REFERENCE / COMPLAINT NO. XI

Reference dated 29-7-2002 – Billion Rs Loss in Army’s Truck Deal

July 29, 2002

Lieutenant General Munir Hafeez
Chairman
National Accountability Bureau
Chief Executive Secretariat
Islamabad

Dear General Muneer Hafeez

The Pakistan Peoples Party is concerned that national resources are being squandered and a loss being caused to the National Exchequer through favouritism in the purchase of army trucks. As reported in a news story captioned “Army’s Rs. 2.4 billion truck deal triggers questions” by Kamran Khan, published in THE NEWS International dated Sunday July 28, 2002.

The decision to procure the army trucks, as indeed other purchases by the army, is made by army personnel appointed by the Chief of Army Staff.

In this connection, the service chief appoints the persons to the specifications committee and then appoints the persons to the tender committee. He then supports the decisions taken by the specifications and tender committees. In other words, the service chief becomes judge and jury.

This procedure was adopted under General Zia when the defence ministry was made a rubber stamp body. None of the civilian governments were allowed by powerful service chiefs backed by an eighth amendment president, to change the procedure to make it transparent and equitable.

A classic case of this emerges in the purchase of a contract of Rs 2.4 billion for the purchase of 1,000 trucks a month back. Gandhara Industries Limited (GIL), vehicles which were better priced were struck out without reason although they were almost half the price of the vehicle that was chosen. This means that the purchase of 1000 trucks could have been done at a price of Rs. 1.2 billion as opposed to double that amount. At stake is Rs. 1.2 billion in a poverty stricken country. This is a huge amount of money and a whole brigade would be unable to earn it during its entire tenure in the Pakistan army.

At a time when our armed forces are on war alert at the borders, and have been there through high altitude winds and snow as well as the shocking heat of summer, it is astonishing that the army could be considering the purchase of trucks at wasteful prices. Such distortions in purchase prices raise issues of corruption. The answer that the army has its self correcting mechanism is a mere excuse to cover up wrong doing. It is known that under the discipline of the army, none can question its chief.

In this age when Prime Ministers are being called to the dock and naval chiefs arrested time and again, it is the demand of the time that the scandalous purchase of the over priced trucks be examined and those responsible brought to task.

I am aware that the explanation given is that the overpriced trucks fit the specifications whereas the GIL trucks fail to do so. I am unable to accept this as an explanation. It is known that the corrupt practices start in the specifications committee. The specifications committee puts in specifications that are specific to a particular brand to bye-pass the selection procedure. In this way, it prejudges the contract ensuring that while technically the decisions are taken higher up, in fact they were taken by the junior selection committee at the behest of more powerful elements.

Therefore the explanation that "The vehicle was not approved for short-listing as 5 ton GS/ammunition carrier vehicle" is untenable as the specification committee specification that 5 ton clause be put in "Hino- specific" to favour the costlier truck. By so doing, the specification committee left the Directorate General Military Purchase, with the choice of the expensive vehicles.

It is disturbing to learn that the specifications committee through manipulation of specifications rejected the cheaper truck by the largest Japanese truck manufacturer. Moreover, a large number of the cheaper Isuzu trucks are already in use of the Pakistan Army. Disturbingly, international tenders were not invited which is usually the way kickbacks come into operation. It is understood that tender documents were sent to four pre-selected companies.

According to press reports, the manufacturers of the cheaper truck, GIL, showed documents that its vehicle underwent successful trials at Thandiani with 7.5 ton ammunition and in Jhelum in sandy terrains. GIL further said that modifications were permitted in the more expensive vehicle allowing them to modify double rear wheels vehicles into single rear wheels vehicles although they had never produced the GT3H model with single rear wheels.

The cheaper Isuzu trucks were offered to the Army at the rate of $25,000 per truck as against the approved price of the expensive truck of about $40,000 per Hino truck.

Pakistan Army purchased 3,000 Land Rover trucks in 1995 amidst allegations of kickbacks. However, NAB has still to investigate the same which it must do to end its image as a political handmaiden of corrupt regimes bent upon anti people policies to continue with its mafia style politics.

It is hoped that under your leadership of the Nab, national interest will be put first to review the political persecutions and replace them with the goal of a corruption free Pakistan.

