KashifAsrar
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Front Page news in Today's (16 May 2007) ToI.
Kashif
16% Was Paid, Russian Agent Pocketed All: Austrian Firm
Dhananjay Mahapatra | TNN
New Delhi: The involvement of middlemen in arms deals and that they pay commission to swing deals with the Indian government for their clients has been hardly a secret. But they have never been known for baring the trade secret in public.
In a rare instance of its kind, an Austrian firm has created a flutter by telling the Supreme Court that Russian armaments manufacturer Kazan Helicopters paid Rs 29 crore to swing a Rs 180-crore deal to supply 16 MI-17 helicopters to the ministry of defence and BSF.
Even though the ministry of defence has angrily denied the charge, a fallout of a business feud between the middleman and the Russian company, levelled in a PIL, the Supreme Court has taken serious note of the matter. It has sent notices to the ministries of defence, finance and home, as well as CBI.
The judicial vigil makes sense considering that India spent Rs 44,000 crore over the past three years on defence purchases to emerge as the biggest arms importer in the world, overtaking China.
If the admission of the Austrian firm that Kazan had pledged to pay 16% of the deal amount as commission to the middlemen is taken as the industry norm, then suspicion is sure to rise about huge costpadding which leaves the armament firms enough room to pay generous commission to middlemen.
The commission confession in the PIL filed by Dipak Kumar Jena is significant also because it shows that for all the muchhyped resolve of successive regimes to banish middlemen, they have not only been in business but have jacked up their cut. The commission paid in the Bofors deal worked out to be just over 5% of the total value of the howitzer deal.
And it took a bitter fight between the middlemen â Singapore-based Austrian firm Rite Approach Group Limited and the Russian Rosoboronexports â for the dirty secret to tumble out. The Austrian firm has acknowledged the veracity of the charge in the PIL that Kazan had contracted to pay 16% of the deal amount to the two agents. The collaboration worked fine till the Russian partner allegedly turned greedy and cornered the entire commission from Kazan.
Jenaâs PIL, based on a TOI report of November 21, 2005, had sought a CBI probe into the matter alleging that commissions were paid, over which two foreign firms fought and had sought SC assistance in adjudication of their dispute.
Rite Approach Group Ltd (RAGL), represented by Austrian Trade Commission with its office in New Delhi, had acted as the agent of the Russian firm and claimed to have helped in clinching the deal.
MONEY MUDDLE
Kazan Helicopters enlists Austrian firm Rite Approach Group Limited and Russian Rosoboronexports as agents
It wants them to facilitate the Rs 180-crore deal to supply 16 MI-17 helicopters to the defence ministry and BSF
Kazan agrees to pay 16% of the deal amount to the agents
Angry over the Russian partner cornering the entire commission, the Austrian firm moves SC, saying Kazan paid Rs 29 cr to bag the deal
Defence ministry claimed no commission was paid
New Delhi: The claim by an Austrian firm that Russian armaments manufacturer Kazan Helicopters paid Rs 29 crore to swing a Rs 180-crore deal to supply 16 MI-17 helicopters to the ministry of defence and BSF has led to a new controversy. In an affidavit before the apex court on May 11, Erich Gutmann of Paolo Santini Warenvertriebs GmbH, which owns RAGL â the agent of the Russian firm â said, ââThe price of helicopters paid for by the Union of India to Rosoboronexports included the component of 16% commission.ââ A copy of the affidavit is with TOI.
Undeterred by the defence ministryâs strong denial, Gutmann mainained, ââKazan Helicopters had also confirmed payment of $6.5 million (Rs 29 crore) as commission in terms of the contract.ââ
The defence ministry had produced a letter from Kazan Helicopters to back up its protestation that no commission was paid.
The affidavit also stressed that it has no bones to pick with the defence ministry. ââSantini Warenvertriebs GmBH is only concerned with the fraud played by Rosoboronexports in misappropriating the entire 16% commission payable under the agreement dated April 14, 2000, between RAGL and the Russian firm,ââ the Austrian firm said.
