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29 May, 2023 22:57

India probes British arms and aerospace manufacturers in aircraft deal graft case

Allegations include criminal conspiracy and corruption in a 2004 procurement of training jets
India probes British arms and aerospace manufacturers in aircraft deal graft case

India’s Central Bureau of Investigation (CBI) filed a complaint on Monday against British multinational aerospace and defense company Rolls Royce, the company’s former India director – Tim Jones, arms dealer Sudhir Choudhrie and his son Bhanu Choudhrie (who are UK citizens), and British Aerospace Systems (BAE Systems).

The accusations involve corruption regarding the purchase of dozens of Hawk 115 trainer aircraft in 2004, when the erstwhile National Democratic Alliance under then-Prime Minister Atal Bihari Vajpayee was in power.

The CBI claims the accused colluded with government officials, who allegedly abused their positions to approve the purchase of 24 planes for $906.87 million. The alleged wrongdoings involve criminal conspiracy, cheating, and violate the provisions of the 1988 Prevention of Corruption Act.

The CBI’s complaint follows up on a preliminary enquiry from December 2016, during Prime Minister Narendra Modi’s first term. The deal specified that the aircraft were to be delivered to India in flyaway condition and that state-run Hindustan Aeronautics Limited (HAL) would have license to manufacture another 42 planes through a transfer of technology (ToT) pact for an additional $308.247 million.

The process allegedly involved “paying huge bribes, commissions and kickbacks to intermediaries,” even though the deal barred payments to middlemen. The role of intermediaries has been under the spotlight in India since the Swedish Bofors gun controversy in the mid-1980s.

Decades later, in 2012, the AgustaWestland helicopter deal exposed the role of a former Indian Air Force (IAF) chief, Marshal Shashindra Pal Tyagi, in a deal beset by bribery of officials instigated by the British firm.

Between 2008 and 2010, the Indian government approved the license manufacturing of 57 additional Hawk aircraft by HAL for over 95 billion rupees (more than $1.1 billion) under a separate agreement with BAE Systems (Operations) Ltd, an entity of the BAES Group.

The CBI complaint revives a case conducted in 2012 by the UK’s Serious Fraud Office, which alleged that Rolls Royce paid a bribe of $1.24 million to an intermediary to increase the license fee in India to $9.26 million from $4.94 million. These allegations were disclosed in 2017 when Rolls Royce paid a $614.21 million fine to the Serious Fraud Office to settle a case that involved transactions with several countries, including India, China, and Thailand.

At present, the IAF and the Indian Navy operate 123 and 17 Hawk Advanced Jet Trainers respectively, most of which have been license-manufactured by HAL under the ToT agreement.