This application numbered as Civil Miscellaneous Application No. 7197/ 2013 in Writ Petition Civil No. 1280/ 2012 is available at https://docs.google.com/file/d/0BzdLbTmYqfPvbllhT0NQNF9xWFU/edit
It is clear from what follows below that General Electric Company executives and in particular Pratyush Kumar and Ashfaq Nainar corrupted Indian public officials working on the tender documents and procured unlawful changes to tender documents to enable General Electric Company to bid for Indian rail tenders using a shell company (GE Global Sourcing India Private Limited) and with intent to avoid having to make mandatory disclosures about General Electric Company to the Government of India. The only beneficiary of the unlawful changes to the tender documents described below in paragraph 169 of the extract was General Electric Company. The other bidders for the Madhepura Project in 2010 were Siemens, Alstom and Bombardier whereas the other bidder for the Marhowra Project in 2010 was the Caterpillar subsidiary EMD.
"Issue of tailoring bid documents to assist General Electric to avoid making necessary disclosures under mandatory GOI guidelines
152. The General Electric bidding entity for both the impugned tenders, GE Global Sourcing India Private Limited (respondent 7) is a shell company and only meets the financial and technical eligibility conditions in the Marhowra and Madhepura RFQs by using the parent company, General Electric Company as is “Associate”.
153. Illegal modifications were made by respondent 4 (with the collusion of corrupt officials from the Planning Commission and the Railway Ministry) to the 2010 RFQ for the proposed diesel locomotive factory with intent to dilute the disclosure requirements mandated by the Government of India Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment bearing Office Memorandum No. 6/4/2001DDII and dated July 13, 2001. These modifications were made at the behest of General Electric and are intended to assist GE to qualify without having to comply with the said GOI guidelines. General Electric has failed to comply with these guidelines in both the 2010 Marhowra and the 2010 Madhepura tenders.
154. The Government of India, Department of Disinvestment has issued ‘Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment’ vide Office Memorandum No. 6/4/2001DDII dated July 13, 2001. Compliance with these Government of India guidelines is mandatory for tenders like the tenders for the proposed Madhepura electric locomotive factory and the proposed Marhowra diesel locomotive factory. These guidelines are applicable to both the Marhowra and Madhepura RFQs for 2010.
155. Clause 1.3.2 of the 2010 Marhowra RFQ provides:
“Government of India has issued guidelines (see Appendix-IV) for qualification of bidders seeking to acquire stakes in any public sector enterprise through the process of disinvestment. These guidelines shall apply mutatis mutandis to this Bidding Process. The Authority shall be entitled to disqualify an Applicant in accordance with the aforesaid guidelines at any stage of the Bidding Process. Applicants must satisfy themselves that they are qualified to bid, and should give an undertaking to this effect in the form at Appendix-I.”
Similarly the second paragraph of Clause 1.2.1 of the 2010 Madhepura RFQ provides:
“Government of India has issued guidelines (see Appendix-V) for qualification of bidders seeking to acquire stakes in any public sector enterprise through the process of disinvestment. These guidelines shall apply mutatis mutandis to this Bidding Process. The Authority shall be entitled to disqualify an Applicant in accordance with the aforesaid guidelines at any stage of the Bidding Process. Applicants must satisfy themselves that they are qualified to bid, and should give an undertaking to this effect in the form at Appendix-I.”
156. These Government of India guidelines provide as follows:
“Government has examined the issue of framing comprehensive and transparent guidelines defining the criteria for bidders interested in PSE disinvestment so that the parties selected through competitive bidding could inspire public confidence. Earlier, criteria like net worth, experience etc. used to be prescribed. Based on experience and in consultation with concerned departments, Government has decided to prescribe the following additional criteria for the qualification/disqualification of the parties seeking to acquire stakes in public sector enterprises through disinvestment:
(a) In regard to matters other than the security and integrity of the country, any conviction by a Court of Law or indictment/ adverse order by a regulatory authority that casts a doubt on the ability of the bidder to manage the public sector unit when it is disinvested, or which relates to a grave offence would constitute disqualification. Grave offence is defined to be of such a nature that it outrages the moral sense of the community. The decision in regard to the nature of the offence would be taken on case to case basis after considering the facts of the case and relevant legal principles, by the Government of India.
(b) In regard to matters relating to the security and integrity of the country, any charge-sheet by an agency of the Government/ conviction by a Court of Law for an offence committed by the bidding party or by any sister concern of the bidding party would result in disqualification. The decision in regard to the relationship between the sister concerns would be taken, based on the relevant facts and after examining whether the two concerns are substantially controlled by the same person/ persons.
(c) In both (a) and (b), disqualification shall continue for a period that Government deems appropriate.
(d) Any entity, which is disqualified from participating in the disinvestment process, would not be allowed to remain associated with it or get associated merely because it has preferred an appeal against the order based on which it has been disqualified. The mere pendency of appeal will have no effect on the disqualification.
(e) The disqualification criteria would come into effect immediately and would apply to all bidders for various disinvestment transactions, which have not been completed as yet.
(f) Before disqualifying a concern, a Show Cause Notice why it should not be disqualified would be issued to it and it would be given an opportunity to explain its position.
(g) Henceforth, these criteria will be prescribed in the advertisements seeking Expression of Interest (EOI) from the interested parties. The interested parties would be required to provide the information on the above criteria, along with their Expressions of Interest (EOI). The bidders shall be required to provide with their EOI an undertaking to the effect that no investigation by a regulatory authority is pending against them. In case any investigation is pending against the concern or its sister concern or against its CEO or any of its Directors/ Managers/ employees, full details of such investigation including the name of the investigating agency, the charge/ offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government. For other criteria also, a similar undertaking shall be obtained along with EOI.”
