CBI case against Air India, IBM and SAP officials over procurement irregularities

The Central Bureau of investigation (CBI) has registered a first information report (FIR) against officials of Air India, German multinational software corporation SAP AG and American Technology giant IBM in connection with alleged irregularities in procurement of software by the national carrier in 2011.

According to officials privy to the investigation, the alleged irregularities are estimated to be worth Rs225 crore. They were first highlighted by the Central Vigilance Commission (CVC), which has examined reports made by the Chief Vigilance Officer of Air India with regard to the alleged irregularities.

Senior officials of the CBI on Friday said the agency is in the process of identifying the officials of Air India and other private firms, following which further action will be taken.

"The CBI has registered the FIR in connection with alleged irregularities in the procurement of software purchase from a German software company," said CBI spokesperson R K Gaur. The case has been registered under sections of the Indian Penal Code related to criminal conspiracy and cheating and some sections of the Prevention of Corruption Act.

According to CBI, back in 2011, Air India had selected the Enterprise Resource Planning (ERP) software system from SAP AG without following proper tendering procedure and without justifying the need for it since already a similar system of Oracle was in operation.

The matter was taken up by the CVC, which has said it found prima facie procedural irregularities in the procurement of software. The CVC had asked the probe agency to investigate the "irregularities in the tendering process and award of contract and undue benefit caused to the SAP/IBM".

In a communication to CBI, the CVC has said it was of the view that there were "serious procedural and other irregularities" in the procurement as well as amount paid and extent of services rendered. The CVC has also alleged that there was no approval from the ministry of civil aviation even though Air India had claimed that it had made a presentation before a group of secretaries on 9 July 2009, and before a group of ministers in 2010.

According to CBI, an open tender system was not adopted for procurement of new ERP software and instead the contract was awarded to SAP and IBM on nomination basis.

The CVC in its findings suggested that the Oracle system was facing some problems but no efforts were made to upgrade the system or to correct the technological glitches.