Brazilian aircraft manufacturer Embraer's deal with DRDO under bribery cloud

NEW DELHI: Another big defence corruption probe is set to hit India. This time it’s a joint US Brazil investigation into bribery charges against Brazilian aircraft manufacturer Embraer that has now been expanded to include the sales made to India.

While Embraer has also sold VVIP executive jets to the Indian Air Force, the deal likely to come under probe is a $210-million contract inked in 2008 with the Defence Research and Development Organisation ( DRDO) for a project to develop a new range of early warning and control aircraft.

Authorities in the US and Brazil are probing charges that the company hired a middleman based out of England to bag the deal, a practice prohibited by Indian military procurement laws.


Besides the Indian deal, the company’s contracts in Saudi Arabia are also being probed, Brazilian newspaper Folha de SãoPaulo reportedon Friday.

The probe, which began in theUS under the Foreign Corrupt Practices Act (FCPA) in 2010, has already led to the arrest of the defence minister of the Dominican Republic last month on bribery charges in a military deal with Embrarer.

This was a result of investigation launched on the basis of the information US Department of Justice shared with Brazilian authorities.

Embraer, which has not denied the charges, told ET that it is cooperating with authorities on alleged violations, and confirmed that it has expanded an internal investigation.

“The company voluntarily expanded the scope of the investigation, systematically reporting the progress of the case to the market,” an Embraer spokesperson told ET.

When contacted, a defence ministry spokesperson said: "The DRDO is not yet aware of the developments."

Safe with shared keys

According to the Brazilian media report, Embraer allegedly drew up a contract that hired a representative for the Indian 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.

In July 2008, India signed a $210 million deal to acquire three Embraer 145 jets for its airborne early warning system programme. As per the deal, the radar and other systems would be developed by DRDO and the Brazilian firm would assist in integrating the system to the aircraft.