NEW DELHI--India's Ministry of Defense has asked for a
government investigation into whether Rolls-Royce Holdings PLC
illegally used outside advisers to get contracts in India, in the
latest probe into the U.K. engine maker's global operations.
State-run Hindustan Aeronautics Ltd.--which distributes and
services the Rolls-Royce turbines in India--was informed by
Rolls-Royce in December that it used an outside adviser to help it
win contracts between 2007 and 2011. It told the defense ministry,
which has now decided to call for an investigation, said a defense
ministry official who asked not to be named.
To discourage corruption, using middlemen or advisers to get
government deals is banned under Indian law.
The ministry "took the call to ask the Central Bureau of
Investigation to investigate the matter," said the defense ministry
official referring to India's top federal investigation agency.
A Rolls-Royce spokesman said the company would cooperate with
any investigation.
"We will cooperate fully with the regulatory authorities and
have repeatedly made clear that we will not tolerate misconduct of
any sort," he said.
While the allegedly illegal contractors were used to bag orders
for industrial gas turbines for generating power, the defense
ministry has asked that the investigation include Rolls-Royce's
military contracts in India as well, the ministry official
said.
In India Rolls-Royce has also received contracts to supply Hawk
advanced jet trainers of BAE Systems PLC that are fitted with
Rolls-Royce's Adour engines. The Indian Air Force's Jaguar fighter
jets also have Rolls-Royce engines.
India has been coming down heavily on any company allegedly
connected to corruption in recent years.
In January it scrapped a EUR556 million helicopter contract with
AgustaWestland--the Anglo-Italian helicopter division of
Finmeccanica SpA--after accusations the company paid bribes to
Indian officials to obtain a helicopter deal. Both AgustaWestland
and Finmeccanica have denied any wrongdoing.
In March 2012, India's defense ministry barred six companies,
including Rheinmetall Air Defence and Singapore Technologies
Engineering Ltd., from doing any business with state-run Ordnance
Factory Board for 10 years for alleged bribery. Rhinemetall and
Singapore Technologies denied the charges.
It isn't clear whether the Indian investigation is linked to a
probe by the U.K.'s Serious Fraud Office of a leading U.K.-based
India-born financier, Sudhir Choudhrie, and his son Bhanu in
connection with alleged bribery and corruption at Rolls-Royce.
Write to Santanu Choudhury at santanu.choudhury@wsj.com
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