The CBI has booked British Aerospace (BAE) Systems and Rolls Royce India Pvt Ltd, for allegedly paying bribe through arms dealers Sudhir Choudhrie and his father Bhanu Choudhrie to clinch a deal in 2004 from India for 66 Hawk advanced jet trainers (AJTs).

The case comes as a setback to BAE Systems and Rolls Royce given the UK’s keen interest in exploiting opportunities in the Indian defence sector.

In an FIR registered on May 23, the CBI charged that the Choudhries are “unregistered Indian agent/middlemen who worked for Rolls Royce and BAE Systems, UK” and allegedly used their “influence on Indian Public Servants to induce the government of India to approve the (Hawk) deal” despite signing of integrity pacts that barred paying commission, influence peddling and engaging agents.

Persons and entities booked in the FIR include Tim Jones, Director of Rolls Royce India Pvt Ltd; Sudhir Choudrie, Bhanu Choudhri; Rolls Royce Plc, UK; BAE Systems, UK, and unknown officials of the Indian government in the procurement of 24 Hawk AJTs, to be flown into India, and remaining 42 were to be manufactured by the defence PSU, Hindustan Aeronautics Ltd (HAL). Put together, the deal was approximately worth ₹8,000 crore.

UK court verdict

Indian agencies got a whiff of the defence scam during a survey carried out by the Income Tax department in 2006-07 but the accused allegedly destroyed the evidence to evade probe. But the UK media reports of 2012 exposed corruption in Rolls Royce civil business prompted an investigation by Serious Fraud Office, London.

A Crown Court at Southwark, UK, delivered a judgment on January 17, 2017, revealing “concealment of involvement of intermediaries in the defence business in India between 2005 and 2009 by Rolls Royce despite restrictions imposed by government in New Delhi”.

“The Crown Court judgment specifically mentions about payment of GBP 1 million by Rolls Royce to intermediary-4 for increase of License Fee of Rolls Royce from GBP 4 million to GBP 7.5 million,” alleged the CBI.

Rolls Royce said in a statement, “Rolls-Royce plc is continuing to assist the Indian authorities. The allegations being investigated by the CBI were disclosed in the Deferred Prosecution Agreement agreed with the UK’s Serious Fraud office in 2017. Rolls-Royce today is a fundamentally different business. We will not tolerate business misconduct of any sort and are committed to maintaining high ethical standards. India remains an important market for Rolls-Royce and we have a valued ecosystem of skilled people and partners in the country.”