The Central Bureau of Investigation on Monday booked British aerospace and defence company Rolls Royce, its executives and arms dealers in a corruption case pertaining to the procurement of advanced jet trainer aircraft for the Indian Air Force and Navy, reported PTI.
After the deal was finalised, India’s Ministry of Defence signed two related deals with Rolls-Royce and Aerospace company BAE Systems – one for directly supplying 24 Hawk 115 aircraft and another for supplying 42 jets through transfer of technology and materials that were to be licence manufactured by India-based Hindustan Aeronautics Limited.
The contracts had “agent/agency commission prohibition clauses” that the supplier will have to confirm that it has not had deals with any middlemen to intercede, facilitate or recommend to the government of India for awarding the contract, according to NDTV.
India’s defence procurement procedure prohibits the payment of commission or the involvement of a middleman.
CBI has registered a first information report against Rolls Royce, its India Director Tim Jones, alleged arms dealers Sudhir Choudhrie and Bhanu Choudhrie and British Aerospace Systems under 120(B) (criminal conspiracy) of the Indian Penal Code and provisions of the Prevention of Corruption Act.
The central agency has alleged in its first information report that Sudhir Choudhrie and his father Bhanu Choudhrie are unregistered Indian agents and middlemen who worked for Rolls Royce to help the company secure the contract. The Choudhries used “undue influence on Indian public servants to induce the government of India to approve the deal”, the CBI has alleged in its FIR, reported PTI.
The agency has alleged that the accused entities conspired with unidentified public servants who “abused their official positions” for procuring 24 Hawk 115 advanced jet trainer aircraft for 734.21 million pounds (about Rs 7,488.18 crore).
The accused entities also allowed licence manufacturing of 42 additional aircraft by Hindustan Aeronautics Limited from materials supplied by Rolls Royce for $308.247 million (about Rs 2,547 crore) and another $7.5 million (around Rs 61.97 crore) for manufacturer’s license fee, the CBI has alleged.
The FIR stated that this was done for “huge bribes, commissions and kickbacks” paid by Rolls Royce even though the agreements and deals prohibited payments to intermediaries and middlemen.
It also alleged that the CBI had seized documents related to the transactions during a raid by the Income Tax department at the Rolls-Royce India office in 2006-’07 but the accused entities destroyed the documents to evade investigation.
In 2012, the UK’s anti-fraud body, the Serious Fraud Office, had begun an investigation into allegations that Rolls-Royce engaged in corruption in securing projects in India and other countries. This investigation was based on reports The Guardian and the BBC.
The anti-fraud body had found that Rolls-Royce paid a bribe of GBP 1 million (about Rs 10.19 crore) to Indian middlemen for increasing the licence manufacturing fee from GBP 4 million (around Rs 40.78 crore) to (approximately Rs 76.47 crore).
The organisation also claimed that Rolls-Royce had paid bribe to Indian tax officials to prevent an investigation into the company’s tax affairs.