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REFERENCE / COMPLAINT NO. X
Reference dated 27-11-2005 – Purchase of Weapons
The Chairman
National Accountability Bureau
Islamabad
Pakistan Peoples Party - - - - COMPLAINANT
VS
1. General Tariq Majeed
Chief of General Staff
General Headquarters
Rawalpindi
2. General Ahsan Saleem Hayat
Vice Chief of Army Staff
General Headquarters
Rawalpindi - - - - - - - - - - - - - ACCUSED / RESPONDENTS
Subject: COMPLAINT UNDER SECTION 5 AND 18 (B) SUB SECTION-II OF THE NATIONAL
ACCOUNTABILITY BUREAU (NAB) ORDINANACE 1999, AGAINST THE HOLDERS OF PUBLIC
OFFICE FOR PUNISHMENT UNDER SECTION 10 OF NAB ORDINANCE FOR CAUSING HUGE
FINANCIAL LOSS TO THE NATIONAL EXCHEQUER BY CORRUPTION AND CORRUPT
PRACTICES.
1. The respondents in this complaint do fall within the ambit of NAB
Ordinance 1999 for the purposes of investigation, trial and punishment.
2. The respondents are reportedly guilty of corruption and corrupt practices
as defined in Section 9 of the NAB Ordinance 1999 and as such are subject to
punishment under Section 10 of the NAB Ordinance 1999 based upon the
following facts and grounds :
Facts and Grounds:
1. That as per enclosed “South Asia Tribune” (SAT) report, the respondents
were deeply involved in 21 Million dollar corruption in purchase of weapons
for Pakistan Military.
2. That according to details contained in the SAT report, a quick fire
restricted tender No 1338/49 / TI Sight /DGDP/PC dated 17 June 2005 was
floated by the Director General of Defence. Such large purchase seeking to
buy 900 Thermal Image Sight (TIS) Fire Control System Units for the main
Pakistan battle Tanks – Al Khalid & Al Zarar , T-85 & T-80 U, and 21 June
2005 as the last date was ( only four days ) given for submission of bids.
3. That this was ostensibly done because the Weapons and Equipment
Directorate (W&ED) of the Army GHQ had already pre-qualified and short
listed two French companies through a long process of test, trial & final
technical evaluation by the ITD Directorate and I & E Directorate in the 1st
week of June, both the companies were practically ready to bid and these
companies were Sagem & Thales.
4. That the test & trial had included draft contract, proposal including
commercial and technical offers, which the W & ED sought on May 24 and 26,
2005 from these two companies, both gave their offers and both were
Pre-Qualified / short listed by the GHQ.
5. That the first technical offers were opened and evaluated by the
technical departments, I&E & ITD Directorates of GHQ and after two hours
both were declared technically qualified with 4 technical observations made
on Sagem, offers and 35 technical observations on Thales bid . The most
significant difference in the two offers was that Sagem bid for the
Generation -3 (G3) TIS Units while Thales offered the older Generation -2
(G-2).The tender had asked for both types although G-2 is almost obsolete.
6. That why G-2 units were put on the tender is a big mystery because
Pakistan Army has already been using the G-3 which is mounted on Al –Khalid
tanks.
7. That Thales was not qualified supplier until early 2004, General Tariq
Majeed promoted the Vice Chief of General Staff by General Musharaf and he
ordered that Thales also be included in trials and was later on qualified.
8. That on June 23, 2005 Lt, General Tariq Majeed took the decision with the
connivance of the Vice Chief of Army Staff General Ahsan Saleem Hayat
,ruling out all objections after harassing , threatening and severe pressure
on the following who matters. Maj General Saeedullah Khan DG Armored Corps,
Maj General Ijaz Bukhari DG weapons & Equipment with his assistant Brig
Sawar Shah, Maj General Yousaf the incharge Military Operation Directorate
and his technical director Brig Khalid Asgher was so terrorized that he was
almost crying and saving their service and pension, to award the contract to
Thales, the high bidder, for it’s inferior G-2 equipment.
