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India Suspends Defence Company Head In Graft Investigation

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India suspended the head of state-owned BEML Ltd. on Monday as part of an investigation into a multi-million dollar defence deal, the second scandal in less than a week to hit weapons procurement in the world's biggest arms buyer.

The scandal involves allegations by India's former army chief that he had been offered a $2.8 million bribe to buy a faulty batch of Tatra trucks for the army.

The ministry of defence said V.R.S. Natarajan, chairman of BEML, an engineering and defence firm, was asked to leave his post for the duration of the inquiry by the Central Bureau of Investigation (CBI).

"The Government has put the MD of BEML V R S Natarajan under suspension following a recommendation by the CBI that he should be kept away from the post to ensure a fair investigation," a government statement said.

On Saturday, an Indian businessman and his wife were charged after the CBI investigated allegations that government officials were bribed to stop a Swiss subsidiary of Germany's Rheinmetall AG from being blacklisted.

The CBI is investigating BEML after former Army chief General Vijay Kumar Singh said in March he had been offered a $2.8 million bribe to buy faulty Tatra trucks for the army.

That accusation that was seen as an attack on the defence ministry for not taking action on corruption in weapons procurement.

BEML assembles Tatra trucks for the army. Tatra is a Czech company, but several firms are now involved in its subsidaries, including British-based Vectra.

India's defence ministry has put in place strict guidelines for arms deals to crack down on bribery and corruption at a time when Asia's third-largest economy is on a weapons-buying spree to modernise its military.

India is the world's largest arms importer.

In another investigation, Italian magistrates are looking into allegations that payments were made to secure a 560 million-euro ($737 million) helicopter deal with India's Air Force that was won by Finmeccanica.