New Delhi, November 18
The CBI has unearthed a scam in the Defence Ministry and registered a case against eight persons including three senior officials of the ministry and two foreign companies, for allegedly causing loss of crores of rupees to the government through the supply of substandard ammunition to the Army during 1992-95.

The FIR registered by the CBI’s Special Investigation Group (SIG) has named as accused the then Joint Secretary (Ordnance) Amitabha Pande, the then Director (Ordnance) Ramanath Jha, the then Additional Financial Adviser to the Defence Ministry B.D. Singh, the then Additional Director-General of Weapons and Equipment (adgwa), Army Headquarters, Lt-Gen Vinay Shankar, (retd), Hong Kong-based company M/s Pitcare Ltd, its Managing Director Peter Lim, Singapore-based company M/s fdsp (Asia) Ltd and its representative Borislav Jurisic.

The CBI alleged that the accused persons and companies committed misconduct in the matter of supply of 10,000 rounds of 130mm illuminating ammunition and 6,700 rounds of 122mm illuminating ammunition to the Army by M/s Pitcare Ltd, Hong Kong, which also had its office in Singapore.

The supplies were received by the Central Ammunition Depot, Pulgaon, Wardha district (Maharashtra), in September, 1993.

But during the proof test in September, 1995, the performance of 130mm illuminating ammunition was found to be “not satisfactory” and the Directorate-General of Quality Assurance (dgqa) recommended the whole lot as “not fit for use”. The 122mm illuminating ammunition was also found to be substandard during user performance trials, the CBI alleged.

The CBI, which conducted a preliminary inquiry into the matter between November last year and July this year, accused Ministry of Defence (MoD) officials of entering into a criminal conspiracy with the foreign companies and their representatives.

In furtherance of the said conspiracy, while entering into the contract with M/s Pitcare Ltd, the ministry officials deliberately did not verify the credentials of the company and accepted terms and conditions in the contract that were unduly favourable to the suppliers and detrimental to the interests of the Government of India, the CBI alleged.

During the negotiations, the company had agreed that the payment would be made only on receipt of goods in India and the competent authority had also approved the award of the contract on the said terms of payment, the FIR said.

However, when the contract was signed on January 21, 1993, the MoD officials, by abusing their position as public servants agreed for the payment to be made on delivery which in turn was construed to be the presentation of the Bill of Lading, the agency alleged.

Further, the consignment covered under the contract was dispatched from Singapore/Hong Kong on May 31, 1993, but the inspection certificate was issued by the purchaser’s team conveying the inspection and acceptance of the ammunition even before the consignment had left the original station. In fact, no such team visited Singapore or Hong Kong for the purpose, the CBI alleged.

Thus, a sum of $ 6,118,400 was paid to the supplier on June 14, 1993 without the consignment actually reaching India, the FIR alleged.

The supplies were eventually received by the Pulgaon Central Ammunition Depot in September, 1993, and that too without marking, covering papers and technical documents.

There was a clause in the contract that mandated the proof test to be carried out within 60 days of receipt of the ammunition at the site. But due to non-receipt of technical documents along with the ammunition, the test could not be carried out within the stipulated period, the FIR alleged.

The papers were supplied by the company only in October, 1994, after the Indian authorities insisted for the same. The dgqa conducted the proof test in September-December, 1995, only to conclude that the ammunition was substandard.

India’s quality claim was forwarded to the supplier by Army Headquarters through the Indian High Commission in Singapore. Efforts were also made to contact M/s Pitcare Ltd for lodging the quality claim in Hong Kong, but it was learnt that the company was not traceable at the given address, the FIR said.