India files graft case against BAE Systems, Rolls-Royce

The ‘criminal conspiracy’ case is related to the procurement and licensed manufacturing of 123 advanced jet trainers.

FILE PHOTO: A BR700-725 jet engine is seen at the assembly line of the Rolls-Royce Germany plant in Dahlewitz near Berlin, Germany, February 28, 2023. REUTERS/Nadja Wohlleben/File Photo
A BR700-725 jet engine at the assembly line of the Rolls-Royce Germany plant in Dahlewitz near Berlin, Germany [File: Nadja Wohlleben/Reuters]

India has filed a graft case against Britain’s BAE Systems plc and Rolls-Royce Holdings for “criminal conspiracy” in the procurement and licensed manufacturing of 123 advanced jet trainers, according to a federal police document.

The case is based on the findings of an investigation launched by India’s Central Bureau of Investigation (CBI) in 2016, the document dated May 23 said.

Rolls-Royce said on Monday that it was continuing to assist the Indian authorities in their investigation and that the allegations being probed were disclosed in 2017 when it paid a fine to British authorities.

“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,” a spokesperson for the blue-chip company told Reuters via email.

India’s defence ministry did not respond to a request for comment. BAE said it would be inappropriate to comment on an ongoing probe.

The document seen by Reuters said the manufacturers of the trainer jet paid commissions to middlemen, in violation of Indian defence contract rules. The middlemen helped them get the contracts by using “undue influence” on government officials.

It also said that Rolls-Royce India and its officials entered into a criminal conspiracy with unknown officials from the defence ministry and two middlemen between 2003 and 2012 for contracts linked to the trainer jets.

In 2005, India signed a deal to buy 24 Hawk 115 advanced jet trainers for 734.21 million pounds ($926.65m), and licensed manufacturing of 42 jets for 308.25 million pounds ($380.94m), along with the supply of materials and transfer of technology.

This was done, the CBI said in its document, “in lieu of huge bribes, commissions and kickbacks paid by the said manufacturer and its officers to intermediaries”.

Between 2008 and 2010, it said the Indian government approved the licensed manufacturing of an additional 57 jets for 95 billion rupees ($1.16bn) under a separate agreement with BAE Systems (Operations) Ltd.

In 2012, Britain’s Serious Fraud Office (SFO) launched an investigation into Rolls-Royce for payments linked to transactions with countries including China, India, Indonesia, Malaysia and Thailand.

Rolls-Royce paid a fine of 497 million pounds ($614.19m) to settle the case with the SFO in 2017.

Source: Reuters