The Defence Ministry has written to the CBI, asking it to conduct an inquiry into the allegations made in Brazilian media report that Brazilian company Embraer employed an agent for sale of three EMB 145 aircraft to India in 2008. Sources in the ministry also told The Indian Express that they are contacting the US government through diplomatic channels to obtain more details about the US Department of Justice’s probe into Embraer’s alleged violation of the Foreign Corrupt Practices Act.
According to sources, the ministry is also in touch with the Brazilian government to gather information about the probe into the matter.
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Last Saturday, the Defence Research and Development Organisation wrote to Embraer, asking it to explain within 15 days the news report, which was based on an investigation by the Federal Public Prosecutor’s Office in Brazil. Defence Minister Manohar Parrikar had then said that he would forward the case to the CBI if the ministry finds that there was a criminal angle to the case.
In 2008, Embraer had sold three EMB 145 AEW&C (Airborne Early Warning and Control) aircraft to DRDO in a $208 million deal. The first two customised aircraft were delivered in 2012, and the third was delivered 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 Indian Air Force by December.
The Brazilian company has been under the scanner of the US Justice Department since 2010 after a defence contract with Dominican Republic raised suspicions of kickbacks. The US investigation has since widened to examine Embraer’s business dealings with eight more countries, including Saudi Arabia and India. In July, Embraer announced that it had set aside $200 million for penalty payment to reach a settlement with the US authorities.
On Friday, Brazilian newspaper Folha de Sao Paulo reported that 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 Federal Public Prosecutor’s Office in Brazil. The plea bargainer said Embraer had contracted a representative to assist in the sale of a surveillance system to India.
The news report also said 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.
The Defence Ministry’s rules do not allow for engagement of a middleman in a defence deal.