Rosoboronexport Accused of Employing “Middleman”

India’s biggest military equipment supplier, Rosoboronexport of Russia could have flouted Indian rules by using the services of a “middleman”, Rosoboronservice in a Rs 21-crore chopper engine deal with the Indian Navy.

The contract refers to the supply of four TV3-117 MAR engines for the Indian Navy Kamov KA-31 helicopters in 2011.

According to a report in the Indian Express newspaper, the Navy audit department dated July 30, 2012, alleges that the 2011 permit for the four TV3-117 MAR engines was “manipulated” while signing the contract between the Indian Navy and Rosoboronservice by resorting to High sea sales on contract basis.

Quoting documents, the report says that the Audit Unit in Mumbai informed the integrated headquarters of the following irregularities; The contract for helicopter engines was concluded on ‘High Sea Sales Basis’, which was in complete disregard of the provisions of the Defense Procurement Manual 2009 and General Finance Rules 2005 of the ministry of Finance.

It suspects of undue favor shown to Rosoboronservice by transferring the liability to pay all taxes, duties, insurance and clearance cost to the government.

According Defense Procurement Procedure (DPP) 2006 and Defense Procurement Manual (DPM 2006) report, allowing a middleman, Rosoboronservice to source helicopter engines from Rosoboronexport, Russia, violates the government’s direction of not dealing with agents or middlemen in defense procurement.

The entire procedure followed after government sanction appears to be non-bonafide since no procedure exists for procurement of goods and services on High sea sales basis in DPM 2009.

If it is proved that Rosoboronexport uses middlemen, according to Defense Procurement Procedure (DPP) 2006 and Defense Procurement Manual (DPM 2006), penalties could be imposed on it.

Rosoboronservice (India) is a joint venture between eight original equipment manufacturers (OEMs) of defense equipment from Russia and Krasny Marine Services Pvt Ltd of India. Of the 8 Russian, Rosoboronexport is the government canalizing agency. The others are manufacturers or designers.

Information posted on its website says, “Rosoboronservice (India) Ltd. is engaged in providing service support for all Russian origin military equipments fitted onboard ships & submarines of the Indian Navy as well as aircraft & helicopters in service with the Naval Aviation. We are also supplying yard materials of Russian origin to Defence shipyards. Presently we are in the process of extending our services to the Indian Air Force”.