India files criminal complaint against Rolls-Royce and BAE

India’s top probe agency has filed a criminal complaint accusing Rolls-Royce and BAE Systems of indulging in corruption in landmark deals to supply fighter jets to the country.

The Central Bureau of Investigation alleged that the companies were involved in a “criminal conspiracy” to “defraud the Government of India” between 2003 and 2012 over BAE’s deals to manufacture dozens of Hawk aircraft that used Rolls-Royce engines. Was.

The complaint revives historic allegations of wrongdoing against Rolls-Royce, which in 2017 reached a deferred prosecution agreement with the UK’s Serious Fraud Office after a year-long investigation. The SFO accused the company of operating illegally for more than three decades, one of the longest running cases at the time.

Rolls-Royce said it is “continuing to assist the Indian authorities”, noting that the allegations being investigated were disclosed in the DPA. The company said it was now a “fundamentally different business”.

“We will not tolerate business misconduct of any kind and are committed to maintaining high ethical standards. India remains an important market for Rolls-Royce.

BAE said that “it would be inappropriate to comment on the ongoing investigation”. The company said it was “committed to maintaining the high standards of ethical conduct that our customers, shareholders, partners and colleagues have come to expect”.

The CBI complaint is a so-called First Information Report, which sets out allegations for further investigation, and is based on a preliminary inquiry launched in 2016.

It is based on the SFO’s investigation, which stems from a 2004 agreement between India’s Ministry of Defense and the companies to supply 24 Hawk aircraft, as well as a license agreement for India’s Hindustan Aeronautics Limited to build dozens more. With deals totaling over £1bn.

The CBI alleged that the companies violated agreements entered into as part of the deals that barred them from paying middlemen or “middlemen”.

Under a deferred prosecution agreement between Rolls-Royce and the SFO in January 2017, Rolls-Royce agreed to pay a little less than £500 million to settle bribery and corruption charges in seven jurisdictions, including Indonesia, Russia and India Did.

In India, the SFO alleged that Rolls-Royce “continued to use one of its principal intermediaries in relation to relevant defense contracts” despite a ban on the use of intermediaries by the Indian government.

In its case, the CBI points to allegations that were part of an SFO case in which Rolls-Royce paid £1mn to an intermediary to increase the license fee from £4mn to £7.5mn. It also points to allegations that an additional £1.85 million was paid to prevent a list of middlemen from falling into the hands of India’s Ministry of Defence.

The CBI complaint states that Tim Jones, a former Rolls-Royce director, was part of a “criminal conspiracy” over contracts with British-Indian businessman Sudhir Chaudhary and his son Bhanu and others. It states that Chaudhary is “allegedly an unregistered Indian agent/intermediary” who worked for Rolls-Royce and BAE.

Sudhir, a major Liberal Democrat donor, and Bhanu were arrested in 2014 as part of an SFO investigation into alleged bribery in Indonesia and China but were released without charge. He has previously denied wrongdoing.

Jones could not be reached for comment.

Sudhir Chowdhary did not immediately respond to a request for comment made via LinkedIn. His son Bhanu declined to comment through a spokesperson for one of his companies.

The CBI said that “unknown” Indian officials were also involved in the conspiracy.

The allegations come at a sensitive time for Rolls-Royce, which has been hit hard by the halting of international air travel during the pandemic. Shares have risen more than 50 per cent this year, after the company in February posted a pre-tax profit of £206mn for 2022, compared with £36mn for 2021.

However, stocks remain well below pre-pandemic levels. Tufan Erginbilgic, who took over as chief executive in January, has warned that the company has historically performed poorly, and has laid out a turnaround plan.

India’s top probe agency has filed a criminal complaint accusing Rolls-Royce and BAE Systems of indulging in corruption in landmark deals to supply fighter jets to the country.

The Central Bureau of Investigation alleged that the companies were involved in a “criminal conspiracy” to “defraud the Government of India” between 2003 and 2012 over BAE’s deals to manufacture dozens of Hawk aircraft that used Rolls-Royce engines. Was.

The complaint revives historic allegations of wrongdoing against Rolls-Royce, which in 2017 reached a deferred prosecution agreement with the UK’s Serious Fraud Office after a year-long investigation. The SFO accused the company of operating illegally for more than three decades, one of the longest running cases at the time.

Rolls-Royce said it is “continuing to assist the Indian authorities”, noting that the allegations being investigated were disclosed in the DPA. The company said it was now a “fundamentally different business”.

“We will not tolerate business misconduct of any kind and are committed to maintaining high ethical standards. India remains an important market for Rolls-Royce.

BAE said that “it would be inappropriate to comment on the ongoing investigation”. The company said it was “committed to maintaining the high standards of ethical conduct that our customers, shareholders, partners and colleagues have come to expect”.

The CBI complaint is a so-called First Information Report, which sets out allegations for further investigation, and is based on a preliminary inquiry launched in 2016.

It is based on the SFO’s investigation, which stems from a 2004 agreement between India’s Ministry of Defense and the companies to supply 24 Hawk aircraft, as well as a license agreement for India’s Hindustan Aeronautics Limited to build dozens more. With deals totaling over £1bn.

The CBI alleged that the companies violated agreements entered into as part of the deals that barred them from paying middlemen or “middlemen”.

Under a deferred prosecution agreement between Rolls-Royce and the SFO in January 2017, Rolls-Royce agreed to pay a little less than £500 million to settle bribery and corruption charges in seven jurisdictions, including Indonesia, Russia and India Did.

In India, the SFO alleged that Rolls-Royce “continued to use one of its principal intermediaries in relation to relevant defense contracts” despite a ban on the use of intermediaries by the Indian government.

In its case, the CBI points to allegations that were part of an SFO case in which Rolls-Royce paid £1mn to an intermediary to increase the license fee from £4mn to £7.5mn. It also points to allegations that an additional £1.85 million was paid to prevent a list of middlemen from falling into the hands of India’s Ministry of Defence.

The CBI complaint states that Tim Jones, a former Rolls-Royce director, was part of a “criminal conspiracy” over contracts with British-Indian businessman Sudhir Chaudhary and his son Bhanu and others. It states that Chaudhary is “allegedly an unregistered Indian agent/intermediary” who worked for Rolls-Royce and BAE.

Sudhir, a major Liberal Democrat donor, and Bhanu were arrested in 2014 as part of an SFO investigation into alleged bribery in Indonesia and China but were released without charge. He has previously denied wrongdoing.

Jones could not be reached for comment.

Sudhir Chowdhary did not immediately respond to a request for comment made via LinkedIn. His son Bhanu declined to comment through a spokesperson for one of his companies.

The CBI said that “unknown” Indian officials were also involved in the conspiracy.

The allegations come at a sensitive time for Rolls-Royce, which has been hit hard by the halting of international air travel during the pandemic. Shares have risen more than 50 per cent this year, after the company in February posted a pre-tax profit of £206mn for 2022, compared with £36mn for 2021.

However, stocks remain well below pre-pandemic levels. Tufan Erginbilgic, who took over as chief executive in January, has warned that the company has historically performed poorly, and has laid out a turnaround plan.