'DNA' investigations: Vectra boss at centre of Tatra trucks scam

The CBI on Friday called NRI businessman Ravindra Kumar Rishi, owner of the UK-based Vectra Group, for questioning in connection with alleged irregularities in the supply of all-terrain Tatra freight vehicles through the state-owned BEML to the Indian Army.

Over the past few days, Rishi has denied any irregularities in the Tatra deal. However, DNA has in its possession a copy of a criminal complaint filed against him in the Czech Republic in the Tatra matter last year.

The complaint alleges that Rishi misused his position in the board of Tatra Czech [the original equipment manufacturer (OEM) of Tatra trucks] to enable Tatra Sipox (UK) Ltd, a company Rishi’s Vectra Group incorporated in 1994 and now owns, to buy knock down trucks from Tatra Czech at below production cost. Tatra Sipox then sold the trucks to India’s BEML at a profit. This caused huge losses to Tatra Czech since profits from the sale were being made by Rishi’s company, says the complaint.

The complaint states: “I hold for important the fact that TATRA Czech was selling Tatra truck to the British company [Tatra Sipox] margin-free, even at prices below the production costs. The entire margin, or all the profit from the transaction, has been earned by Vectra Limited in the UK.”

The complaint was filed by Vaclav Laska, former long-standing head of corruption watchdog Transparency International, based on information provided by a high-ranking Tatra Czech official. The matter is being probed by the Czech Republic’s Department for Detection of Corruption and Financial Offences.

The complaint’s allegation that the entire profit from the Tatra deal “has been earned by Vectra Limited in the UK” assumes significance given army chief General VK Singh’s recent disclosure that he was offered a Rs14 crore bribe to clear a tranche of 600 substandard Tatra trucks.    

In the uproar that followed, fingers were pointed at the involvement of Lt Gen (retd) Tejinder Singh. Whether or not Tejinder Singh was the one who offered the bribe, a question no one has asked so far is: who is the mastermind of this offer? That is, who benefited the most from the Tatra arrangement and would suffer if orders were cancelled? Was it BEML officials, defence officials or Ravindra Kumar Rishi?

Laska told DNA that Rishi is a member of Tatra Czech’s supervisory board too. Though this position officially doesn’t bestow on him many powers, in actuality, “he manages Tatra [Czech], decides everything and management of (sic) company accept his orders”, says Laksa.

This perhaps explains why Tatra Czech agreed to sell trucks to Rishi’s company at below production cost and at a loss to itself.

Laska alleges that Rishi is therefore making a double profit by looting both Tatra Czech and India. He adds that it is clear Czech politicians were also involved in this case which is why the matter was taking so long to be investigated.

In previous exclusive reports, DNA established that BEML, the nodal agency appointed by the government to procure trucks for the Indian Army, violated defence procurement guidelines by procuring Tatra trucks from an agent (Tatra Sipox) and not from the OEM, Tatra Czech. Had BEML bought Tatra trucks directly from the OEM, India would have paid much lower prices.

DNA has a copy of an invoice raised by BEML against Tatra Sipox for the trucks. However, Tatra Sipox’s balance sheet doesn’t reflect the sale. The company’s profit and loss account has not been more than Rs3 crore over the last few years which is surprising since the Tatra orders from India have been worth thousands of crores. The mere reflection of Rs3 crore in Tatra Sipox’s account confirms that the deal’s profits are going elsewhere.

So does that mean Rishi’s Vectra Group is the real financial gainer?

A source and senior BEML employee who has worked closely with Tatra truck deals told DNA that Rishi has been “managing” Tatra deals and used to get Tatra orders cleared every year by bribing officials in the Indian Army and BEML. His company is the real beneficiary of this Tatra deal and he might have wanted to push Gen VK Singh to sign the deal clearing another tranche of trucks, said the source.

According to the Czech complaint, Tatra Czech’s board of executives is obligated under the law to exercise its role diligently. However, by allowing Tatra Czech to supply completely knocked down (CKD) sets of Tatra freight vehicles to BEML Ltd indirectly (via Tatra Sipox/Vectra Group), Tatra Czech is stripped of any profit, which is undoubtedly not diligent. “At a common rate of 0.96 million CZK per set and a usual margin of 10%, TATRA Inc. suffered between 2005 and 2010 a loss of profit of 270 million CZK,” the complaint states. It is obvious that due to this indirect sale, Tatra Czech commits tax evasion to the scale of several dozens of millions of Czech Korunas, says the complaint.