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Corrupt and Malpractices in IT procurement in Indian government projects

Since 2006 there has been boom in IT projects in government space. The various
government departments and state governments have been spending heavily in
procuring high technology, large value IT projects. Key high spent projects have
been PASSPORT SEVA, MCA21, STATE DATACENTERS, CCTNS, Treasuries, State
VAT projects, ICEGATE(Customs), Defence Communications Network, UIDAI,
CICP, Department of Posts and latest is GST.

Largely these projects have been executed by top System Integrators namely
TCS, Infosys, Wipro, NIIT, L&T, Sterlite etc. Largely these companies bid very
competitively and win the tenders with cutthroat competition. But if these
projects were won with such high competition then there was no reason for us to
write this article. Hence there has to be something that is not visible primafacie.

If you look into each of these deals, there are few names that appear in each of
these deals immaterial of the fact that which System Integrator picked the order.
These names are AMTRAK TECHNOLOGIES, INSPIRA ENTERPRISE, RAH
INFOTECH, PRESTO and SISL. These companies have a major and undeniable
role in clinching these deals. This article is to expose the modus operandi if the
nexus.

Companies like AMTRAK and INSPIRA liaison between Consultant, OEM and
customer. The margin is decided for the consultant (usually it is 5% of the value
of the products that are being bought in the deal), OEM sales person and
customer. Accordingly the margin of these AMTRAK and INSPIRA are decided.
Usually there is mark up of approximately 50% is loaded on the prices that the
OEM gives for a deal. That 50% is distributed among the SI, OEM, Consultant and
of course customer.

We will take few examples and cases to see the modus operandi.

Haryana Excise and Taxation: Wipro gave Orders worth 50 crores to AMTRAK
from which 15 Crores of margin was generated that was distributed among
Wipro sales team, Haryana Government and AMTRAK.

CICP: Orders worth 25 Crores were offloaded by L&T on AMTRAK out of which
about 5 crores were distributed to all stakeholders.

BEL: Annually about 20 Crores orders from BEL are given to AMTRAK where the
kickback of 20% + are paid to various people in the value chain.

All orders for State Datacentres, CCTNS(especially won by NIIT) are route
through AMTRAK and payout of minimum 20% is given in the form of kickbacks.

Key OEMs that route their orders through AMTRAK are: Array networks,
Fortinet, Fire-Eye networks, Symantec, Allied Telesys, DELTA, Schneider Electric
If the corruption has to end in the IT procurement in government then these
players like AMTRAK, INSPIRA, SISL have to be weeded out and this multi tiering
has to stop.

The investigation has to be called in the book of accounts of these players for last
10 years to unearth the corrupt deals.