07-09-2005, 07:04 PM
<!--QuoteBegin-->QUOTE<!--QuoteEBegin-->Pakistan secretly procured equipment following 1998 sanctions
M R Klasra
After the nuclear-related economic sanctions of 1998, Pakistan got into agreements with foreign firms to procure equipment for the army
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report before the Public Accounts Committee reveals that the government made secret arrangements, in the wake of sanctions following the May 1998 nuclear tests, to procure various types of equipment for the army by contracting private firms in Germany, Korea and the United States.
While the particular report before PAC relates to the procurement of radio/wireless equipment, sources tell TFT that similar arrangements were made by Pakistan to acquire parts and sub-systems for other military hardware also.
Interestingly, PAC has come into the picture after the Auditor-General of Pakistanâs office found some discrepancy in the accounts of National Radio Telecommunication Corporation (NRTC). The discrepancy related to the penalty clause in the three separate contracts which stipulated that NRTC could penalise foreign firms if they delayed the delivery of equipment. The NRTC is situated in Haripur in the NWFP and supplies signals equipment to the army. It is also the concern that procures signals/communication equipment for the army from foreign firms and researches and develops indigenous capability for the army.
The AGâs office found that in all three cases, NRTC had failed to invoke the penalty clause. This fact came to light when the Auditor-General of Pakistan, sent a team of auditors to examine the annual accounts of the corporation for the year 2000-2001. The AGP noted that under the terms and conditions of the contract agreements, the penalty for late supplies was set at the rate of 2 percent of the delayed store value of each month. However, accounts showed that NRTC had failed to recover the penalty amount from the three suppliers: MS Bohwa Trading Corporation Korea (Rs 0.375 million), MS Deutsche Elno Germany (Rs 0.766 million) and MS E.com USA ($10,923).
This irregularity was brought to the notice of concerned departments in July 2001 and also reported to the ministry of science and technology in December 2001. The NRTC initially relied on technical responses to fob off the AGP. For instance, in one case the NRTC said that it could still impose the penalty at the time of final payment which comes to 10 percent of the total agreement. At one point it also said that it could legally waive off the penalty and so on.
None of these replies, however, satisfied the AGPâs office which argued that the contract agreements with the foreign firms included a clause for late supplies to ensure timely payment and satisfactory delivery of orders. Under this clause, suppliers are bound to deliver within the stipulated time period or pay a penalty. Therefore, NRTC has violated its own agreements with these firms and not penalised them for defaulting.
The back and forth between the AGP and NRTC led to the issue being placed before PAC. It was at this point that NRTC came up with the real reasons for not extracting the penalty from the foreign firms. Pakistan was looking for spares, and other parts and sub-systems for various equipments in the wake of sanctions and was not really in a position to penalise firms that were prepared to deliver even if belatedly. In this case, the firms were contracted to supply parts for AN/PRC-77, a tactical wireless equipment that comes in both manpack and vehicular configurations. The NRTC was forced to contract these firms after the US government turned down a request from Islamabad to supply the US-manufactured wireless sets to NRTC.
According to official documents sent to the PAC by the NRTC, the corporation placed an order (No. FP-1531/98, dated April 16, 1998) with Ms SONETRONIC Inc USA, the sole proprietor of US military specification radio equipment. With economic sanctions in place, the US firm refused to supply the equipment, forcing NRTC to explore other options. Hence, the NRTC got into a deal with Ms Bohwa Trading Corporation, Korea and placed an order (No. FP1531/98-II, dated July 7, 1998) for equipment worth US$ 73970. A Letter of Credit (No. 56197, dated September 10, 1998, to be expired on November 30, 1998) was opened in the firmâs favour.
NRTC officials have also told PAC that it was trying to procure components for AN/PRC-77 on behalf of the army which had placed an order with it (NRTC) for the equipment. According to NRTC, AN/PRC-77 is used by the army and paramilitary troops. However, its components are in short supply and NRTCâs only option was to cut a deal with MS E.Com USA, the only firm that actually held the needed equipment in store. Hence, it placed an order with the firm. After the shipment was delayed, NRTC decided that penalising the only available source of equipment was neither in the interest of the corporation nor the country.
It seems that PAC has accepted NRTCâs explanation and set the issue aside. Talking to TFT, Brig Javed Malik, DG-NRTC, also confirmed that the issue had been laid to rest. He said that NRTC had stopped manufacturing PRC-786. He would not say much but hinted that the army was now into more secure communication equipment.
Another interesting issue relates to procurement of AN/PRC-77 itself. It is a short-range, two-way voice communication set with a range of 6 to 12 km. While it was an improvement on the earlier version, AN/PRC-25, it has since largely been replaced by PRC-786, originally US equipment under a different nomenclature, which the army got NRTC to manufacture and which sources say has a much longer range than AN/PRC-77.
