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14 May 1997 National Karnataka

A Bomb Waiting To Explode

Will the CBI's second probe into the deal yield results?

THE AEG-T-Indian Navy torpedo deal has returned like, well, a redirected torpedo to haunt the J.H. Patel-led Janata Dal government. In the mid-'80s, the Indian Navy had ordered HDW submarines, and chose AEG-T, then in West Germany, to supply torpedoes for them. The deal was worth a hefty DM 150 million. As New Government Engineering Factory (NGEF), Bangalore, was AEG's technical collaborator in India, the public sector company was entitled to a commission on every AEG sale in the country whether the sale was aided by NGEF or not. However, during the accounting of NGEF in 1988-89, AEG was found to have not paid the 2.5 per cent commission due in the torpedo deal. The controversy, not surprisingly, raised a lot of dust. Former chief minister Ramakrishna Hegde and J.H. Patel, then the industries minister, were accused by the Opposition legislators of acting hand-in-glove with NGEF administrators to deny the company the commission. In response to the allegations, Patel, who was president of the state Janata Dal in 1990, denied that any commission was due to NGEF. He supported his statement with NGEF documents and a confirmation from AEG.

An inquiry by retired judge F.L.F. Alvares, however, found that the documents were forged by V. N. Srivathsa, a commercial director said to be acting under orders from the then NGEF chairman, N.K. Prabhakar Rao. The AEG statement too was found to be false. The case was referred to the CBI which registered an FIR—Cr. No. RC-1(A)/90-ACU(1)—in March 1990 where it stated that AEG paid bribes to public servants instead of the commission legally due to NGEF. The bribes, according to the FIR, were routed to various highly placed persons through a Delhi-based firm called Roger Enterprises which belonged to the Jajodias. A simultaneous investigation was launched by the COD headed by Dinakar and his report was presented to the home department last October.

Earlier attempts by the Veerappa Moily government to ensure NGEF the commission had failed to fructify and the controversy was forgotten till earlier this year when the CBI took the case up for investigation once again. Political observers in Bangalore speculate that it was an attempt by the then prime minister Deve Gowda to fix Hegde. A team of CBI officers visited Bangalore in March and questioned Rao and Srivathsa about the deal. At present, much depends on the submission of the two before the CBI. And also, of course, the agency's own zeal to continue with the investigations under a new government.

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PLACES: Karnataka
TAGS: CBI
SECTION: National
OUTLOOK: 14 May, 1997
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