The Hindu was given access to confidential details, including a key banking document, showing massive payments into accounts of companies run by the Choudhrie family.

Stunning details of payments of millions of dollars by several foreign defence companies to an alleged Indian arms dealer, family have emerged in secret documents accessed by the BBC and The Guardian, and shared with The Hindu.

Among the key details are remittance of almost €100 million (approx Rs. 730 crore) in just 12 months by Russian arms firms into accounts of companies controlled by Sudhir Choudhrie, his family and close associates; and about £10 million paid by British company Rolls-Royce to firms linked to him.

Mr. Choudhrie’s lawyers told the BBC that the former Delhi resident, who now lives in London, has “never paid bribes to government officials or acted as an illegal middleman in defence deals.”

The Hindu was given access to confidential details, including a key banking document of October 2, 2008 showing the massive payments into various accounts controlled by companies run by the Choudhrie family.

Mr. Choudhrie has been investigated by the CBI and Enforcement Directorate in various arms deals in the past. Ever since his name emerged in the Tehelka tapes, Mr. Choudhrie and his family have been living in London. He figures in the CBI’s confidential list of ‘Undesirable Contact Men’, who are suspected of manipulating government contracts.

The BBC’s Panorama, the current affairs investigative programme, has claimed that Rolls-Royce made secret payments of around £10 million to an unregistered Indian agent. Rolls-Royce says it has zero tolerance of bribery and corruption. “Panorama has learned Rolls-Royce paid the money to companies linked to arms dealer Sudhir Choudhrie,” the report says.

In 2014, Mr. Choudhrie and his son Bhanu were arrested as part of the U.K.’s Serious Fraud Investigation Office inquiry into Rolls-Royce. Both were released without charge.

Mr. Choudhrie’s lawyers told the BBC that he “has never paid bribes to government officials or acted as an illegal middleman in defence deals.” They said he also had “no knowledge of the contents” of the Undesirable Contactmen list.

Rolls-Royce is a key player in the Indian defence market. Its engines power among other systems, the Hawk advanced trainer aircraft of the Indian Air Force. The report raises questions about the Hawk deal.

According to the BBC, Mr. Bhanu Choudhrie accompanied an arms executive called Peter Ginger on a trip to Switzerland in 2007. During the trip, Mr. Ginger made a payment amounting to hundreds of thousands of pounds into a secret bank account in cash. The account was opened in the name of “Portsmouth” and bank documents show a balance of more than a million Swiss francs, the report said.

As the BAE Systems President (India), Mr. Ginger was a key negotiator on the sale of Hawk aircraft to the Indian government. All of the planes had Rolls-Royce engines and the deal was worth around £400 million to the company.

Mr. Bhanu Choudhrie’s lawyers told the BBC he’s never been paid to secure deals for Rolls-Royce in India, including the sale of Hawk jets. “Mr. Choudhrie has never paid any bribe to Mr. Ginger or anyone else”, his lawyers said. “Mr. Choudhrie has no knowledge of what bank accounts have been set up or operated by Mr. Ginger or what sums [if any] he has deposited in them in cash.”

Mr. Ginger told the BBC he had never acted for Rolls-Royce or had any financial dealings with them. He says he’s “never taken nor paid any bribes.”

Russian payments

In what could raise serious questions about India’s massive defence deals with Russia, the secret documents show that Russian arms companies made massive payments to Mr. Choudhrie and his family.

The BBC said leaked documents from the Choudhries’ Swiss bank account showed that the family’s companies were paid almost €100 million by Russian arms firms in one 12-month period alone.

One company owned by the Choudhrie family, Belinea Services Ltd, received €39.2 million between October 2007 and October 2008. Another company, Cottage Consultants Ltd, was paid €32.8 million in the same period, while a third company – Carter Consultants Inc – was paid €23 million.

The leaked documents say one of the Russian arms firms paying the Choudhries “makes cruise missiles,” the report said.

Some of the payments were viewed as suspicious at the time by the Swiss bank, Clariden Leu. Its compliance office in Singapore raised anti-money laundering alerts and the Choudhrie family accounts were reviewed by the bank’s risk management team.

It’s not clear what action – if any – the bank eventually took. But the leaked report describes the payments from the arms companies as “incoming funds from clients offset business”.

Offset payments are part of big Indian defence deals. However, neither Mr. Choudhrie nor any of the firms linked to him are approved arms agents or offset agencies in India. Nor has there been any defence deal that India has signed in which offset payments were routed through tax havens. Offsets are the share of a contract that is to be sourced/invested in India.

In the leaked documents, Clariden Leu describes the Choudhrie family as being “very wealthy with an overall fortune of approx USD 2bn.”

‘Not violated rules’

Lawyers for Mr. Bhanu Choudhrie told the BBC that he had no knowledge of the Clariden Leu documents. “The report to which you refer appears to be a confidential bank document. Mr. Choudhrie has not broken any money-laundering rules in any of his business dealings at any stage,” they said.

The lawyers said the BBC questions about offset payments by Russian arms companies were too vague: “You have not given the dates or amounts of the alleged payments or the basis on which you say they were ‘suspicious’ or made in relation to Russian arms deals. The business of Cottage Consultants was conducted in a lawful and proper manner.”

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