MoD Freezes HAL Deal with Rolls-Royce

A future repair and overhaul contract with the global major for the IAF’s six-types of aircraft has been put on hold after a CBI probe

Published: 04th March 2014 06:00 AM  |   Last Updated: 04th March 2014 01:16 AM   |  A+A-

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Following the CBI probe into an HAL deal with British engine manufacturer Rolls-Royce, the Ministry of Defence (MoD) on Monday put on hold a future ‘Repair and Overhaul’ (R&O) contract with the global major  for the Indian Air Force’s (IAF) six-types of aircraft, including the British BAE Systems’ Hawk Advanced Jet Trainers and American Lockheed Martin’s C-130J special operations planes.

IAF sources said here that the now stalled deal was to commence  from 2014-15 for engines of the IAF planes that included British combat jet Jaguar, British passenger transport plane Avro and Brazilian Embraer VIP transport plane, apart from the HAL-built Kiran jet trainer.

“The decision to put on hold the likely deal for R&O of engines of these planes was taken after the CBI probe was ordered into  Rolls-Royce’s December 2013 disclosure that it had hired a consultant,” MoD sources said.

“This decision, however, will not impact the operations of the IAF planes,” they clarified, as the IAF does not sign such contracts for engines directly and it was usually done through the Hindustan Aeronautics Limited (HAL). “We have enough spares and the current R&O programme would ensure there is no adverse impact of the decision,” they said.

Sources said Rolls-Royce, which is supplying engines for the 143-plane Hawks programme being executed by the HAL in India, had admitted to hiring a consultant and paying a commission for contracts signed with  the HAL, resulting in the MoD recommending a CBI probe.

Under the Indian defence procurement procedures, hiring of a consultant or agent for lobbying to bag contracts is strictly prohibited.

Union Defence Minister A K Antony had last week asked for the CBI probe into the Roll-Royce contracts signed between 2007 and 2011 following an internal probe by the HAL.

The HAL probe had found that the British firm hired a “commercial adviser” with local business expertise to help it in “sales and logistics support” and business strategy advice, based on the company’s “disclosure”.

The disclosure from Rolls-Royce came in connection with a Rs 140-crore deal with the HAL’s Industrial Marine and Gas Turbine Division that executes projects for the civilian side, including those  for the ONGC and others, sources at the HAL’s Bangalore headquarters said.

“HAL had asked Rolls-Royce if it had hired any intermediary and made payments to them in connection with the Indian contracts. To this, the firm had replied on December 27, 2013 that it had indeed hired the commercial adviser and paid him a percentage of its contract amount as commission,” ministry sources said.

The company had also intimated that the arrangement with the commercial adviser ended in January 2013.

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