CBI registers FIR against Rolls-Royce, its senior officials in corruption case

British aerospace and defence company Rolls Royce PLC, its top executives and arms dealers have been booked by the CBI on charges of paying kickbacks in the procurement of Hawk 115 Advanced Jet Trainer aircraft for the Indian Air Force and Navy.

The premier investigation agency filed the FIR on May 23 against Rolls Royce India Director Tim Jones, suspected arms dealers Sudhir Choudhrie and his son Bhanu Choudhrie, Rolls Royce PLC and British Aerospace Systems, accusing them of greasing the hands of public servants to benefit the companies.

The FIR has been filed under sections 120-B (criminal conspiracy) and provisions of the Prevention of Corruption Act after completing a preliminary enquiry that started six years ago. The illegal involvement of middlemen and payment of commission against the contractual obligations were also mentioned in a British court order of 2017 involving Rolls Royce PLC.

Between 2003 and 2012, according to the FIR, public servants abused their official position and approved and procured 24 Hawk 115 Advance Jet Trainer aircraft for 734.21 million pounds besides permitting licence manufacture of 42 additional aircraft by HAL against materials supplied by Rolls Royce for an additional amount of USD 308.247 million and USD 7.5 million towards the Manufacturer's License Fee.

The FIR claimed that the deal was done in lieu of "huge bribes, commissions and kickbacks paid by the manufacturer (Rolls Royce PLC) and its officers to intermediaries despite the fact that the agreements, Integrity Pact and associated documents/orders pertaining to the deal prohibited payments to intermediaries and middlemen".

The CBI also alleged that the documents related to the transaction were seized from Rolls Royce India office in Mumbai during a tax survey by the Income Tax Department but the accused destroyed or removed it "to evade investigation" by Indian agencies.

In 2008, HAL wanted the MoD to give sanction to enter into a licence agreement with BAE/Rolls Royce to manufacture another 5 Hawk aircraft. The agreement was signed in 2010 and delivered between 2013 and 2016. In 2011, however, there was an increase in the value of the deal from 537.55 million pounds to 600.29 million pounds.

In 2012, the FIR said, media reports alleging corruption in the Rolls Royce operations emerged resulting in an investigation by the Serious Fraud Office, London.

In a Statement of Fact prepared by Rolls Royce PLC, it disclosed corrupt payments in connection with transactions with countries like Indonesia, Malaysia and India. A deferred prosecution agreement (DPA) was reached between the company and SFO.

"The Crown Court at Southwark, UK delivered a judgement dated 17 January, 2017 on the DPA...revealed concealment of involvement of intermediaries in the defence business in India between 2005 to 2009 by Rolls Royce despite restrictions imposed by the Government of India through Integrity Pact...," the FIR said.

According to the FIR, a sum of 1.85 million pound was paid to an intermediary to retrieve the list of middlemen seized by the Income Tax Department during a survey of Rolls Royce India during 2006 to prevent the list falling into the hands of the Ministry of Defence to prevent termination of contract and also to prevent CBI investigation against Rolls Royce.

The FIR also claimed that 100 million pounds were paid by Russian Arms companies into a Swiss account in the name of Portsmouth, a company associated with Sudhir Choudhrie for defence deals with Russia for the purchase of MIG aircraft.

"Out of this amount, the companies in the name of Choudhrie's family namely Belinea Services Ltd, Cottage Consultants Ltd and Carter Consultants Inc. received GBP 39.2 million, GBP 32.8 million and GBP 23 million respectively between October 2007 and October 2008," the FIR claimed.

It also claimed that Choudhries are alleged to be unregistered Indian agents and middlemen who worked for Rolls Royce and BAES "in securing the award of contract for the supply of Hawk aircraft in question and used "undue influence on Indian public servants to induce the Government of India to approve the deal".