BHEL issues an unsigned rejoinder, high in volume and low on facts

The Bharat Heavy Electricals Limited (BHEL), in an unsigned letter with no letter head and no senior official’s name attached to it, accused The Bhutanese of some factual errors in its article, “Indian Journal uncovers a 1.5% commission deal worth Nu 240 mn for a Bhutanese citizen in the Nu 16 bn electro-mechanical equipment tenders awarded for Punatsangchu II and Mangdechu,” published on October 4, 2014.

The BHEL letter says, “At the very outset, we wish to bring to your attention that we categorically deny all statements and views expressed by yourselves in the published article and maintain these are baseless and in the event not factual representations.” The letter then goes on to highlight three specific issues of what it calls ‘blatant misrepresentation’.

However, The Bhutanese, on closer examination and verification of all the claims made in the BHEL letter, found the clarifications on keys points from BHEL to be factually inaccurate and not supported by evidence.

The letter, however, is also interesting in that it does not specifically and legally deny several individual and key facts and evidences raised by the first article carried by this paper.

Though the letter goes to great pains to point out what it perceives as factual errors, but it does not deny the existence of the BVT letter signed by Sangay Wangchuk and sent to BHEL on 14th September 2010. The BVT letter, a copy of which is available for forensic investigation and auditing, if necessary, was received by ENERTIA from a source in BHEL.

The Editor-in-Chief of ENERTIA journal, Professor A.G Iyer, who originally published the letter told The Bhutanese, “The BHEL rejoinder sent to your paper does not deny the existence of the letter sent by BVT. It cannot do so, and if it does, then the only legal cover its management has for issuing payments to Bhutan or any private party will become invalid. It may then lead to a more serious charge of embezzlement of government funds which is a criminal offence in India.”

The BHEL communication does not deny that Bhutan Ventures Trading (BVT) was hired as a local agent by BHEL in September 2010.

It does not deny that a commission of 1.5% was agreed to be paid to BVT as per a meeting in September 2010 for the electro mechanical equipment tender worth Nu 9.50 bn of Punatsangchu II awarded in June 2012 and Nu 6.94 bn for Mangdechu awarded in January 2013.

The BHEL correspondence also does not explain the type of ‘services’ provided by BVT that was different from what its office in Thimphu and its fulltime representatives in Bhutan were already doing.

The BHEL letter also fails to explain that in spite of claiming to provide services, why was BVT or it staff not known to any of the agencies dealing with BHEL, like Punatsangchu Hydroelectric Project Authority ( PHPA I and II), Mangdechu Hydroelectric Project Authority (MHPA), Ministry of Economic Affairs (MoEA) and Druk Green Power Corporation.

One key point raised by BHEL’s letter is that contrary to the statement made in this paper, under the Reserve Bank of India (RBI) guidelines even government entities and PSU’s like BHEL are allowed to nominate agents.

However, The Bhutanese found that the RBI is India’s central bank equivalent to Bhutan’s Royal Monetary Authority and its guidelines and directions are only relevant to Financial Institutions, like banks or in foreign currency exchange matters.

The RBI guidelines have no jurisdiction or role in allowing a heavy electrical company, like BHEL appointing contractual agents in Bhutan for a monopoly tender award. Furthermore, RBI guidelines of any sort cannot be applied in the sovereign territory of a foreign country, like Bhutan where local laws take precedence.

In the case of Bhutan a 2007 Finance Ministry Circular, in the case of tendering for the controversial Bhutan Lottery, it specifically prohibits the appointment of any middlemen or agents.

Similarly, a letter issued by the Druk Air Corporation to Boeing in 2002 with relation to the purchase of airplanes for Druk Air states the government policy is not to have agents or middlemen. The letter also states that no lobbying is allowed.

An issue of interest here is that while the government in the past took pains to reject agents there no due diligence done in finding out if BHEL had any agent and what it could cost the project.

Moreover, the relevant legal framework for 10,000 MW in Bhutan is in the form of the MoU and actual project specific agreements between the two countries and with no such provisions for BHEL to have such agents.

The RBI is also not a signatory to any project in Bhutan allowing or authorizing such agents.

Since this paper had quoted the ENERTIA journal in saying that “BHEL as a government company is not authorized to nominate agents” the paper also contacted the journal for more clarification.

The Editor of ENERTIA and author of the article, A. Prakash Iyer, in an email response said, “The BHEL position is drawing the RBI, a Monetary Institution, of GoI into a private controversial contractual obligation of BHEL. This is simply a tangential reference, not at all connected with the BHEL contract for Punatsangchu

II and Mangdechhu projects contractual supply of equipment which is under a bilateral contract and agreement between two countries i.e. India and Bhutan, governed by the laws of the specific bilateral contractual agreements.”

