CBI books alleged arms dealer for corruption involving Korean firm for ONGC-related contract

The CBI has booked purported arms dealer Sanjay Bhandari for allegedly receiving kickbacks worth USD 4.99 million from South Korean major Samsung Engineering Co Ltd (SECL) in 2009 to influence government officials in awarding a Rs 6,744 crore contract to a company promoted by central and state PSUs including ONGC, officials said.

The agency has alleged that payments disguised as consultancy charges were understood to be bribes for public officials to swing the contract for setting a Dual Feed Cracker Unit (DFCU), used to produce ethylene and propylene, at the ONGC Petro Additions Ltd (OPaL), a company promoted by PSUs like ONGC, GAIL and Gujarat State Petroleum Corporation.

The allegation is that the DFCU, which was to be set up at Dahej Petrochemical complex in Gujarat, was awarded in favour of SECL in 2009 and advance payments were released to it from ONGC in contravention of Central Vigilance Commission (CVC) guidelines, they said.

In its FIR, the probe agency has also named the then Senior Manager of SECL Hong Namkoong, UK-based Foster Wheeler Energy Ltd and Bhandari's UAE-based company Santech International FZC besides unidentified officials of ONGC and OPaL for alleged corruption in the award of contract, they said.

Bhandari, who is being probed in a number of defence deals, is believed to be in London, officials said.

The agency probe has brought under the scanner an alleged sale of a London property by Bhandari to Skylite Investments FZE, they said.

The FIR has alleged that Bhandari bought the property by buying 100 per cent stake in Vertex Investments Holdings Ltd in 2009.

"The deal was stipulated to be completed on or before end of August, 2009 i.e just after the aforesaid transfer of Rs 22 crore (USD five million approx) (from SECL) on June 13, 2009 in the account of the company associated with Bhandari. It was further revealed that the said property was sold by Sanjay Bhandari to an entity by the name Skylite Investments FZE, incorporated in the UAE during 2011-12," the FIR alleged.

The Enforcement Directorate had alleged that Skylite Investments FZE is allegedly linked to Robert Vadra, son-in-law of Congress President Sonia Gandhi.

Vadra had denied any wrongdoing. His legal firm had said he didn't own the London property directly or indirectly.

The tender for the DFCU project was floated on April 20, 2007 for which two consortiums - Germany's Linde and Korean SECL, and USA-based Shaw Stone and Webster and Indian Larsen & Toubro - submitted their bids.

Linde and SECL consortium won the contract at their quoted "lump sum price of Rs 6875.11 crore" on the basis of higher Net Present Value (NPV).

NPV of Linde and SECL was calculated to be around Rs 4,160 crore while that of Shawstone and Webster and L&T around Rs 3,918 crore.

The tender committee came to the conclusion that NPV of Linde and SECL was higher and lump sum prices were 7.75 percent lower than the competing consortium.

The other consortium challenged the decision but the objection was turned down and the contract was awarded to Linde and SECL consortium for a lump sum price of over Rs 6,744 crore on February 10, 2009.

The agreement signed between the consortium and ONGC and OPaL had an integrity pact which said no agent or consultant was to be engaged and no commission or fee could be paid against the contract in India or abroad, officials said.

The agency had registered a preliminary enquiry about the allegations in July 2019 during which it found several emails between Bhandari and Hong Namkoong regarding the said project.

One such mail dated April 3, 2008 contained an attachment 'Consulting Service Agreement' between SECL and Santech International FZC dated October 30, 2007.

"The agreement is regarding the consultancy services to be provided by Santech International FZC to SEC for obtaining contracts at ONGC, DFCU and AU projects at Dahej, Gujarat," the FIR alleged.

The email showed SECL had entered into a consultancy agreement with Bhandari under which it had to pay USD 10 million to his company Santech as "coordination and consultancy fee" with 50 per cent within 30 days of receiving advance from ONGC and remaining within six months of receipt, it alleged.

On October 30, 2007, the date of agreement between SECL and Santech, ONGC and OPaL board had not approved the advance payment to be released and tender document too did not have any such provision, the FIR alleged.

Nearly two months later, OPaL board on December 17, 2007 approved the provision on the request of bidders and linked the payments to progress of work. The interest-free advance payment was made in alleged contravention of a CVC circular, it said.

The CAG had also raised objections on it and the project was not completed even two years after the deadline of August 2012.

The advance payment to SECL was made by OPaL on February 24, 2009, the CBI alleged.

The CBI has alleged that SECL concealed facts of consultancy work given to Santech while signing the integrity pact and contract with OPaL and allegedly made a payment of over USD 4.99 million to Santech's Dubai bank on June 13, 2009, four months after advance was released.

The agency has also alleged that soon after the amount was credited, Bhandari proceeded to purchase the London property by buying 100 per cent stake in Vertex, they said.

The CBI has alleged that Bhandari in its Income Tax returns did not disclose maintenance of foreign bank accounts in the name of Santech International and also the receipt of USD 4.99 million.