $1,159 to $1,328.’’ In contrast, the MoD agreed to pay $2,500 per casket (with another $500 per casket for transport) even though it ordered 500 caskets.
Even as recently as last year, Pentagon procurers bought the same caskets for half that price. ‘‘The last award we made for this item was on October 19, 2001, for a quantity of 70. The unit price for that order was $1250.00,’’ Gregg Tatarka, the contract specialist at the directorate of medical material, DSCP, told TOI.
During the Kargil war, the ministry approved the urgent purchase of aluminium caskets to transport the bodies of martyrs. On July 28, 1999, the MoD’s price negotiating committee comprising L M Mehta and Maj-Gen S P Murgai of the Tehelka fame awarded the contract to Texas-based Buitron & Baiza on the basis of a written quotation of April 29, 1997, viz. ‘‘Item no.12342... NSN 9930-00-823-9805, unit price, $2,500 each.’’
The first consignment of 150 caskets reached India on March 6, 2000, but was rejected as over-weight. Subsequently, the Comptroller and Auditor-General indicted the MoD for paying an inflated price and not attempting to seek quotations from other suppliers. Fernandes has publicly attacked the CAG for this ruling.
Despite the existence of at least three US suppliers, a pamphlet setting out the MoD’s case and endorsed by Fernandes insists the ministry had no option but to go to Baiza & Buitron. It states: ‘‘...There is only one manufacturer now of such aluminium caskets in the world, located in the US. ...It is obvious that avenues abroad were explored but there were just no other sources’’.
Curiously, Buitron Funeral Homes or Buitron & Baiza is not a ‘‘source’’ for caskets as far as the US military is concerned. ‘‘We have two trusted sources of supply for this item,’’ Tatarka of the DSCP told TOI. ‘‘Delta Industries, PO Box 50128, Idaho Falls ID 83405, and Dayton Manufacturing, 3327 Elkton Ave, Dayton OH 45403.’’ Another firm, LaMar Construction, had also bagged an award for transfer cases.
According to Sidor of the DSCP, ‘‘Concerning Buitron Funeral Homes, I have no knowledge of them ever having bid on these items for Richmond (Defence Supply Centre Richmond, another procuring division), but I highly doubt it. We have never received bids from Funeral Homes on this item, or even on any of our human remains pouch procurements. Funeral Homes evidently are just service-oriented industries.’’
Related Stories:
Coffingate rocks RS again, Oppn walks out
George haunted by his own prize defence
Govt not averse to probe on coffingate: George
Monday, July 23, 2007
Coffingate & Bofors, how they're different
7 Aug 2003
Rajesh Ramachandran
The Times of India
NEW DELHI: Politics was much simpler in the nineteen eighties. There used to be no unanimity between the ruling party and the Opposition MPs on controversial issues as in Wednesday's public accounts committee (PAC) observations on "coffin scam".
The coffin scam is to Congress what Bofors was to BJP -- a political tool to embarrass, campaign and if possible dislodge the government. But the great difference is in how the Congress decided to have a "unanimous" report even on this issue. The NDA members in the PAC fully cooperated with chairman Buta Singh of the Congress in not submitting a report at all and to wait for yet another agency's (Central Vigilance Commissioner) report. The PAC's responsibility is to look into the CAG report and to arrive at a conclusion. After all CVC is but a recent insitution that has no bearing on the CAG's functioning.
But during the Bofors scam days there was not even a CAG report on the issue and the controversy was based on media reports. The government announced a joint parliamentarty committee with the Opposition first rejecting the idea and then asking for committee's chair.
The government did not agree and most of the Opposition parties boycotted the JPC. Yet, when the JPC report was tabled on April 26, 1988, it contained a dissent note from a Congress ally AIADMK member, Alladi Aruna.
His 20-page note ended thus: "The conclusion of the report no doubt conceal the facts of the deal and cover up the connivance of our government with Bofors and refuse to identify the recepients who could be none other than Indians or Indian associates or both."
Despite the boycott, Atal Bihari Vajpayee moved a motion in the Rajya Sabha on May 11 asking for the Attorney General to be called to the house to clarify the JPC report. In the Lok Sabha, opposition member S Jaipal Reddy initiated a discussion under Rule 193 on May 14: "If Bofors kickbacks is the biggest scandal in India's history the JPC report may well be described as the biggest whitewash in Parliamentary history. After going through the report I am convinced that the uncanny wisdom of the entire Opposition to keep off the Bofors committee has been vindicated'.
Now, the PAC headed by a Congress member has no dissent but only unanimity.
Rajesh Ramachandran
The Times of India
NEW DELHI: Politics was much simpler in the nineteen eighties. There used to be no unanimity between the ruling party and the Opposition MPs on controversial issues as in Wednesday's public accounts committee (PAC) observations on "coffin scam".
The coffin scam is to Congress what Bofors was to BJP -- a political tool to embarrass, campaign and if possible dislodge the government. But the great difference is in how the Congress decided to have a "unanimous" report even on this issue. The NDA members in the PAC fully cooperated with chairman Buta Singh of the Congress in not submitting a report at all and to wait for yet another agency's (Central Vigilance Commissioner) report. The PAC's responsibility is to look into the CAG report and to arrive at a conclusion. After all CVC is but a recent insitution that has no bearing on the CAG's functioning.
But during the Bofors scam days there was not even a CAG report on the issue and the controversy was based on media reports. The government announced a joint parliamentarty committee with the Opposition first rejecting the idea and then asking for committee's chair.
The government did not agree and most of the Opposition parties boycotted the JPC. Yet, when the JPC report was tabled on April 26, 1988, it contained a dissent note from a Congress ally AIADMK member, Alladi Aruna.
His 20-page note ended thus: "The conclusion of the report no doubt conceal the facts of the deal and cover up the connivance of our government with Bofors and refuse to identify the recepients who could be none other than Indians or Indian associates or both."
Despite the boycott, Atal Bihari Vajpayee moved a motion in the Rajya Sabha on May 11 asking for the Attorney General to be called to the house to clarify the JPC report. In the Lok Sabha, opposition member S Jaipal Reddy initiated a discussion under Rule 193 on May 14: "If Bofors kickbacks is the biggest scandal in India's history the JPC report may well be described as the biggest whitewash in Parliamentary history. After going through the report I am convinced that the uncanny wisdom of the entire Opposition to keep off the Bofors committee has been vindicated'.
Now, the PAC headed by a Congress member has no dissent but only unanimity.
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