India Investigates Violation of MoD Procurement Policies

Rolls Royce has admitted that it engaged Aashmore Private Limited, which Singapore based firm owned by Ashok Patni, and SFO probe clarifies that there was no indication of links to Sudhir & Bhanu Choudhrie.

New Delhi, Delhi, April 2, 2014 /India PRwire/ -- The Indian Defence Ministry has suspended all existing and future contracts with London-based firm Rolls-Royce pending a Central Bureau of Investigation (CBI) India probe into accusations of bribery and involvement of intermediaries in deals worth INR 10,000 crore, for supplying aircraft engines to Hindustan Aeronautics Limited (HAL) India.

The CBI has filed an initial enquiry concerning Rolls-Royce to investigate and probe into the alleged bribery scandal. Meanwhile, Rolls-Royce is willing to return INR 18 crore to the government, which the firm had paid as commission to agents to procure the deal.

In December, last year, Rolls-Royce admitted that it engaged a Singapore-based firm Aashmore Private Limited owned by Ashok Patni, as the 'commercial advisor' for providing 'logistical and business support' as well as 'strategic advice'. Though the probe into the HAL deal brought London based Indian-born businessman Sudhir Choudhrie and his son, Bhanu Choudhrie under the Serious Fraud Office (SFO) radar, however, there was no indication that the probe links them to Rolls-Royce's dealings in China and Indonesia.

Moreover, what triggered the alarm was after HAL's vigilance wing raised concerns on learning that Rolls-Royce had roped in overseas consultants, which is not in line with the Indian Defence Ministry's procurement policies. The vigilance cell learnt that Rolls-Royce had paid commissions to Aashmore Private Limited, for finalising energy deals. Further probes unveiled that both companies in question were involved in business transactions worth over INR 5,000 crore between 2007 and 2011.

Commissions paid by the firm are in violation of the procurement policies in India. The Act forbids hiring of intermediaries or involvement of commission-based representatives in deals with the Defence Ministry of India. After a CBI probe into the matter was initiated, the Defence Ministry roped in the Law Ministry, in effect, to blacklist the British firm, However, the Indian Air Force (IAF) decided to delay the signing of a maintenance contract with Rolls-Royce, with a view that it would impact the country's defence vigilance as maintenance and overhaul of the six aircraft engines is still impending.

In its attempt to avoid violation of laws and regulations in this area which has led to penalties, criminal prosecution, saleable litigation and constraints, (all impacting the future business of the country), India sought to seek information from Britain on the SFO's investigation of bribery charges against Rolls-Royce in cases engaging arbitrators of China and Indonesia.

Roll-Royce also announced that it had severed connections with Aashmore Private Limited and its owner, Ashok Patni, in 2013. The bribery allegation surfaced when HAL received a letter claiming that bribes were paid to HAL officials and other divisions to seal the contract.


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