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BAE in India : Corruption Case


In India, undercover transcripts obtained by investigators allege an agent for BAE Systems - manufacturer of the Hawk jet - made corrupt approaches to a party treasurer linked to the Indian defence minister, George Fernandes.

This was revealed when a team of local journalists disguised themselves as Indian arms sellers.

Their undercover videotapes recorded a claim by the treasurer of the defence minister's party of an approach by an alleged confidential agent for BAE, a businessman named Sudheep Chaudhury.

BAE said: "It does not matter what is said in whatever manufactured document you have. BAE does not and has not used agents in India."

According to the tapes, the treasurer rejected the approach - but for one reason only. He had already been signed up by the Hawk's Russian rivals, he said, for a "special commission" of 10% of the value of the deal.

The tapes, which were made by Tehelka.com, an online team of journalists, caused a huge scandal in India because they implicated the defence minister in a wide range of bribery allegations.

DESO is heavily involved in the Indian bid. In 1988 the then head of DESO, BAE's own Sir Colin Chandler, told a private meeting in London of plane firms: "Doing business in India has always required the use of agents. Following the Bofors scandal the official Indian view on the matter has been quite emphatic. The word is, as I was told: 'There shall be no agents'. However, it is not quite as simple as that ..."

In the Bofors scandal, three millionaire traders, the Hinduja brothers, still face a belated trial, accused of hiding multi-million pound "commissions" from the Swedish howitzer company in Swiss banks.

When the Tehelka "sting" was taped, an Indian army general told them: "There is a famous bloody arms dealer called Mr Chaudhury. You must have heard of him. Bloody everywhere, he roams around in a 500SEL Mercedes. His claim to fame was that his brother-in-law was a chairman of Hindustan Aeronautics [the Indian state plane-makers]."

Subsequently, the undercover journalists met RK Thain, the treasurer of the Samata party, to which the defence minister belonged.

Thain was filmed explaining to them how he passed on shares of commissions to party funds and politicians, and described a meeting he had in 1998 in Delhi: "That Sudheep Chaudhury. That guy approached me. He is the man who was looking after the Hawk interest. I went to Sudheep Chaudhury's house _ He says, 'Mr Thain, why you want to go with MiG? They will not get the order. Both of us, let us _ let us make an understanding. Why competition? If you want, I can give you a letter where all positive points of the British Hawks are there ..."

Thain said he was forced to tell him: "But I am sorry. I cannot shake hands with British Hawk ..., I don't like to run around, run after two companies in the same job. I have feeling that I must work for MiG. So, I am sorry, I cannot work for British Hawk."

In Delhi, Mr Chaudhury's assistant told us: "He is medically unfit at present. He has been away for most of the time". Mr Chaudhury did not respond to invitations to comment. Mr Thain has not commented since the tapes were published.

Mr Fernandes was forced to resign after the Tehelka exposures, but was later reinstated. A commission of inquiry is taking place into his activities and those of Mr Chaudhury but has produced no result so far.

In another part of the world, in Qatar, Sheikh Hamad bin Jassim bin Jaber, the ruler's influential cousin, was paid a £7m commission into a secret Jersey trust run by Grindlay's bank. The Serious Fraud Office traced the payment to BAE and to a deal to sell Piranha armoured cars, originally brokered in 1996 by Michael Portillo, then the Tory defence secretary, now on the BAE board.

However, police investigations into the sheikh were halted when he paid £6m to the Jersey authorities to compensate them for "inconvenience". The government admits the Foreign Office had a report of this commission payment in 1998, the year the Piranhas were delivered.


The following lists all references contained in our database that are relevant to this briefing
The Guardian [5/5/2004] 'BAE chairman named in 'slush fund' files' : http://politics.guardian.co.uk/foreignaffairs/story/0,11538,1209754,00.html [Source ID = 12879]


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