As part of the probe into the Tatra truck scam, Central Bureau of Investigation (CBI) officials have started questioning several persons who retired from senior management positions in Bharat Earth Movers Ltd (BEML) in the last few years.

CBI team in Bangalore

According to sources, a CBI team has been camping in Bangalore since Wednesday.

Among those summoned for questioning, according to CBI sources, were the former Chief General Manager (Marketing) P. Subba Rao, former Director (Defence Procurement) V. Mohan and former Deputy General Manager (Corporate Purchases) A.R. Subbarao.

Sources also said that K.B. Rama Murthy, the present Deputy General Manager (Aerospace Manufacturing Division, Mysore), has been put through rigorous questioning. He has also been asked by CBI officials to stay on in Bangalore for the next few days. Ravi S., Mr. Murthy's immediate superior and Chief General Manager of the Aerospace Manufacturing Division in Mysore, has also been summoned for questioning, said sources.

Mr. Murthy and Mr. Ravi were earlier with the Defence Business Division of BEML and played a key role in negotiations leading to the procurements of Tatra trucks. They were transferred to the Mysore office after General (Retd.) V.K. Singh levelled allegations of foul play in the procurement of trucks. When contacted, Mr. Murthy refused to confirm or deny that he had been summoned. “It is an internal matter,” he said.

Meanwhile, CBI sources told The Hindu in New Delhi that several other BEML officers have also been issued summons.

Three-pronged

Speaking on the condition of anonymity, some of the summoned officials said that the thrust of the CBI's questioning was three-pronged.

The primary focus was on why BEML, under its chief V.R.S. Natarajan, chose an allegedly circuitous route to procure the trucks which are at the centre of the controversy. The allegation is that the public sector undertaking violated purchase guidelines by placing orders on a middleman (Tatra Sipox UK) and not the Original Equipment Manufacturer, based in the Czech Republic.

Recovery of penalty

Second, the officials were asked to explain the circumstances under which “Liquidated Damages” were waived off by BEML when deliveries were delayed by the Ravi Rishi owned, UK-based supplier of the trucks Tatra Sipox.

According to one of the retired officials questioned, the contract between BEML and the supplier stipulated the imposition of penalty on the supplier for delayed deliveries to the extent of 0.5 per cent of the order. “However,” said another retired official, “At least Rs. 8-9 crore in penalties were never recovered from Rishi's company for reasons best known to the management.”

Conversion of currency

Third, the CBI wanted to know why an amendment was made to the purchase orders by changing the procurement currency from Dollars to Euro. BEML allegedly suffered a loss of Rs. 18 crore on account of this change, which was executed after a meeting on February 6, 2007 in which Mr. Ravi Rishi was also present.

‘Calculated risk'

One of those questioned explained that the change in currency was a calculated business risk that unfortunately boomeranged on the public sector unit. “We could have also gained from that change had the fluctuation in the exchange rate between the Euro and Dollar taken a different turn. Would there have been such a hue and cry in such a scenario?”

Another one of those questioned, however, said that several attempts were made to evolve a payment mechanism that created a level-playing field for both the players without indulging in unnecessary risks and speculation.

“But these terms were not acceptable to Mr. Ravi Rishi and he threatened to discontinue supplies if his demand was not met,” said one company source.

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