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Rediff.com  » Business » Indian PSUs deny bribery allegations in US

Indian PSUs deny bribery allegations in US

Last updated on: July 07, 2010 19:10 IST

Facing allegations in the US that their officials were bribed by an American firm for business, state-owned NTPC on Wednesday said no contract had been given to the company in question, while another public sector firm BHEL declined comments in the absence of any specific details.

"For the Sipat project (in Chattisgarh), NTPC has not placed any direct order on the said company. NTPC is also not a party in the contract between any of the manufacturers and its equipment suppliers, i.e. the said party Control Component Inc," the PSU said.

"It is a general statement with no specific details, BHEL can comment only when full details (as put up by Control Component to the US court are accessible," a BHEL official said.

According to documents submitted by the US department of justice before a court, officials of Indian PSUs like BHEL and NTPC appeared beneficiaries of bribes doled out by a California-based valve company to bag lucrative contracts mostly for tools used in power plants.

Prominent among the companies mentioned in the court documents are Bharat Heavy Electricals Ltd, Maharashtra State Electricity Board, Haryana State Electricity Board, National Thermal Power Corporation and Bhilai Electric. Debunking the reports, NTPC said, "NTPC takes strong exception to its name being highlighted."

On the other hand, BHEL said it followed a transparent policy of procurement and is monitored by internal and Central agencies, including the Central Vigilance Commission and Comptroller and Auditor General of India.

The California-based Control Component Inc in June 2009 had pleaded guilty before the US court to having committed bribery in 36 countries between 2003 and 2007.

India, besides China, the UAE and Qatar, are some of the major countries where this company indulged in unfair practices to bag contracts.

Topping the list is the Sipat coal-fired power plant of NTPC, for which Control Component paid a bribe of $1,63,449 in two installments to an official of a Moscow-based company. The official has been identified as Vladimir Batenko, according to the documents  submitted by the US department of justice.

It is possible that the details of the beneficiaries are listed in the sealed court documents, but no names were immediately known.

Control Component Inc (CCI) on June 31, 2009, pleaded guilty before the US court to having committing bribery in 36 countries from 2003 to 2007.

India, besides China, the UAE and Qatar, are some of the major countries where CCI indulged in unfair practices to bag contracts.

According to court documents, the payments related to India were made between 2004 and 2007.

On Tuesday, the US Department of Justice announced that it has extradited Flavio Ricotti, a former executive of CCI on charges of bribing foreign companies.

An Italian national, Ricotti, was arrested on February 14 in Frankfurt, Germany, and arrived in the United States on July 2.

The alleged bribe for the Sipat thermal power plant was paid in two installments.

The first payment of $26,865 was made on November 29, 2005, from the company's Handelsbanken Bank account in Sweden to an account at Dresdner Bank in New York for the purpose of securing the contract for the Sipat thermal power plant.

The second payment of $136,584.98 was made in October, 2006, from the same Handelsbanken Bank account in Sweden to an account at the Baltic International Bank in Latvia, the Federal Bureau if Investigation alleges.

According to court documents, the CCI -- in two installments on November 6, 2006 and January 9, 2009 -- made a total payment of USD 69,012 to BHEL and MSEB.

BHEL officials are reported to be the beneficiaries in several other instances, but most of the amounts are less than $5,000.

In 2007, officials of the Bhilai Electricals are believed to have received $8,600, while those of HSEB received $15,802 through a transaction on July 7, 2007.

In addition, Spin Industries, J Mehta & Co and MSEB were the beneficiaries of another bribery transaction of $15,000 made by CCI on March 3, 2004.

However, the court papers are not clear, how many of these contracts were bagged by CCI and what was the value of the contracts it won.

The Department of Justice said CCI has admitted that from 2003 through 2007 it made approximately 236 corrupt payments in more than 30 countries, which resulted in net profits to the company of approximately $46.5 million from sales related to these corrupt payments.

Lalit K Jha in Washington
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