India: Notices issued to firms linked to arms dealer Choudhrie
Enforcement Directorate has issued notices to firms linked to Indian arms dealer Sudhir Choudhrie in connection with its foreign exchange violations probe in a 16-year-old case emerging out of alleged payment of kickbacks for providing field guns to the army and certain other defence deals.
Official sources said the agency has sought documents and financial statements of the firms linked to Choudhrie as part of its investigation in the case registered under the Foreign Exchange Management Act (FEMA).
One of the notices issued by the Enforcement Directorate (ED) relates to a case in which a Delhi Court in 2011 had directed the agency to probe the "receipt of commission" to Choudhrie and others.
The court had then accepted the closure report filed by CBI in this case that was registered following a sting operation that had alleged upgrade of the army's 130 mm field guns involved payment of USD 1,56,940 in kickbacks. The court had given a clean chit to Choudhrie for lack of evidence while asking ED at the same time to go into the matter.
CBI had registered a case in July 2004 against erstwhile Samata Party's national treasurer R K Jain, also the director of Magnum International Trading Co Ltd (MITCO), Choudhrie and unknown public servants of the Ministry of Defence and the army for alleged cheating and corruption by entering into criminal conspiracy to award the contract for upgrading of 130 mm field guns to 155 mm by importing 185 kits costing Rs 208.15 crore to Israeli firm Soltam Limited.
Sources while said the initial amount under the scanner of ED is about Rs 68 lakh, received by a firm in 2000 through foreign transfer of funds, it is understood that the agency is looking to widen its probe in all the defence deals related to Choudhrie and others.
A media report had recently said that British defence major Rolls Royce made 'secret payments' of around 10 million pounds to an Indian defence agent, identified as Choudhrie, that may have helped the company to win a big contract for engines on Hawk aircraft used by the Indian Air Force.
Choudhrie is understood to be settled in the United Kingdom.
As per the CBI case of 2004 registered under sections of the Prevention of Coruption Act and IPC, there were allegations that an unsolicited offer from Soltam was considered by MoD and the army without any proper trials and procedures and that proposals from all other foreign vendors were not considered to favour the Israeli firm with payment of commission to agents for the same.
CBI in its closure report had said that during its probe it was found that there was no major alternative before the defence authorities and hence Ms Soltam's offer was accepted as it also coincided with urgent requirements of tanks.
It also said that all technical trials for firings, accuracy and others to check the compatibility of 155 mm Bofors ammunition of the modified 130 mm field guns were conducted and its compatibility was confirmed.
CBI had added that no information on objections being raised by other wings of the army and experts was suppressed and all opinions on modification of the field guns were considered.
The agency had noted that its investigation could not corroborate the allegation that other foreign vendors were not considered and a deliberate single vendor situation was created to award the contract to Ms Soltam without ensuring price competitiveness.
On the allegation that there were payments of commission to agents or middlemen as revealed in conversation in the sting operation tapes, CBI had said that the Israeli firm and its general manager for 1992-99 had denied appointing any agent to assist in the matter of import of field guns and that there was no question of payment of any commission.
The CBI probe had said that after the signing of the contract in 2000, MITCO received about Rs 67.48 lakh in its bank account from Ms Soltam.
It was shown as payments in pursuance of an agreement reached in London in June 1999 by which MITCO was appointed the representative of the Israeli firm for their products of "electrical and non-electrical stainless steel kitchen utensils".
The same agreement was terminated by M/s Soltam in August 2001.