9. That the Final signing ceremony had been decided to be held on 30th June
at 22 hours or 10 PM at the GHQ with Thales company. The whole day documents
were being prepared for the final award. But at 9.53 pm the telephone rang
up and the C-IN-C was on line and ordered to ink the contract to call off
the deal and within a few minutes the said entire room was empty and $ 37
million of Pakistan Army was saved. It was due to leakage of the said deal
and published in the press.
10. That the next day the said company Thales was declared defaulting
company by the DG of Defense Production because it had not fulfilled its
contractual obligations on the submarine deals.
11. That the question arises how and why a defaulting company was included
in bidding, why its higher bid with inferior technology had been accepted
and which senior officers were involved in the scam in pre-qualifying for
the contract and C-IN-C had to interfere and ordered to call off the
contract after reading in the Press.
12. That why the Ministry of Defense had been kept totally out of the loop
in the deal. All the files were kept under control of the GS Branch headed
by General Tariq Majeed. But there were other Generals heading other
Directorates involved, who had to agree.
13. The above facts have been taken from the following reference :
The “South Asia Tribune” dated 30-6-2005 and 3-7-2005 (Copies enclosed).
Conclusion:
Based on the above facts and grounds respondents have shown willful
indulgence in corrupt practices under Section 9 of the NAB Ordinance. Such
persons are subject to punishment under Section 10 of the Ordinance 1999.
As such, the Chairman of the National Accountability Bureau is called upon
to initiate investigation in connection with matters set out herein above
and further proceed to file a reference against respondent for violating the
provisions of Section 9 of the NAB Ordinance 1999 punishable under Section
10 of the Ordinance in competent court of law and proceed against those
concerned for violating Section 9 of the NAB Ordinance.
Complainant :
Pakistan Peoples Party
Through :
Amir Fida Paracha, MPA
Advocate High Court
Islamabad - dated : 7 September 2005
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Musharraf's Last Minute Phone Call on SAT Report, Saves Army $37M Loss
By M T Butt
WASHINGTON DC, July 3, 2005 | ISSN: 1684-2057 | www.satribune.com
RAWALPINDI, July 3: General Pervez Musharraf intervened just 7 minutes
before the signing of the final contract between Pakistan Army and the
French Company, Thales, on the night of June 30, to stop what would have
been a straight loss of over 37 million dollars to the country.
Within 24 hours of the South Asia Tribune report that top Generals of the
Pakistan Army had decided to award a Thermal Imaging Units (TIS) contract
for Al-Khalid tanks to Thales, despite the French company had offered a
higher bid for low quality equipment, so much pressure built up that
Musharraf had to personally call the GHQ late at night, just minutes before
the signing ceremony, to stop the deal.
Sources revealed that the Tender floated on June 17, 2005 had now been
cancelled and within two months a new Tender would be floated in which new
bids would be invited.
Angry Army officers had revealed all the details of the on-going scandal to
the South Asia Tribune in a bid to stop the award of the contract for 900
Thermal Imaging Units sought by the GHQ through a restricted tender on June
17. Only two companies, both French, were pre-qualified to bid and Sagem had
offered a price of 59,000 Euros per unit for latest technology units while
Thales had bid 78,000 Euros for Generation-2 technology. Click to Read
earlier story.
The Chief of General Staff of the Army, General Tariq Majeed, had ordered
that the contract be awarded to the highest bidder to buy obsolete
technology and many GHQ officers were angry at the decision. For the first
time some of them picked up the courage to leak the entire scam to the media
to save the image of the Army.
General Majeed had left Pakistan after issuing the orders that the contract
be signed with Thales and June 30 was the last date for signing the
document.
In the meantime, Sagem, the losing bidder, made another cut in its price and
brought it further down by Euro 16,000 per unit from 59,000 to 43,000 or
raising the difference between with the price offered by Thales to Euro
34,500. That would have meant that for 900 units Pakistan would have paid
over US$37 million more.
Concerned insiders kept a tab on the developments on June 30 and informed
the South Asia Tribune that the final signing ceremony had been decided to
be held at 22 hours or 10 pm at the GHQ. The whole day documents were being
prepared for the final award.
“But at exactly 9.53 pm, the telephone rang and General Musharraf was on the
line. He ordered the Defence Production officials ready to ink the contract
to call off the deal. Within a few minutes the entire room was empty and the
Pakistan Army saved some $37 million,” one officer reported after watching
the scene.
