Govt spares babus bribed by US firms


Regular Member
Aug 5, 2009
Govt spares babus bribed by US firms: India Today - Latest Breaking News from India, World, Business, Cricket, Sports, Bollywood.

For the last five months, the Prime Minister's Office is sitting over a complaint lodged by the Indian ambassador to the United States Meera Shankar highlighting instances of millions of dollars paid as bribes to government officials in departments ranging from Customs, Excise and Sales Tax to the Indian Navy by a number of American companies.

The PMO is silent on whether any action has been taken on the complaint, but confirmed that it had received the letter dated May 12, 2009 and addressed to the principal secretary to the Prime Minister, T. K. A. Nair.

Despite pointed questions and a copy of the letter faxed to the PMO, Nair did not comment.

The ambassador's letter mentions staggering bribe amounts paid by US companies to officials in the Indian Navy, Maharashtra State Electricity Board, Indian Railways, Indian Central Insecticides Board and other unnamed senior officials to secure government contracts.

Meera Shankar cited a bribe of $ 132,500 given to Indian Navy officials by an agent of York International Corporation, a global provider of heating, air conditioning and refrigeration products.

The money was transferred over a period of six years ( 2000- 2006) for placing 215 orders.

The letter created a furore in political circles with the BJP demanding to know from the PM why no action had been taken for the last five months. BJP spokesperson Prakash Javdekar said: " Why is Prime Minister Manmohan Singh silent on the report? The silence amounts to shielding the corrupt. The government is not serious about weeding out corruption.

It has to tell the country why the culprits have not been booked and put behind bars." The Congress was unusually silent on the matter. While many chose not to comment, all that the ruling party's official spokesperson Shakeel Ahmed was willing to say was: "We don't know the details of the letter and the allegations.

It is for the government to respond." In her letter, the ambassador urged appropriate action against Indian government officials. She also pointed out that the US companies that paid the bribes had already been fined for "inappropriate payments".

The basis for the complaint was a US government report on the prosecutions carried out under Foreign Corrupt Practices Act (FCPA). The FCPA is a federal law (see box) that prohibits US companies from paying foreign government officials to gain a business advantage. It covers non-monetary gifts or offers in addition to cash payments. Of late, the crackdown under the FCPA has started extending worldwide, penetrating entire industries. The US Justice Department is increasing its prosecution of alleged acts of foreign bribery by US corporations, forcing them to take costly steps to defend against scrutiny.

"I am writing to draw our attention to the US report on the Foreign Corrupt Practices Act (FCPA) and Anti-Corruption Enforcement for the second half of 2008 and early part of 2009 that was released yesterday," Meera Shankar wrote in the letter. "There are several references in the report to illegal payments having been made to officials in India." On January 9, 2009, Mario Cavino of the Control Companies Inc. (Control Companies), an industrial valve manufacturer, pleaded guilty to making illegal payments of over $1 million (Rs 5 crore) to employees of the state-owned entities in four countries, including Maharashtra State Electricity Board in India.

The most serious allegation pertained to corruption in the Indian Navy. According to the letter, various subsidiaries of York International Corporation, a global provider of heating, airconditioning and refrigeration products, made improper payments totalling over $ 7.5 million ( Rs 37.5 crore) to secure orders in West Asia, China, Nigeria, Europe and India.

The allegations are not without basis as York has already agreed to pay fines slapped on them for " improper payments" made overseas to secure contracts.

The ambassador explains in her letter how York's Indian subsidiary bribed Indian Navy officials.

The company retained an agent to assist in securing afterinstallation service contracts and to provide sales and marketing support in connection with equipment sold to the Indian Navy. An employee of the agent admitted to making routine payments to Indian Navy officials to secure business for York between 2000 and 2006.

" Payments were typically less than $ 1,000 ( Rs 50,000); but over time, amounted to approximately $ 132,500 ( Rs 66 lakh) on 215 orders," the ambassador wrote.

Another company, Dow Chemicals, agreed to pay penalties for " improper payments" of approximately $ 200,000 ( Rs 1 crore) made by its subsidiary, the Mumbai- based DE- Nocil Crop Protection Ltd. This included approximately $ 39,700 ( Rs 20 lakh) in improper payments to an official in India's Central Insecticides Board to expedite the registration of three its products.

Other improper payments included $ 19,000 ( Rs 9.5 lakh) to government business officials, $ 11,800 ( Rs 5.9 lakh) to Sales Tax officials, $ 3,700 ( Rs 1.85 lakh) to Excise officials and $ 1500 ( Rs 75,000) to Customs officials.

" Pride International, an oil and gas company disclosed that it may have made third party payments with the intent that they be transferred to a government official in India to resolve a customs dispute in that country. A copy of the relevant portions of the report is enclosed. You may like to take appropriate action to have these investigated at our end," the letter said.


On Vacation!
Super Mod
Apr 5, 2009
This is a very sad situation. Accepting corruption as part of Indian society has become a norm instead of exception. There will be no action whatsoever from government. At the max, there will be appointment of committee to go into details, which then will give a report and it will be consigned to the annals of dustbin. And life goes on, as usual, for our babus.

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