CBI Files Corruption Case Against Rolls Royce, Top Executives

The Central Bureau of Investigation today registered a case against British multinational aerospace and defence company Rolls Royce, its former India Director Tim Jones, arms dealers Sudhir Choudhuire and Bhanu Choudhire, and British Aerospace Systems (BAE Systems), for alleged corruption in the procurement of 123 Hawk 115 Advance Jet Trainer Aircraft in 2004.

CBI sources said the accused, in criminal conspiracy with the then public servants, abused their official positions to approve and procure 24 Hawk 115 Advance Jet Trainer (AT) aircraft for GBP 734.21 million, which were supposed to be delivered to India in flyaway condition, besides permitting India's Hindustan Aeronautics Limited (HAL) to licence manufacture 42 additional aircraft through technology transfer for an additional amount of USD 308.247 million, and getting the Manufacturer's Licence Fee increased from GBP 4 million to 7.5 million, by "paying huge bribes, commissions and kickbacks to intermediaries", despite the fact that the agreements pertaining to the deal prohibited payments to intermediaries and middlemen.

The investigation revealed that in 2008-10, in furtherance of the criminal conspiracy, the accused also approved the Licence manufacturing of 57 additional Hawk aircraft by HAL for a value of Rs 9,502.68 crores under a separate agreement with BAE Systems (Operations) Ltd, another entity belonging to the BAES Group, CBI sources added.

The Cabinet Committee on Security (CCS), Ministry of Defence in a meeting held on September 3, 2003, approved the procurement of 66 Hawk 115 Aircraft and the signing of an Inter-Government Agreement between the governments of India and the UK for long-term product support. A Memorandum of Understanding was then signed between the two countries on March 19, 2004.

Shortly thereafter, two related contracts, both dated March 26, 2004, for the supply of 24 HAWK Aircraft by way of direct supply, and materials and transfer of technology for 42 Aircraft to be licence manufactured by HAL, were signed between the Ministry of Defence and BAE Systems/Rolls Royce. 

The contracts contained "Agent/Agency Commission prohibition clauses" to the effect that the supplier (Rolls Royce/BAE) shall confirm that it has not engaged any middlemen to intercede, facilitate, or in any manner recommend to the government of India for the award of the contract, nor any amount has been paid to any such "individual/agent/middlemen".

In 2012, on the basis of media reports, the UK's SFO (Serious Fraud Office) initiated a probe into allegations of Rolls Royce indulging in corrupt practices in securing projects in India and other countries. The SFO probe revealed Rolls Royce paying a bribe of GBP 1 Million to Indian intermediaries for an increase of licence fee from GBP 4 million to 7.5 million.

UK's SFO probe revealed that Rolls Royce paid bribe to tax officials in India to prevent an investigation into the tax affairs of the company.

The probe has also revealed that GBP 100 million were paid by Russian arms companies into a Swiss Bank account in the name of Portsmouth, a company associated with Sudhir Choudhrie, with regard to defence deals with Russia for the purchase of MIG fighter aircraft.

The IAF operates 123 Hawk Advanced Jet Trainers, and the Indian Navy operates 17. Most of these are being license-manufactured by HAL.