157. In order to enforce compliance with these Guidelines, Appendix I (Letter comprising the Application for Qualification) of the 2010 RFQ for the proposed diesel locomotive factory at Marhowra requires certain certifications from Bidders.
158. The relevant paragraphs in Appendix I (Letter comprising the Application for Qualification) of the 2010 RFQ for the proposed diesel locomotive factory at Marhowra are the following:
(i) “ I/We certify that in the last three years, we/ any of the Consortium Members have neither failed to perform on any contract, as evidenced by imposition of a penalty or a judicial pronouncement or arbitration award, nor been expelled from any project or contract nor have had any contract terminated for breach on our part.” – required as per paragraph 5 of the Letter comprising the Application for Qualification.
(ii) “I/ We certify that in regard to matters other than security and integrity of the country, we have not been convicted by a Court of Law or indicted or adverse orders passed by a regulatory authority which could cast a doubt on our ability to undertake the Project or which relates to a grave offence that outrages the moral sense of the community.” – required as per paragraph 10 of the Letter comprising the Application for Qualification.
(iii) “I/ We further certify that in regard to matters relating to security and integrity of the country, we have not been charge-sheeted by any agency of the Government or convicted by a Court of Law for any offence committed by us or by any of our Associates.” – required as per paragraph 11 of the Letter comprising the Application for Qualification.
(iv) “I/ We further certify that no investigation by a regulatory authority is pending either against us or against our Associates or against our CEO or any of our Directors/ Managers/ employees that affects our ability to undertake / execute the Project.” – required as per paragraph 12 of the Letter comprising the Application for Qualification.
(v) “I/ We further certify that we are not disqualified in terms of the additional criteria specified by the Department of Disinvestment in their OM No. 6/4/2001DDII dated July 13, 2001, a copy of which forms part of the RFQ.” – required as per paragraph 13 of the Letter comprising the Application for Qualification.
(vi) “A statement by the Applicant and each of the members of its Consortium (where applicable) disclosing material nonperformance or contractual noncompliance in past projects, contractual disputes and litigation / arbitration in the recent past that exceed 5% of the contract value is given below (Attach extra sheets, if necessary)”- required as per paragraph 7 of Annex I to the Letter comprising the Application for Qualification.
159. The corresponding paragraphs in Appendix I (Letter comprising the Application for Qualification) of the 2010 RFQ for the proposed electric locomotive factory at Madhepura are as follows:
(i) I/ We certify that in the last three years, we/ any of the Consortium Members or our/ their Associates have neither failed to perform on any contract, as evidenced by imposition of a penalty by an arbitral or judicial authority or a judicial pronouncement or arbitration award, nor been expelled from any project or contract by any public authority nor have had any contract terminated by any public authority for breach on our part. - required as per paragraph 6 of the Letter comprising the Application for Qualification.
(ii) I/ We certify that in regard to matters other than security and integrity of the country, we/ any Member of the Consortium or any of our/ their Associates have not been convicted by a Court of Law or indicted or adverse orders passed by a regulatory authority which could cast a doubt on our ability to undertake the Project or which relates to a grave offence that outrages the moral sense of the community. - required as per paragraph 11 of the Letter comprising the Application for Qualification.
(iii) I/ We further certify that in regard to matters relating to security and integrity of the country, we/ any Member of the Consortium or any of our/ their Associates have not been charge-sheeted by any agency of the Government or convicted by a Court of Law. - required as per paragraph 12 of the Letter comprising the Application for Qualification.
(iv) I/ We further certify that no investigation by a regulatory authority is pending either against us/ any Member of the Consortium or against our/ their Associates or against our CEO or any of our directors/ managers/ employees. - required as per paragraph 13 of the Letter comprising the Application for Qualification.
(v) I/ We further certify that we are qualified to submit a Bid in accordance with the guidelines for qualification of bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment issued by the GOI vide Department of Disinvestment OM No. 6/4/2001-DD-II dated 13th July, 2001 which guidelines apply mutatis mutandis to the Bidding Process. A copy of the aforesaid guidelines form part of the RFQ at Appendix-V thereof. - required as per paragraph 14 of the Letter comprising the Application for Qualification.
(vi) A statement by the Applicant and each of the Members of its Consortium (where applicable) or any of their Associates disclosing material non-performance or contractual non-compliance in past projects, contractual disputes and litigation/ arbitration in the recent past is given below (Attach extra sheets, if necessary) - required as per paragraph 6 of Annex I to the Letter comprising the Application for Qualification.
160. Both the 2010 RFQs (and the 2008 RFQs as well) for the proposed diesel locomotive factory at Marhowra and the proposed electric locomotive factory at Madhepura, required the Bidders to comply with and give undertakings and certifications in accordance with the Government of India Guidelines. Neither General Electric Co., nor its principal Indian subsidiary carrying on business in India (GE India Industrial Private Limited), were in a position to provide the certifications and disclosures required by the Government of India guidelines. General Electric Company therefore fronted a shell company as the Bidder for both the 2010 tenders. This shell company, GE Global Sourcing India Private Limited had not executed any contracts and therefore did not need to make any disclosures pertaining to convictions/ indictments/ adverse orders/ charge-sheets or pending investigations by a regulatory authority. General Electric Company used GE Global Sourcing India Private Limited, a shell company, to front as the applicant for these locomotive tenders because neither General Electric Co. nor GE India Industrial Private Limited were able or willing to provide the certifications and disclosures required by the RFQs and the Government of India Guidelines.
161. Despite using GE Global Sourcing India Private Limited as the applicant for the impugned tenders, GE still found it difficult to provide these certifications because the Government of India Guidelines require certifications on behalf of the Bidder and its sister concerns. These guidelines also require disclosure of investigations by regulatory authorities against the Bidder or its sister concerns or against its CEO or any of its Directors/ Managers/ employees. The disclosure required covers full details of such investigation including the name of the investigating agency, the charge/ offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information to the satisfaction of the Government.
