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CBI files case against Rolls Royce India for alleged fraud in Hawk aircraft procurement

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The CBI has registered an FIR against Rolls-Royce and its senior officials for alleged corruption in procurement of Hawk 115 advance trainer aircraft, officials said.

According to the FIR, the probe agency has named as accused British multinational aerospace and defence company Rolls-Royce PLC, its India Director Tim Jones, alleged arms dealers Sudhir Choudhrie and Bhanu Choudhrie, and British Aerospace Systems for alleged corruption in the procurement of 24 Hawk 115 Advance Jet Trainer Aircraft. The CBI had registered a preliminary enquiry in 2016 which was later converted into a regular case, they added.

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Procurement of 24 aircraft

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, besides permitting licence manufacturing of 42 additional aircraft by India’s Hindustan Aeronautics Limited (HAL) for an additional amount of USD 308.247 million, and USD 7.5 million towards the Manufacturer’s Licence Fee, 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 ₹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 MoU was then signed between the two countries on March 19, 2004, for long-term product support.

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 license manufactured by HAL were signed between the Ministry of Defence and BAE Systems/Rolls Royce.

Clause against commission

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 agent/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.

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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.

UK’s SFO probe revealed Rolls Royce paying a bribe of GBP 1 million to Indian intermediaries for an increase of license fee from GBP 4 million to 7.5 million. The investigation also revealed that Rolls Royce paid bribe to tax officials in India to prevent an investigation into the tax affairs of the company.

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 licence-manufactured by HAL.

(With agency inputs)

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