CBI Initiates Graft Proceedings Against Rolls Royce And Middlemen For Alleged Kickbacks In Hawk Advanced Jet Trainer Deal

Rolls Royce, its executives and arms dealers have been charged by the Central Bureau of Investigation (CBI) for alleged kickbacks in the procurement of 115 Hawk advanced jet trainer aircraft for the Indian Air Force and Indian Navy.

Following a six-year preliminary enquiry, the CBI has filed a case against Tim Jones, director Rolls Royce India, Sudhir Choudhrie, Bhanu Choudhrie, Rolls Royce, and British Aerospace Systems (BAE) under IPC section 120-B and Prevention of Corruption Act.

In 2017, a British court also said in its order about the involvement of middlemen allegedly receiving commission from the company to swing the deal.

They are accused of "abusing their positions" and bribery between 2003-12, alongside unidentified public servants, to obtain 24 Hawk AJTs for GBP 734.21 million.

Furthermore, they allowed HAL to "licence manufacture", 42 more aircraft using kits supplied by Rolls Royce's for $308.247 million and paid a manufacturer's licence fee of $7.5 million.

The CBI FIR alleges that Rolls Royce paid intermediaries "huge bribes, commissions, and kickbacks" despite the prohibitions mentioned in the deal's agreements and integrity pacts.

During raids conducted by the Income Tax Department in 2006-07, vital documents related to the transaction were seized from Rolls Royce India office, as per CBI enquiry. The FIR further alleged that the accused destroyed those documents to evade the investigation.

Earlier, Rolls Royce was investigated by London's Serious Fraud Office following 2012 media reports of alleged corruption in their operations.

The company admitted to corrupt payments in Indonesia, Malaysia, and India in a 'statement of fact'. They agreed to a deferred prosecution agreement with SFO.

In the UK's Crown Court Southwark, a statement of fact was cited during the ruling that disclosed the payment of GBP 1.85 million to a middleman to recover a list of intermediaries confiscated by the Indian Income Tax Department during their examination of Rolls Royce India in 2006.

The motive behind the payment was to avoid the list reaching the Defence Ministry, which may have led to the end of the contract and a subsequent investigation by the CBI.

The CBI also claimed that Russian arms companies transferred GBP 100 million to a Swiss account affiliated with Sudhi Choudhrie's Portsmouth company for defence deals to acquire MIG aircraft.

The FIR filed by CBI alleged that, "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".

Sudhir Choudhrie and his father Bhanu Choudhrie are accused of being unregistered Indian agents and middlemen for Rolls Royce and BAE. They allegedly exerted "undue influence on Indian public servants" to secure a contract for the supply of Hawk aircraft, the FIR further alleged.