162. To overcome this hurdle, General Electric managed to get the language of the 2010 RFQ for the proposed diesel locomotive factory at Marhowra changed and diluted. A comparison of the corresponding clauses in the 2010 Marhowra RFQ and the 2010 Madhepura RFQ shows how the language of the 2010 Marhowra RFQ was tailored to enable General Electric to avoid disclosing any convictions/ indictments/ adverse orders/ charge-sheets or pending investigations by a regulatory authority on behalf of the Associates/ sister concerns of the Bidder and their CEO or Directors/ Managers/ employees.
163. GE Global Sourcing India Private Limited, a wholly-owned subsidiary of General Electric Co. has listed General Electric Co. as its Associate in the technical/ RFQ bids for the 2010 tenders for the Madhepura electric locomotive factory and the Marhowra diesel locomotive factory and also in its RFQ application for the Dankuni project (another Indian railways tender that General Electric was short-listed for).
164. Clause 2.2.8 of the 2010 RFQ for the proposed diesel locomotive factory at Marhowra defines an Associate as follows and provides:
“In computing the Technical Capacity and Net Worth of the Applicant/ Consortium members under Clauses 2.2.2, 3.2 and 3.4, the Technical Capacity and Net Worth of their respective Associates would also be eligible hereunder.
For purposes hereof, Associate means in relation to the Applicant/ Consortium member, a person who controls, is controlled by, or is under the common control with such Applicant/ Consortium member (the “Associate”). As used in this definition, the expression “control” means, with respect to a person which is a company or corporation, the ownership, directly or indirectly, of more than 50% (fifty per cent) of the voting shares of such person, and with respect to a person which is not a company or corporation, the power to direct the management and policies of such person, whether by operation of law or by contract or otherwise.”
Clause 2.2.9 (ii) of the 2010 RFQ for the proposed diesel locomotive factory at Marhowra is also relevant. It provides:
“information supplied by an Applicant (or other constituent member if the Applicant is a Consortium) must apply to the Applicant or constituent member named in the Application and not, unless specifically requested, to other associated companies or firms. Invitation to submit Bids will be issued only to Applicants whose identity and/ or constitution is identical to that at prequalification”.
165. The corresponding clauses in the 2010 RFQ for the proposed electric locomotive factory at Madhepura are Clause 2.2.9 and 2.2.10 (b). Clause 2.2.9 of the 2010 Madhepura RFQ provides:
“In computing the Technical Capacity and Net Worth of the Applicant/ Consortium Members under Clauses 2.2.2, 2.2.4 and 3.2, the Technical Capacity and the Net Worth of their respective Associates would also be eligible hereunder.
For purposes of this RFQ, Associate means, in relation to the Applicant/ Consortium Member, a person who controls, is controlled by, or is under the common control with such Applicant/ Consortium Member (the “Associate”). As used in this definition, the expression “control” means, with respect to a person which is a company or corporation, the ownership, directly or indirectly, of more than 50% (fifty per cent) of the voting shares of such person, and with respect to a person which is not a company or corporation, the power to direct the management and policies of such person by operation of law.”
Clause 2.2.10 (b) of the 2010 Madhepura RFQ provides:
“information supplied by an Applicant (or other constituent Member if the Applicant is a Consortium) must apply to the Applicant, Member or Associate named in the Application and not, unless specifically requested, to other associated companies or firms. Invitation to submit Bids will be issued only to Applicants whose identity and/ or constitution is identical to that at pre-qualification”.
166. The Madhepura 2010 RFQ was issued on March 2, 2010. The Marhowra 2010 RFQ was issued on March 23, 2010.
167. The corresponding requirements in Appendix I (Letter comprising the Application for Qualification) of the 2008 RFQ for the proposed electric locomotive factory at Madhepura were as follows:
(i) We certify that in the last three years, we/ any of the Consortium Members have neither failed to perform on any contract, as evidenced by imposition of a penalty or a judicial pronouncement or arbitration award, nor been expelled from any project or contract nor have had any contract terminated for breach on our part. - required as per paragraph 6 of the Letter comprising the Application for Qualification.
(ii) I/ We certify that in regard to matters other than security and integrity of the country, we have not been convicted by a Court of Law or indicted or adverse orders passed by a regulatory authority which could cast a doubt on our ability to undertake the Project or which relates to a grave offence that outrages the moral sense of the community. - required as per paragraph 11 of the Letter comprising the Application for Qualification.
(iii) I/ We further certify that in regard to matters relating to security and integrity of the country, we have not been charge-sheeted by any agency of the Government or convicted by a Court of Law for any offence committed by us or by any of our Associates. - required as per paragraph 12 of the Letter comprising the Application for Qualification.
(iv) I/ We further certify that no investigation by a regulatory authority is pending either against us or against our Associates or against our CEO or any of our Directors/ Managers/ employees. - required as per paragraph 13 of the Letter comprising the Application for Qualification.
(v) I/ We further certify that we are qualified to submit a Bid in accordance with the guidelines for qualification of bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment issued by the GOI vide Department of Disinvestment OM No. 6/4/2001-DD-II dated 13th July, 2001 which guidelines apply mutatis mutandis to the Bidding Process. A copy of the aforesaid guidelines form part of the RFQ at Appendix-IV thereof. - required as per paragraph 14 of the Letter comprising the Application for Qualification.
(vi) A statement by the Applicant and each of the Members of its Consortium (where applicable) disclosing material non-performance or contractual noncompliance in past projects, contractual disputes and litigation/ arbitration in the recent past is given below (Attach extra sheets, if necessary) - required as per paragraph 6 of Annex I to the Letter comprising the Application for Qualification.
