Scorpene Deal: Defence Minister refutes NDA's charges

New Delhi, Mar 21 (UNI) The Government today denied that it had signed any deal worth Rs 16000 crore with French firms for the Scorpene submarine project, saying that two contracts amounting to Rs 7,197 crores were signed with two separate French firms, M/s Armaris amd MBDA for the purpose.

Making a suo-moto statement in the Lok Sabha, Defence Minister Pranab Mukherjee also refuted the charges levelled by Leader of the Opposition in the Lok Sabha L K Advani and Leader of the Opposition in the Rajya Sabha 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 Indiae 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 for the project, 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.

Mr Mukherjee informed that the Government had also signed an agreement with the French government to ensure continued support to the project.

He said that the Integrity Pacts ensured imposition of severe penalities, in case of breach of any provisions of the contracts, including cancellation of the contract and recovery of all advances with interest at a rate of two per cent more than the European Inter Bank Offered Rate or EURIBOR.
Denying all allegations about commission paid to the middleman, Mr Mukherjee said the French company had described all the e-mails published in the articles in a journal as ''fake and fabricated.'' The French Embassy in India, he said, had also termed these articles as ''slanderous,'' adding that French company had filed a case in the Delhi High Court on February 24, 2006 against the journal. The HC, had on February 27, had given a month's time to the journal for submissions.

The Defence Minister also said that France was a signatory to Organization for Economic Cooperation and Development (OECD) convention on Combating Bribery of Foreign Public Officials in international business transactions.

Regarding allegations about the breach of security at the Naval Headquarters, he said that during the course of Court of Inquiry held in May 2005, it was established that a pen drive was recovered from Lt (Retd) Kulbhushan Praashar, a former Indian Navy Officer, containing classified information about the Directorate of Naval Operations.

A Board of Inquiry held subsequently also held that there had been a leakage of information, primarily of commercial value, to unauthorised persons. ''The leaked information did not pertain to the Scorpene project,'' Mr Mukherjee said.

He said that following the Board's indictment, three Naval Officers -- Captain Kashyap Kumar, Commander Vinod Kumar Jha and Commander Vijayendra Rana, were dismissed on October 26, 2005 under section 15 of the Navy Act, 1957, read in conjuction with Regulation 216 of the Regulations of the Navy Part II (Statutory). Capt Kashyap Kumar had filed a writ petition in the Delhi High Court in November 2005, challenging the dismissal.

The Government, meanwhile, also referred the matter relating to the leakage of information, to the CBI for further investigation on February 18 this year, the Minister added.

UNI