The next day on July 1, the Director General of Defence Production declared
Thales as a “Defaulting Company” because some years back it had not
fulfilled its contractual obligations on the submarines deal, the officers
revealed on July 1.
It was an amazing success for the officers who had leaked the whole scandal
just in time to save the damage. But details of what happened on June 30,
specially in the evening are startling.
According to one version Lt. Gen. (Retd) Tariq Wasim Ghazi, who was
appointed Secretary of the Ministry of Defence after he was superceded and
retired by Gen. Musharraf, when he appointed Lt. General Ahsan Saleem Hayat
as Vice Army Chief, moved in quickly on June 30 to intervene and declare
Thales as a Defaulter.
"Gen. Ghazi spoke directly to Musharraf and briefed him about the details of
the case as well as the past performance of Thales and other companies which
had merged into Thales, and asked him to stop the deal before it was
signed," said an insider.
In the view of an expert: "Gen. Ghazi was trying to get even with the junior
officer (Gen. Ahsan) who superceded him by not allowing him to make easy
millions. Gen. Ghazi was the fittest candidate to become the Vice Army Chief
but he was bypassed."
This episode also reveals that the authority of the Vice Chief and Chief of
General Staff has now been challenged by a retired General who is still
close to General Musharraf. "This grouping on a matter involving corruption
of 35 or 40 million dollars is a much more serious development," the defence
expert said.
But all eyes are now on Thales as it is a major French exporter of
sophisticated war equipment to the world and disqualifying it as a Defaulter
means Pakistan is asking for a lot of legal and financial trouble. Thales
has already signed two earlier contracts this year and what happens to those
is not clear yet.
An expert on defence purchases disclosed to the South Asia Tribune that
Thales was actually a new company set up in 2000 after merger of several
French companies including Thomson-CSF which had been supplying Pakistan
with a lot of weaponry for years.
“It is just possible that one of the many companies which merged into Thales
or were acquired by it in corporate takeover had some history of not meeting
its contractual obligations with Pakistan which was now being used by
Pakistan not to award it the TIS units contract,” the expert said.
The cancellation of the Tender has given rise to many questions now that the
damage has been controlled, the expert said. “General Musharraf should now
start an investigation as to how and why a Defaulter Company had been
pre-qualified, why the higher bid with inferior technology had been accepted
and which senior officers were involved in the scam.”
But, the expert said, there is also a possibility that instead of the senior
officers who pushed the deal, an inquiry may be launched to find out who
leaked the details to the media and some scapegoats may be hunted to appease
the Generals who apparently lost their big chance to make a few million
dollars on the side.
The South Asia Tribune tried to get the official version of Thales on the
latest developments but Emails sent to their Press contacts remained
unanswered. Thales was asked to confirm whether Pakistan Army had declared
it as a “Defaulter” Company and the said contract which was due to be
finalized on June 30, 2005 had been canceled.
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Army's Budding Mansurul Haq Pays Extra $21m in Hush-Hush French Deal
The Sout Asia Tribune
By M T Butt
ISLAMABAD, June 30: For the first time in Pakistan Army’s history, intimate
details of a multi-million dollar weapons deal have been leaked to the media
by angry middle ranking officers who point to a massive scandal which has
already left the Ministry of Defence and most of the senior officers in the
GHQ wondering how bold and blatant some people can get.
These officers have released all the details, including names, places, time
and dates about the deal, raising a plethora of questions about the manner
in which specialized defence equipment is being purchased in a blatantly
roughshod manner, without any financial oversight. They say if no action was
taken now, more details of many more scandals would also be made public
including some personal scandals of Generals which many would not like.
According to an expert, who has studied Pakistan military purchases for
years, such deals and over-payments are a very common occurrence in the
Pakistan Army but what is new and different in this case is that the details
have been leaked to the media for the first time while the deal is still in
the process of being wrapped up.
“These officers cannot reconcile with the fact that an extra 21 million
dollars are being paid to a French company in extra-ordinary haste and that
too to buy inferior quality equipment already discarded by most countries,
including Pakistan Army itself,” an E-Mail received by the South Asia
Tribune disclosed.