Clause 2.2.9 of the 2008 Madhepura RFQ defines an ‘Associate” and provides as follows:
“In computing the Technical Capacity and Net Worth of the Applicant/ Consortium Members under Clauses 2.2.2, 2.2.4 and 3.2, the Technical Capacity and Net Worth of their respective Associates would also be eligible hereunder. For purposes hereof, Associate means, in relation to the Applicant/ Consortium Member, a person who controls, is controlled by, or is under the common control with such Applicant/ Consortium Member (the “Associate”). As used in this definition, the expression “control” means, with respect to a person which is a company or corporation, the ownership, directly or indirectly, of more than 50% (fifty per cent) of the voting shares of such person, and with respect to a person which is not a company or corporation, the power to direct the management and policies of such person, whether by operation of law or by contract or otherwise.”
Clause 2.2.10 (ii) of the 2008 Madhepura RFQ provides:
“information supplied by an Applicant (or other constituent Member if the Applicant is a Consortium) must apply to the Applicant, Member or Associate named in the Application and not, unless specifically requested, to other associated companies or firms. Invitation to submit Bids will be issued only to Applicants whose identity and/ or constitution is identical to that at pre-qualification”.
168. A comparison of the relevant paragraphs from the three RFQs - the 2008 Madhepura RFQ, the 2010 Madhepura RFQ, and the 2010 Marhowra RFQ exhibits a curious pattern of tightening and dilution of language pertaining to the requirements imposed by the above-discussed Government of India guidelines. The comparison exposes a pattern of arbitrary modification of language from one RFQ to another. It is submitted not only are these arbitrary modifications that cannot be justified, but it cannot be a mere coincidence that the modifications introduced suited General Electric’s requirements and strategy perfectly and enabled General Electric to avoid making disclosures that it was unable or unwilling to even though these disclosures were mandated by the applicable GOI guidelines. The relevant disclosure requirements in the 2010 Marhowra RFQ were diluted at the instance of General Electric and because of prohibited lobbying of Indian Railways and Planning Commission officials by General Electric executives, employees and agents and pursuant to corrupt dealings between Indian Railways and Planning Commission officials and General Electric. These unjustifiable and unlawful changes to the 2010 Marhowra RFQ language violate (i) the GOI Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment issued vide Office Memorandum No. 6/4/2001DDII dated July 13, 2001; (ii) the GOI Guidelines issued by the Ministry of Finance (F.No. 24(1)/PF.II/07) titled ‘Guidelines for Pre-Qualification of Bidders for PPP Projects’; and (iii) the Government of India endorsed and recommended model RFQ.
169. Copies of the Guidelines issued by the Ministry of Finance (F.No. 24(1)/PF.II/07) titled ‘Guidelines for Pre-Qualification of Bidders for PPP Projects’ and the Government of India endorsed and recommended model RFQ have been filed by the petitioner before this court.
Comparison of relevant paragraphs
setting out disclosure requirements in the 2008 Madhepura RFQ, the 2010
Madhepura RFQ, and the 2010 Marhowra RFQ
2008
Madhepura RFQ
|
2010
Madhepura RFQ
|
2010
Marhowra RFQ
|
Does
not have language “or
any of our/ their Associates”
Has language “nor have had any contract
terminated for breach on our part.”
|
Has language “or any of our/ their Associates”
Has
language “nor have had any contract terminated by any public authority
for breach on our part”
|
Does
not have language “or
any of our/ their Associates”
Has language “nor have had any contract
terminated for breach on our part”
|
Does not have language “or any of our/ their
Associates”
|
Has language “or any of our/ their Associates”
|
Does not have language “or any of our/ their
Associates”
|
Has language “we have not been charge-sheeted by
any agency of the Government or convicted by a Court of Law for any offence
committed by us or by any of our Associates”
|
Has
language “we/ any Member of the Consortium or any of our/ their Associates
have
not been charge-sheeted by any agency of the Government or convicted by a
Court of Law”
|
Has language “we have not been charge-sheeted by
any agency of the Government or convicted by a Court of Law for any offence
committed by us or by any of our Associates”
|
Has language “against us or against our
Associates or against our CEO or any of our Directors/ Managers/ employees”.
Does not have language “that affects our ability
to undertake / execute the Project.”
|
Has language “against us/ any Member of the
Consortium or against our/ their Associates or against our CEO or any of our
directors/ managers/ employees.”
Does not have language “that affects our ability
to undertake / execute the Project.”
|
Has language “against us or against our
Associates or against our CEO or any of our Directors/ Managers/ employees.”
Has language “that affects our ability to
undertake / execute the Project.”
|
Has
language “I/ We further certify that we are qualified to submit a Bid
in accordance with the guidelines for qualification of bidders seeking to
acquire stakes in Public Sector Enterprises through the process of
disinvestment issued by the GOI vide Department of Disinvestment OM No. 6/4/2001-DD-II
dated 13th July, 2001”
|
Has language “I/ We further certify that we are
qualified to submit a Bid in accordance with the guidelines for qualification
of bidders seeking to acquire stakes in Public Sector Enterprises through the
process of disinvestment issued by the GOI vide Department of Disinvestment
OM No. 6/4/2001-DD-II dated 13th July, 2001”
|
Has language “I/ We further certify that we are
not disqualified in terms of the additional criteria specified by the
Department of Disinvestment in their OM No. 6/4/2001DDII dated July 13, 2001”
|
Does not have language “or any of their
Associates”
Does not have language “that exceed 5% of the
contract value”
|
Has language “or any of their Associates”
Does not have language “that exceed 5% of the
contract value”
|
Does not have language “or any of their
Associates”
Has language “that exceed 5% of the contract
value”
|
Clause 2.2.10 (ii)
Has language “information supplied by an
Applicant (or other constituent Member if the Applicant is a Consortium) must
apply to the Applicant, Member or Associate named in the Application and not,
unless specifically requested, to other associated companies or firms”
|
Clause 2.2.10 (b)
Has language “information supplied by an
Applicant (or other constituent Member if the Applicant is a Consortium) must
apply to the Applicant, Member or Associate named in the Application and not,
unless specifically requested, to other associated companies or firms”
|
Clause 2.2.9 (ii)
Has language “information supplied by an
Applicant (or other constituent member if the Applicant is a Consortium) must
apply to the Applicant or constituent member named in the Application and
not, unless specifically requested, to other associated companies or firms.
