Lok Sabha Question No. 123 (UNSTARRED), answered on 2018-07-18
Subject: Corruption in Defence Deals
Ministry: DEFENCE
Asked by: ANJU BALA, Tejpratap Singh,Yadav

## GOVERNMENT OF INDIA MINISTRY OF DEFENCE DEPARTMENT OF DEFENCE

## LOK  SABHA

## UNSTARRED QUESTION NO.123

TO BE ANSWERED ON THE 18 TH  JULY, 2018

## CORRUPTION IN DEFENCE DEALS

## 123. SHRIMATI ANJU BALA:

SHRI  TEJ PRATAP SINGH YADAV:

Will the Minister of DEFENCE j{kk ea=h be pleased to state:

- (a) whether  there  have  been  reported  cases  of  corruption  in  defence  deals  in  the country;
- (b) if so, the details thereof during the last three years and the current year so far;
- (c) the details of agreements signed for the purchase of arms and ammunitions during the above period;
- (d) the details of the companies which are blacklisted so far by the Government for misconduct / bribery in defence deals; and
- (e) the  steps  taken  by  the  Government  to  check  instances  of  bribery  in  defence procurement?

## A    N    S    W    E    R

MINISTER OF STATE

(DR. SUBHASH BHAMRE)

IN THE MINISTRY OF DEFENCE

र  ा रा य मं ी

(डा. सुभाष भामरे)

## (a) & (b): Four cases of corruption in Defence deals have been registered by CBI since 2015, as under:-

| Year                   | No. of cases   |
|------------------------|----------------|
| 2015                   | Nil            |
| 2016                   | 04             |
| 2017                   | Nil            |
| 2018 (upto 30.06.2018) | Nil            |

(c) The  details  of  agreement  signed  for  the  purchase  of  arms  and ammunitions cannot be disclosed in the interest of national security as well as in the interest of our relations with the foreign countries.

(d) No firm / entity has been blacklisted for misconduct / wrongdoing in defence deals during the last three years. However, six firms were debarred from further business dealings with Ministry of Defence for a period of ten years. This was further made applicable to all allied / subsidiary firms of each  of  the  debarred  firms  until  further  orders  or  until  such  time  as  the orders of debarring subsists, whichever is earlier.  Also business dealings were suspended / put on hold in respect of 14 firms.  In respect of another two firms, orders were issued restricting procurement from the concerned firms  where  procurement  was  justified  and  necessary  for  the  reasons  of operational urgency, national security and non-availability of other alternatives. Another 2 firms have been taken off from the list of restricted procurement based on closure report filed by the investigating agency and acceptance of the same by the Hon'ble Court.

(e) Ministry of Defence has issued Guidelines for penalties in business dealings  with  entities,  which  have  come  into  effect  from  21.11.2016.  The Guidelines have also been put in public domain by uploading them on the website of Ministry of Defence. The Guidelines lay down policy for levy of financial penalties and / or suspension/ banning of business dealings with entities, seeking to enter into contract with / having entered into a contract for the procurement of goods and services by the Ministry of Defence.

Other steps taken to ensure transparency, accountability, probity in defence procurements are as under: -

- (i) The Defence Procurement Procedure(DPP)2016 envisages signing of an Integrity Pact between Government & the bidders for  all  capital  procurement  /  schemes  of  Rs.  20  crores  and above as against the earlier provision of signing of such a pact only in cases involving Rs. 100 cores and above.
- (ii)      DPP  2016  provides  that  all  vendors  including  foreign  vendors disclose full details of any such person, party, firm or institution engaged  by  them  for  marketing  of  their  equipment  in  India, either  on  a  country  specific  basis  or  as  a  part  of  a  global  or regional arrangement.

:  3  :

(iii) DPP 2016 further requires that the Seller confirm and declare to the Buyer that it is the original manufacturer of the stores contracted and that no agent has been   engaged to influence or manipulate award of the contract, or indulge in corrupt and unethical practices. (iv) Penal provisions are included in Standard Clauses of Contract for use of undue influence (including engagement of agents). (v) Submission  of  Integrity  Pact  Bank  Guarantee  (IPBG)  is  also essential. (vi) Violation  of  Pre  Contract  Integrity  Pact  (PCIP)  may  result  in calling off negotiations, cancellation of contract, encashment of bank guarantee and debarment from future procurement. (vii) Ascertaining  vigilance  status  of  L1  vendor  before  seeking Competent Financial  Authority (CFA)  approval is  also prescribed in DPP 2016.

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