WASHINGTON DC, July 3, 2005 | ISSN: 1684-2057 | www.satribune.com

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Musharraf's Last Minute Phone Call on SAT Report, Saves Army $37M Loss

By M T Butt

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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