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FAQ: All you wanted to know about the army-Tatra scam

Last updated on: April 26, 2012 18:40 IST

FAQ: All you wanted to know about the army-Tatra scam

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The Central Bureau of Investigation is inquiring into the irregularities, if any, in the purchase of the all-terrain Tatra vehicles by the Indian Army from the Bharat Earth Movers Limited.

The serious charge of corruption in purchase of Tatra vehicles was made by Army Chief General V K Singh in a recent interview. Since 1986, the Indian Army has bought over 7,000 Tatra trucks.

Rediff.com on the basis of first hand information accessed from the multiple sources tries to give answers to the frequently asked questions about the tainted deal.

What are the allegations of corruption regarding the purchase of Tatra trucks?

The allegation is about the very high cost of the Tatra trucks to the Indian army. Tatra AS is a Czech company who manufactured the world-class trucks. Tatra AS has undergone a change of ownership. (Those details a little later).

The alleged dubious route though which trucks reached the Indian Army is the focus of the investigation by the CBI. If, what the sources in the army claim are true, then it is a serious allegation involving corruption worth crores of rupees.

The allegation is that the deal worked like this:

1. The Czech company sold the trucks to Venus Projects of Hong Kong, the trading arm of Vectra Worldwide, at a 35 per cent discount. (This is the first stage of loss to the Indian Army. The discount would have come to the purchaser, that is Indian Army, if a direct deal was struck with the manufacturer or a part of the discount could have been passed on to the Indian Army by the dealer/seller.)

2. Venus Projects sells the trucks to Tatra Sipox (United Kingdom) Ltd. This UK-based company is the holding company of Vectra Worldwide, owned by controversial businessman Ravi Rishi. He need not pay tax on the deal because there is a no taxation treaty between the two countries. But the price of the Tatra trucks goes up by 30 per cent.

3. Tatra Sipox then sells the inflated-priced trucks to BEML, the government owned company, after adding its profit of around 15 to 20 per cent.

4. BEML sells these trucks to the Indian Army after adding 25 to 35 per cent.

So, if you take into account the addition of transaction cost, commission, profit whatever you say at the four stages quoted above the Indian Army was getting the Tatra trucks paying 100 to 120 per cent higher than the factory price. This is what General Singh was complaining about. The CBI is, also, focusing on these dubious dealmakers at every stage.

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Image: Indian Army soliders during a rescue operation in Surat
Photographs: Reuters

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FAQ: All you wanted to know about the army-Tatra scam

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How does the Indian Army get spare parts?  

That is, probably, another scam. The Indian Army places orders through BEML for the spares. Tatra Sipox gets the intimation and forwards it to a company called Jupiter Slovakia, which is a holding company of Vectra Worldwide.

Jupiter contacts the suppliers of the Tatra spare parts but it does not go to the original Czech company. Thus, the pricing of the spare parts is arbitrary and mostly exorbitant. The Indian Army ends up paying 200 to 300 percent more than the actual cost. Since, the spare parts are not acquired from Tatra AS one is not even sure of the quality.  

Is there any other such dubious deal?

Yes. Brahmos, the Indian-Russian missile joint venture, needs cranes. BEML procures Atlas Cranes from Tatra Sipox. The same modus operandi is used by the Ravi Rishi. He gets it at around 35 per cent discount from Atlas Machinen GMBH, the German company that makes the cranes.  

Tatra hikes the cost by some 25 per cent or more and sells to BEML who in turn gives it to the Brahmos after adding its own margin. India pays some 75 per cent plus higher cost by not buying straight from the Germans.


Image: Army Chief General V K Singh


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FAQ: All you wanted to know about the army-Tatra scam

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So, who is Ravi Rishi?

Ravi Rishi (external link) is a known figure in the defence ministry, in the arms lobby of New Delhi and amongst the media men who cover the MoD.

He was born in Rohtak, Haryana, and graduated from IIT, Delhi. He has good networking amongst ex-IITians. His father was a government contractor. He has also inherited from his father the 'network' amongst government officers who are pliable.

