Embraer aircraft deal: Amid bribery charge, DRDO seeks details from company

The DRDO has given the world’s third largest commercial aircraft maker a period of 15 days to explain, with details, the news report, which was based on investigations by the Federal Public Prosecutor’s Office in Brazil.

Written by Sushant Singh | New Delhi | Updated: September 11, 2016 4:17 am
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THE Defence Research and Development Organisation (DRDO) has written to Brazilian company Embraer seeking more details on a report in the Brazilian media that it had employed an agent to sell three EMB 145 aircraft to the DRDO in 2008.

In the letter sent on Saturday, the DRDO has given the world’s third largest commercial aircraft maker a period of 15 days to explain, with details, the news report, which was based on investigations by the Federal Public Prosecutor’s Office in Brazil.

“Defence Minister Manohar Parrikar spoke to the DRDO chief in the morning. It was then decided to send this letter to Embraer. We can decide on the future course of action when we have more details,” a top Defence Ministry source told The Sunday Express. The DRDO has also been told to review the documents pertaining to the 2008 deal.

An Embraer spokesperson told The Sunday Express from Singapore that “the company is not party to the legal proceedings in Brazil”. “Therefore, it does not have access to the information contained therein,” the spokesperson said, refusing to respond any further to questions on the subject.

In 2008, Embraer had sold three EMB 145 AEW&C (Airborne Early Warning and Control) aircraft to the DRDO in a $208 million deal. The first two customised aircraft were delivered in 2012, and the third aircraft later. They were fitted with indigenous radars in a Rs 2,500 crore DRDO project. The AEW&C aircraft are expected to be inducted into the Indian Air Force by December this year.

Before taking over as the DRDO chief in May last year, S Christopher was the programme director of the AEW&C programme as head of the DRDO’s Centre for Airborne Systems in Bangalore.

The Embraer deal has become the third defence pact to run into problems recently. Earlier this year, the Defence Ministry had taken stringent action against AgustaWestland after a Swiss court concluded that bribes were paid in the VVIP helicopter deal. Last month, The Australian newspaper put out sensitive data related to India’s Scorpene submarines. The submarines have been designed for India by French shipmaker DCNS. The documents were later removed after an Australian court’s order.

The Defence Ministry’s notes to France and Australia on the documents are awaiting a reply. On Friday, Brazilian newspaper Folha de Sao Paulo reported that the US government had started investigations into charges that Embraer paid bribes to obtain contracts with foreign countries, including Saudi Arabia and India.

The Brazilian aircraft manufacturer has been under investigation of the United States Justice Department since 2010, when a contract with the Dominican Republic had come on the American radar for alleged violations of the US Foreign Corrupt Practices Act. The US investigation has since widened to examine business dealings with eight more countries.

In late July, Embraer announced that it had kept aside $200 million for penalty payment to reach a settlement with the American authorities.

According to Folha, these suspicions of wrongdoing got further credence in May when an employee, who had worked for more than 30 years at Embraer, reached a plea-bargain agreement in investigations being conducted by the Federal Public Prosecutor’s Office in Brazil. The plea bargainer said that Embraer had contracted a representative to assist in the sale of a surveillance system to India.

The media report also said that Embraer had allegedly drawn up a contract to engage a representative in London for the DRDO deal, and a copy of the contract was kept in a safe in England, with one key held by the Brazilian company and another by the representative hired. Indian Defence Ministry rules do not allow for engagement of a middleman in a defence deal.