Def Ministry had looked into Tatra truck issue 7 years ago

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Seven years before the issue rocked the country, the Defence Ministry had gone into the procurement of Tatra trucks through an intermediary company and not original manufacturers and had closed the matter.

With Army chief Gen. V.K. Singh raking up the issue of alleged bribes in procurement of Tatra trucks, the CBI is probing alleged irregularities in the procurement of trucks.

It is probing into alleged irregularities in assigning of supply from Czech Republic-based Tatra, with which the agreement was originally signed in 1986, to the Tatra Sipox UK owned by Ravi Rishi in 1997, showing it as Original Equipment Manufacturer (OEM) and the fully-owned subsidiary of the Czech company.

There were allegations in 2005 that Tatra family of trucks were being procured from an agent and not not directly from OEM and that BEML was at best an assembler of such vehicles without absorbing technology.

In the wake of these allegations, the Defence Ministry had gone into the matter and apparently found that there was nothing wrong in procuring components from the intermediary company.

Before coming to this conclusion, the Ministry got a letter from the Indian ambassador in Slovakia about the ownership of the Tatra Sipox UK company.

According to official documents accessed by PTI after a recent review of the issue, the Ambassador had reported in 2005 that Tatra Sipox company was set up to resolve coordination issues arising out of division of the country Czechoslovakia into Czech and Slovak republics resulting in the division of the company producing these trucks.

Giving details of the ownership pattern of the company, the Ambassador's report concluded that "as the vehicles were being supplied by the Original Equipment Manufacturer (OEM) through its own subsidiary, there appeared to be no other channels to purchase Tatra vehicles."

The Ministry had sought clarification and received a reply from Tatra Sipox Director Josef Majsky also who said Tatra Sipox UK was authorised to represent the parent company and was responsible for sale of trucks to India and a number of other countries including Israel, Indonesia and Taiwan.

The Ministry report said there was no option but to buy components from Tatra Sipox UK as the vehicles in question can be produced only if components manufactured by Tatra of Czech Republic and Tatra Sipox of Slovak Republic are both available for making the complete vehicle.

The Department of Defence Production said it concluded that the issue regarding BEML working through an agent and not through the OEM was examined.

"It was concluded that there is no option but to buy components from Tatra Sipox (UK) as the vehicles in question can be produced only if components produced by Tatra AS of the Czech Republic and Tatra Sipox/Tanax of the Slovak Republic are both available for the manufacture of the complete vehicle," the Department said.

The report stated that in view of the 'peculiar situation' created as a result of the division of the original company, dealing with the OEM would entail dealing with not one but two OEMs in two countries not having best of relationships.

It said the incorporation of Tatra Sipox (UK) Limited, it appears, was essentially to resolve the coordination issues arising out of the division and was authorised by the OEMs to sell to India components required for production of trucks by BEML. The Ministry subsequently 'closed' the issue, the documents suggest.