The Central Bureau of Investigation (CBI) has taken action by filing a corruption case against Rolls Royce PLC, a prominent British aerospace and defense company, along with its top executives and arms dealers. The case pertains to alleged kickbacks in the procurement of Hawk 115 Advanced Jet Trainer (AJT) aircraft for the Indian Air Force and Navy, according to officials.
After concluding a six-year-old preliminary enquiry, the CBI has registered a case against Tim Jones, Director of Rolls Royce India, as well as alleged arms dealers Sudhir Choudhrie and Bhanu Choudhrie. The case also includes Rolls Royce Plc and British Aerospace Systems. The charges filed are under Section 120-B of the Indian Penal Code, which deals with criminal conspiracy, and provisions of the Prevention of Corruption Act. The investigation was prompted by a British court order in 2017, which highlighted the alleged involvement of middlemen and the payment of commissions by Rolls Royce to swing the deal.
The CBI’s allegations suggest that between 2003 and 2012, the accused, in collaboration with unidentified public servants, misused their official positions to secure the procurement of 24 Hawk 115 AJTs for GBP 734.21 million. Additionally, they allowed for the ‘license manufacturing’ of 42 more aircraft by Hindustan Aeronautics Limited (HAL) using materials supplied by Rolls Royce. This additional manufacturing agreement involved an extra payment of USD 308.247 million and a Manufacturer’s License Fee of USD 7.5 million.
The CBI FIR claims that this deal was facilitated through “huge bribes, commissions, and kickbacks” paid by Rolls Royce to intermediaries, despite the agreements, integrity pacts, and associated documents of the deal explicitly prohibiting such payments. The investigation further reveals that important transaction-related documents were seized from the Rolls Royce India office during an Income Tax department survey in 2006-07. However, the accused individuals allegedly destroyed and removed these documents to avoid scrutiny.
In 2012, media reports surfaced, alleging corruption within Rolls Royce operations, prompting an investigation by the Serious Fraud Office (SFO) in London. The company prepared a Statement of Fact admitting to corrupt payments made in connection with transactions involving countries like Indonesia, Malaysia, and India. Subsequently, a deferred prosecution agreement was reached between the company and the SFO.
A judgment by the Crown Court Southwark in the UK, referencing the Statement of Fact, indicated that GBP 1.85 million was paid to an intermediary to retrieve the list of middlemen seized by the Income Tax Department during the survey of Rolls Royce India in 2006. This payment was made to prevent the list from falling into the hands of the Defense Ministry, which could have led to contract termination and a CBI probe.
The CBI also alleges that Russian arms companies transferred GBP 100 million into a Swiss account held by Portsmouth, a company associated with Sudhir Choudhrie, for defense deals with Russia related to the purchase of MIG aircraft. The FIR states that various companies linked to Choudhrie’s family, including 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.
According to the CBI, Sudhir Choudhrie and his father Bhanu Choudhrie are alleged to be unregistered Indian agents and middlemen who worked on behalf of Rolls Royce and British Aerospace Systems to secure the contract for the supply of the Hawk aircraft. The FIR alleges that they exerted undue influence on Indian public servants to persuade the Government of India to approve the deal.
