NEW DELHI: Besides the Rs. 1125-crore Barak deal case registered by the Central Bureau of Investigation against the former Defence Minister George Fernandes and his associate Jaya Jaitly and others, the agency has registered two more cases relating to the purchase of Krasnapol munition and supply of Armoured Recovery Vehicles (ARVs).

These cases also bring out the role of defence middlemen, unknown officials of Defence Ministry and the then Samata Party national treasurer R.K. Jain in "cheating the Government, exercising personal influence with the Ministry" and swinging the deal in their favour.

Enquiries by the CBI disclosed that during 1998-99, the officers of Ministry of Defence allegedly "abused their official positions and wilfully ignored the lowest technically suitable offer of M/s PSP Bohemia for supply of 87 ARVs." The Defence Ministry was purchasing VT-72 B ARVs from M/s Unimpex, an agent of M/s ZTS Martin, a Czechoslovakian company since 1993 through the public sector company Bharat Heavy Electricals Limited (BHEL).

The Indian agent of M/s Unimpex, Suresh Nanda, was instrumental in routing the deal through him. The company had also entered into a Transfer of Technology (ToT) contract with BHEL in 1993 for indigenously producing the VT-72 B ARVs. However, it proved to be a non-starter and the 113 ARVs supplied by BHEL since 1993 were imported ones. Each ARV cost Rs. 2.8 crore and Mr. Nanda reportedly made substantial commissions in the ARV supplies.

It came to light in the Ministry of Defence that M/s Unimpex was steadily increasing the prices of ARVs and going back on its earlier commitments. The Ministry decided to issue Requests for Proposals (RFPs) to five vendors in December 1997. These were: M/s Polish Defence Consoritum, M/s Unimpex, Slovakia, M/s PSP Bohemia, Praha, M/s Bharat Earth Movers Limited and BHEL. When their bids were opened, M/s PSP Bohemia turned out be to the lowest bidder at a cost of Rs. 248 crore while M/s Unimpex Slovakia came next at Rs. 295 crore and BHEL in collaboration with M/s Unimpex, Slovakia was put at Rs. 332 crore.

CBI enquiries revealed that some of the bidders protested to the Price Negotiation Committee (PNC) that M/s PSP Bohemia was not the original manufacturer and it would supply old refurbished ARVs to the Army. The Defence Ministry then launched the exercise to ascertain the credentials of M/s PSP Bohemia and it was decided to send a team to visit the firm's facilities.

The agent for M/s Unimpex, Suresh Nanda, got a whiff of the decision to send the team and contacted R.K. Jain, the then national treasurer of Samata Party. The then Defence Minister George Fernandes wrote a note on November 5, 1998, rejecting the proposal to send the technical team. Mr. Nanda allegedly paid Rs. one crore to Mr. Jain, a fact Mr. Jain disclosed to an undercover Tehelka news portal reporter.

The Ministry invited fresh offers from BHEL and BEML for supply of 87 ARVs. Since the offer of BEML in collaboration with Polish defence consortium was lower than that of BHEL which had a collaboration with Unimpex, Slovakia, the Ministry recommended placement of entire order to BEML but Mr. Fernandes intervened and asked if the price of BHEL was the same as BEML and if both were prepared to supply the spares free of cost. A way out was suggested by the Ministry's Financial Advisor, who suggested splitting the order between BHEL and BEML at a total cost of Rs. 299.58 crore.

It was agreed to by Mr. Fernandes, and thus M/s Unimpex got a part of the contract through BHEL though it was not the lowest bidder in both the bids.

Enquiries revealed that Suresh Nanda represented M/s Unimpex which was not an original manufacturer but an agent of M/s ZTS Martin, Czechoslovakia. The Ministry, by dealing with M/s Unimpex, violated the Defence Purchase Procedure 1992, which stipulates that no middleman or agent should be involved in the purchase process. Mr. Nanda allegedly received substantial funds from M/s Unimpex through various companies and laundered the money through acquisition of assets in the names of his family members and companies, CBI investigation has shown.

The CBI alleged in its FIR that unknown officers of Defence Ministry by corrupt or illegal means caused pecuniary advantage to Mr. Nanda of M/s Unimpex through R.K. Jain and corresponding wrongful loss of Rs. 51.83 crore to the Government.

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