Cairn bans agents from procurement tenders

Vol 16, PW 21 (16 May 13) People & Policy

Cairn India has been forced to circulate a ‘code of ethics’ to vendors banning the use of agents, amid reports of financial impropriety in its contracts department.

Last month (April) five Cairn employees working in the Procurement and Supply Chain Management (PSCM) department were asked to leave. Details are scarce but industry sources say they conspired to inflate the costs of an order for drilling equipment in Rajasthan.

“Cairn budgeted $30m,” says a source. “But these guys put in an order for $60m and the purchase order had an agent’s name on it.

” He further alleges the Cairn employees stood to benefit "substantially" from the order. This incident prompted a single-page signed letter to all vendors on April 30 from TK Venkatesan, head of the PSCM department at Cairn, providing a web link to Cairn's 'code of business conduct'.

“In recent times,” writes Venkatesan, “Cairn has learnt that certain agents have approached its current as well as potential suppliers offering to facilitate an engagement with Cairn. Cairn wishes to confirm that it does not employ or endorse agents or any third party for its procurement activities and re-iterates that all its transactions are either with bidders selected through an established and advertised tendering process or a direct engagement of suppliers and contractors.

” Some contractors working with Cairn question the wisdom of this directive. “What happens if Cairn asks for a bid in writing within five hours" wonders a source.

"How can a UK or US company submit a price bid in writing without an agent on the ground”

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