MoD audit finds Rs 500 crore Hawk deal kickbacks

The commission was allegedly paid for clinching deals for Rolls-Royce to supply Adour MK 871-07 aero engines for the Hawk Advanced Jet Trainer aircraft.

Amid charges of millions of pounds of secret kickbacks by UK aviation major Rolls-Royce to an Indian-origin arms middleman in London, an internal inquiry in the defence ministry concluded that around Rs 500 crores was paid as commission to a Singapore-based firm named Aashmore Consultants. The report was submitted to Defence Minister Manohar Parrikar a few months back.

The commission was allegedly paid for clinching deals for Rolls-Royce to supply Adour MK 871-07 aero engines for the Hawk Advanced Jet Trainer aircraft.

“Payment of 10 per cent commission from RollsRoyce to one Ashok Patni of Aashmore Consultants, out of the amount of Rs 5,000 crores, works out to Rs 500 crores... This amount paid in an unauthorised manner needs to be recovered from the agent and other beneficiaries and credited into the public fund of the government,” a copy of the report accessed by this newspaper states.

“MoD may like to take requisite action for recovery of these unauthorised commission amounts urgently”, it adds.

A Rolls-Royce spokesperson said: “Concerns about bribery and corruption involving intermediaries remain subject to investigation by the Serious Fraud Office (SFO) and other (UK) authorities. We are fully cooperating with the authorities and cannot comment on these allegations.”

Set up in Singapore, a well-known tax haven, on November 7, 1992, Aashmore was described as a limited exempt private company and its registered address is given as Paya Lebar Road, Singapore. Mr Patni could not be reached for his comments.

What is more serious is the finding that the Hawk aircraft engines are highly compromised, and that the aircraft deal was signed by the IAF with major deviations from the contractual terms.

“Whereas the contract provided for an aircraft with 2,000 hours of flight continued from Page 1 before overhaul, the life of the engine was assessed at 1,000 hours to 1,400 hours by the inspection authorities. As this was a major deviation, the IAF should have approached the defence ministry for organising a major amendment to the contracts signed between the MoD and Hindustan Aeronautics Limited (HAL).

“Instead of that, the IAF, at their own level, has taken a major decision to accept aircraft with highly compromised engines,” it stated.

A Hawk engine with 2,000 hours of life without overhaul costs Rs 33 crores, and by that standard, the engine with 1,400 hours would cost Rs 23.10 crores.

This would have necessitated a recovery of Rs 9.90 crores per engine per aircraft, and for 83 aircraft for which HAL has submitted bills, the under-recovery amount would be around `548 crores.

“The contract signed by HAL with the foreign vendor and its actual execution needs to be subjected to a major vigilance inquiry by the department of defence production”, the report added. The Hawk was inducted into the IAF to impart Stage-III training to fighter pilots before they man/operate frontline fighters like Sukhoi-30s.

The MoD placed orders for 123 Hawk Mk-132 AJTs, of which 106 were for the IAF and 17 for the Navy. Of the 106 for the IAF, 24 aircraft were procured by October 2009 by direct import from BAeS, Unisted Kingdom, in flyaway state, while the remaining 82 were ordered from HAL for indigenous production under licence from BAeS in two batches of 42 and 40. HAL will also supply 17 aircraft for the Indian Navy.