|
170. The comparison between relevant corresponding paragraphs setting out the disclosure requirements in the 2008 Madhepura RFQ, the 2010 Madhepura RFQ, and the 2010 Marhowra RFQ therefore shows the following:
(a) The disclosures under paragraph 6 of Appendix 1 were not extended to Associates of the Bidder in the 2008 Madhepura RFQ. The 2010 Madhepura RFQ was tightened to extend these disclosures to Associates of Bidders. Curiously, the 2010 Marhowra RFQ also did not extend these disclosures to Associates of the Bidder.
The 2010 Marhowra RFQ therefore violated the GOI disclosure guidelines.
(b) Required disclosures by Bidders about expulsion from projects/ contracts and about contract terminations were diluted in the 2010 Madhepura RFQ by introduction of language that is absent from the 2008 Madhepura RFQ and the 2010 Marhowra RFQ. Additional language was introduced to the relevant provision in the 2010 Madhepura RFQ to limit these disclosures to adverse actions by public authorities. Disclosures under the 2008 Madhepura RFQ and the 2010 Marhowra RFQ were not limited in this manner.
The 2010 Madhepura RFQ therefore violated the GOI disclosure guidelines.
(c) Disclosures about convictions, indictments and adverse orders passed by a regulatory authority did not extend to Associates of the Bidder in the 2008 Madhepura RFQ. The 2010 Madhepura RFQ was tightened to extend these disclosures to Associates of Bidders. Curiously, the 2010 Marhowra RFQ also did not extend these disclosures to Associates of the Bidder.
The 2010 Marhowra RFQ therefore violated the GOI disclosure guidelines.
(d) Disclosures relating to charge-sheeting in matters affecting the security and integrity of India were limited to charge-sheeting of the Bidder in the 2008 Madhepura RFQ. The 2010 Madhepura RFQ was tightened to extend these disclosures to charge-sheeting of the Bidders, consortium members, and Associates of the Bidder and of the consortium members. Curiously, these disclosures under the 2010 Marhowra RFQ were limited to charge-sheeting of the Bidder and did not extend to charge-sheeting of the Associates of the Bidder and of the consortium members.
The 2010 Marhowra RFQ therefore violated the GOI disclosure guidelines.
(e) Disclosures about pending investigations by a regulatory authority were limited to Bidders, their Associates and to the CEO, Directors, Managers and employees of the Bidder in the 2008 Madhepura RFQ. The 2010 Madhepura RFQ extended these disclosures to consortium members and Associates of consortium Members. The 2010 Marhowra RFQ not only does not extend the disclosure to consortium members and Associates of consortium members, but goes even further in diluting this requirement so as to render it completely meaningless, inoperative and nugatory. The 2010 Marhowra RFQ inserts language that limits these disclosures to pending investigations of regulatory authorities which in the subjective opinion of a Bidder affect its ability to undertake / execute the Project.
The 2010 Marhowra RFQ therefore violated the GOI disclosure guidelines.
(f) Both the 2008 and the 2010 Madhepura RFQs contain a positive undertaking by the Bidders that they are qualified to submit a bid in accordance with the Government of India guidelines. The 2010 Marhowra RFQ however, does not require a positive declaration/ certification that the Bidder is qualified under these guidelines. Instead the 2010 Marhowra RFQ only requires a negative certification that the Bidder is not disqualified in terms of the additional criteria specified by the Government of India guidelines.
The 2010 Marhowra RFQ therefore violated the GOI disclosure guidelines.
(g) The requirement to disclose material non-performance and contractual non-compliance in past projects and recent contractual disputes, litigation and arbitration did not extend to Associates of the Bidder in the 2008 Madhepura RFQ. The 2010 Madhepura RFQ was tightened to extend these disclosures to Associates of Bidders. The 2010 Marhowra RFQ also did not extend these disclosures to Associates of the Bidder. And once again the 2010 Marhowra RFQ goes much further in diluting this disclosure requirement through new language that seeks to limit these disclosures to those “that exceed 5% of the contract value”. This extra language in paragraph 7 of Annex 1 to Appendix I the 2010 Marhowra RFQ does not even make logical sense when read with the rest of this paragraph. The disclosures mandated by this provision are about material non-performance and contractual non-compliance in past projects and about recent contractual disputes, litigation and arbitration. It is not made clear how the limit of 5% of the contract value applies to events mentioned in this provision. It appears that this extra language was hurriedly inserted into this provision and that the dilution of the disclosure requirement was sought to be protected from scrutiny by not going for an overall redrafting of this provision. A condition for disclosure was added that could be subjectively interpreted by the Bidder to mean anything. This would then protect a Bidder from a charge of non-responsiveness if subsequently any questions were raised.
The 2010 Marhowra RFQ violated the GOI disclosure guidelines.
(h) Clause 2.2.10 in the 2008 Madhepura RFQ included general instructions for submitting an application and it provided that information supplied by an Applicant (or other constituent Member if the Applicant is a Consortium) must apply to the Applicant, Member or Associate named in the Application and not, unless specifically requested, to other associated companies or firms. Thus disclosures were mandatory for Associates of the Bidder named in the application. This was also the requirement in the corresponding provision in the 2010 Madhepura RFQ. In the 2010 Marhowra RFQ however, the corresponding provision states that information need only be supplied for the Bidder and consortium members. Associates of the Bidder named in the Application are not covered by this provision. The effect of this omission in the 2010 Marhowra diesel locomotive factory RFQ is that this provision could be interpreted to mean that the Bidder was not required to disclose information for its Associates.
