India has asked an explanation from the Brazilian aircraft-maker Embraer following media reports of an international investigation into the alleged payment of bribes to secure an aircraft deal in 2008.
Embraer is alleged to have used bribes and involved middlemen to secure contracts in India and Saudi Arabia. In India’s case, the payoff was made to a U.K.-based middleman in the deal for three Embraer aircraft ordered by the Defence Research and Development Organisation (DRDO) for building an indigenous Airborne Early Warning and Control Systems (AEW&C) aircraft for the Indian Air Force. A Defence Ministry spokesperson said on Saturday that the DRDO sought an explanation and details from the manufacturer within 15 days.
Under watch since 2010
According to Brazilian newspaper Folha de Sao Paulo, Embraer had been under investigation by the United States Justice Department since 2010 “when a contract with the Dominican Republic raised the Americans’ suspicions.”
“Since then, the investigation has widened to examine business dealings with eight more countries,” the report said.
The newspaper reported that the company was cooperating in the investigations, and “is expecting to reach a deal soon with American authorities” and has even set aside $200 million to pay “any eventual fines that come about as a result of the process”.
The newspaper has quoted Albert Phillip Close, manager of Embraer’s defence area, as having admitted to the authorities as part of a plea bargain that in the case of India, the aircraft major had contracted a representative to assist in the sale of a surveillance system to the government.
$208-million deal in 2008
India had signed a $208-million deal in 2008 for procuring three Emb-145 aircraft. The planes were delivered beginning 2011 and the project is now nearing completion after a series of delays.
This is the second major defence deal under the scanner after the VVIP chopper case involving AgustaWestland and both the deals were signed by the previous United Progressive Alliance government.
Indian defence procurement prohibits the employment of middlemen in defence deals.
The Defence Ministry spokesperson when asked about the reports said the DRDO will seek explanation and details from manufacturers of Embraer aircraft on media reports on the 2008 deal.
“On receipt of information by the DRDO, further steps may be initiated,” he said.