US indicts Rajya Sabha MP K V P Ramachandra Rao, a close associate of Y S Rajasekhara Reddy and his son Jaganmohan Reddy, in bribery and corruption case. Rediff.com's Suman Guha Mozumder reports from New York.
A member of the Rajya Sabha from Andhra Pradesh, K V P Ramachandra Rao, left, was on Wednesday, April 2, indicted by United States federal authorities in connection with an alleged bribery and corruption case relating to titanium mining in India.
A federal indictment returned under seal in June 2013 and unsealed April 2, has charged Rao, five other foreign nationals, including an Indian American, in an alleged international racketeering conspiracy involving bribes of state and central government officials in India to allow the mining of titanium.
Five of the six defendants are also charged with conspiracy to violate the US Foreign Corrupt Practices Act, among other offenses.
Besides Rao, who was a close advisor to the late chief minister of Andhra Pradesh, Y S Rajasekhara Reddy and is also considered close to his son Y S Jaganmohan Reddy, the five others indicted are Andras Knopp, 75, a Hungarian businessman; Suren Gevorgyan, 40, of Ukraine; Gajendra Lal, 50, an Indian national and permanent resident of the United States who formerly lived in Winston-Salem, North Crolina, and Periyasamy Sunderalingam, 60, of Sri Lanka, and Dmitry Firtash, 48, a Ukrainian national.
While all six defendants were charged with one count each of racketeering conspiracy and money laundering conspiracy, and two counts of interstate travel in aid of racketeering, the six, excluding Rao, were charged with one count of conspiracy to violate the FCPA.
Beginning in 2006, the defendants allegedly conspired to pay at least $18.5 million in bribes to Indian officials to secure licenses to mine minerals in Andhra Pradesh.
The mining project was expected to generate more than $500 million annually from the sale of titanium products.
The indictment alleged that Sunderalingam met with Rao to determine the total amount of bribes and advised others on the results of the meeting. He identified various foreign bank accounts held in the names of nominees outside India that could be used allegedly to funnel bribes to Rao.
Rao, the prosecutors said, allegedly solicited bribes for himself and others in return for approving licenses for the project. He warned other defendants concerning the threat of a possible law enforcement investigation of the project.
Firtash was arrested March 12, 2014, in Vienna, Austria. He was released from custody on March 21, 2014, after posting 125 million euros (approximately $174 million) bail. Firtash pledged to remain in Austria until the end of extradition proceedings.
As alleged in court documents, Firtash controls Group DF, an international conglomerate of companies that was directly and indirectly owned by Group DF Limited, a British Virgin Islands company.
Group DF companies include: Ostchem Holding AG, an Austrian company in the business of mining and processing minerals, including titanium; Global Energy Mining and Minerals Limited, a Hungarian company, and Bothli Trade AG, a Swiss company, for which Global Energy Mining and Minerals was the majority shareholder.
In April 2006, Bothli Trade and the state government of Andhra Pradesh agreed to set up a joint venture to mine various minerals, including ilmenite, a mineral which may be processed into various titanium-based products such as titanium sponge, a porous form of the mineral that occurs in the processing of titanium ore.
In February 2007, Company A entered into an agreement with Ostchem Holding, through Bothli Trade, to work toward a further agreement that would allow Bothli Trade the ability to supply 5 million to 12 million pounds of titanium sponge from the Indian project to a Chicago-based 'Company A' which was not identified in court documents by name, on an annual basis.
The mining project required licenses and approval of both the Andhra Pradesh state government and the central government of India before the licenses could be issued.
As alleged in the indictment, the defendants used US financial institutions to engage in the international transmission of millions of dollars for the purpose of bribing Indian public officials to obtain approval of the necessary licenses for the project.
They allegedly financed the project and transferred and concealed bribe payments through Group DF, and used threats and intimidation to advance the interests of the enterprise's illegal activities.
According to the indictment, Firtash was the leader of the enterprise and caused the participation of certain Group DF companies in the project. Firtash allegedly met with Indian government officials, including then chief minister Y S Rajasekhara Reddy, to discuss the project and its progress, and authorised payment of at least $18.5 million in bribes to both state and central government officials in India to secure the approval of licenses for the project.
Firtash also allegedly directed his subordinates to create documents to make it falsely appear that money transferred for the purpose of paying these bribes was transferred for legitimate commercial purposes, and he appointed various subordinates to oversee efforts to obtain the licenses through bribery.
Lal allegedly engaged in similar activities and reported to Firtash and Knopp on the status of obtaining licenses, and recommended whether, and in what manner, to pay certain bribes to government officials.
'Fighting global corruption is part of the fabric of the Department of Justice,' said Acting Assistant Attorney General David A O'Neil of the Department of Justice's Criminal Division. 'The charges against six foreign nationals announced today send the unmistakable message that we will root out and attack foreign bribery and bring to justice those who improperly influence foreign officials, wherever we find them.'
The case, which is being prosecuted by Assistant US Attorneys Amarjeet Bhachu and Michael Donovan of the Northern District of Illinois and Trial Attorney Ryan Rohlfsen of the US Criminal Division's Fraud Section, is being investigated by the FBI's Chicago field office.
The indictment lists 57 transfers of funds between various entities, some controlled by Group DF, in various amounts totaling more than $10.59 million beginning April 28, 2006, through July 13, 2010.
The indictment seeks forfeiture from all six defendants of more than $10.59 million.
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