The 2010 Marhowra RFQ therefore violated the GOI disclosure guidelines.
171. It is pointed out that paragraph 12 of Appendix I to the 2010 Marhowra RFQ states that pending investigations by regulatory authorities are also required for Associates of the Bidder. However, the introduction of the words “that affects our ability to undertake / execute the Project” in paragraph 12 of the 2010 Marhowra RFQ renders the certification requirement useless as any and every bidder could say (without resort to any external objective standard) that a particular ongoing regulatory investigation did not affect the ability of the bidder to execute the project. The introduction of this subjective element which cannot be objectively verified by the Indian Railways has reduced this important requirement (that was to be mandatorily met by all bidders) to a nullity or a mere formal unverifiable and therefore meaningless statement. It will also be of interest to see what the corresponding language was in the 2008 Marhowra RFQ.
172. Clause (g) of the aforesaid GOI disclosure guidelines at Appendix –IV of the 2010 Marhowra RFQ provides:
“The bidders shall be required to provide with their EOI an undertaking to the effect that no investigation by a regulatory authority is pending against them. In case any investigation is pending against the concern or its sister concern or against its CEO or any of its Directors/ Managers/ employees, full details of such investigation including the name of the investigating agency, the charge/ offence for which the investigation has been launched, name and designation of persons against whom the investigation has been launched and other relevant information should be disclosed, to the satisfaction of the Government. For other criteria also, a similar undertaking shall be obtained along with EOI.”
173. The RFQ is equivalent to the EOI (Expression of Interest) referred to in the above Clause (g). However, the language in paragraph 12 of the Letter comprising the Application for Qualification (Appendix-I) in the 2010 Marhowra RFQ does not meet the mandatory requirement of the above-quoted Clause (g) of the Government of India’s guidelines dated July 13, 2001. It is relevant to ask when and how was this change introduced into the language of Clause 12 of the Marhowra 2010 RFQ. This change obviously benefits General Electric because it enabled General Electric to avoid disclosing pending investigations by a regulatory authority against General Electric Company.
174. The above discrepancies and differences in three different RFQs, all three issued by the Ministry of Railways and all expressly made subject to compliance with the Government of India ‘Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment’ (the GOI disclosure guidelines), cannot be justified. These give rise to a reasonable and strong apprehension that some Bidders like General Electric were being favoured and that the RFQ terms were crafted and modified by corrupt Planning Commission and Indian Railways officials to help General Electric in qualifying without making the required mandatory disclosures.
175. Guidelines were issued by the Ministry of Finance (F.No. 24(1)/PF.II/07) titled ‘Guidelines for Pre-Qualification of Bidders for PPP Projects’. These guidelines along-with an enclosed Government of India endorsed model RFQ were forwarded by the Ministry of Finance to several Government of India departments including to the Chairman of the Railway Board on December 5, 2007. The corresponding certification and disclosure clauses recommended in the GOI model RFQ also establish that the certification/ disclosure provisions of the 2010 Marhowra RFQ were diluted to benefit General Electric so as to enable it to qualify without making the disclosures required by the GOI disclosure guidelines that were expressly made applicable to the tender.
176. General Electric has clearly benefited from and taken advantage of the diluted disclosure requirements under the 2010 Marhowra RFQ.
177. In contrast, General Electric was unable to comply with the more stringent disclosure requirements in the 2010 Madhepura RFQ. Therefore, in its technical bid for the 2010 Madhepura RFQ submitted on May 17, 2012 prepared while the petitioner was working for General Electric, General Electric limited its disclosures only to those disclosures ordinarily made by General Electric under US securities laws to the United States Securities and Exchange Commission (the SEC). General Electric has therefore not complied with the disclosure/ certification requirements in the 2010 Madhepura RFQ. General Electric’s short-listing/ qualification for the 2010 Madhepura tender was in violation of the RFQ and the Government of India disclosure guidelines dated July 13, 2001 and was therefore liable to be set aside.
178. General Electric has also not complied with the Government of India disclosure guidelines dated July 13, 2001 in its technical bid for the 2010 Marhowra RFQ. General Electric has made no disclosures about the real bidder, General Electric Company, which provides the requisite net-worth, technical experience, technology, and intellectual property rights for General Electric’s bid that has been submitted using a shell company (GE Global Sourcing India Private Limited), a wholly-owned subsidiary that had zero experience of public contracts or manufacturing.
179. In addition, the dilution of the disclosure/ certification requirements in the 2010 Marhowra RFQ in violation of the Government of India guidelines dated July 13, 2001 rendered Global RFQ No. 2010/ME(Proj)/4/ Marhoura / the invitation to bid issued by the Ministry of Railways unlawful, arbitrary, bad in law and liable to be quashed.
180. Another important question that arises before this court is why were the disclosure/ certification requirements tightened/ strengthened in the 2010 Madhepura RFQ over the 2008 Madhepura RFQ? Was an objection raised within the Government that the 2008 Madhepura RFQ did not comply with the Government of India guidelines dated July 13, 2001? This would certainly appear to be the case for the changes made in the 2010 Madhepura RFQ. The question remains why similar changes were not introduced in the 2010 Marhowra RFQ, which also does not comply with the GOI disclosure guidelines dated July 13, 2001.
181. As stated above, General Electric was unable/ unwilling to comply with the more stringent disclosure requirements under the 2010 Madhepura RFQ and was unable/ unwilling to provide the clear certifications as required by paragraphs 6, 11 and 13 of Appendix I of that RFQ.
