DRDO, Embraer deal under lens

Brazil firm hired UK middleman

A 2008 deal to purchase three aircraft for DRDO from Brazilian aviation major Embraer is the latest defence contract to come under the scanner.

This comes in the wake of reports that the company violated Indian rules by hiring a middleman in the UK to secure the deal. The $210-million contract was for buying three Embraer-145 jets for the Defence Research and Development Organisation (DRDO), which was developing an indigenous airborne early warning system under the leadership of
S Christopher, the incumbent DRDO director-general.

Reports of the scam, being probed by the US and Brazilian authorities, appeared in the Brazilian newspaper Folha de Sao Paulo on Friday.

“DRDO is to seek explanation and details from the manufacturers of Embraer aircraft on media reports on the deal signed in 2008. On receipt of information by DRDO, further steps may be initiated,” said a defence spokesperson.

The DRDO has asked the Brazilian manufacturer to furnish the information within the next 15 days. Christopher headed the Indian airborne early warning and control system at the Centre for Airborne System (CABS), Bengaluru, while at the time of inking the deal DRDO was headed by V Saraswat.

While Christopher did not answer phone calls on Saturday, former defence minister A K Antony asked the government to enquire about the deal.

The investigations began in 2010 when another Embraer deal worth $94 million with the Dominican Republic came under a cloud. A Dominican minister and three others were arrested for accepting a bribe of $3.5 million.

Embraer executives told the investigator about corruption in the Indian deal for which a middleman was hired. Since engaging a middleman in defence contracts is banned in India, the person was hired in the UK.

Brazilian media reports suggest that a copy of the Indian contract was kept in a locker in the UK for safekeeping with the firm and the middleman each having a key to the locker.

“Since 2011, Embraer has publicly reported that it has been conducting an extensive internal investigation and cooperating with the authorities on investigations regarding alleged violations of the FCPA. The company voluntarily expanded the scope of the investigation, systematically reporting the progress of the case to the market,” the company said in a statement.

“The company is not party to the legal proceedings in Brazil; therefore, it does not have access to the information contained therein,” it added.