He further went on to add, “So the monetary bodies of the Government of India, namely, Reserve Bank of India (RBI) andThe Royal Monetary Authority (RMA) of Bhutan has nothing to do with the bilateral arrangements directly,”

The Bhutanese after combing through the RBI website only came across a 2013 circular issued by RBI allowing the appointment of overseas agents for a ‘Money Transfer Service Scheme’, which is actually a financial scheme of transferring remittances from abroad to beneficiaries in India and has noting do with having contractual agents in hydropower projects.

This paper, in its article, has not questioned how the money was sent to Bhutan or India, which is the domain of RBI and RMA, but by quoting the ENERTIA journal, had questioned the very legality of setting up of an agent by BHEL for a monopoly hydro power deal in Bhutan.

It is also matter of interest that despite being a government company BHEL did not follow the Right to Information Act in India that makes it mandatory for public agencies to make such appointments and financial deals public on its website. There is also no evidence of BHEL having followed due transparent process as a government agency by publicly inviting interested parties in Bhutan to become its agent.

The Bhutanese in a phone request on Wednesday afternoon and email request on Thursday afternoon requested BHEL to supply the specific RBI provisions, but despite repeated reminders to its local representative BHEL failed to supply the specific provisions until late Saturday morning at 12.30 am when the paper went to print.

The letter then makes another point in stating that with regard to the denial of an agent by the BHEL branch manager, he was only a technical person and that he had said he was only for technical support and not in a position to answer queries on any other issues.

However, The Bhutanese has a copy of a tape recorded interview with the former BHEL Manager A.M Gupta strongly denying the presence of any agent for BHEL in Bhutan. A.M Gupta had also made a similar claim when asked in 2011.

The new BHEL Manager, S.K Gupta, despite repeated requests declined to be tape recorded, but this paper has written notes of that day written by the journalist (open to forensic verification) that clearly has the new BHEL manager S.K Gupta denying knowledge or presence of any private agent of BHEL in Bhutan.

While S.K Gupta did ask the reporter to contact the commercial section for any additional queries on agents, he also made it amply clear that he handled not only technical work as claimed by the BHEL letter, but in fact, he carried out the liaison and all other works related to BHEL in Bhutan, including commercial works, like tender notifications.

Before the journalist could contact the commercial section, a former Executive Director of BHEL, Rajinder Kumar Gupta, relevant to its international operations, contacted the reporter and confirmed that the agreement with BVT as a ‘service provider.’ BVT also accepted the same after which there was no need to contact the commercial section of BHEL for the same information. Also, efforts made to contact BHEL Delhi were neither possible with nobody from Delhi responding to calls nor was it necessary with the detailed admissions and information above.

The Bhutanese article quoting ENERTIA journal has said, “The ENERTIA article raises the point that there was no need to appoint any local agent in Bhutan for BHEL as it was a monopoly supply order for BHEL.” BHEL quoting a part of this statement alleges it to be incorrect saying that there were other global hydropower companies competing in projects, like Basochu and Dagachu.

However, this paper had quoted the statement in the context of the Punatsangchu II and Mangdechu project where BHEL was the sole monopoly company nominated by the two governments of India and Bhutan without even a tender being called or bids invited.

Moreover, though BHEL’s letter says that only Alstom got the Dagachu project, but factually it was a joint consortium of Alstom and Andritz.

Also despite the same information and much stronger allegations being published in ENERTIA naming specific BHEL officials, BHEL has not issued any rejoinder to ENERTIA journal in India so far.

“BHEL has not sent any rejoinder to ENERTIA because they know they have done something wrong and they are trying to bully the Bhutanese media and divert the issue in Bhutan by sending a rejoinder to your paper that does not really say anything and is completely inaccurate,” said Professor A.G Iyer.

It has been learnt that based on the evidences with it ENERTIA journal has filed complaints with Prime Minister Narendra Modi’s office. The PMO of India has given an online acknowledgement of these complaints against BHEL. ENERTIA has also filed a detailed RTI application on the BHEL Commission issue.

“The very fact that BHEL has sent an unsigned letter from Delhi with no senior officials name is a matter of suspicion, and not in keeping with government norms in India. I will be sending this unsigned letter with misleading facts and veiled threats sent to your paper to the Indian PM’s Office for investigation and action,” said Professor A.G Iyer.

He said that in any future investigation on the issue by authorities in India, the BHEL letter and the position taken by it can be used as additional evidence against BHEL officials.

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