Lawsuit in India Shines a Spotlight on Under-the-Table Practices

It’s a standard business story, especially when dealing with Russians. Smaller company does deal with larger company. Larger company decides it’s convenient not to pay for services rendered. Smaller company takes larger company to court. Ah, but here’s where it gets interesting – what if the smaller company’s activities were now technically illegal? An Austrian firm named Rite Approach Ltd. is the small company; Russian firm Kazan is the larger company, who paid the 16% commission on a deal for 16 Mi-17 helicopters to state firm Rosoboronexport instead. As IBN notes in its story “A dogfight in Indian arms bazaar“: “What’s interesting to note here is the fact that payment of undisclosed commissions is banned by India.” Indian Mi-17s(click to view full) This is true, under Defence Acquisitions Procedure 2006’s Integrity Clause. The number of scandals around the practice over the years suggests that it’s rather common, however, and this legal case is opening a very public window into its workings. This one is likely to be watched closely in India and abroad; it will probably attract more attention before it’s over.