Augusta Scam Of Chhattisgarh Govt: A Single Vendor, 30% Commission, Foreign Bank Account of CM’s Son. Yet No Investigation
May 13th, 2016
There has been a lot of heat and dust recently about the purchase of Augusta Westland helicopters by the Central Govt during UPA regime. There appears to be a scam in the deal. Bribes have been paid. Why was it made into a single vendor contract? Who got the money is still being investigated.
Another Augusta Scam
The apparent earnestness of the present govt to go after the culprits of the 2010 Agusta deal is indeed commendable. But what is interesting is that another Augusta deal took place in Chhattisgarh in the year 2007, which though is equally if not more dubious, has gone without any investigation by the same central govt despite it having being brought to the govt. notice by the CAG report of 2011 (Annexure-34), and several letters of a former secretary to the govt. of India Mr. EAS Sarma (Annexure-35).
How it unfolded?
On 19th Dec, 2006, for the first time, a note is prepared by the Department of Civil Aviation of Chattisgarh about the need of a new VIP Helicopter since the earlier ones were requiring a lot of maintenance. It is proposed that inquiries should be made from various Helicopter manufacturing companies. (Annexure-1)
Amazingly however, within 3 days of this note, on 22 Dec, 2006, a meeting takes place between the representatives of one OSS (supposedly the service provider of Augusta W Helicopters) in which OSS makes a presentation to the Chhattisgarh govt. about Augusta 109 Helicopter, and within days thereafter makes an offer to supply this helicopter at USD 6.31 million to the govt. (Annexure-3) After that there is some correspondence with the Augusta company which tells the Chhattisgarh govt. that if the Chhattisgarh govt. were to buy directly from Augusta, it would have to wait for more than 2 years and therefore, it should deal with its dealer / distributor Sharp Ocean based in Hong Kong, which is a company registered in British Virgin Islands, who may be able to supply a pre-sold Helicopter earlier. (Annexure-4) Sharp Ocean through its subsidiary OSS had already quoted a price of 6.31 million (Annexure-3) which supposedly includes a commission of USD 200000 payable to Sharp for arranging a pre-sold helicopter to be delivered earlier than what Agusta could deliver. A team is sent to Hong Kong to negotiate this premium of USD 200000 down with Sharp. This team returns empty handed without any assurance of lowering the premium of USD 200,000. (Annexure-x) The Govt. of Chhattisgarh proposes to go in for “Global Tenders”. (Annexure-18)
On 30th May, 2007 a “Global Tender” is issued by the Chattisgarh govt. calling for suppliers who could supply Augusta 109 Power E Helicopter! (Annexure-20). No attempt is made even at this stage to call for genuine global tenders from different manufacturers across the world. It may be noted that there are at least 10 other helicopter manufacturers, manufacturing similar Helicopters, of the same range, passenger capacity etc. In response to this so called Global Tender, 3 bids are supposedly received – 1 from Aguusta itself, 1 from Sharp Ocean (Agusta’s dealer based in Hong Kong) & another from OSS (Agusta’s maintenance service provider based in India). (Annexure-22) OSS quotes the highest price of 28.36 Cr, Agusta quotes a price of 29.77 Cr. and Sharp Ocean quotes a slightly lower price of USD 6.57M (Eq to 26.11 Cr). Ann 22. On this basis the Chhattisgarh govt. decided to purchase the helicopter from Sharp Ocean at USD 6.57 Million. The invoice which was given later shows that the price payable to Augusta was USD 5.1 million(Annexure-30) while USD 1.57 million is the commission payable to Sharp Ocean. (Annexure-27 Page 79) A contract is thereafter signed in Oct, 2007 which mentions that the delivery would be made by Dec, 2007 when final payment would have to be made. (Annexure-28) In between a tri-partite agreement with Serum Institute (owned by Mr. Cyrus Poonawalla whose brother’s name has also found mention in the Panama papers) is signed showing that Serum Institute which had ordered a Helicopter in May, 2006 was foregoing its rights in favour of Sharp Ocean and that Sharp was selling the same to the Govt. of Chhattisgarh. (Annexure-28)
In sum therefore, a helicopter comes to be purchased by the Govt. of Chattisgarh from a shady dealer registered in the British Virgin Islands by paying it a commission of USD 1.57 million (roughly 30% of the helicopter cost), without any effort to inquire about other helicopters which may be more suitable or cheaper. Current internet inquiry shows that helicopters of atleast 4 different companies, of similar range and capacity are available from prices ranging from USD 1.3 million to USD 2.6 million. All this while, a charade is made of inviting global tenders etc. The CAG has also indicted Chattisgarh Govt. in its 2011 report for having wasted considerable money by going through this charade of Global Tender etc. (Annexure-34)
Involvement of CM’s son
What makes this case even more interesting is the discovery of an account opened by the son of the Chhattisgarh Chief Minister, Abhishek Singh through a company called Quest Heights Ltd. which appears to have been incorporated in British Virgin Islands on 3rd July, 2008 (6 months after the bulk of the payment was made by the Chhattisgarh Govt. to Sharp Ocean). (Annexure-33 Page 114-126) At around the same time, Abhishek’s previous employers, the Sharda Brothers set up another company in the British Virgin Islands by the name of Ideal positioning (Annexure-32 Page 105-113). These facts are available in the ICIJ website for several years. Though the name mentioned in this account is Abhishek Singh, the address of the Company Quest Heights is shown as Raman Medical, Kawardha which is the same as shown in the Affidavit of Raman Singh. This account of Abhishek Singh’s company was brought to the notice of Govt. of India by the former secretary to the Govt. of India Mr. EAS Sarma by letter dated 15th March, 2015. (Annexure-35)Subsequently vide letter dated 7/5/16. Mr.Sarma also mentioned about the curious manner of this deal mentioned in the CAG report of 2011.
While the Central govt is trying to put the previous UPA government in sticky wickets for the Augusta Scam, The Logical Indian believes that equal importance should be given for the investigation of the Augusta Scam unfolded in Chhattisgarh.