Embraer deal: ED registers money laundering case based on CBI probe
The Enforcement Directorate has registered a money laundering case into the alleged payment of $5.7 million in kickbacks in the 2008 Embraer aircraft deal based on the CBI’s case filed last month.
Officials said the agency filed a criminal complaint under provisions of the Prevention of Money Laundering Act (PMLA), and would begin issuing summons to the accused.
The Central Bureau of Investigation (CBI) had booked NRI arms dealer Vipin Khanna and two companies -- Brazil-based Embraer and Singapore-based Interdev Pte Ltd -- over alleged payment of commission in the aircraft deal with Embraer worth $210 million.
It is alleged that the kickbacks were routed from Embraer subsidiaries to Khanna through Interdev in three instalments of $1.92 million each in 2009.
Sources also said that the commission in the deal was allegedly routed through Austria and Switzerland.
A Brazilian newspaper recently reported that the aviation company had taken the services of middlemen to clinch deals in Saudi Arabia and India following which the Indian defence ministry ordered an inquiry into the matter.
Involvement of middlemen in defence deals is strictly barred under the Indian law.
CBI had registered a preliminary enquiry in the case on September 16, 2016, at the request of the Defence Research and Development Organisation (DRDO), to investigate if an agent facilitated the contract for the Airborne Early Warning and Control System (AWACS) project and procurement of three fully modified EMB-145 Aircraft.
The US justice department has been investigating Embraer since 2010 when a contract with the Dominican Republic raised its suspicions, the Brazilian newspaper report said.
Since then, the investigation has been widened to examine Embraer’s business dealings with eight more countries.
After the CBI Preliminary Enquiry (PE) was registered, Embraer issued a statement saying: “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 is not party of the legal proceedings in Brazil. Therefore, it does not have access to the information contained therein.”