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'Serious flaw in Bhatnagar's conduct'

By Vinay Kumar

NEW DELHI NOV. 19. The CBI special court, in its order on framing of charges in the Rs. 64-crore Bofors pay-offs case, has found serious flaws in the conduct of the then Defence Secretary, S.K. Bhatnagar, under whose chairmanship the Price Negotiating Committee allowed the Bofors bag the contract.

The special judge, Prem Kumar, said: "One finds that there has been a serious flaw in the procedure adopted by S.K. Bhatnagar as Chairman of the Negotiating Committee as a result of which objectivity and impartiality could not be observed in deciding the matter and in security possible parameters as well as the best possible weapon system that the Government wanted".

He gave six detailed reasons in support of his argument and concluded that Mr. Bhatnagar "even did not give a clear picture regarding offers to the then Minister of State for Defence, Arun Singh. He himself informed him that Bofors was cheaper on March 21, 1986 whereas on the very same day the French firm, Sofma, had offered further reduction".

To see that the Bofors offer proved cheaper, Mr. Bhatnagar got a verbal assurance from the firm that 10 guns would be supplied free of cost, he noted.

Not only was the Sofma's credit offer cheaper, and its net present value (NPV) lower, the total value was also less. But, by putting extra pressure on Bofors, it was also brought down marginally. For this, Mr. Bhatnagar talked to the then Prime Minister, Rajiv Gandhi. Sofma was not given any further opportunity to respond to Bofor's offer of free guns.

"The purpose seemed two-fold: firstly, to somehow see that the offer of Bofors becomes cheaper and, secondly, that the contract is finalised before March 31, 1986, so that it results in achieving an ulterior and extraneous purpose," the judge said.

Referring to the procedure of the Price Negotiating Committee, Mr. Kumar found that no cut-off date had been made by which time the committee could have fully decided about the gun system after making comparison of the offers received. Second, the decision was taken abruptly without considering the Sofma offer of March 11, 1986. Third, the NPV of Sofma was lower than that of Bofors as on March 21, 1986 and even on February 10, the Sofma's offer was lower than Bofors.

Fourth, the committee ceased to function after March 12, 1986 and Mr. Bhatnagar took the decision on his own in regard to the competitive offers received even after the issuance of letter of intent.

"Fifthly, the haste with which the signatures were obtained from various officials and the Ministers also speaks out for the fact that there was an oblique motive in the whole affair. Six departments namely the Ministry of Defence, Defence (Finance), Defence Production, Economic Affairs, the Ministry of Finance and the Prime Minister's Office were involved. Eleven signatures of the officials and Ministers were got on the file in a matter of less than 48 hours,'' he said.

The judge said the manner in which the negotiations were conducted and the assessment of costs projected revealed a different story. "There seems to be a deliberate attempt on the part of S.K. Bhatnagar to somehow show the Bofors gun system as superior and available at a much cheaper price."

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