The Telegraph
Since 1st March, 1999
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Missile mud on Fernandes

New Delhi, Oct. 10: Allegations of corruption in arms deals erupted on former defence minister George Fernandes today with the CBI registering a case against him.

Charged with irregularities in the Rs 1,150-crore deal to buy the Israeli Barak missiles, Fernandes dragged President A.P.J. Abdul Kalam into the controversy.

“If they have to make any charge, it should start with the President, who first called for it (Barak), asked for it before I went into the government,” Fernandes said.

Sources in Rashtrapati Bhavan said: “The allegation is not about the quality or system of recommendation but about the purchase of certain equipment.”

Kalam was at the time scientific adviser to the defence minister.

Fernandes’s associate Jaya Jaitly has been accused of taking a Rs 2-crore bribe in the October 2000 deal. Then navy chief Sushil Kumar has been charged with irregularities.

R.K. Jain, national treasurer of the then Samata Party that Fernandes led, is alleged to have accepted favours worth several lakhs of rupees.

CBI officials today searched 35 premises in Delhi, Gurgaon, Mumbai, Bangalore and Chandigarh. The agency believes it has also cracked corrupt transactions that were either concluded or being negotiated for Krasnopol terminally guided ammunition, armoured recovery vehicles and anti-materiel rifles, the last from South Africa’s Denel.

Most of the searches took place on the premises and in the offices of six defence agents. They include Suresh Nanda, son of former navy chief Admiral S.K. Nanda, Sudhir Chaudhary, a relative of commerce minister Kamal Nath, retired Major S.J. Singh, retired Lt. Col. V.K. Beri and agents M.S. Sahni and Vipin Khanna.

The CBI found Rs 62.5 lakh in the office of Nanda located in Hotel Claridges and Rs 48 lakh in the Vasant Vihar residence of Sahni.

While Nanda is accused of influencing the Barak and armoured recovery vehicle deals, Sahni was the agent for Krasnopol with two others.

Three of the deals had figured in media organisation Tehelka’s sting operation.

The contract for seven Barak anti-missile defence (AMD) systems and 200 missiles was signed on October 23, 2000, with Israel Aircraft Industries, despite objections by the DRDO (Defence Research & Development Organisation) because of the availability of the indigenous Trishul.

The CBI alleges that Fernandes overruled the DRDO at the behest of Nanda. Sushil Kumar put up a note to Fernandes to import six Barak AMD systems, misrepresenting facts.

Fernandes, who saw the hand of Sonia Gandhi, said: “He (Kalam) said this (missile system) is needed and that is how it came.”

A CBI official, however, said: “Fernandes tried to get the proposal approved by the cabinet committee on security despite objection by the defence secretary.”

CBI sources said the deal had been negotiated at $268.63 million, exceeding the earlier quoted rate by $17 million. Prima facie evidence indicates remittances from abroad into the accounts of the middlemen, they added.

In the procurement of Krasnopol, the lowest offer by PSB Bohemia, which was also technically suitable, was ignored at Nanda’s instance and the contract was awarded to two other companies, at a loss of over Rs 50 crore to the country, the agency said. A kickback of Rs 1 crore — to come to Jain — was allegedly paid.

Vipin, Aditya and Arvind Khanna are suspected to have received cuts from Denel for anti-materiel rifles.

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