However, precisely for its short range, AN/PRC-77 is less prone to jamming and interception as opposed to PRC-786 which has a much-longer range. âIt [AN/PRC-77] can be jammed and intercepted but the jammer or interceptor will have to get within its range to do so. It is good equipment at the infantry battalion level,â said a communications expert<!--QuoteEnd--><!--QuoteEEnd-->
M R Klasra
After the nuclear-related economic sanctions of 1998, Pakistan got into agreements with foreign firms to procure equipment for the army
--------------------------------------------------------------------------------
 Â
report before the Public Accounts Committee reveals that the government made secret arrangements, in the wake of sanctions following the May 1998 nuclear tests, to procure various types of equipment for the army by contracting private firms in Germany, Korea and the United States.
While the particular report before PAC relates to the procurement of radio/wireless equipment, sources tell TFT that similar arrangements were made by Pakistan to acquire parts and sub-systems for other military hardware also.
Interestingly, PAC has come into the picture after the Auditor-General of Pakistanâs office found some discrepancy in the accounts of National Radio Telecommunication Corporation (NRTC). The discrepancy related to the penalty clause in the three separate contracts which stipulated that NRTC could penalise foreign firms if they delayed the delivery of equipment. The NRTC is situated in Haripur in the NWFP and supplies signals equipment to the army. It is also the concern that procures signals/communication equipment for the army from foreign firms and researches and develops indigenous capability for the army.
The AGâs office found that in all three cases, NRTC had failed to invoke the penalty clause. This fact came to light when the Auditor-General of Pakistan, sent a team of auditors to examine the annual accounts of the corporation for the year 2000-2001. The AGP noted that under the terms and conditions of the contract agreements, the penalty for late supplies was set at the rate of 2 percent of the delayed store value of each month. However, accounts showed that NRTC had failed to recover the penalty amount from the three suppliers: MS Bohwa Trading Corporation Korea (Rs 0.375 million), MS Deutsche Elno Germany (Rs 0.766 million) and MS E.com USA ($10,923).
This irregularity was brought to the notice of concerned departments in July 2001 and also reported to the ministry of science and technology in December 2001. The NRTC initially relied on technical responses to fob off the AGP. For instance, in one case the NRTC said that it could still impose the penalty at the time of final payment which comes to 10 percent of the total agreement. At one point it also said that it could legally waive off the penalty and so on.
None of these replies, however, satisfied the AGPâs office which argued that the contract agreements with the foreign firms included a clause for late supplies to ensure timely payment and satisfactory delivery of orders. Under this clause, suppliers are bound to deliver within the stipulated time period or pay a penalty. Therefore, NRTC has violated its own agreements with these firms and not penalised them for defaulting.
The back and forth between the AGP and NRTC led to the issue being placed before PAC. It was at this point that NRTC came up with the real reasons for not extracting the penalty from the foreign firms. Pakistan was looking for spares, and other parts and sub-systems for various equipments in the wake of sanctions and was not really in a position to penalise firms that were prepared to deliver even if belatedly. In this case, the firms were contracted to supply parts for AN/PRC-77, a tactical wireless equipment that comes in both manpack and vehicular configurations. The NRTC was forced to contract these firms after the US government turned down a request from Islamabad to supply the US-manufactured wireless sets to NRTC.
According to official documents sent to the PAC by the NRTC, the corporation placed an order (No. FP-1531/98, dated April 16, 1998) with Ms SONETRONIC Inc USA, the sole proprietor of US military specification radio equipment. With economic sanctions in place, the US firm refused to supply the equipment, forcing NRTC to explore other options. Hence, the NRTC got into a deal with Ms Bohwa Trading Corporation, Korea and placed an order (No. FP1531/98-II, dated July 7, 1998) for equipment worth US$ 73970. A Letter of Credit (No. 56197, dated September 10, 1998, to be expired on November 30, 1998) was opened in the firmâs favour.
NRTC officials have also told PAC that it was trying to procure components for AN/PRC-77 on behalf of the army which had placed an order with it (NRTC) for the equipment. According to NRTC, AN/PRC-77 is used by the army and paramilitary troops. However, its components are in short supply and NRTCâs only option was to cut a deal with MS E.Com USA, the only firm that actually held the needed equipment in store. Hence, it placed an order with the firm. After the shipment was delayed, NRTC decided that penalising the only available source of equipment was neither in the interest of the corporation nor the country.
It seems that PAC has accepted NRTCâs explanation and set the issue aside. Talking to TFT, Brig Javed Malik, DG-NRTC, also confirmed that the issue had been laid to rest. He said that NRTC had stopped manufacturing PRC-786. He would not say much but hinted that the army was now into more secure communication equipment.
Another interesting issue relates to procurement of AN/PRC-77 itself. It is a short-range, two-way voice communication set with a range of 6 to 12 km. While it was an improvement on the earlier version, AN/PRC-25, it has since largely been replaced by PRC-786, originally US equipment under a different nomenclature, which the army got NRTC to manufacture and which sources say has a much longer range than AN/PRC-77.
However, precisely for its short range, AN/PRC-77 is less prone to jamming and interception as opposed to PRC-786 which has a much-longer range. âIt [AN/PRC-77] can be jammed and intercepted but the jammer or interceptor will have to get within its range to do so. It is good equipment at the infantry battalion level,â said a communications expert<!--QuoteEnd--><!--QuoteEEnd-->