ROLLS ROYCE INDIAN JET ENGINE BRIBES
Rolls-Royce, is a business established in 1904 which today designs, manufactures and distributes power systems for aviation and other industries. Rolls-Royce is the world’s second-largest maker of aircraft engines after General Electric and has major businesses in the marine propulsion and energy sectors. Rolls-Royce was the world’s 16th largest defence contractor in 2018 when measured by defence revenues.
However, the organization has faced various corruption allegations in the past. Below is one of the cases where Rolls Royce is again scrutinized for its alleged role in bribing individuals. There was a whistle blowers’ allegation in 2012 which led to multi jurisdiction investigation into Rolls Royce’s extensive history of paying bribes. This includes one major defence deal. According to investigations in India and the United Kingdom, the company contacted and communicated with many different agents to capture a contract in India for trainer-aircraft jet engines.
The GBP 200 million (USD 310 million) contract secured and finalized in 2010, was backed by more than USD 17 million in bribes paid through arms broker Sudhir Chaudhary and a consultancy, Ashmore Private Ltd. The long standing relationship between Rolls Royce and the country in terms of co-orporation has led to the company not been black listed by the government.
• Seller Nation India, France, and The UK
• Seller Business Rolls-Royce, Turbomeca, And Hindustan Aeronautics Limited (also known as Safran Helicopter Engines)
• Buyer Nation India
• Products sold 57 Adour Mk871 Jet Aircraft Engines, with a deal worth of GBP 200 million (USD 310 million).
• INR 50 million ($1.1 million) and GBP 10 million ($16 million) were the amounts engaged in corruption.
• 2010 to 2017 (start and end years)
Outcome status Out of Court Settlement:
• Sudhir Choudhry – London-based arms broker; suspected of involvement in defence-sector corruption in India since the late 1990s; identified as likely conduit for bribes.
• Ashok Patni – director of Singapore-based firm Ashmore Private Ltd. Admitted agent of Rolls-Royce for civil business deals; implicated by Indian investigators in the Hawk engines bribery scandal.
The allegations were later proven by an internal Indian Ministry of Defence inquiry and a BBC report.
Timeline:
• 2010
Rolls-Royce agreed to supply the Indian Navy and Air Force with 57 Hawk Advanced Jet Trainer aircraft.
• 2014
A.K. Anthony, the Indian Minister of Defence, requested an investigation by the Central Bureau of Investigation (CBI) into possible bribery by Rolls-Royce to obtain contracts with the Indian military. Whistleblower activity initially sparked the investigation, but Rolls-Royce was quick to acknowledge that it had recruited Ashok Patni, a middleman, and his company Aashmore Private Ltd. as a “commercial advisor.”
• 2015
BAE Systems and Hindustan Aeronautics signed an agreement to develop an updated, combat-capable version of the Hawk trainer.
• Nov 2016
That month, a BBC Panorama programme revealed more proof that Rolls-Royce had hired Sudhir Choudhry, an arms dealer based in the UK who had been charged in numerous investigations dating back decades, to seal the Hawk trainer agreements. Shortly after, the Indian media reported that a separate Ministry of Defence investigation into the 2014 allegations had come to the separate conclusion that Rolls-Royce’s previously disclosed payments to Ashmore had also been used to secure the Hawk deal. The investigation had been submitted to minister Manohar Parrikar a few months earlier.
Investigation Outcomes
• Jan 2017
Under the terms of a deferred procurement agreement with the UK Serious Fraud Office, Rolls-Royce agreed to pay a total of nearly GBP 500 million in returned profits and penalties, stemming from illegal activity in seven countries.
• Feb 2017
The Indian Air Force announced that it would not buy any units because of the ongoing investigations into Rolls-Royce. Nonetheless, the company has not yet been blacklisted.