June 07, 2013
Indian authorities have filed charges against an official with anti-aircraft system manufacturer Rheinmetall Air Defense (RAD) for allegedly paying bribes to help it avoid being blacklisted in India.
A spokesperson with India’s Central Bureau of Investigation (CBI) tells Aviation Week that bribery charges have been registered in a special court against Gerhard Hoy, the representative in India of Rheinmetall, along with Indian businessman Abhishek Verma and his wife, Anca Neacsu.
Verma allegedly took a bribe from RAD via Ganton Ltd., a company allegedly controlled by him, to stall the blacklisting procedures initiated by the Indian government, the CBI spokesperson says. Swiss-based RAD was one of six companies blacklisted by India’s defense ministry in March 2012 as a result of corruption allegations, forbidding them from doing business with India’s state-run Ordnance Factory Board (OFB) network for 10 years.
RAD transferred $530,000 to a New York bank account belonging to Ganton Ltd, and Verma allegedly contacted the representatives of RAD and assured them that he would use his influence with Indian government officials to help stall the blacklisting procedures.
RAD strongly denies the accusations of inappropriate business dealings with the Ganton group and Abhishek Verma. “Such allegations lack factual substance,” the company says in a statement. “Neither did the company collaborate with Ganton in order to prevent an RAD blacklisting in India through illegal means. To substantiate its position, RAD is committed to a close dialogue with Indian authorities and ready to cooperate with them.”
RAD is equally determined to prove that earlier allegations that had led to the company’s blacklisting in March 2012 are false. The Swiss firm is challenging the order debarring it from doing business with OFB in the Delhi High Court.
The CBI had recommended blacklisting RAD, as it had allegedly used corrupt and illegal means to try to win an OFB contract for a 35mm gun system in 2011. RAD also was one of the bidders for India’s requirement for a very short range air defense system.
The five other entities barred from transacting business with the OFB for the next 10 years are Singapore Technologies Kinetics, Israel Military Industries, Russia’s Corporation Defense, TS Kisan and Co. Pvt. (New Delhi), and RK Machine Tools (Ludhiana, Punjab).
Of late, India’s defense procurement has been rife with corruption scandals. India also is investigating alleged corruption in a $750 million helicopter deal in which Finmeccanica subsidiary AgustaWestland has been accused of paying kickbacks worth around €50 million ($67 million) to Indian officials to secure the sale of 12 AW101 VIP helicopters to the Indian air force.