BJ Services hit by customs fraud allegations

Vol 15, PW 24 (14 Jun 12) People & Policy
     

ONGC and the DGH are carrying out parallel probes into allegations that BJ Services, a Baker Hughes company, is illegally importing spare parts and consumables in ONGC’s name to evade customs duty.

Rival contractors accuse ONGC officials of conspiring to help BJ avoid customs duty on equipment imported for offshore well-stimulation vessel Vestfonn, on a three-year contract in the Mumbai High. When contacted, a BJ executive denied any investigation.

“There is nothing against BJ,” he said. “Whatever is happening is against ONGC.

I can’t give any details.” But an industry source insists both BJ and ONGC officials are implicated in the ‘probe’, spurred by letters to ONGC from rival contractors last month (May).

BJ, claim these letters, was issued Essentiality Certificates (ECs) by the DGH on ONGC’s recommendation to import spares and consumables for 30-year old Vestfonn at zero customs duty. Yet there is reportedly no provision for such imports in BJ’s contract.

“According to clause 6.1.1 on page 45 it is BJ’s responsibility to maintain Vestfonn in operational condition at all times (during the contract) and the cost of this must be borne by BJ,” says a source. Clause 8.4 on page 10 further adds that customs duty on spares and consumables must be borne by the contractor - BJ.

“Yet BJ is importing a large number of spares, consumables and other material without paying customs duty thanks to the ECs,” we hear. “It is benefiting illegally to extend Vestfonn’s working life.

” Critics argue that if ONGC is paying full customs duty on spare parts and consumables for its own well-stimulation vessel Samudra Nidhi, also in the Mumbai High, then BJ should also pay for Vestfonn.

LNG Summit