India Initiates Graft Case Against BAE Systems and Rolls-Royce Over Jet Trainer Procurement

India has officially filed a corruption case against British companies BAE Systems plc and Rolls-Royce Holdings, accusing them of “criminal conspiracy” in the procurement and licensed manufacturing of 123 advanced jet trainers, according to a federal police document.

The case stems from an investigation launched by India’s Central Bureau of Investigation (CBI) in 2016, as detailed in the document dated May 23.

Rolls-Royce responded on Monday, stating its continued cooperation with Indian authorities in the investigation. The company noted that the allegations under scrutiny were disclosed in 2017 when it paid a fine to British authorities. A Rolls-Royce spokesperson emphasized the company’s commitment to ethical standards, stating, “Rolls-Royce today is a fundamentally different business. We will not tolerate business misconduct of any sort and are committed to maintaining high ethical standards.”

India’s defence ministry did not provide a response to requests for comment. BAE Systems refrained from commenting on the ongoing investigation, citing its inappropriate nature.

As per the document seen by Reuters, the allegations revolve around manufacturers of the trainer jet paying commissions to middlemen, breaching Indian defence contract rules. These intermediaries allegedly used “undue influence” on government officials to secure contracts.

The document also claimed that Rolls-Royce India and its officials engaged in a criminal conspiracy with unknown officials from the defence ministry and two middlemen between 2003 and 2012, relating to contracts linked to the trainer jets.

In 2005, India entered a deal to purchase 24 Hawk 115 advanced jet trainers and licensed manufacturing of 42 jets, along with material supply and technology transfer. The CBI document suggested that these agreements were facilitated through “huge bribes, commissions, and kickbacks” paid by the manufacturers and their officers to intermediaries.

Between 2008 and 2010, the Indian government reportedly approved the licensed manufacturing of an additional 57 jets under a separate agreement with BAE Systems (Operations) Ltd, for a sum of 95 billion rupees ($1.16 billion).

The investigation is a continuation of Britain’s Serious Fraud Office (SFO) inquiry launched in 2012, which examined Rolls-Royce’s payments linked to transactions in various countries, including China, India, Indonesia, Malaysia, and Thailand. Rolls-Royce settled the case with the SFO in 2017 by paying a fine of 497 million pounds ($614.19 million).

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