The details of the deal are bizarre and the two top most Army Generals under
General Musharraf are being named as the interested parties who are forcing
the violation of all rules and regulations. Both are due to retire in 2007
and one of them may survive to become the Army Chief as well.
“This violation is happening in the Army Headquarter right now and can
possibly be stopped if General Musharraf or the helpless politicians
occupying the posts of the Defence Minister or the Prime Minister, intervene
and stop these Generals from making quick money at the expense of national
defence and even country’s exports,” a concerned official said.
According to the details, a quick fire, Restricted Tender was floated on
June 17, 2005 by the Director General of Defence Purchases seeking to buy
900 Thermal Image Sight (TIS) Fire Control System Units (Pix Above) for the
main Pakistani battle tanks – Al-Khalid and Al-Zarrar, T-85 & T-80U.
Surprisingly for such a large purchase through Tender No: 1338/49/TISight/DGDP/PC-3B
Dated 17th June, 2005, only four days were given for submission of bids.
June 21 was set as the last date.
This was ostensibly done because the Weapons and Equipment Directorate
(W&ED) of the Army GHQ in Rawalpindi, had already pre-qualified and
short-listed two French companies, through a long process of tests, trials
and final technical evaluation by the ITD-Directorate and I&E Directorates
in the first week of June, 2005. So both the companies were practically
ready to bid.
These companies were Sagem and Thales, the first being Europe's third
largest defence and security electronics company, while Thales is France's
largest military company. Adnan, son of late Maj. Gen. Jamsheed Malik
represents Sagem in Pakistan while Thales is represented by a Colonel Wazir
and Mr Shibli from F.A. Enterprises.
The tests and trials had included draft contract proposals, including
commercial and technical offers, which were sought by the W&ED on May 24 and
May 26, 2005 from these two companies. Both gave their offers and both were
pre-qualified/short listed by GHQ.
Then the W&ED sent the files to DGDP for final purchase contract before June
30, 2005. DGDP floated the tender asking for bids in 4 days. Both Sagem and
Thales separately submitted their technical and commercial offers on June 21
in the presence of DGDP and their own representatives.
First the technical offers were opened and evaluated by the technical
departments, I&E and ITD Directorates of GHQ and after two hours both were
declared technically qualified with 4 technical observations made on Sagem’s
offer and 35 technical observations on Thales bid.
The most significant difference in the two offers was that Sagem bid for the
Generation-3 (G-3) TIS Units while Thales offered the older Generation-2
(G-2). The Tender had asked for both types although G-2 is almost obsolete.
Why were G-2 units put on the tender is a big mystery because Pakistan Army
has already been using the G-3 which are mounted on Al-Khalid tanks being
manufactured by Pakistan for which Islamabad and the GHQ have been trying
hard to secure export orders from the Gulf, Saudi Arabia and other
countries.
The angry Army officers say G-2 units were not being mounted on Al-Khalid
tanks because of integration, stabilization and target identification
problems. In all the demonstrations to potential foreign buyers, the GHQ has
been displaying Al-Khalid tanks with G-3 units.
Side by side, the Pakistan Air Force has upgraded all the F-16, Mirage and
Helicopter Gunships with G-3 units bought in 2001 or thereafter. These were
purchased from Sagem in 1997. Sagem is also the main contractor in
collaboration with Kamra Avionics Company. It introduced Kamra to the
international export market for which General Musharraf is said to be very
proud and keeps referring to.
All NATO armies and Russians are using G-3 because it is light weight, has
no payload problems on air and is more reliable than G-2. In 2002 the
Pakistan Army GHQ and Weapons and Equipment Directorate decided to install
G-3 in all its main battle tanks.
Sagem was also offering transfer of technology which is included in the
quoted price along with state-of-the-art Technical Ugradation Package to
upgrade all the existing tanks from G-2 to G-3. That in itself promises a
huge export market.
Thales, on the other hand, was not even a qualified supplier until early
2004 and only Sagem was in the run. Then came General Tariq Majeed, the
Chief of General Staff with his background of Military Intelligence (MI). He
ordered that Thales should also be included in trials and tests which
continued until November last year. More trials were done in February/March
this year until Thales was pre-qualified, although it was offering only G-2
Units.
