India ordered an investigation on Wednesday into alleged kickbacks in the Embraer aircraft deal.
Defence minister Manohar Parrikar asked the Central Bureau of Investigation to probe bribery allegations in the $208 million deal for three Embraer-145 planes, the platform for India’s airborne early warning and control (AEW&C) systems project. The Enforcement Directorate has also been roped in to track down a possible money trail. Allegations of kickbacks were reported in a Brazilian paper last week.
The United States is already investigating whether the Brazilian aircraft-maker paid bribes to bag contracts abroad and if that influenced deals it closed with India and Saudi Arabia.
India ordered the parallel investigation four days after it set a 15-day deadline for Embraer to submit a report on the graft charges. The handing over of the case to the CBI indicates the possibility of criminality, defence ministry sources said.
The UPA government inked the deal for the planes in 2008 as part of a Defence Research and Development Organisation programme to scale up the Indian Air Force’s AEW&C capabilities. The AEW&C systems developed by the DRDO are being installed on the planes.
DRDO chief S Christopher gave a detailed briefing to the minister on Monday on different aspects of the project that should have been completed in 2011. Last week, Brazilian newspaper Folha de Sao Paulo revealed that the deal was under the watch of US authorities.
The planes have been fitted with indigenous radars to serve as AEW&C aircraft for the Indian Air Force under a Rs 2,400-crore project. It is suspected that a UK-based middleman may have been paid bribes. Middlemen are not allowed in defence business in India.
The ministry has finalised a blacklisting policy for arms contractors, with new penalties debarring firms from conducting business with the government for a period ranging from one to 10 years.
In 2014, India terminated a controversial Rs 3,727-crore contract with AgustaWestland to supply 12 VVIP helicopters to the IAF following allegations of kickbacks. It invoked the integrity pact to scrap the deal. The VVIP chopper case was also handed over to the CBI and ED.