After more than a six-year-long investigation, the Central Bureau of Investigation last week registered a first information report (FIR) for alleged payment of kickbacks and bribe money in yet another defence deal – the acquisition of Hawk advanced jet trainers manufactured by British defence giant BAE Systems in a government-to-government deal with the United Kingdom.
India’s defence acquisitions have often been mired in controversies over the involvement of middlemen and payment of bribe money to politicians and top officials, military and civil. In fact, any allegation of payment of a bribe in big-ticket defence deals becomes a political issue or election issue in the country be it the Bofors gun deal with Sweden during then Prime Minister Rajiv Gandhi’s tenure or the Rafale fighter jet deal with France during the first term of Prime Minister Narendra Modi.
In order to curb the corruption and involvement of middlemen in defence deals, Indian authorities have been inserting integrity or no-middleman clause in defence deals and if the allegations prima facie turned out to be true then it leads to cancellation of the deal as in the case of purchase of helicopters from Italian defence company Leonardo. The scam is known as the AgustaWestland VVIP Helicopter scam, resulting in the cancellation of the deal to procure helicopters for ferrying VVIPs in the country.
The CBI FIR in Hawk Jet Trainer Deal
On May 23, 2023, the Central Bureau of Investigation registered a regular case (RC) at its Delhi Anti-Corruption Bureau (ACB) under Section 154 of the Criminal Procedure Code (CrPC). Section 154 requires a police officer to register a case against any cognizable offence. The FIR was registered under Section 120B of Indian Penal Code read with Section 420 and 201 and also under Section 13(2) of the Prevention of Corruption Act read with Section 13(1)(d) and Section 8 and 9 of the same Act.
While Section 120-B IPC deals with punishment for criminal conspiracy, Section 201 of IPC deals with ‘Causing disappearance of evidence of offence, or giving false information to screen offender’. And Section 420 of IPC deals with Cheating and dishonestly inducing delivery of property. CBI suspects that offences of abuse of official position, criminal conspiracy, cheating, obtaining undue advantage to induce a public servant, causing disappearance of evidence, taking gratification for personal influence with public servant have been committed in this case.
Who are the accused persons in Hawk Jet Trainer Deal
Though the Hawk advanced jet trainer is manufactured by BAE Systems, the first accused in the CBI FIR is Tim Jones, then Director of Rolls Royce India, the Indian subsidiary of British aircraft engine manufacturer that supplies jet engines for Hawk AJT.
The second and third accused in the CBI FIR are Sudhir Choudhrie and his son Bhanu Choudhrie, the father-son duo of Indian origin who are now settled in London. Sudhir Choudhrie and Bhanu Choudhrie’s names have also figured as arms dealers in other deals probed by the CBI and Enforcement Directorate.
While the fourth and fifth accused are two companies - Rolls Royce Plc and British Aerospace Systems, other accused entered as accused number 6 are unknown public officials and private persons. The CBI said that during the period of 2003 to 2012, unknown officers of the Ministry of Defence entered into a criminal conspiracy with Tim Jones, Sudhir Choudhrie, Bhanu Choudhrie, Rolls Royce Plc and its associate group companies including Rolls Royce Turbomeca Limited (a joint venture of British and French jet engine manufacturers), and British Aerospace Systems UK and other unknown public servants and private persons to cheat Government of India.
CBI said these accused persons approved and procured a total number of 24 Hawk 115 AJT for 734.21 million British Pound, besides permitting licence manufacturing of 42 additional aircraft by HAL against material supplied by the same manufacturers for an additional amount of 308.247 million GBP. CBI said the HAL was required to pay an additional 7.5 million USD as a manufacturer's license fee to Rolls Royce.
The central probe agency said it was done in lieu of huge bribes, commissions and kickbacks paid by the manufacturers and its officers to intermediaries despite the fact that the Integrity Pact prohibited payments to intermediaries and middlemen. CBI said its inquiry further revealed that vital documents related to these transactions were seized by the Income Tax Department during a search of Rolls Royce office in India.
How the case came to the light
As in several other cases, the foreign press of the supplier country was able to report wrongdoings before the Indian press got a whiff of any alleged kickback payments. This matter also came to light due to the reporting by British and European press in 2012 about the alleged corruption in Rolls Royce businesses in Asia. Subsequently, the Serious Fraud Office (SFO) in London, UK opened an investigation into Rolls Royce business practices in India, Indonesia, Malaysia, Thailand and China.
Thereafter Rolls Royce submitted a statement of fact to the SFO London and they reached a deferred prosecution agreement. Later a British Court delivered its judgment in January 2017. The judgment refers to the statement of fact submitted by Rolls Royce which confirmed that the company paid 1.85 million GBP to intermediary-4 to retrieve the incriminating documents seized by Indian income tax officials in January 2006 that also included a list of intermediaries.
The British Court’s judgment also revealed that Rolls Royce engaged intermediaries between 2005 and 2007 for conducting its business in India despite the government of India prohibiting the use of agents and middlemen. The judgment also mentioned the payment of 1 million GBP by Rolls Royce to intermediary-4 to increase the licence manufacturing fees to be paid by HAL to the company from 4 million GBP to 7.5 million GBP.
Curious case of payments by Russian companies
The CBI FIR also mentions the payment of $100 million by the Russian Arms Corporation to companies associated with arms dealer Sudhir Choudhrie with regard to defence deals with Russia for the purchase of Mig fighter jets. The FIR said that a sum of $100 million GBP was paid to three companies linked to Sudhir Choudhrie between 2007 and 2008. However, the CBI has not shared any further details about the size and nature of the deal, the number of Mig fighter aircraft to be procured and the period of the deal for which alleged payments have been made to the firms linked to the arms dealer.
