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Kribhco in dock over kickback in Yara JV

India's largest agriculture cooperative, Kribhco, is in the dock over an alleged kickback of $1 million (Rs 4.5 crore) in connection with a 50- 50 joint venture (JV) with Norway's Yara, the world's largest nitrogen fertiliser maker.

Sanjay Singh | May 13, 2011 | Updated 12:44 IST

India's largest agriculture cooperative, Kribhco, is in the dock over an alleged kickback of $1 million (Rs 4.5 crore) in connection with a 50- 50 joint venture (JV) with Norway's Yara, the world's largest nitrogen fertiliser maker.

This further dents the image of Indian PSUs, which have earlier come under the scanner for having received kickbacks.

Last year, a US court indicted the National Thermal Power Corporation (NTPC) Ltd and Bharat Heavy Electricals Ltd ( BHEL) of having received bribes from the Californiabased Control Component Inc ( CCI) for its projects.

Yara, which has been charged in connection with the kickback, on Thursday notified Norway's white-collar crime unit of a suspected irregular payment in Libya. It also said that it had brought the Kribhco matter to the attention of the police and that the 2006- 2007 project to establish a JV for the production and sale of fertiliser was not actually realised.

The managing director of Kribhco, B. D. Sinha, denied having any knowledge about kickbacks being paid by any external agencies. "It was not a JV but a MoU which as far as I remember was for a one-year period. It was a non- binding MoU without any financial commitment. Some official from Yara may have gone for paying kickbacks. But I fail to understand why kickbacks were paid for a MoU that was meant for a limited period (one year)," Sinha argued.

"We got the draft MoU vetted by the internal department. Yara had approached us and wanted some sort of relation with us for providing new quality fertiliser in India. We had never asked for an external consultant," Sinha told Mail Today. Sinha's claim contradicts his claim for a short-term MoU with Yara International and not JV. The chief vigilance officer of Kribhco, AK Gupta. said the matter has not come to his notice. "I have not been updated of it by the concerned agencies (CVC and the fertiliser ministry)," he said.
The then president and CEO of Yara International, Thorlief Enger, had while signing the JV with Kribhco in April 2007 stated: "Our new partnership with Kribhco is a strong fit between their distribution position in one of the world's biggest and fastest growing fertiliser markets, and our global sourcing and leadership on NPKs". The Kribhco- Yara JV was meant to produce and market mineral fertiliser for the fastgrowing Indian market and introduce balanced application of the N, P and K types of plant nutrients.

Until this agreement was signed, Indian farmers had not been able to apply sufficient quantities of P and K. N (nitrogen) promotes leaf growth and forms proteins and chlorophyll, P (phosphorus) contributes to root, flower and fruit development while K (potassium) contributes to stem and root growth and the synthesis of proteins.

Under the JV, Yara and Kribhco are establishing an Indian production base through a combined strategy of buying existing production facilities and importing fertilisers. A foreign production base is also being set up in an area where raw materials are competitively priced, the then CEO had said.
Bernhard Stormyr, a Yara spokesman, said the charges by the Norwegian National Authority for Investigation and Prosecution of Economic and Environmental Crime relate to suspected corruption involving an external consultant.

"There was payment made to an external consultant, and the payment was $ one million, and exactly who made the payment and who knew about this internally is of course part of the investigation, said Stormyr.

"The fact that the payment was made came as a surprise because it was debated ( at the time) whether or not an external consultant was needed," he added.

Courtesy: Mail Today

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