182. Soon after the petitioner started work at General Electric on April 23, 2010, she was informed that General Electric was unable to provide the clear certifications as required under the Madhepura RFQ application due on May 17, 2010. The petitioner was informed that General Electric would provide conditional/ limited certifications and would only disclose those adverse events that it was liable to disclose to the SEC under United States law in routine filings. Accordingly General Electric made modifications to the relevant provisions in Appendix I stating that the disclosures were limited to those ordinarily made to the SEC. The application for qualification/ technical bid submitted by General Electric for the 2010 Madhepura RFQ on May 17, 2010 therefore contained a modified appendix I and was liable to be treated as non-responsive because the required disclosures have not been made. General Electric had therefore not made the full disclosures required by the 2010 Madhepura RFQ. Even internally within GE, these modifications to the language of appendix I were viewed as risky. Despite this failure to comply with the disclosure requirements under the RFQ and the GOI disclosure guidelines, General Electric was qualified/ short-listed by the Railways Ministry for the 2010 Madhepura tender. The fact is that General Electric was unable/ unwilling to provide the certifications required under the 2010 Madhepura RFQ and the GOI guidelines dated July 13, 2001. General Electric’s RFQ application for the 2010 Madhepura tender was therefore non-responsive and also in violation of the aforesaid GOI guidelines dated July 13, 2001. General Electric should not have been prequalified for this tender by respondent 4. This is yet another reason why General Electric’s bid for this tender (the 2010 Madhepura tender) was liable to be rejected.
183. The reason General Electric was unable/ unwilling to provide the certifications required by the 2010 Madhepura RFQ is because paragraphs 6, 11, 12 and 13 of Appendix I to the RFQ requires disclosures for the Bidder’s Associate. The bidder is as pointed out, a shell company, GE Global Sourcing India Private Limited (respondent 7). Its Associate for the bid is General Electric Company (respondent 1). General Electric was unable/ unwilling to provide the certifications and disclosures required by the 2010 Madhepura RFQ under paragraphs 6, 11, 12 and 13 of Appendix I for General Electric Company. In its letter comprising the application for Qualification submitted for the Madhepura electric locomotive factory tender on May 17, 2010, General Electric has added the words “subject to” before paragraphs 11 and 13 and then provided an explanation that the disclosures were limited to matters required to be disclosed by General Electric under SEC guidelines. Disclosures under SEC guidelines and US securities law are essentially limited to disputes having a substantial financial impact upon the company. In the case of General Electric Company, the actual numbers that would have a significant financial impact work out to be quite high. Also, matters/ disputes considered normal and routine in the course of business do not require disclosure to the SEC unless they create a significant potential financial liability. The disclosures required by the GOI Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment’ and by the GOI recommended model RFQ are more stringent because they meet a different standard and serve a different purpose. Therefore GE Global Sourcing India Private Limited had not complied with the 2010 Madhepura RFQ requirement to provide clear certifications or make the required disclosures. GE Global Sourcing India Private Limited had also failed to comply with the requirements of the Government of India ‘Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment’. General Electric’s technical bid for the 2010 tender for the proposed electric locomotive factory at Madhepura was therefore non-responsive and non-compliant.
184. General Electric could have made appropriate disclosures as part of its technical bid for the Madhepura tender in 2010, but did not. There are three possible reasons why General Electric did not make the required disclosures. First, the petitioner was told by Ms Tara Plimpton and Mr James Winget (both in-house lawyers for GE Transportation at the relevant time) that it was not possible for General Electric to compile the information required for these disclosures from its businesses spread all over the world. Second, the petitioner also learnt that General Electric had been disqualified/ blacklisted for a tender in a South American country, probably Brazil. It is possible that General Electric did not want to make disclosures that could be relied upon by the Railway Ministry to disqualify its bid. The third reason was that General Electric had made no disclosures in its 2008/2009 technical bid for the Marhowra tender and therefore any disclosures made by General Electric for the Madhepura 2010 tender would have raised red flags in the Ministry of Railways as to why these were not disclosed in 2009. The petitioner came across this reason in an email written by Mr. Pratyush Kumar to General Electric executives in GE Transportation’s US headquarters.
185. As submitted, the 2010 RFQ for the proposed Marhowra diesel locomotive factory also did not comply with the GOI ‘Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment’. The disclosure/ certification requirements prescribed in this RFQ were a diluted version of the disclosure/ certification requirements prescribed by the GOI disclosure guidelines. This dilution was clearly intended to benefit General Electric. The 2010 Marhowra RFQ was ultra vires and violative of the GOI disclosure guidelines as it omitted disclosures/ certifications for “Associates” of the Bidder. As a result, General Electric avoided making disclosures for General Electric Company (respondent 1) and the de-facto bidder by using a shell company, GE Global Sourcing India Private Limited as the applicant. GE Global Sourcing India Private Limited being a shell company, and having never manufactured or supplied locomotives or any other product for that matter, had a clean slate and therefore made no disclosures in its technical bid for the 2010 Marhowra RFQ submitted on July 12, 2010. This failure by General Electric to make disclosures about the de-facto and real Bidder (General Electric Company/ respondent 1) violated the GOI disclosure guidelines (Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment).
186. The Global RFQ No. 2010/ME(Proj)/4/Marhoura/RFQ prepared by the Ministry of Railways, Government of India in March 2010 also violated the GOI ‘Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment’. The modifications made to this RFQ by Respondent 4 to dilute the disclosure requirements and to thereby benefit General Electric were unjustifiable, illegal and ultra-vires. Global RFQ No. 2010/ME(Proj)/4/Marhoura/RFQ was therefore liable to be scrapped.
187. For the reasons set out above, the 2010 Marhowra RFQ and the 2010 Madhepura RFQ were in violation of the Government of India Guidelines dated July 13, 2001 and also in violation of the Ministry of Finance Guidelines for Pre-qualification of Bidders for PPP Projects dated December 5, 2007 and with office memorandum No. F.No. 24(1)/PF.II/07 and were therefore illegal, ultravires and liable to be quashed/ scrapped.
