Holes punched in Volcker report

AHMEDABAD: Even as Assocham, the national level industry association, is yelling foul about Paul Volcker’s report on alleged illicit payments to the Iraqi regime by Indian firms, a few Gujarat-based companies have accused the committee of shoddy work.

Exhibit one in their case against Volcker is Vishal Exports Overseas Ltd, a 20-year-old, Ahmedabad-based agro-commodity exporter, which is alleged to have paid over US $ 70,000 as after sales service fees (ASSF). “The said deal never took place.

The Iraqi government rejected our consignment mid-sea and the entire amount was returned to us. Where is the question of kickback? This shows that probably there was no research. Instead, a complete list of all the contracts made by Iraq in those days has been included in the report,” says an agitated TG Natarajan, CEO of Vishal.    

According to Vishal Exports officials, a contract for 5,000 metric tonnes of wheat was allotted to them by the State Trading Corporation (STC), a 100% government company. However, after the freight was sent, the Australian and Argentine suppliers who used to regularly supply wheat to the Iraqis offered a better deal and the Vishal deal was cancelled.

“We then diverted the freight to other customers. We had deposited all the money under UN observation and on the approval of our government. It was a contract through the STC and not on our own. We paid money to the Iraqis through our bankers, State Bank of Travancore, and the same amount was soon returned to us through the same bank,” explains Vishal Exports’ president TD Mehta.

The chairmen of Alembic Industries, Chirayu Amin, and Jord Engineers, both Vadodara-based companies, which were alleged to have paid ASSF amounts of over $100,000 each, were unreachable.

The director of Gujarat Raffia Ltd, Pradeep Bhutia, said he failed to understand how his company could be accused of kickbacks when it did not have any direct dealings with the Iraqis.

“The entire process was through our government agencies, under UN supervision. Payments were made through our bank. We were never asked an explanation about the same. This is unfair.”

Some of the other companies who exported goods to Iraq are agitated for being dragged into the controversy needlessly.

“It was a very nominal amount of business — a little over $2,000. Where  is the scope for kickbacks? We made legal payments through cheques and  documents. This is how business took place in  Iraq back then. Everything was done through  UN,” says Vasanti Yadav of Dishman Pharmaceuticals.

The apex trade and  business organisations in Gujarat are, however,  seemingly unwilling to take a formal stand on Volcker.

“We have not gone into the details. It will take us a couple of days to come  up with a perspective on that,” said the chairman  of the Confederation of  Indian Industry’s Gujarat chapter Amresh Dhawan.

Even the Gujarat Chamber of Commerce and Industry had a very philosophical take on the controversy. 

“Normally, it is expected that companies adopt ethical practices. But some resort to short-cuts. Sometimes, people commit mistakes unknowingly,” said its president Chinubhai Shah.