New Delhi: In a major development, the Defence Ministry has banned for a year the Swiss firm Pilatus, which has supplied the bulk of trainer aircraft currently in operation with the Indian Air Force following registration of formal cases by the Central Bureau of Investigation (CBI) into charges that corrupt practices were used by the company to bag the Rs 2,800 crore deal in 2012.

The ban strictly prohibits any business dealings with the Swiss firm and means that the IAF has to find alternate sources for spares and parts for the existing fleet of basic trainers that are used for the initial stage training of its pilots. The IAF operates 75 of the Pilatus PC 7 Mk1 aircraft.

“Business dealings with the firm will remain suspended for a period of one year for violation of article 6.6 of the PCIP (Pre Contract Integrity Pact) and ongoing investigation by CBI, Delhi Police, ED and Income Tax Department into corrupt practices, unfair means and illegal activities by Pilatus Aircraft Limited,” an official notification by the ministry said.

The order issued by the vigilance department of the ministry on July 12 said that business dealings with Pilatus will remain suspended for one year or until further orders for violation of the Pre-Contract Integrity Pact (PCIP).

Under the PCIP of November 12, 2010, Pilatus had agreed that while presenting the bid or during pre-contract negotiation or before signing the contract, it shall disclose any payments made, committed or intended to be made to officials of the buyer or their family members, agents, brokers or any intermediaries in connection with the contract and the details of the services agreed upon such payments.

The Defence Ministry had received reports of engagement of agents by Pilatus for assistance in the sale of the basic trainer aircraft for the IAF on payment of a commission, according to the vigilance department order.

The ministry had written a letter to the company in December 2016 asking it to offer comments on the report along with details of any such engagement.

In its response submitted in January 2017, the company admitted engaging Offset India Solutions, a firm belonging to fugitive arms dealer Sanjay Bhandari, for the successful resolution, approval or implementation of Pilatus offset proposals, plans and obligations.

Following the response by Pilatus, the ministry issued a show-cause notice to the company and demanded an explanation. The reply by the Swiss firm in June 2017 was not found to be satisfactory.

The CBI filed the case against unknown officials of the IAF, Ministry of Defence, arms dealer Bhandari and Pilatus Aircraft Limited for alleged irregularities in the procurement of 75 basic trainer aircraft.

The agency has alleged that kickbacks to the tune of Rs 339 crore were paid in the 2012 deal.