The big envelopes of bids were opened on June 21, 2005 after the technical
offers of both the companies were approved. Lo and Behold, Sagem had offered
each G-3 TIS unit for 59,000 Euros or a total of 53.1 million Euros (US$64.5
million) for 900 units. The price of Thales was an unbelievable 78,000 for
each G-2 unit or a total of 70.2 million Euros (US$85.3 million).
On Thursday June 23, 2005, Lt. Gen. Tariq Majeed, Chief of General Staff
took the decision, with the knowledge of the Vice Chief of Army Staff,
General Ahsan Saleem Hayat, ruling out all technical and other objections to
give the contract to Thales, the highest bidder, for its inferior G-2
equipment.
His decision was given on the last day of his work as Gen Majeed proceeded
the very next day on an official trip abroad.
The decision stunned many who were involved with the project. There were so
many angry officers who found it unpatriotic to keep quiet. Some of them
believe the use of brute authority to reward a company which did not offer
competitive technology has created a big problem for General Majeed who is
being likened to Admiral Mansurul Haq of Pakistan Navy, the convicted former
Navy Chief who made millions in submarine purchase deals and paid off a tiny
percentage to get off the hook.
The Ministry of Defence has been kept totally out of the loop in the deal.
All the files were kept under control of the GS Branch headed by General
Majeed. But there were other Generals heading other Directorates involved,
who had to agree.
These Officers and Directorates included Director General Armored Corps,
Maj. General Saeedullah Khan, DG Weapons & Equipment Directorate Maj. Gen.
Ejaz Bakhshi who was assisted by Brig. Zawwar Shah. The Military Operations
Directorate under Major General Yousuf and his Technical Director Brig.
Khalid Asghar also had to approve the purchase. The ITD Directorate was also
involved.
The angry officers of the Army say all these Generals and Brigadiers were
put under severe pressure to approve the deal. “Maj General Ejaz Bakhshi was
under tons of pressure, so was Major Gen. Yousuf but Technical Director
Brig. Khalid Asghar was so terrorized he was almost crying, but he had obey
the orders to keep his job and secure a pension,” one officer recalled.
The reason is that General Majeed is the senior most General after the
current Vice Chief of Army Staff, General Ahsan Saleem Hayat, who retires in
October 2007. General Majeed has the outside chance of becoming the Army
Chief as he is due to retire on December 30, 2007 and could thus be a
possible replacement of General Musharraf, if he is not kicked out earlier.
The Editor of the South Asia Tribune contacted the Thales company through
its given Email on its web site to confirm the deal. An Email sent to 'tosasales@fr.thalesgroup.com'
asked Thales whether it had finally got the contract from Pakistan Army of
900 Thermal Imagers at Euro 78,000 per unit for Pakistan’s Main Battle
Tanks.
Thales was also requested to confirm whether the TIS Units were of
Catherine-QW type, whether the imagers were Generation-2 or Generation-3 and
whether Transfer of Technology (ToT) was also part of the contract. No
response was immediately available from the company.
The decision to buy G-2 units from Thales has many implications for the Army
and Pakistan as well. Firstly Pakistan will be paying an extra US$21 million
to buy inferior grade technology which is being phased out by all the armies
the world over, including the Pakistan Army.
Secondly by putting in these old Generation units, Pakistan is seriously
going to compromise its export potential for Al-Khalid and other tanks as
all buyers are looking for the latest technology when they purchase weapons
at such a scale.
Thirdly after a few years Pakistan will in any case have to upgrade these
tanks and install the new technology which would again cost a bundle to the
Army and the country.
Why all this blatant favoritism is being done by some Generals is obvious
but no one is still ready to give out a guess of what will happen to the new
Admiral Mansurul Haq in the making.
What it, nevertheless, proves is that General Musharraf has turned a totally
blind eye on whatever his key position holders in GHQ may be doing because
he wants them to stay happy, healthy, wealthy and content and not challenge
his authority as the Army Chief, although he has crossed his retirement age
years ago
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