CBI PE: Agent paid $5.5 million in DRDO-Embraer deal

NEW DELHI: The CBI has decided to register a case in the $208-million DRDO aircraft purchase deal after a preliminary enquiry has found that Brazilian aerospace company Embraer allegedly paid $5.5 million as commission to an overseas middleman to swing the deal in its favour in 2008. CBI has not named the middleman or location of the agent but said the agency was in touch with the law enforcement agencies of a foreign country for securing more details on the deal.

The CBI said that its sources helped it obtain the commission figure of $5.5 million (approximately Rs 36 crore at current exchange rate). It said that there was enough prima facie material for a probe. The Defence Research and Development Organisation purchased three aircraft from Embraer in 2008 for air-borne radar systems after inking the deal with the manufacturer in the same year. The aircraft was customised and currently serves as air-borne radar system, known as airborne early-warning and control systems, or AWACS, for the Indian Air Force.

The preliminary enquiry (PE) was completed nearly a month after CBI was asked to probe the deal following reports in Brazilian newspaper, Folha de Sao Paulo, that Embraer’s deals in India and Saudi Arabia were secured with the help of middlemen. India’s defence procurement rules do not allow agents but over three decades several defence deals have come up for investigation following allegations of commissions or bribes paid to middlemen and agents.

The allegations have led to political turmoil in the country, time and again. ‘Folha de Sao Paulo’ reported that Embraer allegedly paid commissions to a UK-based defence agent to finalise the deal with India. The company has been under investigation by the US Justice Department since 2010, when a contract with the Dominican Republic raised suspicion.

Since then, the investigation has widened to examine Embraer’s business dealings in eight more countries, including India.