Govt suspends business with Swiss plane-maker

The Ministry of Defence has suspended all business dealings with Swiss armament firm Pilatus for a year because of the "corrupt practices, unfair means and illegal activities" adopted by the company for securing a Rs 2,900-crore contract to sell 75 basic trainer aircraft to the Indian Air Force (IAF).

The CBI had last month registered an FIR against Pilatus Aircraft Ltd, lobbyist Sanjay Bhandari, a few more businessmen and unknown officials of the defence ministry and the IAF.

Separate investigations by the Income Tax department and Enforcement Directorate are also underway.

The defence ministry said Pilatus had hired Offset India Solution (OIS) — a company owned by Bhandari — to advance "successful resolution, approval or implementation of Pilatus' offset proposals, plans and obligations".

The Swiss company made two payments of 2,50,000 Swiss Francs and 7,50,000 Swiss Francs to the OIS for its service, violating the pre-contract integrity pact which is part and parcel of big-ticket Indian defence deals.

The underlying objective behind the introduction of the integrity pact was to reduce corruption in military contracts.

"The competent authority has decided that business dealings with the said firm (Pilatus) will remain suspended for one year," the defence ministry said in an order signed on July 12. The order was uploaded on the ministry's website on Monday. The suspension will be valid for one year or till further orders.

The controversial deal was signed in May 2012 when A K Antony was the defence minister and N A K Browne was the Chief of the Air Staff.

With Bhandari's name surfacing in several defence deals signed in the UPA regime, the CBI and the ED are investigating his links with Congress general secretary Priyanka Vadra's husband Robert Vadra, who too is facing probes.

The CBI also named businessmen Deepak Aggarwal and Himanshu Verma, and Bhandari's business associate Bimal Sareen in the FIR. The probe agency carried out searches at the residence and office of Bhandari in connection with the deal.

The defence ministry's decision puts a spanner in the IAF plans to buy more basic trainer aircraft from the Swiss company, as indigenous trainer jets are not on the horizon. But it is not clear at the moment whether the suspension order would also prevent the IAF from procuring spares from Pilatus for servicing the existing fleet.