CBI books Rolls-Royce, its director for irregularities in aircraft procurement

The case relates to alleged irregularities in Hindustan Aeronautics Ltd (HAL)’s procurement of 24 Hawk 115 advance jet trainer aircraft and licence manufacturing of 42 additional aircraft between 2003 and 2012

The Central Bureau of Investigation (CBI) has booked arms dealer Sudhir Choudhrie, his son Bhanu Choudhrie, British firms Rolls-Royce Plc, British Aerospace Systems, Tim Jones, Rolls Royce India director, and unknown public and private persons in connection with alleged irregularities in Hindustan Aeronautics Ltd (HAL)’s procurement of 24 Hawk 115 advance jet trainer aircraft and licence manufacturing of 42 additional aircraft between 2003 and 2012.

The case was registered on May 23. (PTI)

People familiar with the matter said Rolls-Royce allegedly paid “kickbacks” to intermediaries even as agreements, integrity pact and associated documents and orders related to the deal prohibited payments to middlemen.

Choudhrie, a British citizen, is a known arms dealer. He earlier faced the CBI and the Enforcement Directorate probe in defence deals including alleged bribery in securing a contract for an upgrade of artillery guns for an Israel-based defence firm in 2004 and in Barak missile scandal (2006-07). Both the cases were closed due to lack to evidence.

Rolls-Royce was investigated in 2018-2019 in a separate case related to dubious payments in the form of commissions in return for contracts from three state-run Indian companies. It allegedly made payments to a Singapore based middleman between 2007 and 2011 in bank accounts in Singapore and Hong Kong.

The fresh case was registered on May 23 under sections related to cheating, destruction of evidence and Prevention of Corruption Act. It names Jones, Choudhrie, his son and two companies as accused. The case is based on CBI’s preliminary inquiry carried out since December 2016.

“Enquiry revealed that unknown officers of ministry of defence, during the period 2003 to 2012, entered into a criminal conspiracy with Tim Jones, director of Rolls Royce India Pvt Ltd, Sudhir Choudhrie, Bhanu Choudhrie, M/s Rolls Royce Plc, British Aerospace Systems UK, and other unknown public servants and private persons with the object 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 Rolls Royce Turbomeca Limited, and in pursuance of the criminal conspiracy, the unknown public servants abused their official position and approved and procured a total number of 24 Hawk 115 advance jet trainer (AJT) aircrafts for British Pounds 734.21 million (around ₹7,400 crore according to Monday’s exchange rate),” said the CBI’s first information report (FIR). HT has seen a copy of the FIR.

The FIR says the accused persons permitted “licence manufacturing of 42 additional aircraft by HAL against materials supplied by the said manufacturer (Rolls-Royce) for an additional amount of $308.247 million (around ₹2,545 crore in latest forex rates) and $7.5 million (around ₹62 crore) towards manufacturer’s licence fee, in lieu of huge bribes, commissions and kickbacks paid by manufacturer and its officers to intermediaries, despite the fact that agreements, integrity pact and associated documents/orders pertaining to the said deal prohibited payments to intermediaries and middlemen.”

The Income Tax department allegedly recovered documents related to the deal during a survey at Rolls-Royce premises in 2006-07. But the accused persons allegedly caused the disappearance of the vital documents.

Rolls-Royce allegedly paid 1.85 million pounds (around ₹19 crore) to intermediaries. According to the CBI, 100 million British pounds were deposited by Russian arm companies into a Swiss bank account in the name of Portsmouth, a company associated with Choudhrie with regard to defence deals with Russia for purchase of MIG fighter aircraft.

HT has reached out to Rolls-Royce for comments and the story will be updated accordingly.