In what could raise serious questions about India’s massive defence deals with Russia, a groundbreaking joint investigation by The Guardian and BBC revealed details of millions of dollars of payments by several foreign defence companies to an unauthorised Indian arms dealing middle-man Sudhir Choudhrie.
The secret documents accessed by the media houses shows that Russian arms firms have remitted around ₹ 730 crores to companies controlled by Sudhir Choudhrie and his family and close associates. It also says about ₹ 81.6 crores paid by British company Rolls-Royce, is a key player in the Indian defence market, to firms linked to Choudhrie in order to secure a major contract for engines on India’s Hawk aircrafts.
The joint investigation has also found evidence of a suspicious payment that was made in cash. It involves Choudhrie’s son, Bhanu, who accompanied an arms executive called Peter Ginger on a trip to Switzerland in 2007BBC report
The Rolls-Royce is a key player in the Indian defence market. Its engines power among other systems, the advanced trainer aircraft of the Indian Air Force. The report raises questions about the Hawk deal, The Hindu reported.
Choudhrie has been investigated by the CBI and Enforcement Directorate in various arms deals in the past. Choudhrie and his family have been living in London. He figures in the CBI’s confidential list of ‘Undesirable Contact Men’, who are suspected of manipulating government contracts.
However, Choudhrie’s lawyer rubbished these allegations claiming “he has never paid bribes to government officials or acted as an illegal middleman in defence deals.”
BBC’s Panorama, the current affairs investigative programme, has claimed that Rolls-Royce made secret payments of around ₹ 73.2 crore to an unregistered Indian agent.
Panorama has learned Rolls-Royce paid the money to companies linked to arms dealer Sudhir ChoudhrieBBC report
In 2014 Sudhir Choudhrie and his son Bhanu were arrested as part of U.K.’s Serious Fraud Investigation Office inquiry into Rolls-Royce. Both were released without charge.
According to BBC, Choudhrie’s son Bhanu accompanied an arms executive called Peter Ginger on a trip to Switzerland in 2007. During the trip, Ginger made a payment amounting to hundreds of thousands of pounds into a secret bank account in cash. The account was opened in the name of “Portsmouth” and bank documents show a balance of more than a million Swiss francs.
Ginger was a key negotiator on the sale of Hawk aircraft to the Indian government. All of the planes had Rolls-Royce engines and the deal was worth around ₹ 326.4 crores to the company.
Choudhrie’s lawyers was quoted by BBC as saying that he has never been paid to secure deals for Rolls-Royce in India, including the sale of Hawk jets. “Choudhrie has never paid any bribe to Mr. Ginger or anyone else”, his lawyers said. “Mr. Choudhrie has no knowledge of what bank accounts have been set up or operated by Mr. Ginger or what sums (if any) he has deposited in them in cash.”
Ginger told the BBC he has never acted for Rolls-Royce or had any financial dealings with them. He says he’s “never taken nor paid any bribes.”
Rolls Royce had bagged a £ 700 million deal with the Hindustan Aeronauntics in early 2010. The deal followed an order for 66 Hawk jets by India in 2004.
BBC said leaked documents from Choudhrie’s and his relative’s Swiss bank account show that the family’s companies were paid almost €100 million by Russian arms firms in one 12-month period alone.
Belinea Services Ltd, a company owned by the Choudhrie family received ₹ 287 crore between October 2007 and October 2008. Another company, Cottage Consultants Ltd, was paid ₹ 240.5 crore in the same period, while a third company – Carter Consultants Inc – was paid ₹ 168.6 crore.
According to the leaked reports, one of the Russian arms firms paying the Choudhrie “makes cruise missiles”. The report describes the payments from the arms companies as “incoming funds from clients offset business”.
“Offset payments” are part of big Indian defence deals. However, neither Choudhrie nor any of the firms linked to him are “approved arms agents” or “offset agencies” in India. Nor has there been any defence deal that India has signed in which offset payments were routed through tax havens. Offsets are the share of a contract that is to be sourced or invested in India, The Hindu reported.
Lawyers acting for Bhanu Choudhrie told the BBC that he had no knowledge of the Clariden Leu documents.
The report to which you refer appears to be a confidential bank document. Choudhrie has not broken any money-laundering rules in any of his business dealings at any stageSudhir Choudhrie’s Lawyer
The lawyers said the BBC questions about offset payments by Russian arms companies were too vague: “You have not given the dates or amounts of the alleged payments or the basis on which you say they were ‘suspicious’ or made in relation to Russian arms deals. The business of Cottage Consultants was conducted in a lawful and proper manner.”
Rolls Royce also said that it was fully co-operating with the authorities and that it could not comment on the ongoing investigations, adding that it has zero tolerance for bribery and corruption.