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Antony red-flags defence ministry proposal on Rolls-Royce

LiveMint logoLiveMint 11-05-2014 PTI

New Delhi: Defence minister A.K. Antony has red-flagged a proposal of his own ministry to continue doing business with the UK-based Rolls-Royce Holdings Plc, which is facing a Central Bureau of investigation (CBI) probe for allegedly paying bribes and engaging middlemen in contracts for supplying engines to Hindustan Aeronautics Ltd (HAL).

After the scam broke out early this year, the ministry had put on hold all dealings with Rolls-Royce pending a CBI probe ordered into the allegations against it. The defence ministry wing dealing with the Rolls-Royce case is understood to have recommended that the government should continue doing business with the firm but Antony refused to give a go-ahead and asked the officials concerned to take an opinion from the law ministry and the solicitor-general before moving any further in the case, people in the government familiar with the matter said in New Delhi.

The minister had earlier asked the ministry to take an opinion from the law ministry about the actions that could be taken against Rolls-Royce. The UK-based firm has already told the defence ministry that it would return `18 crore paid by it as commission to its agents but the government is yet to take any decision in this regard. Rolls-Royce in a letter written to HAL in December last admitted it had employed a Singapore-based person identified as Ashok Patni and his firm Aashmore Private Ltd as “commercial advisor” in India, providing sales and logistical support, local business support and “strategic advice”.

The commissions paid by the firm are in violation of the procurement rules in India which prohibit hiring of middlemen or commission agents while transacting deals with the defence ministry. The Indian Air Force (IAF) was of the view that a delay in signing a maintenance contract with Rolls-Royce will impact the defence preparedness of the country. The IAF has to sign a fresh contract with it for maintenance and overhaul of six types of aircraft engines in the AJT Hawk, Jaguar, Avro, Kiran MkII and Sea Harrier military aircraft and Sea King helicopters.

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