The Defence Ministry has imposed a one-year ban on all business dealings with Vectra Advanced Engineering Private Limited in relation to the Tatra truck scam that was unearthed in 2012 during the UPA era. At that time former Army Chief General VK Singh alleged that he was offered a bribe of Rs.14 crore for clearing procurement of 600 all-terrain Tatra Trucks from Bharat Earth Movers Limited (BEML).
Defence Ministry has suspended all business dealings with Vectra Advanced Engineering Private Limited for one year in connection with the Tatra truck deal case. pic.twitter.com/3E6fhz8Y1A— ANI (@ANI) August 25, 2020
Tatra Trucks and its history with Indian Army
BEML had signed a contract with Tatra Trucks to supply trucks to Indian Army in 1986. For more than two decades, the company had a monopoly in providing vehicles to the army. In 2010, the Indian government changed the rules of procuring the vehicles for the Army so that other companies could apply as a supplier in open bidding. Tatra trucks are widely used by the Army in transport, artillery and mounted guided missile launchers.
BEML, and the involved Army officials had allegedly flouted norms in this regard because Indian Army procurement guidelines state that all purchases are to be made directly from the manufacturing company.
Tatra is a truck manufacturing company from the Czech Republic. It was alleged that the company sold the trucks to Venus Projects, Hong Kong at a 35 per cent discount. Venus Projects is the trading arm of Vectra Worldwide. The company further sold the trucks to Tatra Sipox Ltd, which is the UK based holding company of Vectra Worldwide. It is owned by Ravi Rishi who is known for several controversies. Ravi, a UK citizen, was also questioned by the CBI in 2012.
While Rishi did not pay taxes on the trucks because of the treaty between the two countries, the price of the trucks went up by 30 per cent. Tatra Sipox then sold the trucks to state-owned BEML after further adding 15 to 20 per cent as profit. BEML offered the trucks to the Indian Army after adding 25 to 35 per cent profit on the price, making the MRP much higher than the original price.
If Tatra sold trucks directly to the Indian Army, it could have offered a 35 per cent discount directly that it gave to Venus Projects. However, because the truck went through multiple channels, the final price went up by 100 to 120 per cent compared to the original price.
Thousands of overpriced trucks sold to Indian Army
It was alleged that in 2010, a lobbyist ex-Lieutenant-General Tejinder Singh met then Army Chief General VK Singh for clearance of a batch of 600 trucks that were supposed to be purchased by the Army. For this, he offered General Singh 14 crore as a bribe. General Singh in an interview said that he was offered a bribe to clear 600 sub-standard trucks for purchase. He alleged that in two decades, the company had already supplied 7000 trucks at an inflated price to the Indian Army.
The inflated price was not for the trucks only but also the spare parts. For example, Jacks for the Tatra truck were available at Rs 3000 at that time, but the Army bought them for Rs 30,000 per piece. Indian companies like Ashok Leyland or Tata Motors could have supplied similar trucks for Rs.16-18 lakhs that were bought from Tatra at around Rs.1 crore per truck.
In a statement, then-Defence Minister AK Antony told parliament that when he heard about the bribe in 2010, he was shocked. He said, “I was shocked. I told him to take action, but he said ‘I refuse to pursue the matter.”
CBI initiated the investigation in the case in March 2012. In their charge sheet filed in July 2014, the investigation agency said, “AK Antony, the then Raksha Mantri (defence minister), in his statement in parliament March 27, 2012, and the one recorded under Section 161 CrPC during the investigation, has confirmed having been informed by General VK Singh about such offer of bribe made to him about 1-1.5 years ago by Lt Gen (retd) Tejinder Singh.” CBI included a list of 20 witnesses in the case that included Antony’s name.
The scam allegedly led to siphoning off Rs.750 crores from the Government funds. Senior advocate KS Periyaswamy who sought the intervention of President in the case and asked for CBI probe alleged that 15% of the money sanctioned for the procurement of the trucks was siphoned off as commission. CBI submitted a closure report in 2014 saying that it did not find enough evidence in the case. The CBI had informed the court that it did not even find enough evidence to file a charge sheet in the case.
Questions raised by special Court
In 2019, a special Court pulled up CBI and the Ministry of Defence for not following the basic rules. In a strongly-worded statement, the court said that it was shocked to learn that the investigation agency failed to produce the defence procurement manual. Judge Pramachala said, “This is a bit surprising and shocking to see that CBI has completed investigation even without laying a hand over such manual, so as to make the relevant assessment.” The case was pulled for re-consideration. The Ministry of Defence, while mentioning the case, imposed a one-year ban on Vectra Advanced Engineering Private Limited.