Nayyar Bokhari, Advocate
On Behalf of the Pakistan Peoples Party

The Reference / Complaint is based on the source incorporated as under :

CEC Army's Rs 2.4 billion truck deal triggers questions

The News International - Sunday July 28, 2002

By Kamran Khan

KARACHI: The Pakistan Army has dismissed questions focusing the price and technical worthiness of its contract of Rs 2.4 billion for the purchase of 1,000 trucks about a month ago. The questions had been raised by one of the most decorated retired lieutenant generals, whose company lost the bid for the trucks, well-informed sources said here. Since the deal represented the largest purchase order of trucks by the Pakistan Army since 1995, it has invoked considerable interest in the military and business circles. The assembly of these 1,000 vehicles would be completed by June next year in Pakistan. Gandhara Industries Limited (GIL), owned by the family of Lt Gen (retd) Ali Quli Khan, who had served Pakistan Army as chief of general staff, corps commander and military intelligence chief, believes that its trucks were unfairly struck out of the race without assigning specific technical reasons.

But, the Army maintains that the GIL's Isuzu vehicle did not meet the required specifications and was not approved by the technical personnel of the Army. Inviting the attention of the Vice-Chief of Army Staff General Mohammad Yusuf towards the truck deal, Lt Gen (retd) Ali Quli Khan had claimed in a letter last month: "From all indications it appears that the Army is ready to purchase Hino trucks at approximately double the price for which equally good Isuzu could be available provided the Pak Army decides to give preference to substance over form."

A senior general officer of the Army, however, responded to Lt Gen (retd) Ali Quli's observation: "The vehicle was not approved for short-listing as 5 ton GS/ammunition carrier vehicle. After necessary modification of suspension system the vehicle was again tried but the technical personnel are not satisfied and do no recommend the vehicle for induction."

The thrust of Gen Quli's argument, however, was that the decision to put the 5 ton clause in the specification was "Hino- specific" because it leaves Directorate General Military Purchase, the purchaser, with only one choice, while it threw the largest truck manufacturer of Japan out of the contest. A large number of Isuzu trucks are already in use of the Pakistan Army, while the Hino truck manufacturers are getting their first chance to prove their worth with the Army. As per standard procedures for bulk military purchases in Pakistan, no international tenders were invited but tender documents were sent to four pre-selected companies for procurement of 1,000 5 ton 4x4 trucks (ammunition carrier vehicle) by the director general military purchase on April 10.

Sources familiar with the issue said that from the very first day it was one-on-one competition between the agents of Hino and Isuzu trucks in Pakistan. The European gun and military vehicle manufacturer Styer and a Chinese firm that had initially shown interest in the project were also invited to send their vehicles for the trial, but both the companies subsequently lost interest in the deal.

Gandhara Industries sources dispute the Army's claim that their vehicle was not approved as 5 ton ammunition carrier. They say after necessary upgrading, as suggested by the technical personnel of the Army, the Isuzu trucks were delivered to the Army for extended trial in February and after two months of trials the vehicle was finally short-listed and approved as 5 ton ammo carrier at the GSEEC meeting held on April 13.

Documents available with this correspondent show that the vehicle had actually been short-listed and approved and on the basis of that certification alone the Directorate General of Military Purchase had sent tender documents to Gandhara Industries Limited. While the military sources said that a serious suspension problem had been detected in the Isuzu trucks, GIL officials showed documents to claim that the vehicle - after improved suspension - successfully underwent strict trials at Thandiani where it was loaded with 7.5 ton ammunition and in Jehlum where it underwent trials in a sandy terrain. The GIL sources said that while the technical personnel of the Army raised questions about the modification made in the Isuzu vehicle, they let the Hino manufacturers modify their double rear wheels vehicles into single rear wheels vehicles - a key specification mentioned in the tender document. Hino, sources in the motor industry said, had never produced the GT3H model with single rear wheels.

These sources said that while making the final decision the officials clearly ignored an extended international warranty of five years that Isuzu was ready to offer with full back-up support. The Isuzu trucks were offered to the Army at the rate of $25,000 per truck as against the approved price of about $40,000 per Hino truck. Isuzu had offered a deletion plan of 40 per cent against Hino's 35 per cent, documents show. Pakistan Army's purchase of more than 3,000 Land Rover trucks in 1995 had also generated controversy with the allegation that the owner of Sygma motors, which had supplied the vehicles, was closely associated with the then chief of general staff of the Pakistan Arm.