NEW DELHI, March 3 India's defence ministry said
on Monday it had ordered an investigation into state-run
Hindustan Aeronautics Ltd's (HAL) orders from Britain's
Rolls-Royce Holdings worth at least $1.2 billion.
The Central Bureau of Investigation, the country's top
crime-fighting agency, will look into more than 5 billion rupees
($80 million) in alleged kickbacks in a deal that was signed in
2011, a ministry official told Reuters.
Defence Minister AK Antony referred the case to
investigators after being informed by HAL that Rolls-Royce had
disclosed its use of outside consultants receiving a percentage
commission, the official added.
Such arrangements could violate India's procurement rules,
as they might be used to channel corrupt payments to secure
lucrative government contracts.
Suspicions of corruption in India's state procurement
programme have for years delayed the modernisation of the armed
forces of the world's most populous nation that continue to rely
on outdated Soviet-designed equipment.
The air force has been dogged by a series of crashes of its
Russian-built MiG fighter jets, while an accident aboard a
Soviet-made submarine that killed two officers last week led the
navy's chief of staff to resign.
India's Congress party-led government is keen to be seen as
tough on graft before parliamentary elections due by May. The
party, lagging in the polls, has faced rising public anger over
a string of corruption scandals in its current term.
The probe into the HAL deal follows the arrest in Britain
last month of Indian-born businessman Sudhir Choudhrie and his
son in a bribery investigation by the Serious Fraud Office into
Rolls-Royce's dealings in China and Indonesia.
Both men denied any wrongdoing and have been released on
bail, their spokesman said last month.
While there was no indication that the latest probe was
linked to the Choudhries, newspapers reported that HAL's
"vigilance wing" had raised the alarm after learning that
Rolls-Royce had hired outside consultants.
Indian newspapers reported on Monday that the deals in
question were signed between 2007-11, a period when Rolls-Royce
sold aero engines to power Hawk advanced jet trainers supplied
to the Indian air force.
India has ordered a total of 123 twin-seater Hawks from BAE
Systems to date, with 24 to be supplied directly and
the rest made under licence by HAL, according to the British
defence and aerospace group.
The disclosure by Rolls-Royce was, however, related to a
2011 deal to sell gas turbines to HAL, defence industry sources
The probe could deal another blow to Rolls-Royce, the
world's second largest maker of aircraft engines behind General
Electric, which said in February that U.S. and European
defence cuts mean that a decade of profit growth will come to an
end this year.
Rolls-Royce has since outlined plans designed to maintain
its dominance in large aircraft engines, showcasing two new
models that could improve efficiency by up to 10 percent.