CBI questions former defence minister in ARV bungling case

New Delhi, May 5 (PTI) The Central Bureau of
Investigation (CBI), India's top investigating agency, has
questioned former Defence Minister George Fernandes in
connection with the alleged bungling of Rs 5,183 crore in the
purchase of Armoured Recovery Vehicles (ARV) during 1998-2000.

A CBI team came to Fernandes' house on Monday morning
and quizzed him in connection with the case as his name
figured in the FIR filed by the agency.

During the 90-minute questioning by the CBI team led
by Deputy Inspector General Tilotama Verma, the agency
recorded his statement and asked him about his role before the
tender was given to Czechoslovakia-based ZTS Martin, being
represented by Unimpex.

Fernandes' lawyer Abhijat told PTI that "CBI team came
on Monday morning in connection with the ARV case. They were
there for 90 minutes and all questions to Fernandes were duly
answered by him to the best of his knowledge and recollection,
given the transaction is more 10 years old."

The CBI said the investigation was on and they would
not like to comment on any development.

According to the FIR naming former Samata Party
Treasurer R K Jain, arms dealer Suresh Nanda and other
officials as accused, the CBI alleged that Nanda had
approached Jain to stop the contract going in favour of PSP
Bohemia of Czech Republic whose bid for 87 ARVs was the lowest
at Rs 247.75 crore.

During the opening of price bids on March six, 1998,
the consortium of Slovakia-based Unimpex and BHEL lodged a
protest with the Price Negotiation Committee of the Defence
Ministry alleging that PSP Bohemia was not the Original
Equipment Manufacturer (OEM).

The PSP Bohemia accordingly submitted a certificate
issued by the Trade Ministry of Czech Republic stating that it
had the status of OEM.

It was decided by the Defence Ministry to send a team to
Czech Republic to check its manufacturing capability, but the
proposal was allegedly turned down by Fernandes.

"Fernandes, accordingly, vide note dated November five,
1998 rejected the proposal to send the technical delegation.
Thus, the offer of PSP Bohemia, which was the lowest, was
dishonestly ignored. Nanda then paid Rs one crore to Jain for
getting his work done," the CBI FIR alleged.

Thereafter, fresh offers were invited from Bharat Heavy
Electrical Limited and Bharat Earth Movers Limited for supply
of 87 ARVs. While the former had a collaboration with Polish
Defence Consortium, the latter had a tie-up with Unimpex of
Slovakia.

BEML had a lower bid than BHEL and the Defence
Ministry decided to place an order with them. "However,
Fernandes intervened in the matter again and asked vide his
note dated February 20, 1999, whether the price offered by
BHEL is the same as that of BEML and whether both are prepared
to supply the spares free of cost," the CBI said.

On receipt of the above note, the Financial Advisor
(DS) of the Ministry suggested splitting of the tender between
BHEL and BEML if the former agreed to supply ARVs at the same
cost.

"Fernandes agreed with the above proposal of the
Financial Advisor (DS) and approved it on February 27, 1999,"
the FIR alleged and added there was a wrongful loss of
Rs 51.83 crore in the entire deal.

The CBI said according to information it received
Nanda represented Unimpex which itself was not an OEM but an
agent of ZTS Martin of Czechoslovakia and allegedly "received
huge funds from Unimpex through various companies and the same
were laundered by him through acquisition of assets in the
name of his family members and companies."

The former Defence Minister was also questioned last
year by the CBI in connection with the procurement of Rs
1150-crore Barak Missile System from Israel in 2000. PTI