Defence Industry

CBI’s Investigation Into Rolls-Royce’s Graft In Defense Jet Deal

Story Highlights
  • The preliminary inquiry used a Rolls-Royce document called a Statement of Fact (SoF) that said the company had paid bribes to officials in countries
  • Allegations of scam during the UPA's time in power from 2004 to 2014 were a big part of why Congress lost, and they continue to help the BJP's successful campaign.

The CBI has filed a FIR against British aerospace company Rolls-Royce PLC, its former India head Tim Jones, and PIO arms dealer Sudhir Choudhrie in connection with alleged corruption in the purchase of Hawk-115 Advance Jet Trainer aircraft. The FIR also names British Aerospace Systems and Choudhrie’s son, Bhanu, as suspects.

The CBI opened the case after a preliminary investigation in 2016 found that Choudhrie and others had formed a criminal plot with public servants who allegedly used their official positions to increase the number of Hawk aircraft to be bought from British Aerospace Systems and raise the manufacturer license fee from 4 million pounds to 7.5 million pounds by paying huge kickbacks to middlemen between 2008 and 2010.

The FIR also said that Russian arms companies put 100 million pounds into a Swiss bank account (No. 120467) in the name of Portsmouth, a company with ties to Choudhrie, as part of defense deals with Russia for the purchase of MIG fighter aircraft.

The CBI filed the case based on the results of a preliminary inquiry that began in 2016.

‘Graft could’ve come to light between 2006-2007 but accused got files destroyed’

The preliminary investigation found that Choudhrie and others had formed a criminal plot with public servants who allegedly used their jobs to get more Hawk aircraft from British Aerospace Systems and raise the manufacturer license fee from 4 million pounds to 7.5 million pounds by paying huge kickbacks to middlemen. The CBI said this happened even though the deal had a clause called a “integrity pact” that said payments to intermediaries and middlemen were not allowed.

The FIR also made the shocking claim that corruption in the purchase of aircraft would have been found in 2006-2007, when the income tax department was doing a survey of Rolls Royce India Pvt Ltd, but the accused managed to get the documents destroyed.

The CBI’s preliminary investigation found that on September 3, 2003, the Cabinet Committee on Security approved the purchase of 66 Hawk-115 aircraft and the signing of an inter-government deal between the governments of India and the UK for long-term product support.

On March 19, 2004, the Indian and UK governments signed an MoU for long-term product support.

“Shortly after that, the ministry of defense and BAE Systems/Rolls Royce signed two related contracts on March 26, 2004, for supply of 24 Hawk aircraft by direct supply and materials and transfer of technology for 42 aircraft to be made under license by HAL,” the FIR said.

In 2008-2010, when the UPA was in power, the accused people also got approval for 57 more Hawk aircraft to be made under license by HAL for Rs 9,502.7 crore under a separate deal with BAE Systems Ltd. The 57 additional Hawk planes were made by HAL under the license manufacturing method and given to the IAF between March 2013 and July 2016.

Allegations of scam during the UPA’s time in power from 2004 to 2014 were a big part of why Congress lost, and they continue to help the BJP’s successful campaign. The CBI FIR will give the ruling party more ammunition to use against the biggest opposition party.

The preliminary inquiry used a Rolls-Royce document called a Statement of Fact (SoF) that said the company had paid bribes to officials in countries like Indonesia, Thailand, China, Malaysia, and India.

A Crown Court ruling from 2017 showed that Rolls Royce hid the participation of intermediaries in the defense business in India between 2005 and 2009, even though the Indian government put limits on how much commissions or fees could be paid to intermediaries.

It said that Rolls Royce paid 1 million pounds to a middleman so that its license fee could go from 4 million pounds to 7.5 million pounds. The SoF also said that corrupt payments were made to public workers in India between 2006 and 2007. It was said that India’s I-T department seized a list of middlemen in 2006.

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