India orders bribery probe into $2 billion Rolls-Royce deal

NEW DELHI (AFP) - India's defence ministry has ordered an investigation into the purchase of jet fighter engines from Britain's Rolls-Royce in a deal reportedly worth US$1.6 billion (S$2 billion), an official said Monday.

The Central Bureau of Investigation (CBI) will probe allegations of kickbacks over the deal for Rolls-Royce to supply engines to state-run Hindustan Aeronautics Ltd (HAL) between 2007 and 2011, a defence ministry official told AFP.

"There was an internal vigilance report (conducted by HAL) that suggested there were discrepancies in the deal. The CBI will look into that," the official said on condition of anonymity.

The deal involved the purchase of engines for advanced fighter jets being developed by HAL as training aircraft for the Indian air force and navy.

No comment was immediately available from Rolls-Royce.

The probe by the top crime-fighting body is the latest controversy to hit India's defence procurement programme.

Some of the controversies have resulted in failed deals that have left the military short of vital equipment.

Last month India cancelled a US$740 million contract with Anglo-Italian firm AgustaWestland to buy luxury transport helicopters for VIPs amid bribery allegations.

The Congress-led coalition government, already under fire over a string of graft scandals, is keen to appear tough on corruption as it attempts to win a third term in office at looming general elections.

The latest probe comes after Rolls in December revealed that it was facing a formal investigation by Britain's Serious Fraud Office into alleged bribery linked to the giant group's overseas operations.

Indian media reported on Monday that the CBI probe followed the arrest last month of an Indian-born arms dealer and his son in Britain over concerns about some of those deals.

The Indian Express daily said the CBI "has already sought information" about the arrest of the pair from Britain.

India, which relies mainly on outdated Soviet-era defence equipment, has been trying to modernise its military and has emerged as one of the world's leading arms importers.