Story ID: 3030714ADP
Rolls-Royce Under Indian Spotlight
By: Neelam Mathews
Caption: 
Word Count: 596
India's Central Bureau of Investigation has launched an investigation into Rolls-Royce military deals. The investigation began just a day before the announcement of forthcoming elections and the beginning of the “model code of conduct” that disallows announcement of new projects. The probe follows a voluntary disclosure last December by Rolls-Royce to its partner Hindustan Aeronautics (HAL) that it had used a consultant, Singapore-based Aashmore, for sales and logistics support in its business in the energy sector.

While civil and military projects generally do not overlap, the Ministry of Defense (MoD) has nevertheless put on hold the repair, overhaul and supply of Adour Mk 871 engines for the Indian Air Force and Indian Navy BAE Systems Hawk advanced jet trainers (AJT), among other contracts. India ordered 123 two-seat AJTs, of which 76 are in the fleet. The fate of the remaining 47 AJTs produced under licence by HAL, with deliveries expected by 2016, stands frozen for now.

“We await clarification from the authorities in India. We have made clear that we will cooperate with the regulators and have been explicit that we will not tolerate misconduct of any sort,” a Rolls-Royce spokesperson told AIN.

The only official statement regarding the issue from the Indian MoD came in a long document praising the seven-year achievements of the defense minister A.K. Antony. Under the heading “Transparency,” it referred to a “green signal given to the Central Bureau of Investigation to probe into the allegations of the appointment of an intermediary in the deals concluded between HAL and the Rolls-Royce company of [the] UK, in contravention of the contract rule.”

Rolls-Royce, along with HAL through its (civil) Industrial & Marine Gas Turbine Division, buys and maintains gas turbines for the government-owned Oil and Natural Gas Commission. The UK manufacturer's RB211 engines power India’s major gas pipelines. An official from the division told AIN that Rolls-Royce had clarified the services used by Aashmore were not connected with its military business in India.

“By the looks of it, the MoD took this action following the arrest and release last month in London of an Indian-born businessman in a bribery investigation by the Serious Fraud Office into Rolls-Royce’s dealings in Indonesia …this is justice at random,” said a senior Indian defense official speaking to AIN on condition of anonymity.

With no definite guidelines on how to move on India’s Integrity Pact, ad hoc decisions on freezing of projects by the MoD have become commonplace, stalling the military modernization program. In the past, without proof of wrongdoing, a 197-helicopter contract won by Eurocopter was cancelled following a complaint by its opponent, Bell Helicopters. Recently, following the delivery of three of 12 AgustaWestland AW101 VVIP helicopters, the project was halted on suspicion of wrongdoings.

Meanwhile, there is a lack of clarity regarding the many Rolls-Royce engines that power a large mixed fleet in Indian service: they include the AE3007 on Embraer Legacy jets for VVIP transport and surveillance; the AE2100 on the C-130J transporters (with six more on order); engines in the HJT-16 Kiran trainer, HS748 Avros, and Embraer EMB-145 AEW&C; and Adour Mk 821s on the 125-strong fleet of Jaguar strike aircraft that are to be re-engined with the Honeywell F125 IN.

Immediate procurements that might be affected include the Trent 700, competing against the GE CF6 to power the IAF’s Airbus A330 MRTT (Multi Role Tanker Transport). The Indian Navy also has plans to acquire Japanese ShinMaiwa US-2i amphibious aircraft with Rolls-Royce engines.