CBI files graft case against Rolls-Royce India, British aerospace firm, arms agent

The FIR names Rolls-Royce PLC; Tim Jones, director, Rolls Royce India Pvt Ltd; alleged arms dealers Sudhir Choudhrie and Bhanu Choudhrie; and British Aerospace Systems as accused, the CBI stated.

According to the FIR, a British court order in 2017 had also mentioned alleged involvement of intermediaries and payment of commission by the company for swinging the deal. The FIR stated that details of the PE reveal that “unknown officers of MoD, during the period 2003 to 2012, entered into criminal conspiracy with Tim Jones, Sudhir Choudhrie and his son Bhanu, Rolls Royce, UK, M/s British Aerospace Systems, UK, and other unknown public servants and private persons with the object to cheat the Central government in the matter of procurement of Hawk Aircraft from M/s Rolls Royce, and its associate group companies.”

The FIR stated that “unknown public servants abused their official positions” and “approved and procured” 24 Hawk 115 Advance Jet Trainer (AJT) aircraft for £734.21 million. Licence manufacturing of 42 additional aircraft by the Hindustan Aeronautics Limited (HAL) “against materials supplied by the manufacturer for an additional amount of $308.247 million”, and “£7.5 million towards Manufacturer’s Licence Fee” were also cleared “in lieu of huge bribes, commissions and kickbacks”, the FIR stated.

This is despite the fact that agreements, integrity pact and associated documents/orders related to the deal “prohibited payments to intermediaries and middlemen”, the CBI alleged.

“It was further alleged that GBP (British pound) 100 million were paid by Russian arms companies into Swiss bank account in the name of Portsmouth, a company associated with Sudhir Choudhrie, with regard to defence deals with Russia for purchase of MIG fighter aircraft,” the FIR stated. “Out of this amount, companies in the name of Choudhrie’s family — Belines Services Ltd., Cottage Consultant 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.”

It stated that Choudharie and his son Bhanu are alleged to be “unregistered Indian agents/middlemen who worked for Rolls Royce/BAES in securing award of contract for supply of Hawk aircraft” concerned and allegedly used “undue influence” on Indian bureaucrats to get them to approve the deal.

As reported by The Indian Express in the Panama Papers investigation in 2016, Bhanu Choudhrie was director of Belinea Services Limited and Anterna Limited, two companies set up in the British Virgin Islands in October 2002, which made more than 200 transactions of at least $118 million between 2009 and 2014 even as three global banks kept flagging suspected “money laundering/structuring” without blocking any.

According to the CBI’s FIR, the PE noted that in 2008-10, the accused persons approved license-manufacturing of 57 additional Hawk aircraft by HAL for Rs 1,502.68 crore under a separate agreement with BAE Systems (Operations) Ltd, another entity belonging to the BAES group.

The FIR mentions that the Cabinet Committee on Security (CCS) had approved procurement of 66 Hawk 115 aircraft on September 3, 2003. Two related contracts, both dated March 26, 2004, for supply of 24 HAWK aircraft and materials and transfer of technology for 42 aircraft to be manufactured by HAL were signed between the MoD and BAE Systems/Rolls-Royce.