CBI Case Against Rolls Royce India, Others For 'Cheating' Govt In Procurement Of 24 Hawk Aircraft

Rolls Royce allegedly paid a bribe of 1 Million pounds to Indian intermediaries for hiking the license fee and then further to prevent a probe into the tax affairs of the company.

The Central Bureau of Investigation (CBI) has registered a case against British Aerospace company Rolls Royce India Pvt Ltd and unknown public servants as well as private persons for allegedly cheating the Government of India in the matter of procurement of Hawk Aircraft from Rolls Royce. The CBI said that public servants "abused their official positions" to approve procurement of a total number of 24 Hawk 115 Advance Jet Trainer (AJT) aircraft for 734.21 million pounds "in lieu of huge bribes, commissions and kickbacks paid by the said manufacturer and its officers to intermediaries."

"CBI registers a case against British Aerospace company Rolls Royce India Pvt Ltd, Tim Jones, Director Rolls Royce India Pvt Ltd and private individuals Sudhir Chuadhrie and Bhanu Chaudharie and other unknown public servants and private persons with the objective to cheat the Government of India in the matter of procurement of Hawk Aircraft from Rolls Royce plc, UK and its associate group companies, including M/s Rolls Royce Turbomeca Limited," news agency ANI reported the central agency as stating.

Elaborating the accusation against the public servants and Rolls Royce, the CBI stated, "The unknown public servants abused their official positions as public servants and approved & procured a total number of 24 Hawk 115 Advance Jet Trainer (AJT) aircraft for GBP 734.21 million, besides permitting licence manufacturing of 42 additional aircraft by M/s Hindustan Aeronautics Limited (HAL) against materials supplied by the said manufacturer for an additional amount of USD 308.247 million for the said 42 License Manufactured aircraft and USD 7.5 million towards Manufacturer's Licence Fee, in lieu of huge bribes, commissions, and kickbacks paid by the said manufacturer and its officers to intermediaries".

Rolls Royce Bribed For Hiking License Fee, Prevent Investigation In Tax Affairs: UK's Serious Fraud Office

According to a report by NDTV, the Cabinet Committee on Security (CCS) of the 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 United Kingdom for long-term product support. Following that, a Memorandum of Understanding was signed between the two countries on March 19, 2004, for long-term product support. 

After this, two related contracts, both dated March 26, 2004, were signed between the Ministry of Defence and BAE Systems/Rolls Royce 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 Hindustan Aeronautics Limited (HAL). 

As per the report, the contracts contained Agent and Agency Commission prohibition clauses directing 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.

Following media reports, the UK's Serious Fraud Office (SFO) initiated a probe in 2012 into accusations that Rolls Royce indulged in corrupt practices in securing projects in India and other countries. The probe revealed that Rolls Royce paid a bribe of GBP 1 Million to Indian intermediaries for hiking the license fee from GBP 4 million to 7.5 million.

It also revealed that Rolls Royce paid a bribe to tax officials in India to prevent a probe into the tax affairs of the company, the report mentioned.