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Six defence firms blacklisted over ordnance scam

delhi Updated: Mar 06, 2012 02:45 IST
Rahul Singh
Rahul Singh
Hindustan Times
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Sending out a strong message to arms suppliers indulging in unfair practices, the defence ministry on Monday blacklisted six vendors --- including four foreign defence contractors -- for their alleged involvement in the Ordnance Factory Board (OFB) scam in 2009.

The ministry has decided not to do any business with these defence firms, including Singapore Technologies Kinetics Limited, Israeli Military Industries and Rheinmetall Air Defence (RAD), Zurich, for 10 years. The blacklisted companies include Russian entity Corporation Defence and two Indian firms, Delhi-based T S Kisan and Company and Ludhiana-based RK Machine Tool based in Ludhiana.

The ministry had frozen all business with the defence firms after they were named by the Central Bureau of Investigation in an FIR against former OFB director-general Sudipto Ghosh in May 2009. The OFB is the country’s main producer of military arsenal. Ghosh had allegedly received kickbacks to favour these firms. The Kolkata-based board had then enjoyed near-autonomy in awarding lucrative deals.

“The firms were recommended for blacklisting by the CBI. They were issued show cause notices to explain why action should not be taken against them consequent to the filing of the chargesheet in the case related to illegal gratification against Sudipto Ghosh,” a defence ministry spokesperson said. He said the decision to debar the firms was taken on Monday after taking their replies into consideration. The CBI had filed a chargesheet against Ghosh and some other officials in 2010.

After the government put all dealings with these firms on hold in 2009, some of the companies approached the Delhi High Court seeking relief. The court said principles of natural justice had not been followed as the companies weren’t given an opportunity to be heard. The government then issued show cause notices to the firms and blacklisted them on Monday after scrutinising their replies.

The army was in 2009 banking on Singapore Technologies Kinetics for lightweight howitzers that can be swiftly deployed in the mountains for accurate artillery fire. It had emerged as a strong contender for supplying its 155mm Pegasus lightweight howitzer to the army under a Rs 4,800-crore artillery upgrade plan. The firm was the sole bidder for an order of ultra-light howitzers after the other contender, BAE Systems, failed to respond to a global tender. The army had then said the ban on defence suppliers could hit artillery modernisation.

The government had signed an agreement with Israel Military Industries in 2009 to build five artillery munitions factories in Bihar’s Nalanda district in a project worth Rs 1,200 crore.

The OFB controls 39 ordnance factories engaged in the production of tanks, armoured personnel carriers, bombs, rockets, artillery guns, anti-aircraft guns, parachutes, small arms, clothing and leather equipment for soldiers. The board is collaborating with foreign firms for several products.