A Rs 1,000-crore BSNL project has run into rough weather with a company, charged with evading customs duty worth Rs 55 crore, emerging among the top four bidders. The WiMAX Rural Tender Project II, a wireless broadband project for which BSNL and MTNL are the only ones with the licence, proposes to cover rural areas across the country.
As per tender norms, the four lowest bidders would share the work. While the tender evaluation committee cleared the first three lowest bidders on November 26, 2009, it raised objections in awarding the contract to the fourth bidder , Vuppalamritha Magnetic Components Ltd (VMCL), Hyderabad, because the company had come under the scanner of the Directorate of Revenue Intelligence (DRI) in 2008 for alleged customs duty evasion of Rs 55 crore in the import of transmission equipment for BSNL.
Chief general manager of Southern Telecom Project Circle (STP) of BSNL, P R Ananthan, in a letter to director (consumer mobility) at BSNL corporate office, R K Aggarwal, on December 21 recommended handing over VMCL’s case to the chief vigilance officer (CVO) of the BSNL saying the bidder had violated the “integrity pact” by falsely claiming that there was no criminal charge pending against it.
However, instead of referring the VMCL case to the CVO, the deputy general manager for WiMAX at BSNL corporate office, Anil Bhardwaj, asked Ananthan to clear VMCL’s case. His letter said, “The case with regard to VMCL has been examined. Approval is hereby conveyed to issue APO (advance purchase order) to M/s Vuppalamritha Magnetic Components Limited, Hyderabad, who has been evaluated as L4 bidder in Rural Tender Project II.”
But the vigilance department has now put the brakes on the deal . When TOI sought BSNL CVO Sat Paul’s reaction, he said, “The corporate office of BSNL has not forwarded VMCL’s case to me. But I got an independent representation, based on which I called for details from DRI. I got the DRI papers only on January 13. Meanwhile, I have sent a communication to the corporate office not to proceed further on VMCL’s case till our investigation is over. It is wrong to award a tender to a firm against which a DRI case is pending. So far, I have not got any response from the corporate office for my letter.” Sure this issue will reduce belly fat of his :-)
As per CVC guidelines, every private company, which a government of India department or PSU deals with, should have high integrity and ethical standards. This is to ensure transparency in tender procedures and awarding contracts. The WiMAX project is for a second-generation protocol that enables more efficient use of bandwidth whereby transmission of video, voice and data from even a mobile phone is made easy. BSNL and MTNL are the only operators in India to get spectrum for rolling out WiMAX broadband services.
The DRI showcause notice (equivalent to a chargesheet) says VMCL and its sister concern Prithvi Information Solutions Ltd (PISL) had “conceived, devised and formulated the scheme of defrauding the government” of Rs 55 crore. The DRI rapped the BSNL too. It said, “BSNL officials helped in the execution of the conspiracy.”
However, BSNL CMD Kuldeep Goyal said contracts have so far been awarded only to the first three bidders of the WiMAX project and that the VMCL contract was being kept on hold till the issue was resolved. Interestingly, even after DRI issued the first show-cause notice to VMCL and PISL on February 10, 2009, close to Rs 480 crore worth purchase orders were issued by BSNL to these firms.
V V Rama Rao, VMCL chairman, when contacted, refuted the DRI charge saying the DRI had wrongly interpreted the case. Also, “the case is pending adjudication by the customs collector and as of now we are not guilty of committing any crime. We are confident that the adjudication authority will give us a clean chit,” said Rao. He confirmed that even while the DRI case was going on, BSNL had awarded contracts worth several hundred crores of rupees to his firms. “But what is wrong in it? Every other company that deals with telecom equipment, including the BSNL, has similar cases against them,” he claimed.
The 350-page DRI showcause notice said the two firms split the hardware and software components of dense wavelength division multiplexing (DWDM) equipment “with a view to avail(ing) undue benefits of customs (duty) exemption for the software portions.”
But Rama Rao denied that his firm had committed duty evasion. “DRI’s claim that the hardware contained embedded software is wrong. Some hardware had software, which was loaded for testing purpose. They cannot be called embedded software. DRI has gone by the test report given by the C-DOT. We have disputed that. We are awaiting the adjudication by the customs collector. We participated in the WiMAX tender last year because till now we have not been pronounced guilty in the DRI case.”
