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The Central Bureau of Investigation on Friday registered a case against NRI arms dealer Vipin Khanna and two companies based abroad in connection with alleged payment of $5.7 million (Rs 38 crore) in kickbacks in the 2008 Embraer aircraft deal and issued a lookout circular against him to prevent him from leaving the country.
CBI sources said the agency has registered a case against 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 (Rs 1405 crore).
The investigative agency has issued Lookout Circular for all exit routes to ensure Khanna is detained if he attempts to leave the country, they said.
The CBI carried out searches at four locations in New Delhi – Khanna’s residence in Greater Kailash, farmhouse in Chattarpur, a private vault in Hauz Khas, and his son’s residence in Vasant Kunj -- on Thursday.
It is alleged that the kickbacks were allegedly routed from Embraer subsidiaries to Khanna through Interdev in three instalments of $1.92 million (Rs 12.8 crore) each in 2009.
The sources also said that it is alleged that the commission in the deal was routed through Austria and Switzerland.
A Brazilian newspaper had alleged that the aviation company had taken the services of middlemen to clinch deals in Saudi Arabia and India following which Defence Ministry had ordered an inquiry into the matter.
Involvement of middlemen in defence deals is strictly barred under the Indian law.
The CBI had registered a preliminary enquiry in the case on September 16, 2016 at the request of the Defence Research and Development Organisation to probe allegations regarding employment of an agent for facilitating the contract for Airborne Early Warning and Control System project for procurement of three fully modified EMB-145 aircraft.
A CBI spokesperson said it was found during enquiry that the Brazil-based firm had engaged a middleman (a non-resident Indian) based in United Kingdom.
‘It was further alleged that as a result of mediation by said middleman, the officials of DRDO moved a proposal for purchase of three EMB-145 Aircraft from Brazil-based firm on a single vendor basis and the said firm secured the contract for supplying three EMB-145 Aircraft from DRDO, Ministry of Defence,’ the CBI said.
The spokesperson said a Purchase Agreement was allegedly signed between the Brazil-based firm and DRDO, Ministry of Defence, on July 03, 2008 for supply of three modified Embraer Aircraft EMB-145 for a consideration of $210 Million.
‘It was also alleged that in return for facilitating the agreement between the Brazil-based firm and the DRDO (India), the firm paid an amount of $5.76 million (approx) to the said middleman through Singapore-based company during the year 2009 to influence the officials of DRDO /Ministry of Defence (the government of India) for the contract,” she said.
Khanna had faced CBI probe in a gun deal involving South African company Denel in which the agency had to file a closure report as it could not gather enough evidence.
He had also faced the agency probe in the Barak missile deal with Israel and sale of arms to Pakistan. Khanna is believed to be a relative of a former Congress leader and his son was an MLA in Punjab till last year.
Embraer has been under investigation by the US Justice Department since 2010 when a contract with the Dominican Republic raised US suspicions, the report in Brazilian newspaper said.
Since then, the investigation has widened to examine its business dealings with eight more countries.
After the PE was registered, Embraer had 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,” it had said.
Image: An Embraer R-99 aircraft fitted with Airborne Early Warning and Control System developed by India. Photograph: Hamad I Mohammed/Reuters