Adviser to Tim Farron arrested over 'links to firms receiving payouts from Rolls Royce'

An Indian billionaire who has donated more than £1.6million to the Liberal Democrats was last night at the centre of a Rolls-Royce corruption scandal.

Sudhir Choudhrie, 67 – an adviser to Lib Dem leader Tim Farron – and his son Bhanu were arrested over their alleged links to firms that received secret payouts from the engineering giant.

Mr Choudhrie, an arms dealer who collected a business award from Theresa May in 2013, was also on an Indian government blacklist of people suspected of corruption, it emerged.

A joint BBC and Guardian investigation revealed Rolls-Royce hired a network of agents to help it land lucrative contracts in at least 12 different countries.

Sometimes they used bribes and they may have benefited from the use of illicit payments to boost profits for years, it was claimed. The network of agents is now the focus of large-scale investigations by anti-corruption agencies in the UK and the US.

Rolls-Royce, which makes engines for fighter jets and commercial airliners, was sucked into a multinational corruption scandal in 2012. It became the subject of a bribery probe by the Serious Fraud Office (SFO). The ongoing investigation concerns ‘intermediaries’, middlemen who help seal business deals when a company has a limited local presence.

Rolls-Royce hired law firm Freshfields Bruckhaus Deringer, which launched an internal investigation, ending with information being passed to the SFO.

The internal probe is understood to have unearthed the evidence of corruption in a number of countries. The fresh evidence shows the firm made secret payments of around £10million to an unregistered Indian agent. The money included a suspicious payment of cash that may have helped Rolls-Royce win a major contract for engines on Hawk aircraft.

Rolls-Royce paid money to companies linked to Mr Choudhrie, it was claimed. It is illegal to pay secret middlemen to win defence contracts in India.

Mr Choudhrie, who lives in London, and his son were arrested and questioned by the SFO over the bribery allegations in 2014. Both denied wrongdoing and were released without charge. Mr Choudhrie is also on an Indian government blacklist of people suspected of ‘corrupt or irregular practice’. It warns Indian civil servants and government ministers to take extra care when dealing with such ‘unscrupulous persons’.

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

He is an adviser on India to Mr Farron, and his family has donated more than £1.6million to the party. His family foundation owns more than 600 rare works by artists including Picasso, Renoir and Andy Warhol.

The joint investigation also found evidence of a suspicious payment made in cash. It involves Bhanu Choudhrie, who accompanied an arms executive called Peter Ginger to Switzerland in 2007. During the trip, it has been suggested that Mr Ginger made a cash payment amounting to hundreds of thousands of pounds into a secret bank account. It was apparently opened in the name of ‘Portsmouth’ and bank documents showed a balance of more than one million Swiss francs.

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 £400million to the company.

Bhanu Choudhrie’s lawyers told the BBC he has 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 said he has never acted for Rolls-Royce or had any financial dealings with them. He says he has ‘never taken nor paid any bribes’.

A Rolls-Royce spokesman said: ‘We have made it clear that Rolls-Royce will not tolerate business misconduct or inappropriate behaviour of any kind.

‘Concerns about bribery and corruption involving intermediaries remain subject to investigation by the SFO and other authorities. We are fully co-operating with the authorities and we cannot comment on ongoing investigations.’