Rishi is a typical operator. He allegedly has given nicknames to all his important contacts on Raisina Hill, the seat of power in New Delhi. But he never ventures into Raisina Hill.

His contacts see him at his house or at secret places. He operates in New Delhi with his old friend Anil Mansharamani. Both studied together. Anil is managing director of Rishi's company. Rishi is a storehouse of information, tips and knowledge on all the Indian Army's purchases. Some say he is a smooth operator while some say he is a slimy businessman. The CBI should find out his real identity.

It is alleged that he has made friends with many retired generals. They help him get to know the serving generals. He studies their profile, understands their needs and psyche and decides how to go about using them. Rishi, always, knows the process of new appointments of army men to sensitive postings. More importantly, he is well aware of the army's priorities in purchases. He saves time by contacting the global vendors much in advance of the actual procurement process.

He is better equipped with facts to negotiate the final deals because the retired army men help him. His pattern of appointing retired army men in his company is unethical to say the least, says the army officer who knows him. He employs retired army men to influence the outcome of deals.

A Punjabi-speaking former colonel helps Anil Mansharamani get appointments with key officers. The names of four retired senior army officers who helped Ravi Rishi flourish, including a lieutenant general who passed away recently, are with the CBI.

When Czechoslovakia was divided into Slovakia and Czech Republic in 1993, Rishi bought many companies during the turmoil. He told a daily that he acquired 17 factories in 1991-92 when that country was in turmoil.

The CBI has found that Rishi, also, operated, at another level with BEML. He co-opted BEML officers by tempting them to take early retirement.

Rishi, always, knew through them what the BEML's current and future plans are. One of the chairman and managing directors of BEML was appointed in Rishi's company after his retirement. The malpractices allegedly began during his tenure. The CBI has carried out searches at the residence of current BEML chairman V R S Natarajan, in connection with alleged irregularities in tendering process for hiring a consultancy firm. He is not above board and has landed in trouble after the CBI inquiry was initiated against him.


Image: Businesman Ravi Rishi


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FAQ: All you wanted to know about the army-Tatra scam

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What is Vectra Worldwide?

It's the parent company with Rishi having major interests. 

Their website (external link) tells us all. They have operations in the UK, India, France, Slovakia, Hungary, Czech Republic, Bulgaria, Canada, UAE, Russia, Singapore and Hong Kong.

In India they have major interests. Vectra group is a family business headed by Rishi. It owns 100 per cent of Tatra Slovakia and nearly 66 percent of Tatra Czech Republic operations. Vectra sells trucks to 58 countries and 38 armies across the world including the US, Russia and Israel.

They operate with help of ten companies in India. They manufacture a range of equipment including trucks, dumpers, tractors, construction equipment, oil tankers and special gears. They have huge establishment in Hosur, Tamil Nadu, Greater Noida, Uttar Pradesh, Mumbai, Maharashtra and Bangalore, Karnataka. They also have a coach manufacturing company in Abu Dhabi, another company in Slovakia and a commodity trading firm in Russia.

Vectra's Paris operation is headed by Anil Bidani. The Moscow operation was headed by Alexander Pozhilov but he has left the company recently. Nitin Sachdev, son of a retired defence service officer, handles the Bangalore office. Nitin is a son-in-law of a director in Hindustan Aeronautic Limited. The HAL work is handled by Nitin.

The operations in New Delhi are handled by Anil Mansharamani. Swati Rishi, Dilip Singh, Captain Krishnamurty and Sunita Saighal are also key officers in their Indian operations.

A few years back, Tatra AS was bought over by the American company Terex but they could not handle it. The assets and employees were stripped. Rishi entered at this stage and brought it in a distress sale through a consortium and reconstituted the board with him as a member and former US ambassador to Czech Republic William J Cabaniss as its chairman. 

The most important company for Rishi's gameplan is the Slovak operation. Jupiter Slovakia is headed by Bozena Durdovicova. Jupiter Slovakia is the key to the Tatra truck scandal. They are the people who dispatch trucks and many other things to BEML who, in turn, put the logo and hand it over to the Indian Army.

 


Image: A Tatra truck


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