Rolls-Royce contracts on hold, may hit IAF, navy

The defence ministry has put on hold all contracts with British engineering giant Rolls-Royce (RR) following a bribery scandal, a move that could cast a shadow over several key Indian Air Force and navy programmes.

The defence ministry has put on hold all contracts with British engineering giant Rolls-Royce (RR) following a bribery scandal, a move that could cast a shadow over several key Indian Air Force and navy programmes.

A defence ministry source told HT that the engine maker had admitted in a letter to state-owned Hindustan Aeronautics Limited (HAL), last December, that it had employed a Singapore-based firm Aashmore Private Limited as its “commercial advisor” in India. The firm’s job was to provide strategic advice for which it was paid commission.

Defence procurement rules debar middlemen or agents. As a result, the CBI has been asked to probe bribery allegations and investigate all contracts the firm signed with HAL from 2007-11.

“We will cooperate fully with the regulatory authorities and have repeatedly made clear that we will not tolerate misconduct of any sort,” a Rolls-Royce spokesperson told HT on Monday.

An IAF source said the suspension of the contracts would have no immediate implications but it could pose problems if the CBI probe drags on. Six planes, including the newly-acquired C-130J Super Hercules, Jaguar fighters and Hawk advanced jet trainers in the IAF’s inventory are powered by RR engines.

The government has signed a rash of contracts with the firm for repairing, upgrading and supplying spares for these engines.

The navy’s Sea Harrier fighters and Sea King choppers also use its engines.

The development could also hit the proposed sale of Japanese ShinMaywa US-2 amphibious aircraft to India, also powered by RR engines.

The CBI probe comes weeks after arms dealer Sudhir Choudhrie and his son Bhanu were arrested by British officials probing allegations that RR paid bribes for contracts in China and Indonesia.

The government is likely to seek details from UK’s Serious Fraud Office, which is probing bribery allegations against RR.

Rolls-Royce has a huge presence in India across defence aerospace, civil aerospace, energy and marine sectors. Its RB211 engines power major gas pipelines with Gas Authority of India Limited.”