Friday, April 22 2005 19:44 Hrs (IST) - World Time -

New Delhi: The Defence Ministry today (Apr 22, 2005) ordered a CBI probe into alleged payoffs by state-owned South African armament company Denel to a British agent to secure an Indian rifles contract during NDA (National Democratic Alliance) regime in 2003.

Mukherjee told PTI that CBI (Central Bureau of Investigation) has been asked to investigate if any middlemen were involved in clinching the Rs 20-crore Denel deal.

Under Indian rules, no middleman is permitted to be involved in any Defence deal, he said adding CBI would look into if this norm has been violated.

Under the deal involving 1200 bunker-bursting rifles and ammunitions, Denel has supplied 300 weapons and another 300 were in the pipeline.

Ministry sources said the CAG found that the rifles did not conform to qualitative requirement and were also delivered six months behind schedule.

A South African newspaper had alleged that Denel had paid nearly 13 percent commission to the British Isle-based Varas Associates to influence India's decision to award the contract to the South African company.

While asserting that the supply of these rifles was frozen, Mukherjee said the freeze would also apply to Denel's technology transfer project at Nalanda in Bihar, the former Lok Sabha constituency of the then Defence Minister George Fernandes. The project involves production of advanced illuminated artilleries and tank shells for the Indian Army.

"Work has already started on the project but the pace is slow due to the fact that it is a naxalite-dominated area," he said.

The Denel issue had rocked Parliament earlier this week when the House proceedings were stalled by the Opposition demanding tabling of Phukan Commission and CVC reports on Kargil arms purchases.