Govt penalises Israeli defence firm for graft

In a first, India has seized a bank guarantee worth Rs 224 crore furnished by an Israeli defence vendor for breach of integrity pact after the company was blacklisted for alleged involvement in graft cases related to ordnance factories.

Defence Minister A K Antony was apprised of the development on Monday during a meeting to review the performance of Ordnance Factory Board in New Delhi.

"It is the first case in which the integrity pact was brought in vogue and the bank guarantee given by the Israeli Military Industry was encashed for their involvement in

corruption related cases. The bank guarantee amounting to Rs 224 crore has been encashed by the OFB," defence ministry officials said.

The integrity pact for the foreign vendors bars them from indulging in any corrupt activity ranging from hiring middlemen or influencing government officials and  processes.

IMI was blacklisted by the Defence Ministry last month along with three other foreign firms and two Indian companies following action against former Director General of Ordnance Factories Sudipta Ghosh, who was chargesheeted by the Central Bureau of Investigation for his alleged role in defence scams.

Chairing the meeting, Antony announced a massive modernisation plan for the OFB worth Rs 15,000 crore during the 12th plan period.

Reiterating the need for transparency and probity in the functioning of OFBs, he emphasised the need for their modernisation as well.

"The officers who are honest have nothing to fear, they will get full support of the ministry," he told the OFB members.

Along with the OFB officials, the meeting was attended by Secretary Defence Production Sekhar Agarwal and other senior officials in the Defence Ministry.

In the last fiscal of 2011-12, the OFB achieved a turnover of Rs 12,390 crore marking an increase of 10.48 per cent against the turnover of Rs 11,215 crore in 2010-11.