Blacklisted firms to be reviewed; New defence policy out

The Defence Ministry will review all cases of blacklisted firms as it prepares a new list of such entities following the new policy unveiled by it which is a mixture of heavy fines and graded banning.

Defence Minister Manohar Parrikar today said that the Director General (Acquisition) will draw up a list as required under the new policy and hence old cases will also be looked into.

"That does not mean they will be taken out. Don't interpret... they will be examined. What is the status, how many years they have been blacklisted for and why they were blacklisted," Parrikar told PTI on the sidelines of a seminar here.

He said that as per the new policy, there has to be a new list."So the list will have to be re-ascertained," the Minister said.The review will include about a dozen firms that came under blanket blacklisting in the previous regime, a move which the forces were unhappy about as it proved detrimental to their modernisation plans.

Some of the firms like Singapore Technologies have approached the courts seeking removal of blacklisting.

Singapore Technologies' argument is that it has been wrongly blacklisted since no contract was ever awarded to it and neither is it mentioned in the charge sheet filed by the CBI in connection with a bribery case involving the then Ordinance Factory Board chief.

Under its new liberalised blacklisting policy for arms companies, India will now be open to doing business even with a banned firm if there is no alternative available to its weapon system or equipment in the market.

This can be done on the grounds of national security, operational military readiness and export obligations, after the vice-chief of the Service concerned, the chief of the integrated defence staff or the additional secretary (defence production) signs a certificate to that effect and gets permission from the "competent authority", who is the Defence Minister.

Another key element of the new policy is that unlike the blanket ban of 10 years, the government has said that ban on serious defaulters will be for minimum five years.
The policy does not mention the maximum time period for ban.

Called the 'Guidelines of the Ministry of Defence for Penalties in Business Dealings with Entities', the policy, which has been in the works for long, aims to ensure probity and transparency in defence deals without affecting the modernisation plans.

"An updated list of entities with which business dealings have been suspended or banned by the competent authority and/or against which financial penalties have been imposed shall be maintained on the official website of the Ministry of Defence," the policy read.

Listing out six reasons for which companies can get banned, it says that violating the integrity pact, indulging in corrupt practices and endangering national security would be treated most seriously while non-performance and any other grounds would invite a less harsh penalty.

Talking about penalties, it said that for the lesser offence of non-performance, the ban would not exceed three years.

The new policy says that orders of banning business dealings with an entity may be extended to its allied firms by specific order of the competent authority.

It also makes it clear that the period of suspension of business dealing with an arms company shall not ordinarily exceed one year pending a probe into the corruption allegations.

A review of the suspension order will be undertaken every six months. The suspension time can, however, be extended for additional six months.

"The total period of suspension of business dealings with an entity shall not exceed the maximum period of banning of business dealing with an entity for the same cause of action," the policy read.

It also calls for banning of agents or employees of a company who are convicted for any act of impropriety.