British defence and aerospace major Rolls-Royce has sought a quick end to its Indian imbroglio arising out of its use of an intermediary to do non-military, energy-related business with Hindustan Aeronautics Ltd.
The company has offered to “provide value” for the commission amount of about Rs. 18 crore that it paid the intermediary, it is reliably learnt.
Rolls Royce offered to find a mutually suited way to resolve the matter and reimburse the money soon after the controversy broke out on March 3, The Hindu learns from persons closely dealing with the matter.
The Ministry of Defence and HAL have put on hold all transactions with the British company; the Ministry is understood to have referred the matter to the Law Ministry for advice.
Many Air Force aircraft and Navy turbines are powered by Rolls-Royce engines. A general worry in military circles is about a costly cascade effect a vendor’s “transgression on the civil business side” would have on the defence forces if the issue is not resolved early, according to these sources.
The British company admittedly needed an external agent for its energy business with HAL as it had a small team in India until 2009.
HAL alerted the Ministry of Defence in December 2013 when RR revealed in its first letter, dated December 19, 2013, that it had engaged Singapore-based Ashok Patni representing Aashmore Pte Ltd as its commercial adviser from around 2007 till 2012.
RR admits to 96 transactions that were done with HAL through Aashmore, for which it paid the agent between 10 per cent and 11.3 per cent of the value of the order. Post 2013, it started dealing directly with its customers.
Rolls-Royce assured its Indian connections that Aashmore did not deal directly with HAL or its employees; an internal probe did not find any evidence of Aashmore’s commissions being passed on to HAL staff or other third parties.