188. GE Global Sourcing India Private Limited (respondent 7), the applicant in the 2010 Madhepura electric locomotive factory tender, the 2010 Marhowra diesel locomotive factory tender, and the 2010 Dankuni tender is a shell company that has been fronted as the Applicant by General Electric Company to avoid providing the certifications required by the Government of India Disinvestment Guidelines (No. 6/4/2001DDII) dated July 13, 2001. GE Global Sourcing India Private Limited changed its registered office address in late July 2010 to AIFACS Building, 1 Rafi Marg, New Delhi 110001 India. Prior to that, the registered office of GE Global Sourcing India Private Limited was a Mumbai address and the address was “care of” the office address of another company which was a non-GE entity. Thus the technical bids submitted by GE Global Sourcing India Private Limited on May 17, 2010 and on July 2010 contained the registered office address which began with “C/o” followed by another company’s name which was not a GE company.
189. The petitioner pointed out to Mr. Pratyush Kumar, Mr, Deepak Adlakha and other members of the GE Transportation team in India in the week commencing May 10, 2010 that it was inappropriate for GE Global Sourcing India Private Limited to use another company’s office as its registered office, especially when this entity was bidding for multi-billion dollar railway tenders. After the petitioner pointed this out, steps were taken to change the registered office for GE Global Sourcing India Private Limited and the change was finally approved in late July 2010. There are internal GE emails dating July 2010 exchanged between the petitioner and General Electric executives (including Mr. K R Radhakrishnan, the company secretary for GE India Industrial Private Limited) on the necessity to notify the change in the registered office of the Applicant to the Ministry of Railways as required by the RFQs for the three 2010 tenders (i.e., the Madhepura, Marhowra and Dankuni tenders).
190. That GE Global Sourcing India Private Limited was a shell company, at least in 2010, is also evident from its memorandum of association, its object clause and the description of its business activities. These came to the attention of the petitioner when she was reviewing the technical bid documents for GE’s bid for the Marhowra diesel locomotive factory tender in late June and early July 2010. Annex I to the Letter comprising the application for qualification submitted by GE contained “Details of Applicant”. Paragraph 2 of Annex I asks for a “Brief description of the Company including details of its main lines of business and proposed role and responsibilities in this Project.” The petitioner recalls that the business of GE Global Sourcing India Private Limited was described in paragraph 2 of Annex I as surveying catalogues on the internet or something similar. The petitioner pointed out to Mr. Ashfaq Nainar that the business description for the Applicant (GE Global Sourcing India Private Limited) showed that it was a shell company. Mr. Ashfaq Nainar agreed that that the Applicant was a shell company but stated that nothing could be done about this.
191. The petitioner also recalls a conversation in late June 2010, with Ms. Himali Arora, the then CFO for GE Transportation in India, and Mr. Ashish Malhotra, a General Electric executive working on the locomotive tenders, during which Ms. Himali Arora admitted that GE Global Sourcing India Private Limited’s funds being limited could not be disclosed, and that buying the tender documents (the RFPs) for these locomotive tenders had depleted the funds in its bank balance.
192. The reason why General Electric has used a shell company to front as the applicant for these locomotive tenders is because neither respondent 1 (General Electric Co.), nor respondent 6 (GE India Industrial Private Limited) were willing/ able to provide the certifications required by the RFQs to comply with the Government of India Guidelines for qualification of Bidders seeking to acquire stakes in Public Sector Enterprises through the process of disinvestment bearing Office Memorandum No. 6/4/2001DDII and dated July 13, 2001. In failing to provide the mandated/ required disclosures and certifications in its technical bids for the 2010 RFQ for the electric locomotive factory and the 2010 RFQ for the diesel locomotive factory, and by using a shell company as the Bidder for this purpose, GE engaged in “fraudulent practices” as defined by Clause 4.3 (b) and Clause 4.1.3 b) of these RFQs respectively. Both these clauses define a fraudulent practice thus: “fraudulent practice” means a misrepresentation or omission of facts or suppression of facts or disclosure of incomplete facts, in order to influence the Bidding Process”.
193. The affidavit filed by the Railway Ministry on 14 January 2013 confirms that General Electric failed to make the mandatory disclosures in its technical bids for the 2010 ELF and DLF RFQs and that this was enabled by tailoring the RFQ language (with the help of corrupt Railway Ministry and Planning Commission officials) and by fraudulently using a shell company to front as the bidding entity and by modifying the language of the disclosure clauses in the technical bids."
For more on General Electric corruption in India in connection with the Indian Rail tenders for the proposed diesel locomotive factory at Marhowra and the proposed electric locomotive factory at Madhepura, see
http://geimpersonationfraud.blogspot.in/ General Electric substituted fake representative/ signatory in Indian corruption legal case
http://gecorruption.blogspot.in/ FCPA alert- General Electric paid bribes to Indian public officials using third party contractor - Aartech Consultants India Private Limited
http://gemarhowracorruption.blogspot.in/ The PwC & Vinod Sharma conflict of interest & GE corruption in Marhowra Project
http://gemarhowracorruptionpart2.blogspot.in/ Shakeel Ahmed, Indian Rail official corruptly vetted GE 2008 bid documents for Marhowra Project
http://gecorruptionpart2.blogspot.in/ General Electric corruptly obtained Indian Rail Marhowra Project bid docs before they were public
http://gecorruptionpart3.blogspot.in/ Wikileaks US Embassy cables on creation of Marhowra loco factory Project for General Electric
http://gecorruptionpart4.blogspot.in/ General Electric corruption & fraud to avoid mandatory disclosures in India tender
http://gecorruptionpart5.blogspot.in/ #FCPA Why is General Electric bidding for India electric loco tender which it does not manufacture
http://seemasapra.blogspot.com/ Seema Sapra - General Electric corruption whistle-blower: the Truth prevails
