The CAG has come down heavily against IAS officer Satyajeet Rajan, who served as the Joint Secretary (Electronic Systems) in the MoD between 2007 and 2012 for giving permission to public sector unit BEL to strike a multi crore deal with the tainted company despite a CBI recommendation for it to be blacklisted.

Incidentally, a separate CBI probe is under 0way against the same company for hiring a middleman and bribing officials to get it off the formal blacklist of the government. This new case was registered by the CBI in 2012 after allegations surfaced that arms dealer Abhishek Verma was involved in the deal.

The CAG has come down hard on the decision to award RAD a contract to manufacture and upgrade gun fire control systems by BEL, signed in September 2010, despite the fact that the CBI had recommended a blacklisting of the firm in August. The blacklisting recommendation had come for allegations that the foreign firm gave kickbacks to a former Director General Ordnance Factories (DGOF) and all dealing with it had been frozen since 2009.

The deal was signed after the recommendation of the IAS officer who ruled that the contract could be signed as the firm had not been 'formally' blacklisted in September 2010, thus going against the government stand that no deals were to be signed with RAD.

"MoD had frozen business with RAD after it was named by the CBI in a case of allegation of kickbacks received from RAD by a former DGOF in May 2009. Therefore, the Joint Secretary's communication of September 2010 allowing BEL to take action regarding procurement from RAD as deemed appropriate was inappropriate," the CAG report says.

As a result of the signing of the contract, BEL blocked over Rs 500 crore of its money as a formal decision to cancel the contract was taken in November 2012. "BEL's funds of Rs 502 crore had been blocked for an indefinite period," CAG has said.

It may be recalled that arms dealer Abhishek Verma is facing charges that RAD paid him 530000 euros to allegedly get its name off the banned list. The money was paid to Ganton USA on January 31, 2011. RAD was one of the frontrunnerss to provide new anti aircraft guns to the Army before it was blacklisted.