STEng – BT

ST Kinetics fights to clear its name

Report by India’s auditor-general lists firm’s links with official under fire

Singapore Technologies Kinetics (ST Kinetics) yesterday announced that it will take vigorous action to clear its involvement in a defence corruption scandal in India, which has seen it being barred from participating in the country’s lucrative defence industry for a decade.

The company was dragged into the case following a report by the Comptroller and Auditor- General of India (CAGI), which outlined the behaviour of the Indian official at the heart of the case and his involvement with ST Kinetics.

Reports in the Indian media said that ST Kinetics, along with six other armament companies, were being blacklisted by the Indian defence ministry for a period of 10 years, for their involvement in a corruption investigation of the country’s former top defence procurement official.

In a statement yesterday, ST Kinetics clarified that ‘there were no official statements or notifications from the Indian authorities’ on this alleged blacklisting.

It said that it has offered the Indian authorities full cooperation since investigations began in 2009 including volunteering to submit its financial books for inspection but the offer was never taken up.

‘Following the Indian Central Bureau of Investigation’s investigation report (First Information Report) made in May 2009 on its corruption investigations, charges were pressed against several companies and individuals for alleged wrongdoings. However, to date, no formal charges have been made by any Indian authorities against ST Kinetics or any of its employees in relation to the alleged blacklisting.’

The company added that it had filed three petitions with the Delhi High Court to seek clarification on the alleged blacklisting and that, in all the court hearings, the Indian defence ministry’s consistent stand was that ST Kinetics was not blacklisted and any putting on hold of its defence business activities in the country was only an interim arrangement.

‘It is still early for us to decide on what we are going to do as these reports just emerged last night, but we are now consulting our lawyers in India on the appropriate course of action,’ the company told BT.

At the heart of this high- profile corruption case investigated by the Indian authorities since 2009 is the former director-general of its Ordnance Factory Board (OFB), Sudipta Ghosh.

A report by the Comptroller and Auditor-General of India dated Nov 15, 2010, highlights two main points of Mr Ghosh’s involvement with ST Kinetics. ST Kinetics had an agreement with his defence procurement agency to supply 50,000 Singapore Assault Rifles (SAR) 21 carbines to the Indian home affairs ministry (MHA).

However, to speed up this order, Mr Ghosh and certain officials from his OFB chose to mislead the MHA with an indigenisation process that did not exist. As part of this plan, they informed the MHA that an offset agreement had been signed between OFB and ST Kinetics that would allow the latter to transfer technology to OFB so that up to half of each carbine would be manufactured in India.

There is no indication in the report that ST Kinetics played any part in the scheme.

In addition, ST Kinetics subsequently supplied OFB a set of test SAR 21 carbines for trial on two occasions. The first trial was held on Sept 15, 2008 at the Small Arms Factory in Kanpur while the other was held on Nov 17 the same year at the National Security Guards (NSG) facility in Manesar.

The report stated that even though the weapons passed one trial but were deemed less than satisfactory in the other, Mr Ghosh still recommended that the MHA make the purchase.

‘Incidentally, the SAR 21 is a well respected carbine internationally and is in use in armies of several countries,’ added the report. ‘(Ministries should) analyse the reasons why such procurements could not be made in a more transparent manner without so much falsities and lies.’

In its statement, ST Kinetics clarified that it had never been awarded any defence contracts in India, so this development would have no direct impact on its defence business as India has not been a market for its defence export sales. But, separately, it acknowledged the importance of minimising any impact on its overall brand value.

‘From 2009 until now, our name has not been cleared and for 10 years we are not supposed to do business with OFB. So our reputation is at stake as in India we also have other commercial business interests, while it is a reputation issue for our defence business in other countries,’ the company told BT.

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