The Defence Ministry has suspended all commercial dealings for one year with Switzerland-based Pilatus Aircraft Limited following alleged corruption charges. The decision came after the CBI in June registered a case against arms dealer Sanjay Bhandari, officials of the Swiss company, unknown officials of the IAF and the defence ministry. Pilatus supplied 72 basic trainer aircraft to the IAF and is alleged Rs 339 crore was paid as kickbacks. The deal was worth over Rs 2,896 crores and inked in May 2012.
The order to suspend business dealings issued on July 12 was for violating the pre-contract integrity pact(PCIP) and will remain in force for one year until further orders. It referred to the ongoing investigation by the CBI, Delhi Police, Enforcement Directorate and Income Tax Department into “corrupt practices, unfair means and illegal activities” by the company.
Under the PCIP of November 12, 2010, Pilatus had agreed that while presenting the bid or during pre-contract negotiation or before signing the contract, it shall disclose any payments made, committed or intended to be made to officials of the buyer
or their family members, agents, brokers or any intermediaries in connection with the contract and the details of the services agreed upon such payments.
The Defence Ministry received reports of engagement of agents by Pilatus for assistance in the sale of the basic trainer aircraft for the IAF on payment of a commission, according to the vigilance department order.
The ministry had written a letter to the company in December 2016 asking it to offer comments on the report along with details of any such engagement.
In its response submitted in January 2017, the company admitted engaging Offset India Solutions, a firm belonging to fugitive arms dealer Sanjay Bhandari, for the successful resolution, approval or implementation of Pilatus offset proposals, plans and obligations. The ministry then issued a show cause notice as the reply was not found satisfactory.
The CBI registered a regular case on June 19 this year under sections 120-B (criminal conspiracy) and 420 (cheating) of the Indian Penal Code. The investigations by the ED and I-T Department are also underway.