Govt denies pay offs in the Scorpene deal

New Delhi, Mar 21 (UNI) The Government today told Parliament that it had not signed any deal worth Rs 16,000 crore with French firms for the Scorpene submarine project or paid commission to middlemen in the process, as alleged in a section of the press and by the Opposition.

It said two contracts amounting to Rs 7,197 crores were signed with two separate French firms, M/s Armaris and MBDA for the purpose.

Taking note of the controversy, Defence Minister Pranab Mukherjee made a suo-motu statement in the Rajya Sabha and Lok Sabha, refuting the charges levelled by Leader of the Opposition in the Lower House L K Advani and Leader of the Opposition in the Upper House Jaswant Singh at a press conference yesterday that an extra amount of Rs 4,500 crore was paid over the amount negotiated earlier.

''On the contrary, after the present Government came to power, it re-examined the project even though all negotiations had been completed in 2002 and the Ministry of Finance had accorded approval to the project in 2003,'' he said, adding that the UPA government had held further negotiations and were able to achieve a reduction of Rs 313 crore in the contracts with the two French firms from the negotiated position in 2002.

Mr Mukherjee also noted that the signing of Integrity Pacts with the French firms was made mandatory. The first two Integrity Pacts ever to be signed by the Ministry of Defence were signed along with the contracts, he said.

The Defence Minister said that as a result of the negotiations, the Government was able to achieve several long-term concessions which included the revision of the escalation formulae to the advantage of India by adjusting the fixed elements in the Armaris contract and placing a cap on escalation in the MBDA contract.

In addition, the Government also successfully negotiated to place a cap on the Exchange Rate Variation (ERV) for calculation of profit for the public sector Mazagon Docks Limited.

Mr Mukherjee said that besides two French contracts, the only other contract that was signed was with the Mazagon Docks Limited, worth Rs 5,888 crores, for the indigenous construction of the submarines.

Even taking into account the value of contract signed with MDL, the total value of all contracts for the Scorpene Projects worked out to Rs 13,085 crores out of the sanctioned amount of Rs 18,798 crores, he said, adding that out of the balance amount of Rs 5,713 crores, Rs 3,553 crores were for payments towards taxes and Rs 2,160 crores towards other items to be acquired during the project period.

More UNI NAZ/JSS MSJ GC1800