Exposed! The Rs750 crore Tatra scam

Top officials of BEML Limited, a Bangalore-based company, and the defence ministry have siphoned off at least Rs750 crore in bribes and commissions over the past 14 years in the purchase of components for Tatra trucks, backbone of the army’s artillery and transportation wings.

The Indian Army uses Tatra all-terrain vehicles to mount guided missile launchers and haul heavy artillery. It also uses these vehicles to transport personnel, supplies, tanks, ammunition, bailey bridges, and the like.

Flouting defence ministry guidelines, BEML, formerly Bharat Earth Movers Limited, a Rs3,500 crore company in which the government of India is the majority shareholder, has been buying components for the 6x6 and 8x8 trucks from a middleman in London.

The defence procurement guidelines clearly say all purchases should be made only from the original equipment manufacturer (OEM). But DNA’s investigations show that BEML, nodal production agency for the family of Tatra trucks, has been dealing with Tatra Sipox (UK) Ltd, which is neither the OEM nor a subsidiary of the OEM.

This racket has been in operation since 1997, according to documents in DNA’s possession. A former employee who held a senior position in BEML said that so far the company has completed transactions worth Rs5,000 crore with Tatra Sipox (UK) Limited, purported British subsidiary of Tatra Sipox a s (Slovakia), with at least Rs750 crore having been paid as kickbacks to BEML and defence ministry officials.

Senior advocate KS Periyaswamy, a shareholder of BEML, who sought the intervention of the president and a CBI probe into the Tatra deals, said: “At least 15% of the money sanctioned for the purchase of Tatra trucks is siphoned off as commission. Everyone from top to bottom gets their share. In my capacity as shareholder, I had highlighted this issue in the 2002 annual general meeting, but it wasn’t taken up.”

The deal worked so well for the officials involved that BEML signed another 10-year agreement with Tatra Sipox (UK) in 2003, four years before the first agreement ended, to increase the scope of the relationship. Since BEML doesn’t have the know-how to manufacture these trucks even 14 years after the deal was first struck, it sources components from Tatra Sipox (UK) and uses them for assembling the trucks.