Brazil’s largest aircraft maker reportedly paid bribes to make surveillance jets for India

In the eye of the storm.
In the eye of the storm.
Image: Reuters/Nacho Doce
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Embraer, the world’s third-largest aircraft maker, is in the midst of a graft storm in India.

The Sao Paulo-based company is reportedly being probed by the US justice department for allegedly paying bribes to middlemen to secure an Indian government defence contract. The firm had inked a $208-million, three-aircraft deal with India’s Defence Research and Development Organisation in 2008.

The planes were to be equipped with indigenously built, airborne early-warning and control system (AEW&C) radars. The first of the three was delivered in 2011 and the remaining in 2013.

“I am not going to give a knee-jerk reaction and just make a statement based on rumours,” India’s defence minister Manohar Parrikar said about the alleged payoffs. “I have asked for a report which will be submitted on Monday, and if the issues are of a criminal nature, then we can forward this case to the CBI for a criminal investigation and if there are just procedural issues then we can do an internal investigation.”

Embraer has been under investigation by the United States justice department since 2010 for alleged violations of the US Foreign Corrupt Practices Act. The probe began when a contract between the Brazilian firm and the Dominican Republic raised suspicion. The investigation was later expanded to business dealings with eight other countries.

The Brazilian newspaper Folha de Sao Paulo first reported that the US government had launched a probe into bribes allegedly paid by Embraer to middlemen for “deals concluded in Saudi Arabia and India.” India does not allow the use of middlemen in defence deals.

The higher echelons of India’s defence establishment have frequently been mired in corruption scandals. In 2013, the government launched a probe into allegations of kickbacks paid to middlemen in a Rs3,600-crore ($542 million) helicopter deal with AgustaWestland, a subsidiary of the Italian government-owned Finmeccanica SpA.

In 2010, the Indian government and AgustaWestland had signed a Rs3,546-crore deal to buy 12 AW-101 helicopters for the Indian Air Force to replace the Soviet-era MI-8s. These choppers were to be used to transport the president, prime minister, and the vice-president, among others. Last year, an Italian court even named Sonia Gandhi, the leader of India’s Congress party, as the “driving force” behind the chopper deal.