The defence
ministry said on Monday it had ordered a
bribery investigation over state-run Hindustan Aeronautics Limited's purchase of jet engines from Britain's
Rolls-Royce Holdings in a deal worth at least $1.2 billion.
The Central Bureau of Investigation, the
country's top crime-fighting agency, will look into more than Rs 500 crore in
alleged kickbacks in the deal that was signed in 2011, a ministry official told
Reuters.
No comment was immediately available from
Rolls-Royce's office in India.
Suspicions of corruption in India's defence
procurement programme have for years delayed the modernisation of the armed
forces of the world's most populous nation that continue to rely heavily 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outdated Soviet-designed equipment.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.
The 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 Hindustan Aeronautics
Limited's 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 Hindustan
Aeronautics Limited's "vigilance
wing" had raised the alarm after hearing allegations that Rolls-Royce had
hired consultants to advise on the deal.
Such lobbyists are explicitly banned under
India's defence procurement system.
The Rolls-Royce aero engines were being
procured to power Hawk advanced jet trainers, used to prepare Indian defense
force pilots to fly next-generation fighter jets.
India had ordered a total of 123 twin-seater
Hawks from BAE Systems so far, with 24 to be supplied directly and the rest
made under licence by Hindustan Aeronautics Limited's , according to the
British defence and aerospace group.
The probe deals 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 long-term dominance in large aircraft engines, showcasing two
new models that could improve efficiency by up to 10 per cent.
