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India Orders Bribery Probe into Rolls-Royce Deal

March 4, 2014
Government will probe kickbacks over deal to supply engines to Hindustan Aeronautics. All existing and future deals with Rolls Royce are on hold pending the investigation. The probe is the latest controversy to hit the country's defense procurement program.

NEW DELHI -- India's defense ministry has ordered an investigation into the purchase of jet fighter engines from Britain's Rolls-Royce in a deal reportedly worth $1.6 billion, an official said Monday.

The Central Bureau of Investigation (CBI) will probe allegations of kickbacks over the deal for Rolls-Royce to supply engines to state-run Hindustan Aeronautics Ltd (HAL) between 2007 and 2011, a defense ministry official said.

"There was an internal vigilance report (conducted by HAL) that suggested there were discrepancies in the deal. The CBI will look into that," the official said on condition of anonymity.

The deal involved the purchase of engines for advanced fighter jets being developed by HAL as training aircraft for the Indian air force and navy.

A spokesman for Rolls-Royce said the company would "cooperate fully" with Indian authorities, the Press Trust of India reported.

"We have repeatedly made clear that we will not tolerate misconduct of any sort," PTI quoted the spokesman as saying.

The probe by India's top crime-fighting body is the latest controversy to hit the country's defence procurement program. Some of the controversies have resulted in failed deals that have left the military short of vital equipment. Last month India cancelled a $740 million contract with Anglo-Italian firm AgustaWestland to buy luxury transport helicopters for VIPs amid bribery allegations.

The Congress-led coalition government, already under fire over a string of graft scandals, is keen to appear tough on corruption as it attempts to win a third term in office at looming general elections.

The latest probe comes after Rolls in December revealed that it was facing a formal investigation by Britain's Serious Fraud Office into alleged bribery linked to the giant group's overseas operations.

Indian media reported on Monday that the CBI probe followed the arrest last month of an Indian-born arms dealer and his son in Britain over concerns about some of those deals.

The Indian Express daily said the CBI "has already sought information" about the arrest of the pair from Britain.

India's main opposition Bharatiya Janata Party (BJP) said the probe must be monitored by a court to ensure there is no "cover-up."

"The Congress wants to suppress the truth from coming out. We demand a court-monitored probe into this scandal," BJP spokesman Prakash Javadekar said.

The PTI news agency said the defense ministry had put on hold all "existing and future" deals with Rolls pending the investigation.

The news agency also said the Bangalore-based HAL had been asked to recover the money which Rolls had allegedly paid to its "commission agents and middlemen."

India, which relies mainly on outdated Soviet-era defense equipment, has been trying to modernize its military and has emerged as one of the world's leading arms importers.

- Abhaya Srivastava, AFP

Copyright Agence France-Presse, 2014

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