ED to investigate money trail in Embraer deal case

CBI files case alleging criminal conspiracy and corruption in collusion with unknown government officials

The Enforcement Directorate will soon launch money laundering investigations into the $ 208-million Embraer deal in 2008 for sale of three aircraft to the Defence Research and Development Organisation (DRDO), on the basis of a case registered by the Central Bureau of Investigation.

To approach CBI The Directorate will approach the CBI for a copy of the case that has been registered against the United Kingdom-based NRI defence consultant Vipin Khanna, Embraer and Singapore-based Interdev Pte Ltd for alleged payment of $ 5.76 million commission in 2009 for helping the company bag the deal.

It is suspected that the funds paid to the middleman through the Singapore-based company were channelled through Switzerland and Austria.

“The amount was used to influence the DRDO and Defence Ministry officials,” said a CBI official, adding that the agency conducted searches on the premises of Mr. Khanna and other suspects in Delhi on Thursday.

While the ED will probe the money trail, the CBI has invoked provisions alleging criminal conspiracy and corruption in collusion with unknown government officials. The agency has also issued a lookout circular to prevent accused Mr. Khanna from travelling abroad.

Lack of evidence

The CBI had earlier investigated the role of Mr. Khanna in a gun deal with a South African company named Denel, but it failed to gather prosecutable evidence in the case and had to file a closure report.

The defence consultant’s suspected involvement was also probed in the Barak missile contract with Israel and supply of weapons to Pakistan, said the agency sources.

Mr. Khanna’s son was a legislator in the Punjab Assembly till last year.

Taking note of media reports in Brazil on the Embraer deal, the Defence Ministry had referred the matter to the CBI in September. Subsequently, the agency instituted a preliminary enquiry into the sale of three fully modified EMB-145 aircraft by the Brazilian supplier to the DRDO for building indigenous Airborne Early Warning and Control Systems for the Indian Air Force.

During the enquiry, the CBI found that the company had allegedly engaged Mr. Khanna for the deal. “As a result of his mediation, it is alleged that certain DRDO and Defence Ministry officials moved a proposal for purchase of aircraft from the accused company on a single vendor basis. A purchase agreement was allegedly signed on July 3, 2008,” said the CBI official.

After the CBI initiated a probe, Embraer had issued a statement stating that since 2011, the company had publicly said that it had been carrying out an extensive internal inquiry and was cooperating with the authorities on a probe into alleged violations of The Foreign Corrupt Practices Act.