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No kickbacks in Scorpene deal: Pranab

Govt had, in fact, been able to effect a price cut over what had earlier been agreed to, Defence Minister told LS.

india Updated: Mar 21, 2006 14:55 IST

Firmly denying kickbacks in the Scorpene submarine deal with France, the Government asserted on Tuesday it had, in fact, been able to effect a price reduction over what had previously been agreed to.

"The Government did not pay an extra amount of Rs4,500 crore (Rs 45 billion-$1 billion) than what was negotiated earlier" for the purchase of Scorpene submarines as has been alleged by a newsmagazine, Defence Minister Pranab Mukherjee said in a suo moto statement in the Lok Sabha.

Holding that the "facts of the case are contrary to these allegations", Mukherjee said: "No contract or contracts were signed with French firms for Rs16,000 crore (Rs160 billion) for the Scorpene project. The total cost of the two contracts signed with the two French firms for the project is Rs 7,197 crore (Rs71.97 billion)."

Even taking into account the Rs58.88 billion contract with the Government-owned Mazagon Docks Limited for the indigenous construction of the submarines, the total value of all contracts signed for the Scorpene project was Rs130.85 billion against the sanctioned Rs187.98 billion, Mukherjee pointed out.

Of the balance Rs57.13 billion, Rs 35.53 billion went toward taxes while Rs21.60 billion was meant for "other items to be acquired during the project period for which only preliminary steps have been taken", the minister said.

After the present Government came to power in May 2004, "it re-examined the project even though all negotiations had been completed in 2002...and was able to achieve a reduction of Rs313 crore (Rs3.13 billion", Mukherjee maintained.

"As a result of these negotiations, the Government was also able to achieve several long term concessions," the minister said, adding: "These included the revision of the escalation formula to the advantage of the Indian side by adjusting the fixed element in (one) contract and placing a cap on escalation (in the other contract. A cap was also placed on the exchange rate variation for calculation of profit for Mazagon Docks Limited."

Pointing to the Integrity Pacts that had been signed "to ensure transparency of the project", Mukherjee stated these "contain severe penalties in case of breach of any of the provisions".

"The safeguards include cancellation of the contract, recovery of all advances with interest at a rate of two per cent higher than the European Inter Bank Offered Rate, non-payment by the buyer of any dues, and the recovery of all sums paid to any middleman or agent," the minister added.

He also pointed out that the French Government was a signatory to the Organisation for Economic Cooperation and Development Convention on Combating Bribery of Foreign Public Officials in International Business Transactions.

Holding that the French companies accused of kickbacks had denied the allegations and stated that the e-mails carried by the newsmagazine to substantiate its charges were "fake and fabricated", Mukherjee said they had also sued the journal in the Delhi High Court, which had given the publication till March 27 to respond.

Referring to the leak of classified information from the Indian Navy War Room, the minister said this did not relate to the Scorpene deal.

Three navy officers had been dismissed for the leaks and the case had been had been handed over to the Central Bureau of Investigation for a further probe, Mukherjee said.

First Published: Mar 21, 2006 13:59 IST