British engineering firm Rolls Royce has conceded that it hired " commercial advisers" in India to provide "sales and logistic support for local business expertise and strategic advice," according to defence ministry official who spoke on condition of anonymity.
The defence ministry has put on hold all its maintenance contracts with Rolls Royce over suspicions that the company paid approximately Rs 650 crore to an intermediary company without making the required disclosures. In the fours years between 2007 to 2011, Rolls Royce received contracts worth over Rs 6,500 crore for Bangalore-based Hindustan Aeronautics Limited (HAL). Ironically, the ministry has asked HAL to now recover the amount that Rolls Royce paid to the intermediary company — Singapore-based M/s Aashmore Private Limited.
"In a reply to HAL, Rolls Royce has confirmed certain percentage of the purchase order to M/s Aashmore Private Limited and claimed that it had ended the contract with the company in December 2013 only," said the ministry official.
The ministry added that HAL has been asked to provide detailed information on any form of contact it had with representatives of Aashmore, including meetings in HAL offices, communication and even phone calls made to any defence official by the intermediary company.
A Rolls Royce spokesperson said that the company will "cooperate fully with the regulatory authorities".
Defence minister AK Antony has also ordered a Central Bureau of Investigation probe into the allegations that huge kickbacks were paid to HAL and defence officials to bag military contracts from 2007-2011 for deals worth more than Rs 10,000 crore. The Indian defence ministry woke up to the issue only after India-born arms agent Sudhir Choudhrie and his son, Bhanu, were arrested in February in London in a bribery probe out by the UK's Serious Fraud Office into Rolls Royce's dealings in China and Indonesia. According to sources, members of the Serious Fraud Office seized from Choudhrie's house some documents, pertaining to Rolls Royce's deals in India.
"Keeping in view that M/s Rolls Royce is being investigated by the Serious Fraud Office in the UK, we are formally requesting the UK government to share any information which may come up on the dealings of the company involving India. The ministry of external affairs has also been roped in," the defence ministry official added.
Over 1,600 Indian military aircraft have Rolls Royce engines, including premier IAF aircraft such as C-130J, Hawk, Embraer, Kiran and Avro transport.