A $275 million deal between Indian state-owned BEML and Polish arms firm Bumar for supply of 204 armoured recovery and repair vehicles (ARRV) has reportedly got into trouble for alleged irregularities following an audit in Poland.
The Bharat Earth Movers Ltd.-Bumar contract got the approval of the Cabinet Committee on Security (CCS) in October last year when Gen. V.K. Singh was still the Indian Army chief.
The deal envisages supply of Bumar's WZT-3 ARRVs to the Indian Army for its 1,500 Soviet-origin T-72 Ajeya main battle tanks.
BEML will build the ARRVs through technology transfer from Bumar, which has an Indian subsidiary called Bumar India.
IANS attempts to contact Bumar India chairman Chetan Seth and get his comments on the report were unsuccessful. A call to his mobile phone got diverted to his office phone.
Seth's office staff told IANS that their boss was travelling at present and hence not available. He would respond to the call, they said, but did not specify by when.
According to a report in the Polish newspaper Puls Biznesu Sep 26, the Polish firm's auditors, beginning May this year, checked Bumar's businesses, particularly the Indian deal, and in the second week of September, approached state prosecutors seeking a detailed probe.
The auditors, according to the report, conveyed to state prosecutors that the Indian ARRVs contract is "not profitable" as Bumar had tied up with a third party (BEML) for supply of its products to the Indian Army.
The auditors, who went through Bumar's documents on the ARRV deal with India, concluded that the Polish firm was allowing 36 percent of the Indian contract worth $100 million to be cornered by BEML.
The Polish firm's auditors are looking into the role of former Bumar chairman Edward Nowak and two other company executives in the Indian deal.
The auditors, according to the newspaper report, concluded that Nowak had no powers to enter into third party contracts without the approval of Bumar's supervisory board.
Yet, he went ahead and signed the deal with BEML for the Indian Army order and obtained post facto approval from the board, they said.
But soon after the approval, Nowak lost his job in the company.
His successor Krzysztof Krystowski was quoted by the news report as having admitted that the Indian order for ARRVs could not be implemented in its current form and that the company was now considering a renegotiation of the deal.
According to Krystowski, the Indian contract was flawed with regard to delivery schedule, pricing and the Indian PSU's role.
Bumar has also agreed with the auditors' view that the contract was not profitable, the news report said.
BEML and Bumar came together for the first time in February 2003 when they signed a memorandum of understanding.
BEML is already under a Central Bureau of Investigation (CBI) probe over alleged irregularities in its deal for supply of Tatra multi-purpose military vehicles to Indian armed forces and defence research agencies.