But the firm argued that Rosoboronexports should be held liable for violation of any policy decision of the government not to pay commission in defence deals.
dhananjay.mahapatra@timesgroup.com
Kashif
On record in SC: Defence deal kickback
16% Was Paid, Russian Agent Pocketed All: Austrian Firm
Dhananjay Mahapatra | TNN
New Delhi: The involvement of middlemen in arms deals and that they pay commission to swing deals with the Indian government for their clients has been hardly a secret. But they have never been known for baring the trade secret in public.
In a rare instance of its kind, an Austrian firm has created a flutter by telling the Supreme Court that Russian armaments manufacturer Kazan Helicopters paid Rs 29 crore to swing a Rs 180-crore deal to supply 16 MI-17 helicopters to the ministry of defence and BSF.
Even though the ministry of defence has angrily denied the charge, a fallout of a business feud between the middleman and the Russian company, levelled in a PIL, the Supreme Court has taken serious note of the matter. It has sent notices to the ministries of defence, finance and home, as well as CBI.
The judicial vigil makes sense considering that India spent Rs 44,000 crore over the past three years on defence purchases to emerge as the biggest arms importer in the world, overtaking China.
If the admission of the Austrian firm that Kazan had pledged to pay 16% of the deal amount as commission to the middlemen is taken as the industry norm, then suspicion is sure to rise about huge costpadding which leaves the armament firms enough room to pay generous commission to middlemen.
The commission confession in the PIL filed by Dipak Kumar Jena is significant also because it shows that for all the muchhyped resolve of successive regimes to banish middlemen, they have not only been in business but have jacked up their cut. The commission paid in the Bofors deal worked out to be just over 5% of the total value of the howitzer deal.
And it took a bitter fight between the middlemen â Singapore-based Austrian firm Rite Approach Group Limited and the Russian Rosoboronexports â for the dirty secret to tumble out. The Austrian firm has acknowledged the veracity of the charge in the PIL that Kazan had contracted to pay 16% of the deal amount to the two agents. The collaboration worked fine till the Russian partner allegedly turned greedy and cornered the entire commission from Kazan.
Jenaâs PIL, based on a TOI report of November 21, 2005, had sought a CBI probe into the matter alleging that commissions were paid, over which two foreign firms fought and had sought SC assistance in adjudication of their dispute.
Rite Approach Group Ltd (RAGL), represented by Austrian Trade Commission with its office in New Delhi, had acted as the agent of the Russian firm and claimed to have helped in clinching the deal.
MONEY MUDDLE
Kazan Helicopters enlists Austrian firm Rite Approach Group Limited and Russian Rosoboronexports as agents
It wants them to facilitate the Rs 180-crore deal to supply 16 MI-17 helicopters to the defence ministry and BSF
Kazan agrees to pay 16% of the deal amount to the agents
Angry over the Russian partner cornering the entire commission, the Austrian firm moves SC, saying Kazan paid Rs 29 cr to bag the deal
Defence ministry claimed no commission was paid
New Delhi: The claim by an Austrian firm that Russian armaments manufacturer Kazan Helicopters paid Rs 29 crore to swing a Rs 180-crore deal to supply 16 MI-17 helicopters to the ministry of defence and BSF has led to a new controversy. In an affidavit before the apex court on May 11, Erich Gutmann of Paolo Santini Warenvertriebs GmbH, which owns RAGL â the agent of the Russian firm â said, ââThe price of helicopters paid for by the Union of India to Rosoboronexports included the component of 16% commission.ââ A copy of the affidavit is with TOI.
Undeterred by the defence ministryâs strong denial, Gutmann mainained, ââKazan Helicopters had also confirmed payment of $6.5 million (Rs 29 crore) as commission in terms of the contract.ââ
The defence ministry had produced a letter from Kazan Helicopters to back up its protestation that no commission was paid.
The affidavit also stressed that it has no bones to pick with the defence ministry. ââSantini Warenvertriebs GmBH is only concerned with the fraud played by Rosoboronexports in misappropriating the entire 16% commission payable under the agreement dated April 14, 2000, between RAGL and the Russian firm,ââ the Austrian firm said.
But the firm argued that Rosoboronexports should be held liable for violation of any policy decision of the government not to pay commission in defence deals.
dhananjay.mahapatra@timesgroup.com
